Select Committee on Regulatory Reform Sixth Report


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

  Standing Order No. 141(7) Back

  The 1997 regulations (SI 1997/194) were amended by The Assured Tenancies and Agricultural Occupancies (Forms) (Amendment) (England) Regulations 2002 (SI 2002/337))Back

  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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