II
DRAFT REGULATORY REFORM (ASSURED PERIODIC
TENANCIES)
(RENT INCREASES) ORDER 2003
Report under Standing Order No.
141
10. The Regulatory Reform Committee has examined
the draft Regulatory Reform (Assured Periodic Tenancies) (Rent
Increases) Order 2003 in accordance with Standing Order No. 141.
We recommend unanimously that the draft order be approved.
Introduction
11. On 13 January 2003 the Government laid the draft
order before Parliament, together with an explanatory statement
from the Office of the Deputy Prime Minister (the Department).[3]
We have already reported on the proposal for this order, which
would amend section 13 of the Housing Act 1988 by amending the
existing procedure for assured periodic tenancies so as to allow
landlords to set a fixed day for rent increases.
12. The House has instructed us to examine the draft
order against such of the criteria specified in Standing Order
No. 141(6) as are relevant. We are also required to consider the
extent to which the responsible Minister has had regard to any
resolution or report of the Committee or to any other representations
made during the period for parliamentary consideration.[4]
Our discussion of matters arising from our examination is set
out below.
Findings of our previous report
13. We were satisfied that the proposal met the criteria
against which we are required to judge it. We recommended that
a draft order in the same terms as the proposal be laid before
the House, provided that the Minister's statement accompanying
the draft order contained a particular confirmation that we sought.
This confirmation related to the Department's assessment of the
increases or reductions in costs or other benefits likely to result
from the implementation of the draft order; our reasons for requiring
such a confirmation are discussed further, below.
14. Additionally, we requested further information
from the Department relating to whether the Department had taken
appropriate account of consultation responses. We asked the Department
to provide us with a copy of the revised form prescribed for landlords
giving notice of a new rental to assured periodic tenants. A copy
of the revised form was not available at the time at which we
reported to the House because it was to be prescribed by way of
an amendment to The Assured Tenancies and Agricultural Occupancies
(Forms) Regulations 1997; the amendment was not yet available.[5]
We asked to see a copy of the form as soon as possible, and in
any case prior to the Minister laying the draft order before Parliament.
Costs and benefits
15. The confirmation we sought arose from our assessment
that the Department had provided insufficient evidence that the
proposed draft order had been the subject of, and taken appropriate
account of, estimates of increases or reductions in costs or other
benefits which may result from its implementation. The draft order
would allow two possible methods for setting rent increases; we
considered that the Department had not properly estimated the
increases or reductions in costs or other benefits which could
result from the proposal being implemented by the second of these
two methods. Under this method, a landlord could choose to set
rent increases by applying the minimum 52 week period—in
other words, by increasing rent at the first possible opportunity
each year.
16. The Department considered it was unlikely that
any landlords would choose to adopt this method of setting rent
increases because the method would create an administrative burden
and there would be little or no advantage to landlords in terms
of gaining increased rent sooner. Consequently, it estimated only
those increases or reductions in costs or other benefits which
could arise from the first method of setting rent increases, whereby
landlords would establish a fixed day for annual rent increases.
17. Although we considered the Department's assessment
of the increases or reductions in costs or other benefits likely
to result from the proposal's implementation to be incomplete,
we concluded that the aspect of the proposal which had not been
the subject of appropriate estimates was relatively minor. We
were therefore content for the proposal to proceed to draft order
stage, provided that the Minister's statement accompanying the
draft order confirmed the Department's opinion that no landlords,
or only very few landlords, would be likely to apply the minimum
52 week period and increase rent at the first possible opportunity.
Adequate consultation: taking
appropriate account of consultation responses
18. We asked the Department to provide us with a
copy of the revised form prescribed for landlords giving notice
of a new rental because, during the consultation process, two
registered social landlords raised concerns about the current
prescribed form. Respondents were concerned that the form was
not user-friendly, did not allow variable service charge amounts
to be included and did not take account of the "Supporting
People Programme". The Department undertook to consider these
comments when revising the form to take account of the proposal.
19. We considered the form to be important because
it is the principal means by which most of the people affected
by the proposal, particularly tenants, would be informed of the
effects of the proposal. We wanted to ensure that, if the proposed
order were to be made, the form will provide an effective explanation
to the layperson of the order's legal effect, particularly given
the complexity of the order.
The Department's response to
our report
20. No changes have been made to the draft order
since the proposal was laid on 16 October 2002.
Costs and benefits
21. The Department has provided the confirmation
that we requested. It states that it remains the Department's
opinion that landlords will, in practice, opt to increase rents
on a fixed date each year. The Department bases its assessment
on reasons similar to those set out in paragraph 16 above.
22. The Department notes that, during the consultation
process, it did not ask landlords whether they would consider
increasing rent at the first possible opportunity. We consider
it is unfortunate that the Department did not seek this information.
However, we accept the Department's assessment that landlords
are likely to adopt the first method of setting rent increases,
whereby landlords would establish a fixed day for annual rent
increases.
Adequate consultation: taking
appropriate account of consultation responses
23. The Department provided us with a copy of the
revised form prior to laying the draft order.[6]
It also responded to the concerns raised by the two registered
social landlords during consultation.[7]
24. Having examined the revised form, we are satisfied
with its explanation of the order's legal effect. Note 15 of the
revised guidance note for landlords adequately explains the effect
of the anniversary rule, as it would be amended by the draft order.
We are also satisfied with the Department's reasons for not adopting
the changes to the form suggested by the two registered social
landlords.
25. On the basis of the explanatory statement
and the additional information provided to us prior to the laying
of the draft order before Parliament, we are satisfied that the
responsible Minister has had due regard to our previous report
on the proposal for the draft order.
Other representations
26. The Department states, in the explanatory statement,
that it is not aware of any other representations made during
the period for Parliamentary consideration.
Recommendation
27. In accordance with Standing Order No. 141(15),
we recommend unanimously that the draft order be approved.
3 Copies of the draft order are available to Members
of Parliament from the Vote Office and to members of the public
from the Department. The draft order is also available on the
Cabinet Office web site http://www.cabinet-office.gov.uk/regulation/act/proposals.htm. Back
4
Standing Order No. 141(7) Back
5
The 1997 regulations
(SI 1997/194) were amended by The Assured Tenancies and Agricultural
Occupancies (Forms) (Amendment) (England) Regulations 2002 (SI 2002/337)). Back
6
See the Appendix; the
revised form is prescribed in The Assured Tenancies and Agricultural
Occupancies (Forms) (Amendment) (England) Regulations 2003, which
are currently in draft form but which will be made shortly, provided
that the draft order is made. Back
7
Appendix Back
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