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Amendment No. 108ZH would place a requirement on non-profit providers to notify the regulator when they make a disposal for which consent is not required, although the regulator is free to give a direction dispensing with that requirement. At present, the information received by the Housing Corporation about disposals is an important part of its understanding of the financial standing of landlords. We do not believe that it is necessary for the regulator to have power to withhold disposal consent for land other than social housing, but that it should have access to important financial information about major transactions. We have therefore provided this requirement to notify the regulator, which would probably be dispensed with for large numbers of minor transactions. It is about minimising the regulatory burden while ensuring that the regulator can maintain good information about providers’ financial standing. Again, it is about balancing risks.

Amendment No. 108ZF corrects a drafting error in Clause 172, which sets out the exceptions to the requirement to seek consent to dispose of social housing. The first exception is for disposals under the types of residential tenancies most commonly used by registered providers. At present, this exception applies to non-profit registered providers only, which is an error. It would mean that profit-making registered providers would need to seek the consent of the regulator before letting a home to a social tenant. That would obviously be absurd and a serious impediment to their normal business. The amendment therefore deletes the words “non-profit” so that this exception applies to all registered providers.

Finally, Amendment No. 108ZJ is a technical amendment to ensure that the existing system of a disposal proceeds fund for the proceeds of right-to-acquire sales is preserved under the new arrangements. It may help if I set out the background. The disposal proceeds fund is an important part of the legal framework of the right-to-acquire scheme. By requiring providers to place the proceeds of sale, along with any grants for discounts, into the disposal proceeds fund and then requiring the fund to be spent in line with the regulator’s direction, this system enables us to ensure that stock lost through the right-to-acquire is replaced.

Although the Bill makes no substantive changes to the right-to-acquire itself, this group of clauses is necessary to ensure that the system of reinvesting proceeds is maintained under the new organisational framework. The amendment is needed because of the regulator’s greater independence from government, compared to the Housing Corporation. Obviously, the key feature of this Bill is that we are giving the

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regulator statutory independence with the Government’s powers to direct limited to a few very specific areas. Unlike with the Housing Corporation, the Government cannot rely on a general direction power to require the regulator to achieve government policy.

In the vast majority of circumstances, that is quite right. However, it is important that the Government have the power to direct the regulator on the use of the disposal proceeds fund because it is a key feature of our policy on the right to acquire that proceeds will be reinvested in replacement social housing. That has been achieved until now through the Housing Corporation’s control of the disposal proceeds fund. In future, it will be achieved through the regulator’s control of the disposal proceeds fund. The greater independence means that we need to spell out the Government’s role more clearly. If we are to ensure that the right to acquire remains unchanged, the Secretary of State must have a power to direct the regulator in this very limited area.

I am grateful for the Committee’s patience as I ploughed through that. I beg to move.

Baroness Hamwee: I have some amendments in this group, but first may I say how helpful it was to have the Minister’s speaking notes as well as the oral explanation? I shall make an observation rather than oblige the Minister to respond. It is a pity that the last amendment achieves something that I would support but does not say so specifically. The explanation was entirely cogent, and, as I say, we support it, but the amendment is much broader.

My Amendment No. 108ZFA is a probing amendment about the involvement of the tenants. It is the same as Amendment No. 108ZBC in the last group, but I was assured that Clauses 88 and 98 apply there, and I dare say that they do here, too. Amendment No. 108ZGA would amend Clause 174 on disposals. Case 2 in Clause 174(4) deals with small disposals of a single dwelling or a principal residence. My amendment limits the exclusion so that there is no salami-slicing of properties and probes what the Government have to say about how they would protect against that.

Amendment No. 108ZHA amends the clause that deals with what can be deducted from gross proceeds to get to net proceeds. As I read the clause, the regulator could decide to determine every last pound and penny. I suggest that it would be adequate and proper for the regulator to look at categories of amounts—headings—rather than at the detail of the cash spent. It may be a small matter, but it struck me as a heavy burden for everyone involved, not just for the regulator, if there had to an examination of every cent spent.

Baroness Andrews: I am grateful for the noble Baroness’s explanation of the amendments. Amendment No. 108ZFA is about the role of tenants in the disposal consent process. She is right about Clauses 88 and 98 applying. It is also worth saying that any disposal of social housing requires the specific consent of the Housing Corporation and, in future, that of the regulator. Disposals are rare and have significant implications for tenants, so it is right that they have an opportunity

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to be fully informed. It is Housing Corporation policy not to give consent for a disposal of tenanted social housing except to another registered social landlord, and we would expect the regulator to continue that policy, particularly given its explicit objective of protecting tenants.

In deciding whether to give that consent, the corporation requires the landlord to provide information on how it has consulted tenants and other stakeholders, including local authorities. That seems to be quite right because that sort of detailed consultation is the job of landlords. In future, the role of the regulator is to make sure that that is done, not to do the job for them. It is essential that tenants are properly involved if there is a proposal for their homes to be transferred. The amendment raises some issues because general disposal consents do not apply to particular landlords or properties but set out categories of disposals. I understand that the purpose of the amendment is to enable us to put on record the protections that are available to all social housing tenants.

Amendment No. 180ZGA provides that a purported disposal by a registered provider that requires consent, but for which consent has not been given, is void. There are exceptions to this rule for disposals by non-profit registered providers where the land concerned is not a dwelling or is a single dwelling sold to an owner-occupier. This exception is to protect individual purchasers who buy their home from a registered provider from finding that their purchase is void. The burden of establishing that the vendor is a registered provider, that they are required to seek consent and whether that consent has been given is excessive. However, I understand where the amendment is coming from. The noble Baroness argued that there is potential for abuse of this provision by non-profit registered providers who could evade sanctions against making disposals without consent by salami slicing—selling off properties one by one to individual home buyers. I can see the intent behind that. The amendment sweeps in any disposal, including disposals for which consent was not required or for which consent had been given. Whether a disposal was void could turn on whether any resident in the same development had recently exercised his right to acquire, which seems perverse.

Let me reassure the noble Baroness that I do not believe that there is potential for abuse here, so I do not share her fears. Non-profit registered providers are bound by their constitutions to devote themselves to the provision of housing and related services¸ so there is no motivation for them to abuse the system in this way. We have no record of this happening. If it did take place, it would still constitute mismanagement and would still be grounds for regulatory intervention. This exception is not to the requirement to seek consent, but to the sanction that the disposal is void. If there were abuse, and I think it unlikely, the regulator would have other sanctions available. It would amount to a breach of standards, and the regulator could take appropriate enforcement action. I believe that there is no need for that.

Amendment No. 108ZHA relates to the disposals proceeds fund. The funds can be spent only in line with a determination by the regulator on new social

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housing. This ensures that homes sold under the right to acquire are replaced. The noble Baroness correctly set out the way that that happens. Before placing the proceeds of sale in the disposals proceeds fund, landlords are able to deduct an administration fee, which is specified by the regulator. The fee currently stands at £701 for a house and £1,576 for a flat to recognise the more complex leasehold arrangements normally involved in flats. The Housing Corporation had and used that power. This amendment, which specifies categories or types of costs but not amounts, would not improve the situation. The Housing Corporation has been happy to use the power and found it useful—I am looking at my noble friend Lady Dean—and I do not think that the amendment would improve it. Doing it this way is a proper use of the system

Baroness Hamwee: I am grateful for that. The term “mismanagement” is defined in Clause 274. I am not sure whether, in responding to the second of the amendments, the Minister intended it to be a technical term, but it is defined as,

which would not be the case in the salami slicing, or,

7.15 pm

Baroness Andrews: I am grateful to the noble Baroness for drawing that to my attention. In that clause I was using it not in the legalistic sense, but in the general sense.

On Question, amendment agreed to.

Clause 170, as amended, agreed to.

Clause 171 [Requirement of consent]:

Baroness Andrews moved Amendments Nos. 108ZD and 108ZE:

On Question, amendments agreed to.

Clause 171, as amended, agreed to.

Clause 172 [Exceptions]:

Baroness Andrews moved Amendment No. 108ZF:

On Question, amendment agreed to.

Clause 172, as amended, agreed to.

Clause 173 [Procedure]:

[Amendment No. 108ZFA not moved.]

Clause 173 agreed to.

Clause 174 [Disposal without consent]:

Baroness Andrews moved Amendment No. 108ZG:

On Question, amendment agreed to.

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[Amendment No. 108ZGA not moved.]

Clause 174, as amended, agreed to.

Baroness Andrews moved Amendment No. 108ZH:

On Question, amendment agreed to.

Clause 175 [Separate accounting]:

[Amendment No. 108ZHA not moved.]

Clause 175 agreed to.

Clause 176 [Use of proceeds]:

Baroness Andrews moved Amendment No. 108ZJ:

On Question, amendment agreed to.

Clause 176, as amended, agreed to.

Clauses 177 to 183 agreed to.

Clause 184 [Unregistered housing associations]:

On Question, Whether Clause 184 shall stand part of the Bill?

Baroness Andrews: The Lord Deputy Chairman will be very disappointed by this response. I ask that the Committee agrees to the removal of this clause. I have tabled Amendment No. 112C which moves consequential provisions into a new schedule. I hope the Committee will allow me to do that.

Clause 184 disagreed to.

Clauses 185 to 190 agreed to.

Clause 191 [Provision of social housing]:

[Amendments Nos. 108A and 109 not moved.]

Earl Cathcart moved Amendment No. 109ZA:

The noble Earl said: There are three amendments in this group in my name—Amendments Nos. 109ZA, 109ZB and 109ZC. They are fairly straightforward. Amendment No. 109ZA leaves out,

and inserts,

There may be troublesome tenants against whom the landlord has a genuine grievance. The Bill should recognise that it is not just landlords who will always be in the wrong. Our amendment is a little less prescriptive, inserting “differences” rather than “complaints”. This has a wider interpretation, although it is hard to think

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of any major differences between the parties that are not formalised in the form of a complaint. However, the point is that the process should be a two-way street.

Amendment No. 109ZB leaves out “or control”. It is one thing for tenants to influence a management of their accommodation but quite another for them to have control over it. If tenants were granted control, it would bypass the normal structures of management and render management impotent and somewhat pointless. Likewise, in Amendment No. 109ZC, we remove “and environment”. The phrase has a wide meaning indeed. What exactly does it mean? Does it mean the immediate surroundings, the wider surroundings, the ambience, the climate? Leaving it out would restrict the subsection to enabling tenants to influence the management of their accommodation. That is easily definable and less open to misinterpretation than the wording in the Bill. I beg to move.

Baroness Hamwee: I have two amendments in this group. First, I congratulate the Government, who are dealing with probably the two most important clauses in this part—Clauses 88 and 191—and are getting away with the most minor of amendments. For my own part, I wonder whether I have missed the wood for looking at the trees too closely.

Amendment No. 109ZD is to probe whether we are restricted to rented property here—and I think that the answer must be yes, when I come to look at it again. Amendment No. 110CA to Clause 194 is about consultation in setting standards. I am suggesting a local authority organisation—possibly the local authority organisation—should be one of the consultees. I suggest that because they are concerned with allocations above all things; they would have a contribution to make and should be included in the debate about standards, given the wider environmental interests, and so on. The criteria for allocating accommodation are among the standards.

Baroness Andrews: I do not think that it is because these clauses are not worthy of more fundamental changes; I think that it is because these clauses are right that we have not had debates on huge issues. But every debate that we have raises interesting issues and enables us to probe a little under the structure of what we are trying to do. It is all extremely useful and certainly keeps the Government on their toes.

To recap, Clause 191 is very important, as it covers the standards that the regulator can issue on housing management issues and which providers would need to comply with. It includes a list on which standards might be issued, and all four amendments address different aspects of that.

I appreciate the intention behind the noble Earl’s first amendment. Procedures for addressing differences between landlords and tenants certainly sound less confrontational than addressing complaints, but I reassure him that there is no practical difference between procedures for dealing with complaints and procedures that address differences. They are all swept up in that same notion, so putting this in the Bill would have no effect. The list of issues in Clause 191 is purely indicative in the sense that the regulator is not obliged to set standards on

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those issues and is not prohibited from setting standards on other issues. The combination suggests that good intent is not necessary.

Amendments Nos. 109ZB and 109ZC cover other items on the list of areas where standards might be set. They seek to remove the words “or control” from Clause 191(2)(g), which states,

In some ways, I am sympathetic to this, because the intent of the first amendment, as the noble Earl described it, is to avoid standards being set that force landlords to let tenants take control of management through regulation.

I certainly support tenant management organisations as a really good way—in fact, sometimes the best way—of ensuring the high quality and inclusive management of stock. The regulator may well also support them. I do not believe that housing associations should be compelled to accept them either by statute or by regulation. This is possible under the standards, which are outcome-based. In essence, tenant management is a process to achieve outcomes of good management and tenant involvement. Any standards that we set on tenant control might well address circumstances in which tenants had control, but they would not force the regulator to take any particular route to give them control. In any case, the regulator can set standards on anything that meets the criteria in Clause 191(1), which limits issues covered to the nature, extent and quality of accommodation, facilities and services provided in connection with social housing.

On the next amendment, the question is what “environment” means in this context. This is an important question. I reassure noble Lords that this is not about setting standards on housing association voluntary activities. Under Clause 191(1), the standards are restricted to accommodation, facilities and services provided in connection with social housing. “Environment” in this context is intended to mean the immediate environment: the shared facilities and the grounds of an estate. It is right that tenants have some say about such facilities.

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