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Session 2008 - 09
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The Committee consisted of the following Members:

Chairman: Robert Key
Crausby, Mr. David (Bolton, North-East) (Lab)
Dorries, Nadine (Mid-Bedfordshire) (Con)
Efford, Clive (Eltham) (Lab)
Gilroy, Linda (Plymouth, Sutton) (Lab/Co-op)
Goldsworthy, Julia (Falmouth and Camborne) (LD)
Howarth, Mr. George (Knowsley, North and Sefton, East) (Lab)
Jackson, Glenda (Hampstead and Highgate) (Lab)
Jackson, Mr. Stewart (Peterborough) (Con)
Jenkins, Mr. Brian (Tamworth) (Lab)
Scott, Mr. Lee (Ilford, North) (Con)
Teather, Sarah (Brent, East) (LD)
Turner, Mr. Andrew (Isle of Wight) (Con)
Twigg, Derek (Halton) (Lab)
Watts, Mr. Dave (Lord Commissioner of Her Majesty's Treasury)
Wilson, Mr. Rob (Reading, East) (Con)
Wright, Mr. Iain (Parliamentary Under-Secretary of State for Communities and Local Government)
Ed Waller, Eliot Barrass, Committee Clerks
† attended the Committee

First Delegated Legislation Committee

Monday 27 April 2009

[Mr. Robert Key in the Chair]

Draft Housing (Replacement of Terminated Tenancies) (Successor Landlords) (England) Order 2009
4.30 pm
The Parliamentary Under-Secretary of State for Communities and Local Government (Mr. Iain Wright): I beg to move,
That the Committee has considered the draft Housing (Replacement of Terminated Tenancies) (Successor Landlords) (England) Order 2009.
Mr. Key, it is a delight to serve under your chairmanship again. Last time, I was far too gushing in my praise for you, so I will temper that today.
The matter under consideration is important. The order will extend the provisions on existing tolerated trespassers in schedule 11 to the Housing and Regeneration Act 2008 to situations where the landlord has changed after the occupant became a tolerated trespasser. That is often seen to be a complex area, not least by me, so it might be worth while if I set out the concept.
“Tolerated trespassers” are people who rent property, usually in social housing, who have lost their status as tenants after the court has granted the landlord a possession order, but whom either the landlord or the court is allowing to remain in the property. A number of problems face tolerated trespassers and their former landlords. Neither can rely on the terms of their tenancy agreement or the provisions in the various Housing Acts. For the ex-tenant, the most serious consequence is probably that no succession will be possible on death. For the ex-landlord, problems include uncertainty about entitlement to annual increases in rent and whether tolerated trespassers should be allowed to vote in stock transfer and tenant management ballots.
Last year’s Housing and Regeneration Act resolves the problem for future tolerated trespassers and the vast majority of existing tolerated trespassers. Part 1 of schedule 11 will ensure that, in future, where a person is subject to a possession order, they will retain their status as a tenant until they are evicted from the property. Part 2 of the schedule will restore tenancy status to existing tolerated trespassers by creating a new tenancy from the date that the provisions come into force. It will apply to all tolerated trespassers who remain in their home, with the exception of those whose landlord has changed after the occupant became a tolerated trespasser—what may be referred to as successor landlord cases. There could be a number of situations where ownership of the property changes, but the most usual is a transfer from a local authority to a registered social landlord following a large-scale voluntary transfer.
We did not deal with successor landlord cases in the 2008 Act when it was in Committee because it was an issue on which we had not consulted and we felt that landlords might have strong views. Instead, during the passage of the Bill through the other place, a power was added for the appropriate national authority, either the Secretary of State in England or Welsh Ministers in Wales, to provide by order for part 2 of schedule 11 to be extended to successor landlord cases, following consultation.
In September last year, my Department consulted on options for using the order-making power. Responses to the consultation were unanimously in favour of amending the legislation to restore tenancy status in successor landlord cases. The draft order extends the provisions in part 2 of schedule 11 to successor landlord cases, and makes appropriate modifications where necessary.
The main aims of the draft order are twofold. First, it is to ensure that the provisions in relation to successor landlord cases are kept as close as possible to the provisions for other existing tolerated trespassers in part 2 of schedule 11. Secondly, it is to provide, as far as possible, that both landlord and tenant are in the same position as they would have been had the tenant not become a tolerated trespasser, and that neither tenant nor landlord is disadvantaged by the changes. The order will restore tenancy status to tolerated trespassers whose landlord has changed, by creating a new tenancy between the successor landlord and the occupant, which will come into effect on the commencement date.
The draft order provides for the new tenancy to be of the same type as, or as near an equivalent as possible to, the original tenancy. However, we recognise that where there has been a change of landlord, in particular where the nature of that landlord has changed, that may not always be possible. Where the property has been transferred from one local authority to another, the new tenancy will be the same as the original in all but one case. The exception is where the original was an introductory tenancy, but the new local authority landlord does not operate such a scheme. In that case, the replacement will be a secure tenancy. Where the property is being transferred from one RSL to another, the new tenancy will also generally be the same as the original one.
The stock transfer situation when the property has transferred from a local authority to an RSL is more complex. Former secure or introductory tenants under the Housing Act 1985 cannot continue their previous tenancy, but must become assured tenants under the Housing Act 1988 because of the mutually exclusive provisions regarding landlords of secure and assured tenancies under the two Acts.
The draft order also provides for the terms and conditions of the replacement tenancy to be the same as the original tenancy, subject to any modifications that may be needed to reflect the fact that the two tenancy types are different.
Mr. George Howarth (Knowsley, North and Sefton, East) (Lab): My hon. Friend the Minister might be about to deal with such matters, but I want to give him the opportunity to consider my two questions before he does. First, why does he consider that the measures are necessary and, secondly, why has he used the term “trespasser” in that context?
My right hon. Friend’s second point was good. “Trespasser” has negative connotations. Unfortunately, that term has stuck, but we are keen to address the matter by giving people as much security as possible and creating a sense of fairness, in respect of the tenant as well as the landlord, a point to which I shall to return.
I am keen to make sure that the creation of a new tenancy will not impact unfairly on landlords or tenants. The order provides the court with the power to allow claims during the tolerated trespasser period between the newly restored tenant and the original landlord and/or the successor landlord as appropriate. The aim is to reproduce as far as possible the provisions under schedule 11 of the 2008 Act which give the court discretion whether to allow such claims. In turn, they are designed to continue the discretion that the courts currently have to allow such claims.
Finally, I wish to make an important clarification. The order will apply only to occupants who are still classed as tolerated trespassers on the date that the order comes into force. That is in line with the provisions under part 2 of schedule 11 to the Act. Accordingly, the order will affect only those landlords who have failed to take action before the commencement date, whether that action is to issue a new tenancy or to proceed to eviction. It is our intention that, if the order is approved, it will be brought into force at the same time as the provisions under schedule 11. To that end, we have delayed commencement of schedule 11. In an ideal world, we would not have done that, but we felt that it was justifiable and appropriate to ensure that tolerated trespassers who have transferred to a new landlord are not disadvantaged by the timing of the changes. We shall be commencing the measures under schedule 11 for England and Wales, and the Welsh Assembly Government are introducing parallel affirmative orders in the same terms as the order, which, all being well, will come into force on the same date.
We recognise that this area of the law is complex, and we shall therefore be issuing non-statutory guidance to landlords to assist them in implementing the provisions under schedule 11 and the successor landlord order. On the basis of that information, I hope that members of the Committee will be minded to approve the order, but I look forward to hearing any questions they might want to ask about it.
4.39 pm
Mr. Stewart Jackson (Peterborough) (Con): It is a pleasure to serve under your chairmanship, Mr. Key. I concur with the Minister about complexity: the order is like the Schleswig-Holstein question in that the only people who understand must be either mad or dead.
We have a few questions. I might have missed the Minister’s remarks on this matter, but I read in the impact assessment and the explanatory memorandum that the consultation took place in summer 2007. I am slightly surprised that the order was not dealt with then and a way found to include this tidying-up exercise in the Housing and Regeneration Act 2008, which was debated last spring and got Royal Assent towards the end of the year. Perhaps the Minister will comment on why the transfer of tolerated trespassers was not considered in the summer 2007 consultation by the 500 key stakeholders who were consulted.
We have figures for the estimated number of tolerated trespassers only to 2006. Will the Minister update us on the trend since then, and especially on the most recent figures for the variation of possession orders that have been sought and obtained? That is important. It would be invidious to expect registered social landlords to have a separate system for dealing with tenants who are tolerated trespassers. I accept the reservations of the right hon. Member for Knowsley, North and Sefton, East about the use of that term, but that is what we have.
Does the Minister foresee any difficulties regarding the rights and responsibilities of tolerated trespassers as voters in a large-scale voluntary stock transfer from a local authority, for example, to a housing association? Would the rights that now accrue to those individuals as tolerated trespassers be different from the rights of others who take part in a stock transfer ballot? With those questions, I conclude my remarks. I hope that the Minister will be able to answer those specific points.
4.43 pm
Sarah Teather (Brent, East) (LD): It is a pleasure to serve under your chairmanship, Mr Key. I see no reason to detain the Committee for an extended period. I fully support the order, which is long overdue, and echo the comments made by the hon. Member for Peterborough about why this matter could not have been dealt with under schedule 11 to the 2008 Act. I know that Shelter made representations to the Government to try to deal with that point. It felt that this was an obvious anomaly that should have been included in the Act.
The concept of the tolerated trespasser has been unhelpful for landlords and tenants. The measure extends the provisions of the 2008 Act to that group, which has so far been left out. It was an obvious anomaly and I support the Government in closing the loophole. I wish that they had done so earlier, but I am glad to see them do it today.
4.44 pm
Mr. Wright: I thank hon. Members for their positive comments. I am not entirely certain what I should say to the hon. Member for Peterborough, who says that I am either mad or dead. I will let the Committee decide which is more appropriate. I welcome his point about a tolerated trespasser, if we must use that phrase, who is paying rent and managing his or her arrears. It is right for us to correct that anomaly.
The hon. Gentleman makes a fair point regarding why we did not address this matter in the Housing and Regeneration Act 2008. He points out that we consulted on this in the summer of 2007. We did not consult specifically on the issue of transferring tolerated trespassers. The reason was that different stock-transfer RSLs deal differently with how tolerated trespassers are transferred to them. Some grant full assured tenancies and some only assured shorthold tenancies, often with the promise of a full assured tenancy after a certain time if the tenant behaves—for want of a better term—appropriately. In some cases, landlords proceed to eviction of some transferred tolerated trespassers.
Given the different approaches, we did not include any provision in the Housing and Regeneration Act because we felt that doing so would remove choices from some registered social landlords. We took the view, fairly and appropriately, that we ought first to consult landlords. When discussing the merits of the Bill, I recall pledging to do that. Parliamentary approval will ensure that the order comes into force at the same time as the tolerated trespasser provisions under schedule 11 to the 2008 Act—we are correcting the anomaly. Going back slightly, one striking thing from the subsequent consultation was that landlords unanimously agreed that we should do something about the situation. There is a large degree of consensus on the issue and on how we can move forward.
The hon. Member for Peterborough mentioned the tolerated trespasser figures and asked how many could be classed as successor landlord cases. In the explanatory notes, we have estimated the figure to be as high as some 70,000 to 85,000—hopefully, we can provide a great deal of fairness for a large number of people. The figure for the number of tolerated trespassers is in the region of 250,000 to 300,000, which remains valid data.
I think that I have answered all the questions, so on that basis, and given the positive spirit in which hon. Members have dealt with the order, I hope that we can approve it.
Question put and agreed to.
4.48 pm
Committee rose.
 
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