The Deregulation Committee has agreed to the following
PROPOSAL FOR THE DEREGULATION (DISPOSALS
OF DWELLING-HOUSES BY LOCAL AUTHORITIES) ORDER 2001
1. On 31 January 2001 the Government laid before
Parliament the proposal for the Deregulation (Disposals of Dwelling-Houses
by Local Authorities) Order 2001 in the form of a draft of the
Order and an Explanatory Memorandum from the Department of the
Environment, Transport and the Regions.
2. The proposed Deregulation Order would amend the
Leasehold Reform, Housing and Urban Development Act 1993 ("the
1993 Act") to extend the time for the completion of housing
transfers on a large scale voluntary transfer programme ("LSVT")
to two financial years rather than the existing one.
3. The 1993 Act governs the sale or disposal of local
authority housing to registered social landlords ("RSL"),
principally housing associations. Where more than 499 dwellings
are involved the housing transfer is designated as a LSVT and
is regulated under section 135 of the 1993 Act. One of the conditions
under section 135 is that LSVT housing transfers must be completed
by the end of the relevant financial year - that is to say, the
year in which the transfer is included in the Secretary of State's
annual disposals programme.
4. The House has instructed us to examine the proposal
against nine criteria and then, in the light of that examination,
to report whether the Government should proceed, whether amendments
should be made, or whether the order-making power should not be
We now report on the proposal against the criteria
in Standing Order No. 141(5)(A) as follows:
Does the proposal appear to make an appropriate
use of delegated legislation?
5. We conclude that the proposal may be proceeded
with as delegated legislation.
Does the proposal remove or reduce a burden or
the authorisation or requirement of a burden?
6. The current procedure for LSVT housing transfers
takes place in five stages. At the first stage, which is usually
in the autumn or winter of each year, local authorities are invited
to submit applications for a place on the annual disposals programme.
The disposals programme is formally announced at the start of
the financial year in the spring. Following selection for a place
on the programme, local authorities are required to carry out
a tenant consultation to gauge whether the majority of tenants
support the transfer. This ballot would normally take place in
the spring or summer. Only if the tenants vote in favour of the
transfer will the local authority proceed to agree the terms and
conditions of the sale with the RSL.
7. At the start of the following calendar year the
new landlord must obtain registration with the Housing Corporation.
Subject to the transfer complying with the policies of the Department,
the Secretary of State may consent to the transfer. Crucially,
if consent is granted, the transfer must be completed before the
end of the financial year.
8. Failure to complete the transfer within the financial
year means consent cannot be given to the transfer by the Secretary
of State in England or the Assembly in Wales. This results in
the local authorities having to restart the process by bidding
for a place on another transfer programme.
9. The Government argues that this procedure places
many of the actors involved in the process under a considerable
burden. These include consultants advising on housing strategy,
financial institutions funding the transfer, lawyers dealing with
the conveyancing, surveyors, the purchasing RSLs and local authorities.
10. The Government maintains that management planning
and basic daily logistics become extremely difficult for these
organisations who face increased costs as human resources have
to keep pace with the workload. RSLs, because they all apply for
funding at the same time, find that the terms of their loan may
be adversely affected. By extending the deadline for completion,
the Government believes that these problems will be alleviated
and key activities can be spread out throughout the year rather
than being compacted in February and March.
11. The requirements of the 1993 Act clearly place
an administrative burden on businesses and local authorities.
We conclude that the proposal meets this criterion.
Does the proposal continue any necessary protection?
12. The proposal would continue to require the Department
to run the transfer programme for England. It would still be necessary
for local authorities to apply for a place on the annual disposal
programme. However, a successful place on the programme would
not automatically guarantee a transfer. Local authorities would
still need to consult their tenants in accordance with the statutory
requirements of the Housing Act 1985. The transfer can only proceed
if there is a majority vote in favour of the disposal. The consent
of the Secretary of State to the transfer would also continue
to be necessary.
13. The Department states that it expects authorities
to continue to adopt its policy of completion of transfer within
six months of a successful ballot. Failure to complete within
this period could result in a requirement for another balloting
of tenants. We believe that the proposal will not remove any
Has the proposal been the subject of, and do they
take appropriate account of, adequate consultation?
14. In England a consultation paper setting out the
Government's proposals was issued on 6 August 1999. Responses
were requested by 15 October 1999. In Wales the Assembly was asked
by the Secretary of State for Wales to conduct the consultation
process on his behalf. A consultation paper was issued on 14 July
2000 and responses were requested by 31 August 2000.
15. The Department conducted a comprehensive consultation
with several organisations involved at all stages of a housing
transfer. Included among those organisations consulted were local
authorities, consultants, financial institutions, housing associations,
lawyers and other representative bodies or individuals involved
in the provision of advice or funding for the purchase of local
authority housing, or of housing generally. The range of consultations
seems to have been appropriately wide. In addition, several organisations
who had not been consulted directly responded.
16. Respondents in England included forty-three local
authorities, five consultants, four lenders, two RSLs, one law
firm and nine other interested parties. In Wales three local authorities
and three representative bodies responded.
17. The consultation document outlined three possible
(i) continue to run an annual bidding round
for places on the programme, but allow programmes to last for
two financial years rather than one;
(ii) continue to run an annual bidding round
for places on the programme and automatically roll it over into
the next programme if transfer has not been completed i.e. an
open-ended process; or
(iii) allow authorities to apply for a place
on the programme at anytime, and complete the transfer at their
The Department's preferred option was for the extension
of the LSVT completion deadline by a full financial year (Option
1) and the consultation focussed on this option,although some
respondents commented on the other two options.
18. Of the sixty-four responses received to the consultation
process in England, forty- four supported this option and two
made no comment. In Wales all six respondents supported the proposal
and two made further suggestions.
19. Three respondents suggested that the programme
should have two application dates per year and that from that
point of entry the transfer should be completed in two years.
The Government rejected this suggestion on the grounds that it
would make it more difficult to balance the number of authorities
going through a transfer process with budget constraints and organisation
of the LSVT Pool would create no real benefits but increased paperwork
for everyone. The Government also argues that authorities do not
normally review their housing strategy twice a year.
20. The Chartered Institute of Housing, Halifax plc
and the Council of Mortgage Lenders suggested that there should
be a limited time to complete the transfer once a positive ballot
had been received. Westminster City Council put forward the idea
of a transfer date within two years of tenant approval. The Government
rejected these suggestions. The Government maintained that delays
in completion may be due to genuine problems such as difficulty
in obtaining funding. The idea suggested by Westminster Council
was also rejected on the grounds that there may be significant
turnover of tenants in the period between the ballot and transfer
and this could raise questions over the ballot and whether those
tenants involved in the transferring process where the same as
those who voted.
21. Trowers and Hamlins, the Council of Mortgage
Lenders and Sunderland City Council raised concerns about the
length of a two year transfer programme. The latter suggested
that tenants may be confused if a transfer occurs 18 months after
they were balloted. The Government response is that the option
gives authorities the choice of transferring up to two
years after being selected for the programme. The possibility
of transferring in less than two years has not been removed; and
the Department would in any case continue to expect a transfer
to be completed within six months of a successful ballot.
22. Fareham Borough Council and Blaby Council favoured
a three year transfer programme. The Government's response was
that such a period would be too long and momentum would be lost.
23. Halifax plc and Trowers and Hamlin were concerned
that the proposal would result in authorities transferring in
February and March of the second year and therefore displacing
the bottleneck effect to another period. However the Government
rejected this theory on the basis that the proposal gives authorities
the opportunity and time to roll over into the second year. They
would be better able to control key decisions and there would
be no need to delay transfer longer than necessary. Overall,
we believe that the scope of the consultation was adequate and
that the Department took appropriate account of the representations
Does the proposal impose a charge on the public
revenues or contain provisions requiring payments to be made to
the Exchequer or any government department or to any local or
public authority in consideration of any licence or consent or
of any services to be rendered, or prescribe the amount of any
such charge or payment?
Does the proposal purport to have retrospective
Does the proposal give rise to doubts whether
it is intra vires?
Does the proposal require elucidation or appear
to be defectively drafted?
24. The House of Lords Select Committee on Delegated
Powers and Deregulation questioned whether the drafting of the
Order exceeded what is required to achieve the apparent policy
purpose and clarification was sought from the Department. In an
exchange of correspondence, the Department subsequently undertook
to modify the Order so that provision under section 135 for an
annual disposals programme is clearly spelt out on the face of
the draft Order in order to ensure the retention of any protection
given to the tax-payer under section 135. We are satisfied with
Does the proposal appear to be incompatible with
any obligation arising from membership of the European Union?
25. We have no other concerns to raise under these
26. The proposed Order would apply to England and
Report under Standing Order No.141
27. We have concluded that a draft Order in the
same terms as the proposal for the Deregulation (Disposals of
Dwelling-Houses by Local Authorities) Order 2001, taking into
account the drafting concerns of the House of Lords Select Committee
on Delegated Powers and Deregulation, should be laid before the
10 Copies are available to
Members from the Vote Office and to members of the public from
the Department of the Environment, Transport and the Regions. Back
11 Standing Order No. 141. Back