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Lord Mackay of Ardbrecknish: I am not entirely sure I understand my noble friend's question. If an association sells a house to a sitting tenant at a discount, it obviously receives from the tenant the market price less the discount and then receives the discount from the Housing Corporation. From those two routes the association receives the market value of the house it sold. The money that the housing association receives from such sources is to be ring-fenced to provide another rented house. I hope that that answers the question.

Baroness Gardner of Parkes: I thank my noble friend, but there is another point that has arisen previously; namely, what happens when the amount provided by both the grant and the tenant's purchase still does not cover what was land at an unrealistically low price in the first instance? The case has been raised again and again of someone selling land at an artificially low price. Surely local properties would not be saleable at the same figure.

Lord Mackay of Ardbrecknish: If the land is sold at a low price and a house on the land is then sold to a sitting tenant, the market price will reflect the proper market value of the land. The housing association will gain that additional money and will therefore be able to fulfil the purpose for which the land was originally given; namely, to provide social housing. It will provide another social house.

The Earl of Dundonald: Who will be responsible for carrying out the valuation? Will it be the district valuer?

Lord Mackay of Ardbrecknish: I am not entirely sure whether that is the name used in England. My noble friend comes from north of the Border. In Scotland it will certainly be somebody like the district valuer. I am

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not entirely sure whether the district valuer exists in the south but some such person will do the valuations. As I understand it, that is how it works currently with the sale of local authority houses.

The Earl of Dundonald: In that case, perhaps I may put another point to my noble friend. It is normal practice for the district valuer to set the value slightly lower than the open market value. Therefore there would be a difference.

Lord Mackay of Ardbrecknish: I shall take advice on whether district valuers set valuations lower than the market value and perhaps write to my noble friend.

Lord Carter: Perhaps I may take up a point made by the Minister in referring to the "salami" technique of gradually removing the right to buy slice by slice. I suggest that if the criteria were on the face of the Bill, the problem would not exist.

Lord Monkswell: I have a slightly different question. At present local authority tenants who have a right to buy are locked into the private sector. Once they have bought their council house it is virtually impossible for the local authority to buy it back. From what the Minister says, it will be possible for a housing association to sell a house to a tenant under the right to buy; the tenant will receive a discount; three years later the housing association could buy back the property at the market price and almost immediately sell it again to the tenant, whereupon the tenant would receive a discount. It would seem logical in that sort of situation for the housing association and the tenant to come to an agreement that every three years they go through such a transaction and split the difference in terms of the discount. Have the Government thought of that? Do they think it a sensible use of the public funds involved in the discounting procedure?

Lord Mackay of Ardbrecknish: The noble Lord allows his imagination to run away with him on hypothetical cases. I cannot see a housing association and a tenant entering into successive deals in which the tenant moves from being a tenant to being the owner, to being a tenant again, and then to becoming the owner again. That is very unlikely. I suspect that something would stop any such procedure dead in its tracks. Common sense might do so in the case of a tenant who had become the owner and had to become a tenant again. Perhaps we should leave the matter to one side. In case I have misunderstood the noble Lord's intervention, I shall certainly look into it. If I feel that he has a point that should be addressed, I shall come back to him.

Perhaps I may use this opportunity to save writing to my noble friend Lord Dundonald. The landlord can use anyone to make a valuation. But if the tenant disputes it, there is a right to go to the district valuer. The legislation states clearly that the valuation must be the open market value. I refer my noble friend to Section 127 of the Housing Act 1985 where that is clearly spelt out. The valuation must be the open market value.

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To return to the nightmare scenario suggested by the noble Lord, Lord Monkswell, any tenant's discount in the circular dance he suggested has to take into account any earlier discount that the tenant received.

Lord Hamilton of Dalzell: It may be clear to other Members of the Committee. It is not quite clear to me. Will the open market value that is decided be the open market value as if the house had a tenant? Or will it be the freehold market value? Before you can put another tenant in another place you have to buy the freehold, not a leasehold.

Lord Mackay of Ardbrecknish: As the Committee knows, I am not a lawyer; nor am I an estate agent. I am afraid my noble friend takes me into territory to which I shall need to give a little thought. I suspect that the Housing Act 1985 may be helpful. I can advise my noble friend that the open market value, which must be taken, must be on the basis of vacant possession.

Lord Gisborough: I thank my noble friend for that explanation. I am not totally convinced. I do not totally understand how the value can be maintained for continually replacing the houses. However, I shall read his remarks. At this stage I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 80 to 83 not moved.]

Clause 17 agreed to.

Lord Carter moved Amendment No. 84:

After Clause 17, insert the following new clause--

Tenants' Incentive Scheme: allocation of funds

(". Allocation of funds for the Tenants' Incentive Scheme shall take into account the fact that tenants whose dwelling is entered on the Register of Exempt Rural Properties do not have the right to buy the dwelling which they occupy.").

The noble Lord said: We can be extremely brief with this amendment. It seems to me worth exploring the attitude of the Government on the matter of taking away the right to buy through the exemptions policy. This is a community benefit and it is being done for social purposes. But, in a sense, the tenant is a loser. I feel that there should be some form of quid pro quo because a tenant in that situation has lost the right to buy.

Would it not be fair to allow the tenants of exempted properties to be taken into particular account when the allocations of the incentive scheme are being made? That would give them a new freedom, if their exempted property remains within the stock of rural and social housing, to have the chance to pick up the right that the exemptions policy removed from them? It seems to me that the community should give some kind of quid pro quo to the individual tenant in respect of the right that he is losing as a result of the social purposes, which are the intention of the legislation. I beg to move.

Lord Mackay of Ardbrecknish: The purpose of the tenants' incentive scheme is to make housing association property available for a family in housing need by giving the existing tenant a cash grant to help

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him buy a property on the open market and thus free the tenanted property for another tenant. Approximately £81 million was spent on the tenants' incentive scheme in 1994-95 and around 7,000 grants were distributed.

As with any cash limited programme, clearly it is essential that funds are targeted at areas where there is the greatest housing need. Approximately 53 per cent. of all TIS, as it is called, grants in 1994-95 were distributed to the London and South-East area where there is the most acute need for social housing. We expect that trend to continue.

Many housing associations in rural areas simply do not bid for TIS grants as there appears to be very much less demand for those grants in rural areas. But if they were to bid, they would be considered, just like everybody else. With that assurance, I hope that the noble Lord will feel able to withdraw his amendment.

Lord Carter: I thank the Minister for that helpful answer. I understand that they do not bid because they do not believe they will get an allocation. I understand that that is the problem. And that is the reason for the amendment. We want to have it clear that, if they wish to bid, they can do so. It is to be hoped that the particular circumstances of the exempted tenants can be taken into account when the allocations of the TIS money are made. I shall read what the noble Lord said. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 18 [Social housing grants]:

[Amendment No. 85 not moved.]

Clause 18 agreed to.

Clause 19 agreed to.

4.15 p.m.

Clause 20 [Purchase grant where right to acquire exercised]:

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