Housing and Regeneration Bill

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New Clause 12

Possession action for rent arrears involving housing benefit
‘Section 7 (orders for possession) of the Housing Act 1988 (c. 50) is amended as follows.
(1) In subsection (3), for “subsections (5A) and (6)” substitute “subsections (5A), (6) and (6A)”.
(2) In subsection (4), for “subsections (5A) and (6)” substitute “subsections (5A), (6) and (6A)”.
(3) After subsection (6), insert—
“(6A) If the court is satisfied—
(a) that Ground 8 in Part 1 of Schedule 2 to this Act is established; and
(b) that some rent is in arrears as a consequence of a delay or failure in the payment of relevant housing benefit, it shall not make an order for possession unless it considers it reasonable to do so.
(4) At end insert—
“(8) In subsection (6A) above—
(a) “relevant housing benefit” means—
(i) any rent allowance or rent rebate to which the tenant was entitled in respect of the rent under the Housing Benefit Regulations 2006 (S.I. 2006/213); or
(ii) any payment on account of any such entitlement awarded under Regulation 93 of those Regulations;
(b) references to delay or failure in the payment of relevant housing benefit do not include such delay or failure so far as referable to any wilful act or omission of the tenant.”.’.—[Sir George Young.]
Brought up, and read the First time.
Sir George Young: I beg to move, That the clause be read a Second time.
After moving new clause 12 I shall take a vow of silence—for the rest of the day. The new clause is important as it would prevent tenants on assured tenancies from being evicted when the reason for the eviction was a failure to pay housing benefit. I am sure that all hon. Members have constituents who are given notice by their landlord because the local authority has failed to pay their housing benefit on time.
The new clause would amend ground 8 in schedule 2 to the Housing Act 1988. Before someone jumps up to say that I want to amend an Act that I put on the statute book, in 1988 there was an important discontinuity in my ministerial career because of the poll tax—someone else put the Act on the statute book.
Private landlords and housing associations can use ground 8 to seek possession of accommodation let on an assured tenancy where the tenant is behind with the rent by two months or more. Unlike other grounds for possession, this one is mandatory. The court has no discretion whatever to deny the order for possession if the rent is in arrears. My new clause would give the court some discretion in cases where housing benefit issues are outstanding. The discretion does not extend to other reasons, only where housing benefit is the reason for the arrears.
About 2.5 million households are in receipt of housing benefit to help them with the rent. While many local authorities administer housing benefit efficiently, sadly there are elements of poor administration in many local authorities. That, in turn, leads to debt and rent arrears for tenants. Research by Shelter across three county courts found that arrears were linked to problems with housing benefit in 70 per cent. of possession cases.
As I said a moment ago, ground 8 is mandatory. It requires the court to grant outright possession when the tenant has two months rent arrears both at the time of the notice of possession and at the time of the court hearing. If those conditions are satisfied, the court has no discretion to refuse an order, whatever the reasons for the arrears, or even to adjourn the claim. The ground is open to private landlords and housing associations who use assured shorthold tenancies, but it is not available to local authorities.
6.30 pm
A survey was carried out into how 116 of the largest housing associations were using ground 8. In 2000, the National Housing Federation found that 16 per cent. of possession orders were granted on the basis of ground 8. Some associations have policies stating that they will not use ground 8, and many have adopted positive alternative strategies to deal with rent arrears in order to manage them rather than evict. However, in Shelter’s experience, some associations are using ground 8 in cases in which housing benefit claims are outstanding in order to show improvements in the collection of rent arrears. They are not taking appropriate steps to liaise with the housing benefit departments or to help their tenants to resolve the housing benefit or the debt problem.
Mr. Raynsford: I rise simply to support the right hon. Gentleman. He will not be alone in experiencing heavy criticism of this provision. It comes from all sides—from representatives of lawyers who discover that it is impossible to get the courts to exercise discretion when they ought to; and by landlords, who may use the provision in order to try to speed up the local authority but then discover that they have unleashed a process that is irreversible because the court does not have any discretion. The right hon. Gentleman makes a very strong point. I intervene simply to say that he has a great deal of sympathy from my side of the Committee.
Sir George Young: I am much obliged to the right hon. Gentleman; I value his endorsement of my new clause.
A rent arrears protocol came into effect in 2006. It is part of the civil procedure rules, and it sets out measures that social landlords should take before starting possession proceedings on the basis of rent arrears. Theoretically, the protocol applies to ground 8 claims, but it will have no practical effect because the court does not have the power to dismiss or adjourn claims. The Scottish Executive have already introduced measures to prevent eviction of tenants for rent arrears caused by housing benefit problems. Section 12 of the Homelessness etc. (Scotland) Act 2003 amends ground 8, as I propose in the new clause.
It is not a theoretical problem. I refer briefly to the case of North British Housing Association Ltd v. Matthews and others in 2004. The housing association brought proceedings under ground 8 despite being aware that the tenant had an outstanding housing benefit claim. The county court judge decided that he had no choice but to grant an outright possession order. Miss Matthews subsequently received a backdated payment of housing benefit that cleared her arrears completely and put her rent account into credit. None the less, the possession order still stood.
The Court of Appeal held that when ground 8 was involved, the county court had no power even to adjourn the hearing to await a housing benefit payment unless there were exceptional circumstances. Understandably, the Court of Appeal was troubled by the situation. Lord Justice Dyson said:
“We acknowledge that this conclusion will lead to tenants who are in receipt of housing benefit having no defence to a claim for possession in circumstances where they are not at fault. The statutory scheme is, therefore, potentially draconian in its application.”
So far, all my pleas have fallen on deaf ears. However, I have hopes that this, the last new clause that I shall move—
Margaret Moran: I, too, rise to support the right hon. Gentleman. It is a long-standing aberration. The fact is that some social landlords have deliberately used the tenant in a ploy to force the local authority to improve its housing benefit administration through ground 8. It is an absolute travesty of the intention behind all the work that we have been discussing.
Is it not the case that even when a local authority acknowledges that it has erred in its administration and tries to make a hardship payment—something that it can do under the housing benefit remit, although it cannot to do so to prevent possession—it will in effect cause them further expense, as they will have to pick up the homelessness costs?
Sir George Young: The hon. Lady is right. The court cannot take into account what the local authority might be doing to remedy the position. If my oratory failed to move the Minister, I am sure that he will have been touched by that intervention—as well as by the powerful advocacy from the right hon. Member for Greenwich and Woolwich.
Mr. Wright: How can I possibly refuse the last amendment from the right hon. Gentleman? I will do my best to do so. I have a great deal of sympathy for his contribution. I think he made his case extremely well. I do appreciate the intention behind the amendment is to protect tenants from being evicted where, frankly, failure to pay the rent that is due is not of their own making.
However, I am reluctantly forced to say to him that the proposed amendment is not a necessary change. Landlords have a reasonable expectation of receiving rent for their property in good time. It would not be fair to expect landlords who let to tenants on housing benefit to be treated differently from those who do not. Where tenants rely on housing benefit to pay their rent, local authorities should process claims efficiently and in good time and landlords should not be penalised by their failure to do so.
I appreciate what the right hon. Gentleman was saying, but I am concerned that the unintended consequence of this amendment could be that a greater number of landlords would be disinclined to let to tenants on housing benefit. The Government are doing their best to address the perception of some landlords that housing benefit claimants somehow pose a higher risk than other tenants because of difficulties they have experienced with housing benefit administration.
The Department for Work and Pensions has put in place a number of measures to improve housing benefit administration, including the introduction of clear national performance standards, regular monitoring and inspections, measures to intervene in poor-performing authorities, and a £200 million standards fund to help local authorities invest in training and new IT facilities. As a result of this, standards of administration have started to improve, both on average and for the poorest performing local authorities.
The Government will continue to place a high priority on improving the administration of housing benefit. The introduction of the Local Housing Allowance last April is also likely to shorten the time tenants have to wait for assistance with their rent. Since the LHA is a flat-rate payment, based on the size of the household and the area it is in, there will no longer be a need for individual rent determinations, which contribute to a delay in processing claims. In addition, the LHA figures for each area will be published in advance, which means that tenants will be able to make an informed choice about the level of rent they can afford.
Mr. Love: I welcome my hon. Friend’s comments on the LHA and some of the changes that have been made to speed up the housing benefit delivery from local authorities. Does he accept, however, the concern that exists on both sides of the Committee today that if the only reason we can give for rejecting this amendment is that we are improving the delivery of housing benefit, the experience of all Members of what is actually happening in housing benefit administration would not allow us to accept that that is likely to do enough to protect affected tenants?
Mr. Wright: I understand what my hon. Friend has said. In reply, I would say that if the roll-out of the LHA is successful, this amendment should not be required. If it were to be accepted, the amendment could still deter landlords from letting to tenants who receive the LHA. The concerted effort by the DWP in trying to improve matters will have an impact. However, I have taken on board the sentiments of the Committee and I can take them away and have a look; but as I said, that push toward improving standards and performance is a key point.
Mr. Raynsford: Can I leave this final thought with him? On Thursday, we will be debating the social housing regulator. The Bill states that the second objective of the regulator is
“to ensure that actual or potential tenants of social housing have an appropriate degree of —
(a) choice, and
(b) protection.”
Would it not be unfortunate if our new regulator, when established, decided that as a result of existing landlord and tenant powers, tenants do not have an appropriate degree of protection because the mandatory grounds for possession in such cases means that, through no fault of their own, they can be evicted due to the failure of a body to administer housing benefit efficiently? That cannot be a satisfactory position. It would be most embarrassing for the Government if the regulator were to reach that conclusion.
I urge my hon. Friend to give further thought to this matter in the ensuing period because however much the administration of housing benefit improves, there is always the risk of error and delay in such a complex scheme. It is clearly unwise to leave individuals so vulnerable when no discretion is available to the court.
Mr. Wright: My right hon. Friend makes a good point. Notwithstanding the points that I was trying to make about the Department for Work and Pensions and improving performance, my right hon. Friend, the Minister for Housing, has recently commissioned a major review of the private rented sector. That will take place in the next couple of months. The review will look at the experiences of landlords and tenants. I will instruct the review to look at this matter closely and keep the Committee informed. On that basis, I hope that the right hon. Member for North-West Hampshire will not press the motion.
Sir George Young: Well, the fact is that in Scotland, it has already been decided that the courts will have this discretion. As far as I am aware, it has not had a hugely adverse impact on housing benefit. It has not led to tenants falling into arrears or to landlords being reluctant to let to people on housing benefit. We are talking about a measure that a judge has described as draconian. I would like the Minister to say that in the light of the debate on the new clause, he will go away and see whether there are ways of letting the courts have the discretion that all members of the Committee would like them to have. He might have said that already, but I would like to hear him say it again.
The new clause says:
“If the court is satisfied ... that some rent is in arrears as a consequence of a delay or failure in the payment of relevant housing benefit, it shall not make an order for possession unless it considers it reasonable to do so.”
That is the thrust of the new clause and I cannot for the life of me see what is objectionable about it. If the Minister says that between now and the Report stage, he will have another look at this issue so that if there is another debate about it on Report he might have something more constructive to say, I will not press the motion. A little bit of body language from the Minister would assist. We now have that, so on that basis, I beg to ask leave to withdraw the motion.
Motion and clause, by leave, withdrawn.
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