Housing and Regeneration Bill

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Clause 261

Certain family intervention tenancies: termination

Lembit Öpik (Montgomeryshire) (LD): I beg to move amendment No. 105, in clause 261, page 108, line 2, at end insert—
‘(1A) In an action for possession of a family intervention tenancy, the court shall have power to—
(a) postpone the date for possession; or
(b) stay or suspend execution of the order
on such terms as it thinks fit.
(1B) The court shall not have the power referred to in subsection (1A) where the notice in subsection (1) was served on the basis that the tenant or a member of his household has been guilty of conduct causing or likely to cause a nuisance or annoyance to a person residing, visiting or otherwise engaging in a lawful activity in the locality.’.
What concerns us is that the legislation, as it is currently drafted, means that the 28-day notice period for a FIT can be issued for any reason and not solely one linked to antisocial behaviour, for example due to rent arrears caused by housing benefit delays, and so forth.
The test as to what behaviour would merit possession, or—to be more frank about it and use common parlance—eviction is, in our view, simply not robust enough. That is what the amendment attempts to correct. The purpose is to allow the court to retain its discretion, which it has in the case of a secure or assured tenancy, to dismiss a claim for possession, or to grant a suspended possession, where the reason for the landlord’s action is not antisocial behaviour, but something else, such as rent arrears. The amendment would ensure that fast-track eviction proceedings available for family intervention tenancies could be used for antisocial behaviour reasons only.
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The process for family intervention projects and tenancies has been laid out by the Government, which hopefully we all understand. However, under the Bill, if the landlord decides to continue with proceedings for possession after following the process for family intervention tenancies, the county court cannot examine the reasons for doing so. We are concerned about the inflexibility there, and the lack of discretion to refuse an order raises alarm bells for us. We seek the Minister’s perspective on that, because we cannot believe that it is right, nor the Government’s intention, to create a process so inflexible that it could be a breach of natural justice for the tenant. Although landlords could use the provision in many ways, it goes against the spirit of what I think the Government are trying to do with this legislation. Shelter feels the same, and on its behalf I ask the Minister to share his perspective and to take on board what I think is a fairly common-sense modification to this part of the Bill.
Mr. Wright: I disagree with the amendment, although I appreciate the manner in which the hon. Gentleman moved it. If we accepted the amendment, it would allow the courts to postpone, stay or suspend an order for possession granted in respect of a common law tenancy. As I think that he said, currently that is not the case. A court must award possession if it is satisfied that due process has been followed, and set the date on which the landlord can gain possession of the property.
If, for instance, a family wilfully refuse to pay rent for the family intervention project accommodation that they are occupying, having voluntarily agreed to do so, the amendment would mean that the courts had the power to decide whether, and on what terms, the tenant might remain in the property. That would create a situation similar to that of secure or assured tenancies. I believe strongly that that would seriously undermine our proposal that family intervention tenancies should be common law tenancies. We want to provide landlords with greater flexibility in arranging tenancies for families who have voluntarily accepted support and who are housed in specialist accommodation.
Family intervention projects have been proven to deliver notable successes in helping families address the root causes of antisocial behaviour. To give courts the discretion proposed by this amendment would threaten the use of family intervention tenancies as an effective tool in encouraging families to comply with the terms of their support contract. In other words, in voluntarily accepting a family intervention tenancy, they should be aware of the consequences of their actions. If they subsequently refuse to meet the conditions of the tenancy, the landlord may move to evict swiftly.
I understand what the hon. Member for Montgomeryshire said, however, and his concerns about clause 261. We are mindful already of the need to guard against the misuse of family intervention tenancies and have provided safeguards in this clause, including a right to a review of the reason why eviction is being sought under a local authority family intervention tenancy. In addition to that review procedure, it is possible, if the tenant deems it necessary, to apply for judicial review of the reason for a decision to evict.
If one accepts the premise, which I do not, that the courts should be given discretion where possession under a family intervention tenancy is sought, I question the validity of removing that discretion solely where possession is sought on antisocial behaviour grounds. I think that the hon. Gentleman made that point himself, so in some respects I am making his argument for him, which was not my intention. However, it would mean that courts would have discretion over matters such as rent arrears, with which it is relatively easy to demonstrate matters of fact, but not in cases of antisocial behaviour, in which issues are often much more complex and open to subjectivity. On that basis, I disagree with the amendment. I think that we have covered this matter adequately in the Bill, and I hope that the hon. Gentleman will withdraw his amendment.
Lembit Öpik: Well, Mr. Gale, the Minister makes the case for the amendment, and then asks me to withdraw it. In fairness to the Government, they have shown active recognition of the link between antisocial behaviour and the social needs of perpetrators—we all agree on that. Also, Shelter has done some research to back up the effectiveness of taking a support approach, so there is no disagreement there. In terms of enforcement, communities need protection, and it is appropriate for housing providers to use measures available to them to enforce the responsibilities laid out in tenancy agreements. However, the Minister’s argument goes wrong on its non-acceptance that this approach balances the legislation against the tenant and in favour of the landlord. The FIPs are voluntary, as he says, but surely this is a significant disincentive to families taking part in the project, not least because it seems to make their tenancies less secure.
Mr. Wright: Is not that precisely the point? The voluntary nature—I remind the hon. Gentleman of our discussions on previous amendments—helps to strengthen the information provided to families, so that they are fully aware of the consequences. Families have to enter the process voluntarily.
The test as to what behaviour would merit possession is not robust enough. Landlords often feel that possession is merited, but that view has not always been backed by the courts. The position taken here will actively alter circumstances for many families. That is why the courts should have the power to exercise discretion when antisocial behaviour is not the basis on which the landlord seeks possession.
This part of the legislation was conceived primarily to deal with antisocial issues, but mission creep has meant that it now has a broader remit. We are uncomfortable about the clause, as is Shelter. In other circumstances, I would push the matter to a vote, but I shall not do so, given the shortage of time. However, I give notice that we may return to this issue on Report. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 261 ordered to stand part of the Bill.
Clauses 262 to 264 ordered to stand part of the Bill.

Clause 265

Former right to buy flats etc: service charge loans
Question proposed, That the clause stand part of the Bill.
The Chairman: With this it will be convenient to discuss the following: Government new clause 27—Former right to buy and other flats: equity share purchases.
Government amendment No. 132
Mr. Wright: This important clause enables the Secretary of State to empower housing authorities to offer equity loans—interest-free loans which pay a percentage of the market value when the property in question is sold. Owners of flats in blocks, who are known as leaseholders, cannot maintain and improve the fabric of the building and estate grounds. Instead, their landlord does that and reclaims a share of the cost by levying major works service charges. Owners of ex-council flats bought under the right to buy or on the open market will remain as leaseholders and will therefore remain responsible, under the terms of their leases, for contributing to the cost of repairs, maintenance and improvements.
A survey by London councils suggests that up to March 2007, of 154,000 council leaseholders in 26 London boroughs, 9,100 have received or expect to receive major works bills for £10,000 or more. I have met hon. Members with regard to this who are concerned about leaseholders facing high bills for major works. Clause 265 widens the range of options that landlords can use to assist their leaseholders in paying such bills.
Section 450B of the Housing Act 1985 enables landlords at their discretion to offer leaseholders interest-bearing loans. The clause amends section 450C of the 1985 Act regarding the Secretary of State’s powers to make regulations. The Housing (Service Charge Loans) Regulations 1992 already allow housing authorities to offer loans for service charges on properties bought under right to buy. In specified circumstances, loans to the original right-to-buy purchasers are mandatory. Interest must then be charged, and administrative expenses up to £100 may also be charged to the borrower.
The regulations also give housing authorities discretion to offer loans to help with service charge bills on terms of their choosing to any of their leaseholders, but it is not clear whether they are currently able to offer equity loan terms, or whether they must charge interest.
A working group of London boroughs concluded in 2005 that if landlords had the option of offering interest-free equity loans, it would increase the likelihood that leaseholders would be able to pay the money that they owe. Interest-bearing loans may be unattractive to leaseholders because the proportion of interest to principal grows over time so much that the borrower becomes liable to repay twice or even three times the amount originally borrowed.
Let me give an example, albeit I have to admit an extreme one. If a leaseholder faced a bill for major works for £30,000 and there was a period of 15 years before the property was sold, at an interest rate of 7 per cent. the amount due would be £82,771—nearly three times the amount borrowed. However, with equity share loans, the amount to be repaid will depend on the movement of the market value of the property over the period of the loan.
If leaseholders are unable to pay what they owe, the landlord has to make up the difference. Although it is always open to landlords to take the leaseholder to court and obtain a judgment that can be enforced by a charge on the property, it is clearly preferable to all concerned if that can be avoided. It is in the interests of leaseholders themselves, and of taxpayers and tenants, that landlords can offer the widest possible range of payment options. The amendment to the regulations which may be made as a result of the clause will place no obligation on landlords. Instead, it will add to the range of options available to them to use if, in their judgment, the circumstances justify it.
The provision regarding valuation of the property will enable the Secretary of State to amend the 1992 regulations so that if a landlord and leaseholder agree to a loan on equity share terms, an impartial assessment can be made by district valuers of the market value both on commencement and eventual payment of the loan. Provision can also be made for paying for the district valuer’s services.
New clause 27 seeks to give local authorities and registered social landlords the power to buy a share—formally, an equitable interest—in flats that they have let on long leases. The power is to be used for the purpose of assisting the owner of such a flat to meet some or all of the service charges that he or she is liable to pay. The new clause fulfils the Government’s commitment in our statement to Parliament on 29 March 2007 to give landlords such a power. Under the new clause, the Government, or, in Wales, the Welsh Assembly, may make regulations that give landlords this power and also impose conditions where appropriate on how it will work in practice.
We have specified that the landlord must pay the purchase price by cancelling part or all of the service charge that the leaseholder is liable to pay. This is to ensure that the money is used for this purpose only. The purchase price will be a price related to market value that is acceptable to both the landlord and the leaseholder. Either party may ask the district valuer to determine the value. The regulations may specify, as I mentioned, that the district valuer’s costs in such cases will be met by the leaseholder and deducted from the purchase price.
I should make it clear that the power to buy an equity share is not mandatory. It will be one more way in which landlords can help leaseholders to meet their obligations, and entering into such an agreement will be entirely voluntary for both parties. The Government are not seeking to specify in detail any of the terms of the contract. It will be up to the parties to reach agreement, but we intend to provide a framework so that landlords have the necessary powers.
On the basis of the hardship that some leaseholders face as a result of high service charges, I am keen to help as much as possible. I have met representatives of London boroughs to discuss the matter and instructed officials to consider using existing resources, such as funding from the regional housing pot and the private sector renewal fund, to target and assist leaseholders who might not be able to pay their service charges by any other means. That is consistent with our aim that those funds should help those in need and on low incomes.
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I have to point out, though, that many local authority landlords already offer a range of payment options, but if none of those appear suitable, landlords will be able to use the power introduced by the new clause to purchase equitable shares if they and the leaseholders agree that it is the best way to help the leaseholders meet their obligations under the lease.
The new power to purchase equity shares will be introduced by means of regulations, and amendment No. 132 ensures that the new clause will be commenced by order when the regulations are laid. I hope that I have made the situation clear and that the Committee will accept the new clause and amendment.
Andrew George: I refer to a point made in an earlier debate on the application of stamp duty to the purchase of portions of a property. If the Government want to facilitate a means by which a tenant can take ownership of an equity or other share of the property, does the Minister agree that it would be unhelpful if, because of the market value of the property, the tenant found himself or herself having to pay stamp duty on the purchase of that equity share?
Mr. Wright: I can understand what the hon. Gentleman is saying. In certain circumstances, stamp duty does not apply to areas that are classed as deprived areas. I am not certain what those circumstances are, but they may apply to such a case. I will examine what the hon. Gentleman said and write to him about it.
On the important basis that a number of families in London and elsewhere are facing high service charges and major works bills, I hope that the Committee will accept the new clause and amendment.
Question put and agreed to.
Clause 265 ordered to stand part of the Bill.
Clauses 266 and 267 ordered to stand part of the Bill.
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