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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