Clause 64 - References to Welsh Ministers

113.     This clause sets out in a table those provisions of the 1996 Act where "Welsh Ministers" is to be substituted for references to the "Secretary of State". These amendments are consequential on clause 63.

Clause 65 - References to National Assembly for Wales

114.     This clause sets out in a table those provisions of the 1996 Act where "the National Assembly for Wales" is to be substituted for references to the "either House of Parliament" principally to reflect the effects of clause 63.

Clause 66 - Dissolution of Housing Corporation

115.     This clause makes provision for the dissolution of the Housing Corporation by order of the Secretary of State including provision for the transfer of property, rights and liabilities, and consequential amendments of enactments referring to the Housing Corporation.

Social housing

Clause 67 - Basic principle

116.     This clause defines social housing for the purposes of this Bill. Under this Bill registered providers (defined at clause 79) are only regulated in respect of their provision of social housing (and in the case of non-profit providers, their governance and financial viability arrangements). The definition ensures that registered bodies will not be regulated in respect of their other activities, e.g. provision of housing for sale on the open market.

117.     Subsection (1) explains that there are two types of social housing - (a) low cost rental accommodation (defined by clause 68) and (b) low cost home ownership accommodation (defined by clause 69).

118.     Subsection (2) states that accommodation which becomes "social housing" by satisfying subsection (1)(a) or (b) remains "social housing" unless an event specified in clauses 72 to 75 occurs (e.g. sale to a tenant, expiry of a lease, or disposal with the Regulator's consent). This subsection ensures that, once designated as social housing, accommodation continues to be social housing and subject to the regulator's standards (e.g. on rents and management) and enforcement powers unless one of the specified events occurs.

119.     Subsection (3) refers to clause 76 which ensures that certain accommodation is to be treated as "social housing" whether or not it satisfies subsection (1)(a) or (b). This will ensure that accommodation provided by existing RSLs is designated as "social housing" even if, for example, rents are not below market rents. This will ensure that homes subject to regulation under the existing regulation system remain regulated under the new one.

Clause 68 - Low cost rental

120.     This clause defines low cost rental accommodation. Low cost rental accommodation is one of the two types of social housing referred to in clause 67. This definition is intended to capture homes provided for "social rent", a term which is not currently defined in law. It makes that definition by reference to a rent below the market rate (paragraph (b)) and rules for eligibility designed to ensure that it is occupied by people who cannot afford to buy or rent at market rate (paragraph (c)).

121.     Subsection (2) of clause 67 provides that accommodation which becomes social housing by satisfying this definition remains social housing unless an event specified at clauses 72-75 occurs.

Clause 69 - Low cost home ownership

122.     This clause defines low cost home ownership accommodation.

123.     Subsection (1) defines low cost home ownership accommodation as that which meets two conditions.

124.     Subsection (2) defines condition 1 as accommodation made available on the basis of a shared ownership arrangement, an equity percentage arrangement or shared ownership trust.

125.     Subsection (3) defines condition 2, which refers to rules for eligibility designed to ensure that it is occupied by people who cannot afford to buy or rent at market rate.

126.     Subsection (4) defines "shared ownership arrangements" as arrangements for rental under a lease which:

• ??? is granted on the purchase of an initial share, the price of which is calculated by reference to a percentage of the value of the accommodation or the cost of providing it; and

• provides that the tenant (i.e. the purchaser) is entitled to a sum calculated by reference to the value of the accommodation. This means that when the property is sold, the purchaser is entitled to a sum in proportion to the share he or she has purchased.

127.     This description is intended to capture traditional shared ownership schemes, such as the current New Build HomeBuy scheme, also described as "part-buy, part-rent", where the purchaser buys a share in a property, and pays rent to the freeholder on the unowned share.

128.     Subsection (5) defines "equity percentage arrangements". These work on similar principles to traditional shared ownership but do not involve a shared ownership lease. The key features are that the owner of the property sells it (conveys it) to the purchaser in exchange for:

• an initial sum equivalent to a percentage of the value of the property at the time of sale,

• an agreement to pay further sums also calculated by reference to a percentage of the value of the property, and

• the liability to make any payments under this arrangement is secured by a mortgage.

129.     This description is intended to capture schemes such as the current First Time Buyers Initiative. Under this scheme, the purchaser makes an initial payment based on a percentage of the value of the property (as in a traditional shared ownership arrangement). Unlike a shared ownership arrangement, however, the purchaser owns the property outright. The provider's interest in the property is secured through a mortgage which would normally be a second charge, sitting behind the purchaser's conventional mortgage loan.

130.     Subsection (6) defines "shared ownership trusts" as having the same meaning as in Schedule 9 to the Finance Act 2003.

131.     Subsection (7) allows the Secretary of State to make regulations amending the definition of low cost home ownership accommodation, or any of the sub-categories specified in that definition. This is to ensure that innovative low cost home ownership schemes, not anticipated here, can be brought within the scope of regulation.

Clause 70 - Shared ownership low cost rental

132.     This clause makes it clear that accommodation which satisfies both the definitions of low cost rental accommodation and low cost shared ownership accommodation is to be treated as low cost shared ownership accommodation. This clarification is necessary because shared ownership arrangements will generally include the payment of a sub-market rent on the share retained by the registered provider, and will also have eligibility criteria which will mean that they satisfy the definition of low cost rental as well as that of low cost shared ownership.

Clause 71 - Regulations

133.     Subsection (1) allows the Secretary of State to make regulations providing that specified accommodation (or a specified class of accommodation) is or is not to be treated as social housing. This allows the Secretary of State to ensure, for example, that all homes funded through public investment are designated as social housing. This is necessary to allow decisions on the classification of new types of social housing (in particular low cost home ownership arrangements) which are likely to be developed in future.

134.     Subsection (2) states that the regulations may provide for accommodation to be social housing despite not satisfying clause 67(1)(a) or (b) - i.e. not meeting the definitions of low cost rental accommodation or low cost home ownership accommodation - where the Secretary of State thinks the accommodation is of a kind, or is provided in circumstances, that serve the needs of a group whose needs are not adequately served by the commercial housing market. This may, for example, cover housing for vulnerable people.

135.     Subsection (3) states that the regulations:

• may override clause 67(2)

• are subject to clause 67(3) and clause 76

• are subject to clauses 68 and 69 (but may clarify doubt about the application of those clauses).

136.     Paragraph (a) means that the Secretary of State can make regulations which specify that certain accommodation is not social housing, even if it had previously satisfied clause 67(1)(a) or (b). This power is necessary to correct any errors of classification that become apparent over time.

137.     Paragraph (b) means that the regulations cannot override clauses 67(3) and 76 which ensure that homes currently regulated by the Housing Corporation under the 1996 Act are regulated under the new system.

138.     Paragraph (c) means that the regulations can clarify the application of the definitions of low cost rental and low cost home ownership, but cannot fundamentally alter them. Note, however, that clause 69(7) separately allows the Secretary of State to make regulations amending the definition of low cost home ownership.

139.     Subsection (4) states that the regulations may make provision by reference to-

• the opinion of the regulator or another specified person;

• designation, agreement or other action by the regulator or another specified person.

140.     This could, for example, include accommodation funded under an agreement with the HCA and designated by the HCA as social housing.

Clause 72 - Leaving the social housing stock: sale

141.     This clause states that a dwelling ceases to be social housing if it is sold to the tenant.

142.     Subsections (2) and (3) state that the low cost rental accommodation and shared ownership accommodation are "sold to the tenant" when the tenant exercises a statutory or contractual right and as a result becomes the owner of either the freehold or the leasehold previously owned by the registered provider.

143.     Subsection (4) states that low cost home ownership accommodation of the equity percentage kind is "sold to the tenant" when the buyer exercises a statutory or contractual right as the result of which the equity percentage arrangements come to an end.

144.     Subsection (5) states that low cost home ownership accommodation of the shared ownership trust kind comes to an end when the purchaser exercises a statutory or contractual right as a result of which the trust comes to an end.

Clause 73 - Leaving the social housing stock: expired lease

145.     This clause states that a dwelling ceases to be social housing if the provider holds a leasehold interest in the dwelling, and the leasehold interest expires.

146.     Subsection (2) makes it clear that a lease from an associate or subsidiary of the provider is disregarded.

Clause 74 - Leaving the social housing stock: disposal with consent

147.     This clause states that a dwelling ceases to be social housing if it is disposed of with the regulator's consent in accordance with Chapter 5.

Clause 75 - Leaving the social housing stock: regulator's direction

148.     This clause allows the regulator to direct that a specific dwelling which has ceased to be low cost rental accommodation or low cost home ownership accommodation is to cease to be social housing.

149.     The regulator may make a direction only on application of the provider.

Clause 76 - Housing stock under Housing Act 1996

150.     This clause ensures that properties owned by an RSL immediately before the coming into force of clause 67 are defined as social housing under this Bill.

151.     Subsection (2) clarifies that such properties are social housing even if they do not satisfy the definitions of low cost rental or low cost home ownership accommodation in clauses 68 and 69. As with other social housing, it remains social housing until an event specified in clauses 72 to 75 (sales to tenants, expiry of lease, disposal with regulator's consent, etc) occurs.

Other key concepts

Clause 77 - Regulator of Social Housing

152.     Clause 77 specifies that for this Part "the regulator" means the Office for Tenants and Social Landlords as specified in clause 80.

Clause 78 - English bodies

153.     This clause provides a definition of "English body". An English body is either:

• a registered charity with the Charity Commission, or

• an industrial and provident society whose registered office is in England, or

• a company which has a registered office is in England, or

• any other person, whether or not a corporate body, that is not a Welsh body, and that makes available, or intends to make available, accommodation in England

154.     Clause 63(4) defines "Welsh body".

Clause 79 - Provider of social housing

155.     This clause refers to the provisions in Chapter 3 that establish the register of providers of social housing.

156.     It specifies that persons listed on the register under the provisions of Chapter 3 are referred to in this Part as "registered providers", and in other primary or secondary legislation as "registered providers of social housing".

Chapter 2 - The Social Housing Regulator

Constitution

Clause 80 - Establishment

157.     This clause establishes the regulator, which is to be responsible for carrying out the functions of the social housing regulator as set out in this Bill.

Clause 81 - Membership

158.     This clause makes provision for the Board of the regulator. The Board is to consist of not less than three members and up to a maximum of 11 members (including the Chair who is appointed by the Secretary of State) and a Chief Executive (appointed under clause 83). The Secretary of State must consult the Chair before appointing other members. Subsection (4) makes clear that former Board members of the Housing Corporation can become members of the regulator.

Clause 82 - Tenure

159.     This clause sets out the tenure of appointment of appointed Board members and the circumstances where the Secretary of State may dismiss a Board member (eg absence, bankruptcy or misbehaviour). Board appointment terms cannot exceed 5 years although members may be reappointed for additional terms. Board members can resign by written notice to the Secretary of State.

Clause 83 - Chief executive

160.     This clause sets out the appointment process of a Chief Executive. The first Chief Executive will be directly appointed by the Secretary of State after consulting the Chair. Subsequent appointments will be made by the regulator subject to approval by the Secretary of State.

Clause 84 - Other staff

161.     This clause provides the regulator with the power to appoint employees.

Clause 85 - Consequential amendments

162.     Subsection (1) of this clause inserts the regulator into Schedule 1 of the Public Records Act 1958 so that it is listed as a body whose records are public records.

163.     Subsection (2) of this clause inserts the regulator into Schedule 1 of the House of Commons Disqualification Act 1975 so that it is listed as a body of which all members are disqualified from taking up a seat in House of Commons.

164.     Subsection (3) of this clause inserts the regulator into Schedule 1 of the Freedom of Information Act 2000 so that it is listed as a public body or office that comes under the Act for the disclosure of information held by public authorities.

Proceedings

Clause 86 - Fundamental objectives

165.     Clause 86 sets out the fundamental objectives of the regulator. These objectives are separately identified in subsections (2) to (11). The regulator must perform its functions with a view to achieving these objectives so far as possible.

166.     Subsection (2) specifies the first objective: to encourage and support a supply of well-managed social housing of appropriate quality and sufficient to meet reasonable needs. Social housing is defined in clause 67(1).

167.     Subsection (3) specifies the second objective: to provide an appropriate degree of choice and protection for current and potential future tenants of social housing in relation to their homes.

168.     Subsection (4) specifies the third objective: to ensure that tenants have the opportunity to be involved in the management of their social housing.

169.     Subsection (5) specifies the fourth objective: to promote the efficient, effective and economic performance of landlord functions by registered providers of social housing.

170.     Subsection (6) specifies the fifth objective: to ensure that registered providers are financially viable and properly managed.

171.     Subsection (7) specifies the sixth objective: to encourage registered providers of social housing to contribute to the environmental, social and economic well-being of the areas in which their property is situated.

172.     Subsection (8) specifies the seventh objective: to encourage investment in social housing. This means investment both in respect of the provision of new social housing, and in continuing investment in the existing social housing that it already owns in order to ensure that it continues to be of a good quality.

173.     Subsection (9) specifies the eighth objective: to avoid creating either as a direct or indirect consequence of its actions an unreasonable burden on public funds.

174.     Subsection (10) specifies the ninth objective: to guard against the misuse of public funds.

175.     Subsection (11) specifies the tenth objective: to regulate in such a way as to minimise administrative burdens, consistent with its ability to achieve its other objectives. Subsection (12) provides that this will include compliance with the Regulators' Compliance Code issued under the provisions of the Legislative and Regulatory Reform Act 2006.

176.     Subsection (13) indicates that there is no significance to the order in which the objectives are listed in the clause. It is for the regulator to balance these objectives in carrying out each of its functions as it deems appropriate.

Clauses 87 and 88 - Procedure and conflict of interest

177.     Clause 87 provides for the regulator to determine its own procedures and for the manner in which those procedures are made public. Clause 88 states that these procedures must include a provision for dealing with conflicts of interest of members or employees.

Clauses 89 and 90 - Committees and delegation

178.     Clauses 89 and 90 provide for the regulator to authorise a committee, a sub-committee, a member or an employee to exercise a function on its behalf. All committees or sub-committees will need to include at least one member of the regulator (but may also include non-members).

Clause 91 - Annual report

179.     This clause requires the regulator to prepare and publish an annual report, as soon as is reasonably practicable after the end of each financial year.

180.     The contents must be a report on the performance of its functions during the preceding financial year. In particular, it will include a statement of the regulator's accounts, and specify any direction that it has been given by the Secretary of State during the preceding year under clause 177.

181.     Having prepared the report, the regulator will send a copy of the report to the Secretary of State, who will then lay a copy before Parliament.

Powers

Clause 92 - General

182.     This clause gives the regulator power to do anything it thinks necessary or expedient for the purpose of, or in connection with, the performance of a function conferred on it by this Part, or another enactment. In particular the regulator may do anything it thinks appropriate for advancing its fundamental objectives.

Clause 93 - Studies

183.     This clause gives the regulator a power to commission studies or to carry them out itself with the objective of improving the economy, efficiency and effectiveness of registered providers. Where the regulator carries out or commissions such studies, it may publish a report.

Clause 94 - Financial assistance

184.     This clause gives the regulator a power to give financial assistance to another person for the purpose of advancing its fundamental objectives as set out in clause 86.

185.     Subsection (1) gives the regulator power to give financial assistance in connection with research, guidance, best practice and tenant involvement.

186.     Subsection (3) gives the regulator a separate power to give financial assistance to a registered provider by lending money or giving a guarantee or indemnity. Such assistance may only be given with the consent of the Secretary of State (subsection (4)) and with the approval of the Treasury.

Clause 95 - Evidence

187.     This clause provides that the regulator may, in considering whether to exercise a power, have regard to information from any source including, in particular, from tenants, bodies representing tenants, local housing authorities, or the Housing Ombudsman.

Money

Clause 96 - Remuneration

188.     This clause provides for the regulator to make payments to appointed members and employees. Subsection (1) enables the regulator to pay remuneration, allowances and pensions to Board members although subsection (2) makes clear that rates and eligibility will be determined by the Secretary of State. Subsection (3) provides for the regulator to make compensation payments on Board members ceasing in their functions in special circumstances and at a level determined by the Secretary of State.

189.     Subsection (4) gives the regulator the power to pay its employees remuneration, allowances and pensions.

Clause 97 - Charging

190.     This clause allows the regulator to charge for giving advice, conducting research or providing other services. This replaces the power of the Housing Corporation under section 77 of the Housing Associations Act 1985.

Clause 98 - Assistance by Secretary of State

191.     This clause enables the Secretary of State to make payments to the regulator by way of grant or loan, and for those payments to be subject to conditions.

Clause 99 - Borrowing

192.     This clause specifies that the regulator may borrow by way of an overdraft or otherwise, for the short-term management of its finances, or from the Secretary of State. It may not borrow otherwise.

193.     This replaces the wider borrowing powers of the Housing Corporation under section 92 of the Housing Associations Act 1985. Those powers will not be needed by the regulator as it will not be investing in affordable housing.