Special delivery

Housing Fitness: part 1 of the act

The housing fitness regime described in the Housing Act 1985 is to be replaced by a new framework called the Housing Health and Safety Rating System (HHSRS). In essence, this will incorporate external health and safety risks overlooked by the older act. Examples might be noise pollution, fire hazards and the presence of radioactive radon gas, which can affect a home’s air quality.

HOW WILL IT WORK? It will be local authorities’ job to assess homes using the HHSRS. There are 29 classes of risk, divided into two categories. For category one hazards such as the existence of gas, local authorities will be obliged to take, or insist that the landlord takes, action to resolve the problem. For category two hazards, such as faulty stairs, local authorities will have the power to take action but they are not obliged to.

Powers at their disposal include improvement notices requiring owners to carry out repairs, prohibition orders to close all or part of a building, and even, in extreme cases, demolition.

According to Sam Lister, policy officer at the Chartered Institute of Housing (CIH), the impact on housing associations will be limited because most social landlords are already improving the quality of their homes to meet the Decent Homes standard. However, the new emphasis on risk factors outside the home could affect some. “We don’t envisage the assessment as a major stumbling block,” he says. “Although landlords will have to pay more attention to external hazards from, for example, gas pipes.”

Though unperturbed by the introduction of a new system, the National Housing Federation (NHF) is concerned that it is open to subjective assessments and duplicates areas already covered by existing regulation. Chloe Hardy, parliamentary officer at the NHF, explains: “We have suggested that a simplified version of housing fitness should be made available for landlords to assess whether they comply with Decent Homes, which would also cover the new legislation.” The Federation also anticipates knock-on effects for training requirements and surveying costs – but pending detailed guidance on HHSRS, it is difficult to determine what those might be.

STILL TO COME:Detailed guidance on how local authorities can force owners and managers of private housing to make sure their homes meet the standard – to be produced at a later date.

TIMELINE
1985: Housing fitness is defined in Housing Act
1989: Local Government Act amends definition
December
2000: Government sets a target that all social housing is to be of a decent standard by 2010, defined as meeting current legislation; being in a reasonable state of repair; providing reasonably modern facilities; providing a reasonable degree of thermal comfort.

Licensing Hmos: part 2

Certain houses that are occupied by more than one household will have to be licensed by a local housing authority. The idea is to increase local authorities’ control of large houses in multiple occupancy (HMOs) that are considered a high risk in terms of health and safety.

HOW WILL IT WORK? The law will apply to HMOs of three storeys or more that are occupied by five or more people, who comprise two or more households. It will be up to council housing departments to decide which houses are exempt from the rule – student accommodation or houses owned by an RSL, for example. Converted blocks of flats don’t automatically need a licence, but if a block has problems with antisocial behaviour or health and safety, council staff can insist upon one.

Disputes with landlords or managers will be resolved through a Residential Property Tribunal – an independent body funded by the government. Properties that don’t meet housing fitness standards (see above) will not be given a licence.

The housing department will be able to charge a licence fee up to a maximum level set by the government, and it can also begin court proceedings against the owner of a building that should be licensed but isn’t – this is a criminal offence attracting a maximum fine of £20,000.

The Local Government Association sees this part of the act as an opportunity for local authorities to get to grips with the problems associated with many privately run HMOs, such as poor maintenance and antisocial behaviour.

Selective licensing: part 3

Like the section on houses in multiple occupancy, this meaty chunk of the act gives local authorities more power over how private properties are managed and maintained. In areas where there is low demand for housing or persistent antisocial behaviour, councils will be able to demand that private landlords apply for licences. This would normally apply for five years.

HOW WILL IT WORK? Licensing private housing is a strategy to “drive out rogue landlords”, explains Marc Francis, public affairs officer at Shelter. “The legislation will target those areas where private landlords have bought up property cheaply and are renting sub-standard homes often to vulnerable people who are on housing benefit,” he says.

This follows on from a regulatory reform order – an order made by ministers, with the approval of Parliament, to reform legislation – that came into effect in July 2002, giving local authorities the power to give assistance “in any form and to any person” to improve living conditions in their area.

This section adds to the battery of new powers council housing staff will be able to exercise. These include the power to enforce the closure of accommodation deemed unfit for habitation and force landlords to carry out remedial repair work.

Housing associations won’t feel any direct impact on their work, but some social housing experts predict knock-on effects. Helen Collins, business development director at consultant Hacas Chapman Hendy, says selective licensing could create opportunities for housing associations to become further involved in regeneration. “Local authorities may well look to registered social landlords to take on the management of private landlords’ properties, if the private companies are falling short of the standards set out in the Act. This would mean that RSLs would have an even greater influence on the performance of neighbourhoods,” she says.

Overcrowding: part 4, chapter 3

The secretary of state – deputy prime minister John Prescott in this case – has the power to alter the overcrowding definition at some point in the future. The current standard that determines whether families are overcrowded dates back to 1935, and states that both kitchens and living rooms can be counted as “sleeping accommodation”. Children under the age of one do not count and those under 10 are considered as only half a person.

HOW WILL IT WORK? The government will have to consult local authorities, housing associations and housing experts before establishing what the new standard should be, a process that will start by the end of November. It will most likely be up to local housing authorities to enforce the new standard once it has been set.

The CIH says it is hard to anticipate what the impact could be but expects that most councils and housing associations let their properties well in excess of the minimum standards. Councils, especially those in London, are the most likely to be affected by a change.
The NHF and CIH don’t think it will have much impact on RSLs. The NHF’s Hardy says the effects are more likely to be felt by councils, especially in the capital. A housing survey published in November by the ODPM put the figure of overcrowded households at over 53,000, with 30,000 of that number living in London.

The Housing Corporation is considering changing its guidance on overcrowding to encourage RSLs to build more family-sized houses. The CIH’s Lister says this could alter the development plans of housing associations’ that currently concentrate on building small starter homes.

TIMELINE:
1985: Sections 324-344 of the Housing Act covers overcrowding, but it is extremely complicated and relies on a standard that was written in 1935.
January 2004: Karen Buck, MP for Regents Park and Kensington North, proposed an amendment to the Housing Bill requiring this standard to be updated.
May 2004: After pressure from the social housing sector (and Housing Today’s campaign on the subject) the ODPM amends the bill to provide an order for updating the standard.

Home Information packs: Part 5

Easily the most contentious section of the Housing Act for the private sector, the introduction of Home Information Packs was almost voted out by Conservatives and Liberal Democrat peers earlier this month, but their amendment was overturned on the last day of parliament by MPs.

HOW WILL IT WORK? The act makes it compulsory for people selling their homes to pay for a survey of the condition of the building’s structure and fittings before putting their home on the market. This is likely to cost around £650 and would include an appraisal of its energy efficiency. According to the ODPM, the packs would improve the efficiency of the housing market by empowering buyers with the knowledge to make informed decisions. The Council of Mortgage Lenders agrees, although organisations such as the National Association of Estate Agents and the Association of Residential Letting Agents have vigorously attacked the proposal.

HOW WILL IT AFFECT SOCIAL HOUSING? The proposals do not apply to sales under right to buy, although the ODPM is planning to consult on extending them to these properties. Neither do social housing experts predict any immediate impact on housing associations selling homes at market rates or for shared ownership. Packs will not be required for the first sale of a new home, provided it is sold with a warranty.

Christopher Munday, partner in housing projects at solicitor Trowers and Hamlins, says some shared ownership homes will require a pack (for example, when the property isn’t new), but doubts that the need to provide a survey will be problematic. “Most registered social landlords already provide a package of information about a home available for shared ownership and have a good track record for being thorough,” he says.

Right to Buy: part 6

The act proposes major restrictions to social tenants’ right to buy – welcomed by most social housing leaders. It extends the qualifying period from two to five years, but only for secure tenancies granted after the act comes into force. The period when purchasers who resell the property have to repay the discount on the property’s value changes from three to five years.

HOW WILL IT WORK? Importantly, the new rules on repaying discounts include a proportion of any appreciation in the property’s value, so landlords should benefit from any increase in the property’s value. The act also outlaws abuses of the system under what is known as “deferred resale agreements”, where private companies help tenants to buy, and then let the property for three years to avoid the discount repayment before selling it on at a profit.

Trowers and Hamlins’ Munday anticipates these changes will be relatively straightforward for council and housing association staff to administer. “It’s a matter of extending restrictions that already apply,” he says.

The act introduces a new covenant that gives the former social landlord “right of first refusal” when properties are resold within 10 years of the date of the initial sale. This applies to the tenant purchaser or any successor in title. Social housing representatives have welcomed this, but the CIH has warned that the procedure is complex and in some circumstances housing staff will have just four weeks to make a decision about whether to buy and raise the necessary funds. The CIH’s Lister says: “Landlords will need to have a plan in place to deal with these cases if they wish to take advantage of this change or else it may make very little difference.”

Also featured in the act are new scenarios to restrict the right to buy; it cannot be exercised if the tenant has been served an Antisocial Behaviour Order or if a property is to be demolished within 18 months, which will stop tenants buying the property and subsequently receiving a compensation payment.
Again, though, in practice the restriction could have a reduced effect unless landlords are extremely organised, as Trowers’ Munday explains. “Before demolition, landlords almost certainly have to go through a consultation period. They will have to be organised and upfront about their timings and intentions if they are to avoid situations, for example, where tenants challenge demolition orders in order to create enough time to exercise their right to buy. There are other situations where for instance regeneration doesn’t call for outright demolition but a significant amount. In this case, tenants could exercise their right to buy and still be eligible for compensation,” he says.

Antisocial Behaviour: part 6

As well as licensing private landlords and suspending a tenant’s right to buy when antisocial behaviour is a problem, local authority landlords will be able to extend introductory tenancies by six months to 18 months where there are doubts about the conduct of the tenancy.

HOW WILL IT WORK? These provisions will only affect tenancies starting after the act becomes law. All social landlords will also have the power to refuse secure tenants the right to participate in mutual exchange applications with other secure tenants. This is intended to help housing staff deal with antisocial behaviour more effectively.

Landlords will be able to deal with troublemakers over the long term rather than the tenant swapping homes to avoid disciplinary measures. So this should help RSL staff deal with antisocial behaviour more effectively. There are also proposals to make it easier for housing associations to receive information from other parties such as the police to support applications for antisocial behaviour orders. As the law currently stands, in order to receive information RSLs have to show that they are acting on behalf of a “relevant authority” such as a local council. The change will allow RSLs to ask the police for info in their own right as enforcers of Antisocial Behaviour Orders.

RSL regulation: part 6, chapter 4

The act introduces a clutch of measures the ODPM hopes will make regulators of RSLs more effective. It will enable the Housing Corporation (in England) and the National Assembly (in Wales) to respond more swiftly when RSLs are in difficulty.

HOW WILL IT WORK? Measures include removing from RSLs the burden of having to maintain a rent surplus fund; increasing the penalties for intentionally altering documents required by the relevant authority; and making it possible to transfer funds between members of RSL groups to enable the group to make the best use of assets. Helen Collins, director of business development at Hacas Chapman Hendy, says most of the changes are technical and won’t have a major impact on how RSLs run their business, but certain new requirements will need further elaboration. She says the exemption of auditors from their duty of confidentiality in, as the act puts it, “certain cases” is open to interpretation. “It raises the question, at what stage do you alert the Housing Corporation? Would you tell your client first or go to the corporation directly? These are significant questions and could impact auditors’ and accountants’ relationship with their clients. But at this early stage, it is hard to imagine what the exact effects might be.”

STILL TO COME: Further guidance on auditors’ duties of confidentiality versus their duties to regulators.

Grant to developers: part 6, chapter 4

This is the most controversial section of the act for the social housing sector, as it contains a provision that would allow the Housing Corporation and the National Assembly to pay grants to companies other than RSLs to build social rented accommodation. The main aim of the provision is to drive efficiency and improve value for money in the sector by widening the pool of potential social housing providers.

HOW WILL IT WORK? The Housing Corporation will continue to devise the criteria and invite bids for grant, and the objectives to be met in the bids would be set out in advance (as at present). Commercial developers receiving grant would have to meet the same criteria as RSLs in relation to scheme standards and rents. Management performance and public money would then be safeguarded through “appropriate grant conditions”. The ODPM expects that a programme of £200m will be approved for 2005/6 for which both RSLs and non-RSLs could bid. The rest of the Approved Development Programme for 2004-6 would be delivered through grants to RSLs only, as dictated by the Housing Act 1996.

David Hucker, director at consultant Ecotech, says getting used to the new regime will be hard. “RSLs have had to adapt to change in the past with the introduction of right to buy and the use of private finance. This provision seems the next logical step. It’ll be the landlords who adapt and raise their game that will do well.” He points to the success of some RSLs’ private development companies: “These would presumably be eligible to bid, which represents an opportunity for RSLs to expand their private sector interests.” The provision would allow arm’s-length management organisations to bid for grants, unlike the current system. In practice, the change may have a limited affect. Ruth Lucas, senior project officer at the LGA, says: “ALMOs don’t actually own their own stock; it is owned by local authorities. So to make a bid, they would have to work in partnership with the relevant local authority. Putting together a bid would have cost implications so it is questionable whether ALMOs would have adequate incentive to compete with both RSLs and private developers.” The LGA say one scenario would be for ALMOs and their partner local authorities to work together in a consortium; another would be for consortia to work with private developers rather than in competition. The LGA says the opportunities presented by the act are still being assessed. For Trowers and Hamlins’ Munday, a lot of the sector’s concern results from the act’s lack of detail about how the provision would work. He says: “The provision raises all sorts of questions; will private companies set up their own RSL? Will they work in partnership with existing RSLs? Will they be audited on a contract-by-contract basis? The act is very short on detail.”

STILL TO COME: The Housing Corporation is drafting a consultation paper that will detail how the payment of grants would be managed; the document is due to be published at the time of going to press.

HISTORICAL NOTE: The last Conservative government suggested a similar provision in 1995, but it was dropped for being too “free market” – even for the Tories.