Housing And Regeneration Bill - continued          House of Lords

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Schedule 11- Service charges: provision of information and designated accounts

959.     Schedule 11 makes changes to the requirements in the Landlord and Tenant Act 1985 ("the 1985 Act") and the Landlord and Tenant Act 1987 ("the 1987 Act") regarding the information that landlords must supply to service charge payers and how service charge monies are to be held. The main amendments are to section 21 of the 1985 Act (as substituted by the Commonhold and Leasehold Reform Act 2002) and section 42A of the 1987 Act (as inserted by the 2002 Act). Section 21 of the 1985 Act and section 42A of the 1987 Act, as amended or introduced by the 2002 Act, have not been brought into force.

960.     Paragraph 2 replaces section 21 of the 1985 Act. Subsection (1) provides the appropriate national authority (the Secretary of State in England, and the Welsh Ministers in Wales) with power to make regulations about the provision by landlords of dwellings of service charge information. Subsection (2) sets out the types of information that should be dealt with in those regulations. In particular, the regulations must (subject to exceptions) require a landlord to provide information about the service charges of the tenant and any "associated charges" (defined in subsection (8)); and the relevant costs relating to the service charges. Subsection (3) provides that the regulations must (subject to exceptions) require that a report by a qualified person be supplied with the information provided. Subsection (4) sets out the additional matters about which provision may be made in the regulations. In particular the regulations may make provision about the information and reports that need to be provided, the periods in relation to which information or reports are to be provided, the times at or by which they need to be provided, and the form and manner in which they may be provided. The regulations may also describe the persons who are "qualified persons" for the purposes of preparing the report that must accompany the information supplied by the landlord. Subsection (5) provides that the power under subsection (1) to make regulations is not limited in any way by the provisions of subsections (2) to (4).

961.     Subsection (6) allows regulations made under section 21 to make different provision for different cases, descriptions of case or different purposes and to make supplementary, incidental, consequential, transitional or saving provision that is considered to be appropriate. Subsection (7) provides that the regulations will be subject to the negative procedure. Subsection (8) contains definitions.

962.     Paragraphs 3 to 8 of the Schedule make amendments to sections 21A, 22, 23, 26 and 27 of the 1985 Act, which are consequential on the new terminology used in section 21. These sections enable tenants to withhold service charges if the provisions in section 21 are not complied with, provide rights of inspection of supporting documentation, deal with the situation where information is held by a superior landlord or there is a change of landlord and provide for exceptions. These amendments ensure that these provisions reflect where necessary the new terminology used in section 21.

963.     Paragraph 9 omits section 28 of the 1985 Act, which defines the meaning of 'qualified accountant' for the purposes of providing a certificate supporting information supplied under the existing section 21. This is being replaced with the power to specify in regulations made under the new section 21(4) the persons who are qualified to provide a report on such information. Paragraph 10 removes the reference to 'qualified accountant' in the index of defined expressions in the 1985 Act.

964.     Paragraphs 11, 12 and 13 amend section 42A of the 1987 Act. These amendments will allow one or more trust funds containing service charge monies held on behalf of different groups of service charge payers to be held by the landlord in one designated client account. Provision is made for regulations to be made to ensure that funds cannot be moved between designated client accounts unless conditions specified in the regulations are met.

965.     The regulations to be made under section 42A may make different provision for different cases or different areas. The regulations are subject to the negative procedure.

966.     Paragraph 14 amends section 78 of the Leasehold Reform, Housing and Urban Development Act 1993 which defines the persons able to carry out a management audit of premises under rights provided to long leaseholders by the Act. Instead of referring to section 28 of the 1985 Act (which is being repealed under paragraph 9 of this Schedule), it inserts a new class of auditor, being a person who is a member of a body which is a recognised supervisory body for the purposes of Part 42 of the Companies Act 2006, and disqualifies certain persons.

Schedule 12 - Demolition notices

967.     Schedule 12 amends Schedule 5 to the Housing Act 1985 with respect to final demolition notices and Schedule 5A to that Act with respect to initial demolition notices, so that these notices will remain in effect if the landlord sells or transfers the property to another landlord which intends to continue with the demolition plans. To ensure this, the second landlord will be required to serve a continuation notice confirming that he intends to continue with the demolition plans.

968.     A continuation notice must give reasons for the proposed demolition and specify which of the required conditions applies. The notice may not vary the planned demolition date nor the expiry date of the original demolition notice.

969.     The continuation notice is subject to the same requirements for notice and publication as the original demolition notice.

Schedule 13 - Disposals of dwelling-houses by local authorities

970.     Schedule 13 amends certain provisions of the Housing Act 1985, the Housing Act 1988, the Housing Act 1996, and repeals and amends provisions of the Leasehold Reform, Housing and Urban Development Act 1993. The provisions concern the requirement for consent from the Secretary of State to large scale disposals of housing by local authorities. The intention of the amendments is to remove the requirement that local authorities must apply to the Secretary of State annually to be included in a large scale disposals programme for a particular financial year. The amendments do, however, retain the requirement for Secretary of State consent and provide that the Secretary of State may consider the exchequer costs of such disposals before consent is granted. Notwithstanding removal of provisions concerning the large scale disposals programme, English local authorities will be expected to engage with the HCA at an early stage when considering a large scale disposal.

971.     Paragraph 1(2) amends section 34 of the Housing Act 1985, which applies to the grant of the Secretary of State's consent under section 32 or 33 of the Housing Act 1985 for the disposal of land held for housing purposes by a local authority.

972.     Paragraph 1(2)(b) amends section 34 to provide that, when considering whether to grant consent, the appropriate national body (i.e. the Secretary of State, for England and the Welsh Ministers, for Wales) may, in the case of a large scale disposal, have regard to its estimate of the exchequer costs of such a disposal.

973.     Paragraph 1(2)(c) adds the provision that the appropriate national body may make assumptions as to what the exchequer costs might be and defines "dwelling-house", "exchequer costs", "housing subsidies", "large scale disposal", "long lease", "relevant period", and "subsidiary" for the purpose of those cost calculations. The amendment also gives the appropriate national body the power by order to change the number of dwelling-houses in the definition of "large-scale disposal". The amendment also defines "a dwelling-house to be disregarded", "associates", and how the description of an authority might be framed for the purposes of the section.

974.     Paragraph 1(3) makes identical amendments to section 43 of the Housing Act 1985 in relation to large scale disposals. Section 43 relates to the appropriate national body's powers to grant consent to a local authority to dispose of a house belonging to the local authority which fulfils certain conditions but is not held for housing purposes and is therefore not subject to consent under sections 32, 33 and 34 of the Housing Act 1985.

975.     Paragraph 2 makes consequential amendments to section 133(3) of the Housing Act 1988, which requires the consent of the appropriate national body before the first onward disposal of tenanted homes acquired after consent was given under either 34 or 43 of the Housing Act 1985. This amendment seeks to preserve the status quo by ensuring the amendments to sections 34 or 43 do not apply. Section 133 requires that, before granting consent, the Secretary of State shall take into account such matters considered when granting the original consent under section 34 or 43. This amendment does not change the position. The Secretary of State is not required to consider the exchequer costs of a further disposal. This is because a further disposal should have no impact on exchequer costs. If a local authority is the onward transferor, and so the transfer will effectively be the first transfer away from local authority ownership, the Secretary of State will be required to give consent under section 32 or 43 of the Housing Act 1985 and so will be considering the exchequer costs in any event.

976.     Paragraph 3(2) repeals section 135 of the Leasehold Reform, Housing and Urban Development Act 1993. Section 135 requires that a local authority cannot dispose of more than 499 dwelling-houses (i.e. a large scale disposal) within a particular period without having first been accepted on to an annual disposals programme run by the Secretary of State.

977.     Paragraph 3(3) amends section 136 of the Leasehold Reform, Housing and Urban Development Act 1993 to retain definitions included in section 135, including an expanded definition of "subsidiary", which would otherwise be repealed.

978.     Paragraph 3(4) deletes from section 137 of the Leasehold Reform, Housing and Urban Development Act 1993 transitional provisions relating to section 135, which are now redundant.

979.     Paragraph 4 amends the definitions of "social landlords" and "registered bodies" in section 51(2)(b), paragraph 5(1)(b) of Part 2 and paragraph 28(1)(b) of Part 4 of Schedule 1 to the Housing Act 1996. Those definitions included a body which had been the recipient of a large scale disposal of property by a local authority under section 135 of the Leasehold Reform, Housing and Urban Development Act 1993. This amendment ensures that the definitions capture organisations that in the past had inherited a large number of homes as a consequence of the (to be repealed) section 135 of the Leasehold Reform, Housing and Urban Development Act 1993, and, also, organisations that will in the future inherit such homes further to (amended) sections 34 and 43 of the Housing Act 1985.

Schedule 14 - Repeals

980.     Schedule 14 contains the repeals of various enactments and will be supplemented by orders made under the power of the Secretary of State under clause 319 (power to make further amendments and repeals).

FINANCIAL EFFECTS

981.     The Housing and Regeneration Bill will incur public expenditure in a number of ways which are addressed in the accompanying Impact Assessment. This will amount to some £37.5 million of which one-off costs amount to some £23.5 million.

982.     Most of the one-off costs will be incurred through establishing the HCA (Part 1) and the new social housing regulator (Part 2), together estimated to amount to £23 million. Local authorities may incur one-off costs of some £0.325 million in connection with:

  • the provisions to provide the same security of tenure, and other rights and responsibilities, to gypsies and travellers on local authority sites as gypsies and travellers on private sites, and occupants of other types of residential caravan site, such as park home sites (clause 316); and

  • the provision to enable service personnel to establish a local connection with the district in which they serve, for the purposes of applying to a local housing authority for an allocation of social housing or homelessness assistance (clause 313).

983.     Ongoing costs of the proposed new social housing regulator are estimated to amount to £12.7 million. Local authorities may incur some ongoing costs in connection with the management of their gypsy and traveller sites under the new arrangements, which are estimated at some £0.625 million over 10 years.

PUBLIC SECTOR MANPOWER

984.     In most cases there will be minimal implications for net staffing levels in the public sector, including local authorities. The creation of the HCA is estimated to realise running costs savings of around £3m from 2010-11. Further details are set out in the Impact Assessment.

IMPACT ASSESSMENT

985.     An impact assessment of the Bill's provisions has been published alongside this Bill. It can be read on the Department for Communities and Local Government website at www.communities.gov.uk. Details of the carbon impact of each of the Bill's provisions can be found in the Impact Assessment.

EUROPEAN CONVENTION ON HUMAN RIGHTS

986.     Section 19 of the Human Rights Act 1998 requires the Minister in charge of a Bill in either House of Parliament to make a statement about the compatibility of the provisions of the Bill with the Convention rights (as defined by section 1 of that Act). The Parliamentary Under Secretary of State for Communities and Local Government, Baroness Andrews, has made the following statement:

"In my view the provisions of the Housing and Regeneration Bill are compatible with the Convention rights".

987.     Part 1 of the Bill establishes the HCA which will replace the Urban Regeneration Agency, the Commission for New Towns and the investment functions of the Housing Corporation. The HCA will have powers to acquire land and rights over land, including compulsorily where authorised by the Secretary of State, and to override or extinguish rights in some circumstances. These powers are modelled on powers currently exercised by the Urban Regeneration Agency under the Leasehold Reform, Housing and Urban Development Act 1993. In addition, the Secretary of State will have power to designate an area in England and confer functions on the HCA, including local planning authority and hazardous substance authority functions, in relation to that designated area. The powers potentially raise issues under Articles 6 and 8 of and Article 1 of Protocol 1 to the European Convention on Human Rights. The objects of the HCA incorporate a clear public interest test and as a public body the HCA will be required to act in a manner which is compliant with the Human Rights Act 1998. Any powers conferred on the HCA must also be exercised in accordance with statutory procedures. For example Part 1 of Schedule 2 applies the procedures in the Acquisition of Land Act 1981 to the compulsory purchase of land and also provides for the usual compensation code to apply. Part 2 of Schedule 3 sets out the procedure for the consideration of the extinguishment of a public right of way. With regard to any planning functions which the HCA may have conferred upon it, the established procedures which protect individual human rights remain in place. These include the Secretary of State's powers to call in applications for the Secretary of State's own determination and to hear appeals against decisions of the local planning authority.

988.     Part 2 of the Bill establishes a new regulator for social housing, the Office for Tenants and Social Landlords. The regulator will have a range of regulatory and enforcement powers in relation to registered providers of social housing. The Convention rights that might be engaged by the regulator's powers under Part 2 are Article 6, Article 7, Article 8 and Article 1 of the First Protocol. However the new regulator will be a public authority for the purposes of the Human Rights Act 1998. It will therefore be required by section 6 of that Act to act compatibly with the Convention rights when performing its functions. In addition, the regulator will be required to perform its functions with a view to achieving its statutory objectives, set out in clause 88. The tenth such objective (in subsection (11) of clause 88) requires the regulator to regulate in a manner which minimises interference and is proportionate, consistent, transparent and accountable. An explicit objective to minimise interference and act proportionately provides additional reassurance that the regulator will exercise its enforcement powers in a manner compatible with the Convention rights.

989.     Part 3 of the Bill includes a range of provisions some of which could potentially engage Convention rights.

990.     Clause 296 provides that "Family Intervention Tenancies" (FITs) offered by local housing authorities and registered providers of social housing will not be secure or assured tenancies. These tenancies will be offered to tenants who have had a possession order against them, are likely to, or, in the opinion of the local authority or registered provider of social housing, could have such an order against them on the grounds of anti-social behaviour. FITs will provide behaviour support services to the tenant. These provisions potentially raise issues under Articles 6 and 8 and Article 1 of the First Protocol. In accepting a FIT a secure tenant will agree to give up the secure tenancy but is doing so voluntarily so there is no deprivation of property by the state engaging Article 1 of the First Protocol. In accordance with clause 297 any decision to end a local authority FIT tenancy will be subject to a statutory review procedure meeting the requirements of Article 6. In respect of Article 8 any interference may be justified under Article 8(2) in the interests of public safety, the prevention of disorder and crime and the rights and freedoms of others e.g. by balancing the rights of the FIT tenant with those of other tenants and neighbours who need to be protected from anti-social behaviour.

991.     Clause 298 gives effect to Schedule 10 which amends the 1985, 1988 and 1996 Housing Acts to prevent secure, assured, introductory and demoted tenants subject to a possession order, but whom the landlord has allowed to remain in the property, losing their tenancy status and thus becoming what the courts have termed "tolerated trespassers". In the case of all these tenancies the amendments will provide that in future where a court grants the landlord a possession order, the tenant will remain a tenant until either voluntarily leaving the property or being evicted. They will also provide that where secure, assured or introductory tenancies have already technically ended following a possession order, but with the former tenant still living in the property, a new tenancy (of the same type as before) will arise, and for some purposes will be deemed continuous with the previous tenancy. In the case of demoted and introductory tenants, this will mean that a new one year trial period will apply. The only exception would be if a local authority landlord has in the meantime revoked its election to run an introductory tenancy regime, in which case the new tenancy the former introductory tenant would acquire would necessarily be a secure tenancy.

992.     The impact of the amendments will primarily be on tenants of local authorities and RSLs under secure and assured periodic tenancies. Although the amendments technically will apply also to private tenancies, including statutory periodic tenancies arising after the expiry of assured shorthold and other fixed term assured tenancies, in practice they will have little effect on these because private landlords are more easily able to obtain eviction of their tenants. Similarly, where landlords claim possession against demoted and introductory tenancies it is assumed that the landlord usually proceeds directly to eviction (the courts having no discretionary powers to delay this).

993.     Several of the proposals affect entitlement to statutory or contractual rights. The Convention issues raised are therefore under Article 1 of the First Protocol. Although the measures deal with the legal status of tenants triggered by possession proceedings, they do not affect the process by which a landlord regains possession. It is therefore not considered that the right to respect for private and family life under Article 8 (which has been held to be engaged in possession proceedings) is relevant.

994.     It is not considered that the amendments to statutory provisions for the future give rise to any interference with the property rights of tenants. They will enable property rights to continue. In occasional situations where a joint tenant has left the property, the continuation of responsibility as a tenant may be unwelcome to that tenant, but there are other remedies available in such circumstances. Continuation of tenancy rights does not amount to a deprivation of or control of the use of property rights.

995.     So far as landlords are concerned, the provisions changing how tenancies will end in the future will result in landlords remaining subject to contractual and statutory duties regarding the tenancy, and being affected by the tenant's continuing rights. This may have financial consequences. However, Article 1 of the First Protocol relates only to existing possessions. It is therefore not considered that provisions changing the law in the future, so that the landlord loses the chance of a financial advantage, could be held to interfere with the existing property rights of landlords.

996.     With regard to restoration of tenancy status where an existing possession order has been granted, there is technically a deprivation of an existing possession involved in deferring the landlord's entitlement to possession until eviction. It is not considered that this is in itself significant, because the landlord does not in fact have a right to enter or deal with the property in any way inconsistent with tenancy rights, so long as the tolerated trespasser lives there. Despite the tenant having become a tolerated trespasser and not having the benefit of the relevant statutory provisions in other respects, the possession proceedings are still conducted under the statutory rules.

997.     Schedule 10 also amends Schedule 3 to the 1985 Act (grounds for withholding landlord's consent to assignment of a secure tenancy by way of exchange). Ground 1 of this Schedule is amended. This ground enables the landlord to refuse consent to the tenant exchanging tenancies with another tenant if the court has granted a possession order. The amendment ensures that all variations of wording used in possession orders, including that introduced in 2006 to limit the creation of further tolerated trespassers, are covered. No Convention issues are raised by this amendment, which merely clarifies the wording of the 1985 Act in order to maintain the current legal position that a landlord may refuse to agree to a tenant, subject to a possession order, exchanging properties with another tenant.

998.     Clause 303 ensures that a secure tenant cannot exercise the right to buy where he or she is subject to a possession order. Technically, this may lead to a deprivation or control of the use of a possession under Article 1 of the First Protocol, but any such deprivation may not be permanent and in any event fulfils a clear public interest and is subject to conditions provided by law.

999.     Clause 316 brings licence agreements between site occupiers and the local authority on sites providing accommodation for gypsies and travellers into the regulatory regime imposed by the Mobile Homes Act 1983 and, in particular, gives occupiers the protection of the implied terms contained in Schedule 1 of that Act.

COMMENCEMENT DATE

1000.     Clause 323 makes provision about commencement. In general the provisions of the Bill will be brought into force by order made by the Secretary of State on such days as may be appointed. Certain provisions of the Bill will come into force at the end of the period of two months beginning with the day on which the Act is passed; these are set out in subsections (2)(a) and (b) and (5)(a) of clause 323. Certain provisions will be brought into force in relation to Wales by order made by the Welsh Ministers; these are set out in subsections (3) and (5) of clause 323. All other provisions will come into force on a day as appointed by the Secretary of State by order (subsection (1) and (4)(a)).

Annex A

ProvisionsClauses and Schedules that affect the powers of the National Assembly for Wales
The Homes and Communities AgencyClause 52 introduces Schedule 5. Clause 53 introduces Schedule 6 which amends the New Towns Act 1981 and transfers Welsh functions of the Commission for the New Towns to the Welsh Ministers.
Clause 54 makes provision for the transfer of any residual assets of the Commission for New Towns in Wales to the Welsh Ministers.
Sustainability certificates Clauses 278 - 292 provide for the introduction of mandatory sustainability rating for new homes in England and Wales. Powers are to be exercised by the Secretary of State in relation to England and by Welsh Ministers in relation to Wales.
Tenant empowerment Clause 294 extends the list of matters that might be included in regulations imposing requirements on a local housing authority to enter into a management agreement with a tenant management organisation by amending the existing regulation making power in section 27AB of the Housing Act 1985. Powers are to be exercised by the Secretary of State in relation to England and by Welsh Ministers in relation to Wales.
Clause 295 enables regulations to be made requiring a local housing authority to take forward a proposal for the transfer of the ownership of part of its social housing stock if requested to do so by tenants of those homes. The detailed provision will be set out in regulations made by the Secretary of State in relation to England and by Welsh Ministers in relation to Wales.
Family intervention tenanciesClauses 296 and 297 will enable local housing authorities and registered providers of social housing in England and registered social landlords in Wales to offer tenancies which will not be secure or assured tenancies to certain tenants who have lost or are potentially at risk of losing their secure or assured tenancy. These tenancies will be offered for the purposes of providing behavioural support services to tenants against whom a possession order for anti-social behaviour has been made or to tenants who could face possession proceedings on the grounds of anti-social behaviour. The provisions contain regulation making powers that will be exercised by the Secretary of State in relation to England and by Welsh Ministers in relation to Wales. The provisions will also be commenced separately for England and Wales by the Secretary of State and Welsh Ministers respectively.
Possession orders relating to certain tenanciesClause 298 introduces Schedule 10 which includes seven delegated powers in relation to tolerated trespassers to be exercised by the Secretary of State in relation to England and by the Welsh Ministers in relation to Wales.
Service charges: provision of information and designated accountsClause 302 introduces Schedule 11 which makes changes to the requirements in the 1985 and 1987 Landlord and Tenant Acts about the information landlords will be required to supply to service charge payers and how service charges monies are held. The provisions contain regulation making powers that will be exercised by the Secretary of State in relation to England and by Welsh Ministers in relation to Wales. The provisions will also be commenced separately for England and Wales by the Secretary of State and Welsh Ministers respectively.
Leasehold enfranchisementClause 301 enables the Secretary of State in relation to England and the Welsh Ministers in relation to Wales to make separate regulations designating protected areas and to prescribe additional conditions to be included in shared ownership leases.
Right to buy etc: miscellaneousClause 307 extends the scope of an existing power to make regulations regarding loans in respect of service charges on former right to buy flats and other housing authority flats. Powers are to be exercised by the Secretary of State in relation to England and by Welsh Ministers in relation to Wales.
Clause 308 gives the appropriate national authority power to make regulations providing that a housing authority may purchase an equitable interest in a leasehold property of which it is a landlord. The power will be exercised by the Secretary of State in relation to England and by Welsh Ministers in relation to Wales.
Disposals of dwelling-houses by local authoritiesClause 310 and Schedule 13 remove the requirement that local authorities must apply to the appropriate national body annually to be included in a large scale disposals programme for a particular financial year while enabling the appropriate national body to still consider the exchequer costs of any large scale disposals, by repealing section 135 of the Leasehold Reform, Housing and Urban Development Act 1993, and making consequential amendments to the Housing Act 1985, Housing Act 1988 and Housing Act 1996. The appropriate national body is the Secretary of State in England and the Welsh Ministers in Wales.
Financial assistance for information and other servicesClause 311 widens the existing power contained in section 94 of the Housing Act 1996 for the Secretary of State in England and the Welsh Ministers in Wales to provide financial assistance for the giving of general advice in respect of residential landlord and tenant law, including advice about estate management schemes in connection with enfranchisement, information and training and running an alternative dispute resolution service. Powers are to be exercised by the Secretary of State in relation to England and by Welsh Ministers in relation to Wales.
Housing Revenue Account subsidyClause 312 disapplies sections 79 to 80A of the Local Government and Housing Act 1989 where an agreement exists between the appropriate person and a local housing authority. Such an agreement would have the effect that no Housing Revenue Account Subsidy was payable by or to the appropriate person in respect of properties covered by the agreement. The appropriate person is the Secretary of State in relation to England and Welsh Ministers in relation to Wales. Powers are to be exercised by the Secretary of State in relation to England and by Welsh Ministers in relation to Wales.
Armed forces: alteration of "local connection" testClause 313 amends section 199 of the Housing Act 1996, which sets out the circumstances when a person has a local connection with the district of a local housing authority. The provision will be commenced separately by the Secretary of State in relation to England and by Welsh Ministers in relation to Wales.
Protected mobile home sites to include sites for gypsies and travellers Clause 316 will be commenced separately by the Secretary of State in relation to England and by Welsh Ministers in relation to Wales.
Part 4 - Supplementary and final provisionsClauses 319 and 320 enables the Secretary of State in relation to England and Welsh Ministers in relation to Wales to make orders or regulations to make supplementary, incidental, consequential, transitional, transitory or saving provisions.
 
 
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