Clause 134: Home condition reports

250.     Clause 134 contains provisions relating to home condition reports. These provisions are intended to give confidence to homebuyers, sellers, mortgage lenders and any others who need to rely on the contents of the report. Regulations may be made so as to ensure that only inspectors who are members of a certification scheme approved by the Secretary of State are able to carry out inspections and provide home condition reports for inclusion in the home information pack. Clause 134(5) lists a number of points on which the Secretary of State will need to be satisfied before approving any certification scheme, including that inspectors are appropriately qualified, have adequate insurance and that a satisfactory complaints resolution procedure is in place.

Clause 135: Enforcement authorities

Clause 136: Power to require production of home information packs

Clause 137: Penalty charge notices

Clause 138: Offences relating to enforcement officers

251.     Clauses 135 to 138 and Schedule 7 provide for the enforcement of the home information pack duties by local weights and measures authorities (who act through Trading Standards Officers). Clause 135 describes these authorities as enforcement authorities, and requires them to enforce the Part in their areas.

252.     Clause 136 sets out the powers of officers of the enforcement authority to require the production of a home information pack for inspection. The clause specifies that the duty must be complied with within seven days and that the requirement cannot be made after six months following the end of the period during which the person was responsible for marketing the property.

253.     Clause 137 gives Trading Standards Officers power to serve a penalty charge notice on a person who fails to comply with a duty. This is a civil penalty. Subsection (2) of that clause contains a restriction on the period within which a notice may be given.

254.     The Trading Standards Officer will decide what action to take over a suspected breach of duty under this Bill. The officer will have the discretion to:

255.     Clause 138 provides that it is an offence to obstruct or impersonate enforcement officers.

256.     Schedule 7 contains detailed provision relating to penalty charge notices. It also provides for the Secretary of State to make regulations relating to the amount of the penalty charge and other matters relating to penalty charge notices and their service.

Clause 139: Right of private action

257.     Clause 139 provides that potential buyers may recover from a person breaching the home information pack duty the reasonable costs incurred in commissioning any home information pack document prescribed by the Secretary of State.

Clause 140: Restrictions on disclosure or use of home information packs

258.     Clause 140 allows the Secretary of State to make regulations that restrict the disclosure and the use that can be made of information contained in home information packs.

Clause 141: Application of Part to sub-divided buildings

259.     Clause 141 provides that where a single dwelling, which has been sub-divided, is marketed for sale as a single property, the home information pack duties apply. This covers, for example, a situation where a house that has been converted into flats is offered for sale as a single property.

Clause 142: Office of Fair Trading

260.     Clause 142 sets out circumstances in which a breach of the home information pack duties by a person acting as estate agent would be

261.     notified to the Office of Fair Trading. This procedure could result, ultimately, in the agent being required to cease trading.

Clause 143: Grants

262.     Clause 143 provides power for the Secretary of State to give grant assistance towards the cost of developing a certification scheme for home condition reports (and for other aspects of the home information pack).

Clauses 144 and 145: Interpretation of Part 5 and index of defined expressions

263.     Clauses 144 and 145 contain definitions of expressions used in Part 5 of the Bill. The effect of these definitions has been explained in these Explanatory Notes where those expressions have been used.

PART 6 - OTHER PROVISIONS ABOUT HOUSING

Chapter 1 - Secure Tenancies

264.     For the provisions on Right To Buy (clauses 147-154), and also the provisions mirroring the right to buy scheme for discounts on disposals not involving the right to buy (clauses 158-164), the functions of the Secretary of State under the Acts amended by these clauses have been transferred to the National Assembly for Wales in respect of Wales, so references to functions of the Secretary of State in these clauses will be exercised by the National Assembly for Wales in respect of Wales.

Clause 146: Extension of introductory tenancies

265.     Introductory tenancies are a type of tenancy offered by some LHA landlords to new tenants for an introductory period of one year. If a landlord has chosen to adopt the scheme, it must be applied to all new tenants. After the introductory period, if a tenancy is deemed to have been conducted satisfactorily, it will automatically become secure. If, during the introductory tenancy, the landlord believes that the conduct of a tenancy has been unsatisfactory, it may be terminated by an administrative decision by the landlord, subsequently confirmed by the court if the process has been followed correctly.

266.     Clause 146 introduces new sections 125A and 125B into the Housing Act 1996. It sets out the conditions under which the duration of an introductory tenancy may be increased by six months and the procedure by which the decision to do so may be reviewed.

267.     Landlords will be able to assess the suitability of an introductory tenant, including in cases of anti-social behaviour, for an additional period. The new provisions only apply to new introductory tenancies granted after this Bill comes into force.

Clause 147: Extension of qualifying period for right to buy

268.     At present, the Right to Buy does not arise unless the tenant has occupied accommodation under a public sector tenancy (i.e. armed forces accommodation or as a tenant of one of the classes of public sector landlord specified in Schedule 4 to the 1985 Act) for a period of at least two years. Clause 147 will extend the qualifying period from 2 years to 5 years. In all other ways, qualification will remain subject to the requirements of Schedule 4. However, although tenants will in future have to wait 5 years instead of 2 years to qualify for the Right to Buy, the amount of discount for which they will qualify under section 129 of the 1985 Act will be equal to their current discount entitlement after 5 years. Hence, after 5 years, they will qualify for discount as follows:

269.     The total amount of discount for which any tenant is eligible will, however, remain subject to the limits set by the Secretary of State under section 131 of the 1985 Act.

Clause 148: Exceptions to the right to buy: houses due to be demolished

270.     Schedule 5 to the Housing Act 1985 sets out the exceptions to the Right to Buy. Clause 148 adds to Schedule 5 properties which are to be demolished during the next 18 months, where the landlord has followed the prescribed notification process. The Right to Buy would then not be available in respect of such properties. Landlords will be required to notify occupants affected by the decision to demolish, giving reasons and the intended date for demolition, and also to publicise decisions by placing a notice in a newspaper circulating in the area in which the property is situated, in any newspaper published by the landlord, and on their website (if they have one).

271.     The landlord can make an application to the Secretary of State during the 18-month period for that period to be extended. If the property is not demolished within the notified period (including an extension to the period), the landlord will be unable to serve any further demolition notice in respect of these properties for five years without the Secretary of State's consent. On receipt of an application, the Secretary of State can direct that the period be extended, but he may specify further notification requirements that the landlord must comply with in order for the exception to the Right to Buy to continue.

272.     If the landlord subsequently decides not to demolish the property, he must serve a revocation notice upon affected tenants as soon as is reasonably practicable. If it appears to the Secretary of State that a landlord has no intention of demolishing properties subject to a demolition notice, he may serve a revocation notice on affected tenants.

Clause 149: Repayment of discount: periods and amounts applicable

273.     At present, if a person who has exercised their Right to Buy wishes to resell the property within three years of acquiring it, he or she is required to repay to the former landlord all or some of the Right to Buy discount which they received. Clause 149 extends this period from three years to five years, in respect of both the Right to Buy and the Rent to Mortgage schemes (sections 143-153 of the 1985 Act).

274.     The clause also makes three other separate changes. Firstly, it provides that former landlords have a discretion as to whether or not to demand repayment of discount on early resale within the specified period in relation to purchases under both the Right to Buy and Rent to Mortgage schemes. This discretion is also to be available in relation to people who bought their properties before the coming into force of this section, and who are subject to a three-year discount repayment period that has not yet ended. Secondly, it changes the calculation of the amount of discount to be repaid from a flat-rate basis to a percentage basis, in relation to the Right to Buy only. Thirdly, it changes the repayment taper (i.e., the amount by which the level of discount which has to be repaid is reduced after each complete year since purchase) from one third per year to one fifth per year, in respect of both the Right to Buy and the Rent to Mortgage schemes.

275.     Discretion to waive repayment of discount

276.     Guidance will be issued as to the circumstances in which it is considered appropriate for a former landlord to agree to forego payment of part or all of the discount due for repayment, and will encompass situations where to waive repayment would alleviate potential hardship - e.g. where a buyer wishes to resell for reasons of severe illness, or sudden bereavement, or relationship breakdown (especially in cases of domestic violence).

277.     Section 155A

278.     This provision applies to Right to Buy sales only, and recoups for the public purse a proportion of any appreciation in the value of a property originally sold with the benefit of discount, which is resold during the period within which the former landlord may demand repayment of some or all of that discount. However, it will also benefit Right to Buy purchasers whose property has fallen in value, as the amount they will have to repay will be reduced.

279.     Section 155A provides that the maximum amount that the former landlord may demand (subject to the repayment taper) is that percentage of the resale price which is equal to the discount to which the tenant was entitled at the time of the original sale, where that discount is expressed as a percentage of the value of the property at that time. For example, if a tenant received discount equivalent to 10 per cent of the Right to Buy sale price, the landlord may demand repayment of 10 per cent of the property's resale value. However, this is also subject to the provisions of clause 155C (see below) regarding the value of improvements to the property made by the owner after purchasing it under the Right to Buy. The repayment taper is changed from one third per year to one fifth per year.

280.     Section 155B

281.     Section 155B concerns the Rent to Mortgage scheme. It gives discretion to former landlords regarding the recovery of discount, and also extends the change in the discount repayment taper to the Rent to Mortgage scheme.

Clause 150: Repayment of discount: increase attributable to home improvements to be disregarded

282.     Clause 150 is designed to ensure that an owner who resells during the five-year period during which discount may be recovered retains the value of improvements he or she has made to a property after acquiring it, either under the Right to Buy or as a successor in title to the original purchaser.

283.     The new section 155A inserted by clause 149 provides that the amount of discount to be repaid shall be a percentage of the resale value of the property. Clause 150 inserts new section 155C, under which the resale value will be treated as net of the value of any improvements made by the current owner after acquiring the property and before disposing of it.

284.     If the value of such improvements is disputed, it shall be determined by the District Valuer, so long as (a) it is reasonably practicable for him to do so and (b) the reasonable costs of his doing so are paid by the person making the disposal. If there is no agreement between the parties as to the value of improvements, and the District Valuer does not make a determination, the value of improvements will not be disregarded.

Clause 151: Deferred resale agreements

285.     Section 155 of the Housing Act 1985 provides that tenants who exercise their Right to Buy and then make a 'relevant disposal' (generally a resale) which is not an exempt disposal within the discount repayment period must repay on demand some or all of the discount for which they qualified. Clause 151 makes an agreement to resell made (i) in contemplation of or, in connection with, the tenant exercising the Right to Buy, (ii) before the end of the discount repayment period, and (iii) under which a relevant disposal is to be made after the end of that period, a relevant disposal. Such an agreement will then also trigger repayment of discount.

Clause 152: Right of first refusal for landlord etc.

286.     Clause 152 requires that a covenant be inserted into all conveyances or grants to tenants requiring that, during the period of 10 years from the date of the conveyance or grant, the tenant purchaser (or any successor in title) must make an offer of first refusal to his former landlord, or such other person as the Secretary of State prescribes.

287.     The Secretary of State has power to prescribe by regulations such conditions as he considers appropriate for and in connection with the right of first refusal. This is because the former landlord may not always be the most appropriate body to receive an offer of first refusal, as it may have transferred its remaining interest in that property, or in related properties (e.g. the other properties on an estate of which the property forms a part), to another body. The Secretary of State can make regulations to ensure that offers are made instead to the most appropriate body. He can also make regulations which will allow other persons, such as other social landlords in the area, to be nominated to receive an offer of first refusal in place of the former landlord. This is so that if the former landlord does not wish to accept the offer, an alternative social housing provider will have the opportunity to purchase the property, thus maximising the chances that the property will be brought back into social housing.

288.     The Secretary of State may also provide for time limits within which offers must be accepted, and for the circumstances in which the right of first refusal will lapse, so as to protect the interests of tenant purchasers wishing to sell their properties.

289.     The clause does not remove the current option, in respect of properties in National Parks, areas designated under section 87 of the National Parks and Access to the Countryside Act 1949 as being of outstanding natural beauty, and areas designated as rural under section 157 of the Housing Act 1985, for landlords to require tenant purchasers to resell only to persons who have lived or worked locally for at least three years.

Clause 153: Information to help tenants decide whether to exercise right to buy etc.

290.     At present, landlords have a duty under section 104 of the Housing Act 1985 to provide general information about the express terms of their secure tenancies, the Right to Buy, and the landlord's repair obligations. Clause 153 places an additional, more specific, duty on landlords to supply information to tenants on the responsibilities and consequences of being a homeowner to help them decide whether to exercise their right to buy. The Secretary of State, in respect of England, and the National Assembly for Wales, in respect of Wales, will have the power to specify what kinds of information must be provided, allowing them to respond to possible future changes in housing conditions and markets. The Secretary of State, in respect of England, and the National Assembly for Wales, in respect of Wales, will consult on what kinds of information it would be reasonable to require landlords to provide, and what kinds of information would be helpful to tenants. These are likely to include the costs involved in buying and maintaining a property - for example, stamp duty, fees, and insurance - and then the costs of repairs and maintenance (including service charges levied on leaseholders who have bought flats). The clause sets out the places at which landlords must make the information available, and includes a power for the Secretary of State (or National Assembly for Wales) to specify when the information must be provided directly to tenants.

Clause 154: Termination of rent to mortgage scheme

291.     The Rent to Mortgage scheme is a form of shared ownership for those tenants who cannot afford to buy their homes outright under the Right to Buy scheme. There has not been much take up of Rent to Mortgage. It is therefore considered more sensible to reduce the number of home ownership schemes that are effective, rather than have many that are seldom used. Clause 154 will end the scheme. There will be a grace period of 8 months after Royal Assent, during which existing tenants who are eligible to buy under the Rent to Mortgage scheme can do so.

Clause 155: Secure tenancies: withholding of consent to mutual exchange

292.     Mutual exchanges occur when two tenants of social landlords swap homes by legally assigning their tenancies to each other. The permission of the landlord of both tenants is required. In the case of secure tenants this permission may not be refused unless at least one of the grounds set out in Schedule 3 to the Housing Act 1985 are met.

293.     Clause 155 introduces a new Ground 2A into Schedule 3 of the Housing Act 1985. The landlord may refuse an application if a relevant injunction order or possession order granted on the grounds of nuisance is in force or if court action to obtain such an order or a demotion order is pending against the tenant, the proposed assignee or a person who resides with either of them.

294.     A demotion order is an order obtained under the Anti-Social Behaviour Act 2003 which ends a secure or assured tenancy and replaces it with a demoted tenancy, which is a form of probationary tenancy.

Clause 156: Right to buy: suspension of landlord's obligation to complete

295.     Clause 156 prevents a tenant from being able to compel completion of a Right to Buy sale if an application is pending for a demotion order, or a possession order sought on the basis of Ground 2 of Schedule 2 of the Housing Act 1985 (anti-social behaviour), until those proceedings have ended, and no demotion order or outright possession order was made. If a demotion order or outright possession order is made, the tenant will lose their secure tenancy and thus also lose the right to buy.

296.     A demotion order is an order obtained under the Anti-Social Behaviour Act 2003 which ends a secure tenancy and replaces it with a less secure form of tenancy, which is a probationary tenancy. After the demotion period, normally one year, a tenant may become a secure tenant again and regain the right to buy.

Clause 157: Disclosure of information as to orders etc. in respect of anti-social behaviour

297.     Clause 157 allows any person to provide information to a landlord to enable the landlord to carry out its functions in accordance with the new provisions introduced into the Housing Act 1985 by clauses 155 and 156. This would include information as to whether any of the specified orders or proceedings relating to anti-social behaviour are in force or pending.

Chapter 2- Discounts on disposals not involving the right to buy

Clauses 158-160

298.     Clauses 158-160 carry over the changes made in respect of the Right to Buy in clauses 149-151 to voluntary disposals by local authorities of properties at a discount under section 32 of the Housing Act 1985.

Clauses 161 and 162

299.     Clauses 161 and 162 carry over the changes made in respect of the Right to Buy in clauses 149-151 to voluntary disposals by Registered Social Landlords of properties at a discount under section 9 of the Housing Act 1996.

Clauses 163 and 164

300.     Clauses 163 and 164 carry over the changes made in respect of the Right to Buy in clauses 149-151 to voluntary disposals by Housing Action Trusts of properties at a discount under section 79 of the Housing Act 1988.

Chapter 3 - Miscellaneous

Clause 165: Succession to certain tenancies by same sex partners

301.     The overall affect of clause 165 is to give same sex partners the equivalent right to succeed to Rent Act, secure, assured or introductory tenancies as is given to unmarried different sex partners.

302.     Clause 165(1) replaces paragraph 2(2) of Schedule 1 to the Rent Act 1977, which states that those living with a tenant "as his or her wife or husband" should be treated as the tenant's spouse. Clause 165(1) provides that a person living with the tenant as his or her wife or husband, or if the same sex, in an equivalent relationship, is to be treated as the spouse of the tenant.

303.     Clause 165(2) inserts an additional provision in section 87 of the Housing Act 1985, so that in respect of sections 87 and 89, which gives succession rights to the tenant's spouse or another member of the tenant's family who has resided with the tenant in the twelve months prior to their death, the definition of the "member of the tenant's family" includes a person of the same sex as the tenant who lives together with him or her in an relationship equivalent to that of husband and wife.

304.     Clause 165(3) replaces section 17(4) of the Housing Act 1988, which provides that those living with a tenant "as his or her wife or husband" should be treated as the tenant's spouse. The new section 17(4) provides that a person living with the tenant as his or her wife or husband, or if the same sex, in an equivalent relationship, is to be treated as the spouse of the tenant.

305.     Clause 165(4) inserts an additional provision to section 131 of the Housing Act 1996, so that in respect of sections 131 and 133, which give succession rights to the tenant's spouse or another member of the tenant's family who has resided with the tenant in the twelve months prior to their death, the definition of "member of the tenant's family" includes a person of the same sex as the tenant who lives together with him or her in a relationship equivalent to that of husband and wife.

Clause 166: Additional power to give grants for social housing

306.     Clause 166 extends the powers of the Relevant Authority (i.e. the Housing Corporation or the National Assembly for Wales) under the Housing Act 1996 to allow it to give grants to companies other than registered social landlords for the purposes set out in sub-section (2). For the purposes of this clause "company" means a company registered under the Companies Act 1985, including a company registered as a charity and an unregistered company established by an LHA for the purpose of exercising management functions of the authority under section 27 of the Housing Act 1985 (see subsection (9)). Sub-section (3) provides for the appropriate national authority to make an order, which will be subject to the negative resolution procedure, to specify additional purposes for which grant may be given and make provision in connection with the making of such grants. Sub-section (4) sets out the particulars which may be included in such an order. In relation to these grants, the Relevant Authority will be under a duty to specify the procedure to be followed for applications for such grants, the circumstances in which such grants will be payable, the method for calculating and any limitations on the amount of grant and the manner in which such grants will be paid. The Relevant Authority will have the power to attach conditions to the grant and this includes a condition requiring a sum determined by the Relevant Authority to be paid to the Authority in specified circumstances.