Consultation on Affordable Rented Housing: Analysis of Consultation Responses

3 Proposal 2: Income Consideration

Proposal 2: Create the flexibility for social landlords to consider an applicant's income when deciding their priority for housing

3.1 At present, the law does not permit social landlords to take an applicant's income into account when considering their priority for housing. Scotland is one of the very few European countries with no restriction on eligibility for social housing based on income. The Scottish Government believes that this is a barrier for social landlords who want to develop intermediate rented housing, and that it does not conform with the European Commission's definition of social housing. For those reasons the Scottish Government proposes changes to the law to enable income to be one of the many things that social landlords could use when assessing an applicant's need for housing. The proposal is as follows:

THE SCOTTISH GOVERNMENT'S PROPOSALS - PROPOSAL 2
(Source: Consultation Document Page 13)

• Remove the current ban on social landlords taking into account the income of the applicant and their family and allow social landlords to take into account the financial resources available to an applicant and their family to meet their housing costs.

3.2 An analysis of the responses provided to Proposal 2 is set out below.

Views on the Proposal (Q6)

3.3 A large number of respondents who answered this question (44%) disagreed with the proposal, 36% of respondents were in agreement whilst 20% were unsure. The proportion who agreed with the proposals was significantly higher through the written questionnaires than at the regional events or via Facebook.

3.4 The table below breaks down the 206 responses to this question via written questionnaires by respondent type.

3.5 The greatest support for the proposals of those who answered this question came from landlord representative groups where 75% were in agreement with the proposals. Just over 50% of the landlords who responded were also in favour of the proposals. Less than 50% of other groups and just over 40% of individuals agreed with the proposals. Only 25% of tenant groups supported the proposals, with the majority (over 60%) disagreeing that income should be taken into account.

Benefits (Q7)

3.6 The consultation asked respondents to consider the proposed benefits of considering income. A range of responses were put forward, centred primarily around four themes. These are as follows, with the percentages referring to the proportion of the 237 written responses:

• It helps to identify those most in need of housing (about 20% of respondents);
• It creates balanced and long-term sustainable communities (about 18% of respondents);
• It may assist in the establishment of more mid-market rental properties. (about 12% of respondents);
• It helps to identify the perceived sustainability of tenants i.e. if they have a higher income and financial security, they are more likely to be able to afford the rent, comply with regulations and potentially stay longer (about 10% of respondents).

3.7 Landlords in particular noted the benefits in terms of creating sustainable communities, helping those in most need of housing and the impact in terms of more mid market rental. Some respondents suggested other benefits of bringing income into consideration. These include benefits to lower income groups by not subjecting them to social or economic marginalization, the varied choice which it could provide in terms of freeing up properties and providing lower income groups with greater access to social housing and stimulating greater movement in the housing market. A considerable number of respondents (about 20% of respondents) felt that there were no benefits of taking income into consideration in the allocation of housing - this was particularly the case amongst tenants groups and individuals. About 20% did not provide a response, and about 3% did not know.

Problems (Q8)

3.8 Respondents were asked to consider the potential problems of creating the flexibility for social landlords to consider an applicant's income. A range of responses were suggested which primarily focused around six key themes. These are as follows, with the percentages referring to the proportion of the 237 written responses:

• Considering income can stigmatise less fortunate groups (about 37% of respondents);
• Income is a merely subjective measurement; it is subject to fluctuation via job insecurity and the broader macroeconomic environment and can provide a false indication of wealth (about 22% of respondents);
• It may lead to communities having people solely from similar income bands rather than mixed or sustainable communities (about 18% of respondents);
• Income consideration does not equate to housing need (about 13% of respondents).
• It may victimise those more fortunate individuals/social groups with slightly higher incomes e.g. it may expose them to having to pay higher rental premiums, move them away from their area or community of choice or prevent them from living in certain areas (about 9% of respondents);
• It could create greater tensions/social instability between different income groups (about 7% of respondents).

3.9 A large proportion of individuals in particular recognised the tensions between different groups which it may create. A large proportion of landlords made reference to income being a subjective measurement, reflecting some of the difficulties which they may have in assessing and tracking income levels. Tenants were the most concerned that it may lead to unbalanced and unsustainable communities.

3.10 Some respondents suggested other problems including the need for more clarity about the definition of 'family'. Also there would need to be clarity in the legislation about what income is to be taken into account e.g. income only, or assets and savings too. Other problems suggested included the problem of getting tenants to vacate their homes and that the proposal does not consider location, as income and rental prices will vary geographically. Few respondents suggested no problems (approximately 2%), whereas about 15% provided no response and 4% felt that they did not know what the problems were.

Actions to overcome problems (Q9)

3.11 The consultation asked respondents to consider the actions necessary to overcome the potential problems emerging from bringing income into consideration. The majority of responses were based around four themes. These are as follows, with the percentages referring to the proportion of the 237 written responses:

• Greater clarity and guidance is required regarding the implementation of this proposal (about 26% of respondents);
• Other factors, and not merely income, should be fully considered, for example their employment status, previous behaviour and disposable income (taking account of outgoings) as well as salary (about 12% of respondents);
• More support should be given to support the development of the housing market (e.g. via building new homes, providing finance to social landlords) (about 9% of respondents);
• All people should be treated equally, regardless of income (about 8% of respondents).

3.12 Individuals were the most likely respondent type to suggest that all people should be treated equally, whilst a large proportion of landlords felt that greater clarity would be required to assist them in implementing this proposal and that other factors than just income should be taken into account.

3.13 Other actions were also expressed including making it easier to verify income levels; the restriction of the income assessment to particular types of letting initiatives such as mid-market rents; allocating social housing only to those on lower income; and charging market rents to those able to afford it. About 25% of respondents did not provide an answer, 5% did not know what actions could be taken to alleviate the problems arising from this proposal, whilst 8% felt that there were no actions.