Welfare Reform and Work Bill (HL Bill 69)

Welfare Reform and Work BillPage 30

Section 25

SCHEDULE 2 Further provision about social housing rents

Part 1 Provision about levels of rents

5Tenancy of existing social housing

1 (1) This paragraph applies in relation to a tenant of social housing in England
if—

(a) the tenancy begins after the beginning of 8 July 2015, and

(b) the accommodation was social housing during the period starting
10with the beginning of 8 July 2015 and ending with the beginning of
the tenancy.

(2) This paragraph does not apply if paragraph 3 applies.

(3) The registered provider must secure that the maximum amount of rent
payable to the registered provider by the tenant in respect of—

(a) 15the first relevant year, where the tenancy begins before or at the
beginning of the first relevant year,

(b) the part of the relevant year falling after the beginning of the tenancy,
where the tenancy begins after the beginning of the first relevant
year and not at the beginning of a later relevant year,

(c) 20the following relevant year, where the tenancy begins as described in
paragraph (b), or

(d) the relevant year, other than the first relevant year, at the beginning
of which the tenancy begins,

is no more than would be payable if the tenant were paying rent at the higher
25of the social rent rate and the assumed rent rate in respect of that relevant
year or that part of a relevant year.

(4) The social rent rate, in relation to the rent payable by a tenant of social
housing in respect of the first or a subsequent relevant year, is the rate found
by—

(a) 30determining what would have been the rate of formula rent for that
social housing at the beginning of 8 July 2015,

(b) determining the rate of that rent when expressed by reference to a
period of 12 months (if necessary), and

(c) at the beginning of each relevant year (up to and including the
35relevant year in question), making a 1% reduction in the rate.

(5) The assumed rent rate, in relation to the rent payable by a tenant of social
housing in respect of the first or a subsequent relevant year, is the rate found
by—

(a) determining the rate of the rent that—

(i) 40was payable to the registered provider by the tenant of that
social housing at the beginning of the relevant day, in a case
where the relevant day falls after 8 July 2015 and the tenancy
that exists at the beginning of 8 July 2015 does not come to an
end before the beginning of that later day,

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(ii) was payable to the registered provider by the tenant of that
social housing at the beginning of 8 July 2015, in a case where
the relevant day is 8 July 2015 or the tenancy comes to an end
before the beginning of a later relevant day, or

(iii) 5is likely to have been payable to the registered provider by a
tenant of that social housing at the beginning of 8 July 2015,
if there was not a tenant at that time,

(b) determining the rate of that rent when expressed by reference to a
period of 12 months (if necessary), and

(c) 10at the beginning of each relevant year (up to and including the
relevant year in question), making a 1% reduction in the rate.

(6) If—

(a) the tenancy comes to an end after part of a relevant year to which
sub-paragraph (3) applies has elapsed, or

(b) 15sub-paragraph (3)(a), (b), (c) or (d) ceases to apply in relation to the
tenancy after part of the relevant year in question has elapsed,

sub-paragraph (3) has effect in relation to the part of the relevant year falling
before that time with a proportionate reduction in the maximum amount of
rent payable to the registered provider by the tenant.

(7) 20The Secretary of State may by regulations define “formula rate”.

(8) Regulations under sub-paragraph (7) may, in particular, make provision by
reference to—

(a) standards issued by the regulator under section 194(2A) or 198(3) of
the Housing and Regeneration Act 2008 (the powers of the regulator
25to set and revise standards relating to levels of rent) providing for the
determination of social rents, or

(b) guidance issued by the Secretary of State relating to the
determination of social rents.

Tenancy of new social housing

2 (1) 30This paragraph applies in relation to a tenant of social housing in England
if—

(a) the tenancy begins after the beginning of 8 July 2015, and

(b) paragraph 1(1)(b) is not satisfied as regards the accommodation.

(2) This paragraph does not apply if paragraph 3 applies.

(3) 35If the tenancy begins before or at the beginning of the first relevant year, the
registered provider must secure that the maximum amount of rent payable
to the registered provider by the tenant in respect of the first relevant year is
the amount that would be payable by the tenant if the social rent rate applied
during that relevant year.

(4) 40If the tenancy begins after the beginning of the first relevant year, the
registered provider must secure that—

(a) the maximum amount of rent payable to the registered provider by
the tenant in respect of the part of the relevant year falling after the
tenancy begins, where the tenancy begins after part of a relevant year
45has elapsed,

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(b) the maximum amount of rent payable to the registered provider by
the tenant in respect of the following relevant year, where the
tenancy begins as described in paragraph (a), or

(c) the maximum amount of rent payable to the registered provider by
5the tenant in respect of the relevant year, where the tenancy begins
at the beginning of a relevant year,

is the amount that would be payable if the social rent rate applied during
that period.

(5) If—

(a) 10the tenancy comes to an end after part of a relevant year to which
subsection (3) or (4) applies has elapsed, or

(b) sub-paragraph (3) or (4)(a), (b) or (c) ceases to apply in relation to the
tenancy after part of the relevant year in question has elapsed,

sub-paragraph (3) or (4) has effect in relation to the part of the relevant year
15falling before that time with a proportionate reduction in the maximum
amount of rent payable to the registered provider by the tenant.

(6) “Social rent rate” has the same meaning as in paragraph 1.

Tenancy of affordable rent housing

3 (1) This paragraph applies in relation to a tenant of social housing in England
20if—

(a) the tenancy begins after the beginning of 8 July 2015, and

(b) the accommodation is affordable rent housing (see paragraph 4).

(2) If the tenancy begins before or at the beginning of the first relevant year, the
registered provider must secure that the maximum amount of rent payable
25to the registered provider by the tenant in respect of the first relevant year is
the amount found by—

(a) determining the rate of the market rent for that social housing when
the tenancy begins, and

(b) determining the amount that is 80% of the amount that would be
30payable in respect of a year if that rate had applied during the year.

(3) If the tenancy begins after the beginning of the first relevant year, the
registered provider must secure that—

(a) the maximum amount of rent payable to the registered provider by
the tenant in respect of the part of the relevant year falling after the
35tenancy begins, where the tenancy begins after part of a relevant year
has elapsed, or

(b) the maximum amount of rent payable to the registered provider by
the tenant in respect of the relevant year, where the tenancy begins
at the beginning of a relevant year,

40is the amount found by determining the rate of the market rent for that social
housing when the tenancy begins, determining the amount that is 80% of the
amount that would be payable in respect of a year if that rate had applied
during the year and (if necessary) reducing that amount in proportion to the
part of that relevant year that elapsed before the tenancy begins.

(4) 45If the tenancy begins after the beginning of the first relevant year and not at
the beginning of the second or third relevant year, the registered provider
must secure that the maximum amount of rent payable to the registered
provider by the tenant in respect of the relevant year following the one in

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which the tenancy begins is the amount found under sub-paragraph (2) or
(3) (disregarding the proportionate reduction) reduced by 1%.

(5) If—

(a) the tenancy comes to an end after part of a relevant year to which
5sub-paragraph (2), (3) or (4) applies has elapsed, or

(b) sub-paragraph (2), (3) or (4) ceases to apply in relation to the tenancy
after part of the relevant year in question has elapsed,

sub-paragraph (2), (3) or (4) has effect in relation to the part of the relevant
year falling before that time with a proportionate reduction in the maximum
10amount of rent payable to the registered provider by the tenant.

(6) The market rent is to be determined using a RICS valuation method.

4 (1) This paragraph has effect for the purposes of paragraph 3.

(2) Affordable rent housing is accommodation identified by regulations made
by the Secretary of State as accommodation that may be let as social housing
15at an affordable rent.

(3) Regulations under sub-paragraph (2) may, in particular, make provision for
identifying accommodation that may be let as social housing at an
affordable rent by reference to an agreement or arrangement relating to the
provision of social housing by a registered provider.

(4) 20Regulations made by virtue of sub-paragraph (3) may, for example, make
provision by reference to—

(a) an agreement relating to the exercise of a power under section 5 or 19
of the Housing and Regeneration Act 2008 (powers of the Homes and
Communities Agency as regards the provision of housing or other
25land and financial assistance);

(b) an agreement relating to the exercise of a power under section 30 or
34 of the Greater London Authority Act 1999 (general and subsidiary
powers of the Greater London Authority);

(c) an agreement between a local authority and the Secretary of State
30under section 11(6) of the Local Government Act 2003 (agreement
about capital receipts payable to the Secretary of State).

(5) The Secretary of State may by regulations define “affordable rent”.

(6) Regulations under sub-paragraph (5) may, in particular, make provision by
reference to—

(a) 35standards issued by the regulator under section 194(2A) or 198(3) of
the Housing and Regeneration Act 2008 (the powers of the regulator
to set and revise standards relating to levels of rent) providing for the
setting of rents at up to 80% of market rent in certain cases or
circumstances, or

(b) 40guidance issued by the Secretary of State relating to the setting of
rents at up to 80% of market rent in certain cases or circumstances.

(7) RICS valuation method” means a method for determining market rent that
complies with standards for valuation published from time to time by the
Royal Institution of Chartered Surveyors.

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Part 2 Exceptions, exemptions and enforcement

Exceptions

5 (1) Part 1 does not apply in relation to a tenant of social housing if—

(a) 5the accommodation is low cost home ownership accommodation;

(b) the accommodation is both low cost rental accommodation and low
cost home ownership accommodation (see section 71 of the Housing
and Regeneration Act 2008).

(2) Part 1 does not apply in relation to social housing that consists of or is
10included in a property if, where the property is subject to a mortgage or
other arrangement under which it is security for the payment of a sum or
sums—

(a) the mortgagee, or a person entitled under the arrangement to be in
possession of the property, is in possession of the property,

(b) 15a receiver has been appointed by the mortgagee, by a person entitled
under the arrangement to do so or by the court to receive the rents
and profits of that property and that appointment is in force, or

(c) a person has been appointed under or because of the mortgage or the
arrangement to administer or sell or otherwise dispose of the
20property and that appointment is in force.

(3) If a registered provider’s interest in property that consists of or includes
social housing—

(a) was mortgaged or made subject to an arrangement other than a
mortgage under which the interest in property was security for the
25payment of a sum or sums, and

(b) is sold or otherwise disposed of after the coming into force of Part 1
by—

(i) the mortgagee or a person entitled under the arrangement to
do so,

(ii) 30a receiver appointed by the mortgagee, by a person entitled
under the arrangement to do so or by the court to receive the
rents and profits of the interest in property, or

(iii) a person appointed under or because of the mortgage or the
arrangement to exercise powers that consist of or include the
35sale or other disposal of the interest in property,

Part 1 ceases at that time to apply in relation to that social housing.

(4) The Secretary of State may by regulations provide for Part 1 not to apply in
cases prescribed by the regulations.

(5) Regulations under sub-paragraph (4) may in particular make provision
40about—

(a) tenants of a description prescribed by the regulations;

(b) tenancies of a description prescribed by the regulations;

(c) accommodation of a description prescribed by the regulations;

(d) accommodation which satisfies conditions prescribed by the
45regulations, including conditions relating to the funding of its
building or refurbishment;

(e) events of a description prescribed by the regulations.

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(6) Regulations made by virtue of sub-paragraph (5)(a) may include provision
about tenants whose income exceeds, or whose household’s incomes
exceed, an amount prescribed by the regulations during a period prescribed
by the regulations.

(7) 5Regulations made by virtue of sub-paragraph (5)(e) may include provision
about periods during a tenancy when the rent payable is temporarily
reduced or waived.

Exemptions

6 (1) The regulator may issue a direction mentioned in sub-paragraph (2) in
10respect of a private registered provider if—

(a) the condition in sub-paragraph (4) or (5) is satisfied, and

(b) the Secretary of State consents.

(2) The directions are—

(a) a direction that Part 1 does not apply in relation to a private
15registered provider specified in the direction;

(b) a direction that Part 1 is to have effect in relation to a private
registered provider specified in the direction as if paragraph 1(4)(c)
or (5)(c)

(i) were omitted,

(ii) 20required the lesser reduction specified in the direction, or

(iii) required the increase specified in the direction;

(c) a direction that Part 1 is to have effect in relation to a private
registered provider specified in the direction as if—

(i) in paragraph 3(4), “reduced by 1%” were omitted,

(ii) 25paragraph 3(4) required the lesser reduction specified in the
direction, or

(iii) paragraph 3(4) required the increase specified in the
direction.

(3) The regulator may specify in a direction—

(a) 30the period during which it is to have effect, and

(b) the social housing in relation to which it is to have effect.

(4) The condition in this sub-paragraph is that the regulator considers that
complying with Part 1 would jeopardise the financial viability of the private
registered provider.

(5) 35The condition in this sub-paragraph is that the circumstances of the private
registered provider satisfy requirements prescribed in regulations made by
the Secretary of State.

(6) The regulator may publish a document about the measures that the
regulator considers could be taken by a private registered provider to
40comply with Part 1 and to avoid jeopardising its financial viability.

(7) The Secretary of State may issue a direction mentioned in sub-paragraph (8)
in respect of a local authority if the condition in sub-paragraph (10) or (11) is
satisfied.

(8) The directions are—

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(a) a direction that Part 1 does not apply in relation to a local authority
specified in the direction;

(b) a direction that Part 1 is to have effect in relation to a local authority
specified in the direction as if paragraph 1(4)(c) or (5)(c)

(i) 5were omitted,

(ii) required the lesser reduction specified in the direction, or

(iii) required the increase specified in the direction;

(c) a direction that Part 1 is to have effect in relation to a local authority
specified in the direction as if—

(i) 10in paragraph 3(4), “reduced by 1%” were omitted,

(ii) paragraph 3(4) required the lesser reduction specified in the
direction, or

(iii) paragraph 3(4) required the increase specified in the
direction.

(9) 15The Secretary of State may specify in a direction—

(a) the period during which it is to have effect, and

(b) the social housing in relation to which it is to have effect.

(10) The condition in this sub-paragraph is that the Secretary of State considers
that the local authority would be unable to avoid serious financial
20difficulties if it were to comply with Part 1.

(11) The condition in this sub-paragraph is that the circumstances of the local
authority satisfy requirements prescribed in regulations by the Secretary of
State.

(12) The Secretary of State may publish a document about the measures that the
25Secretary of State considers could be taken by a local authority in order to
comply with Part 1 and to avoid serious financial difficulties.

Enforcement

7 The Secretary of State may by regulations make provision about the
enforcement of requirements imposed by or under this Schedule, including
30provision applying Part 2 of the Housing and Regeneration Act 2008 with
modifications.

Part 3 General

Regulations

8 (1) 35Regulations under this Schedule must be made by statutory instrument.

(2) A statutory instrument containing regulations under this Schedule is subject
to annulment in pursuance of a resolution of either House of Parliament.

Guidance

9 (1) The Secretary of State may issue guidance about determining, for the
40purposes of paragraph 1(5)(a)(iii), what rate of rent is likely to have been
payable by a tenant of particular social housing at the beginning of 8 July
2015.

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(2) Registered providers must have regard to guidance issued under sub-
paragraph (1).

Interpretation

10 (1) In this Schedule “the relevant day”, in relation to social housing, means—

(a) 58 July 2015, or

(b) if the Secretary of State consents to the use of a different day (“the
permitted review day”) in the case of that social housing, the
permitted review day.

(2) A consent given for the purposes of sub-paragraph (1) may be a consent
10given for a particular case or for a description of cases.