On 29 June 2016, Thomson Reuters was delighted to host a Lawyers in Local Government (LLG) London Housing and Regeneration group seminar (headed by Alexander McDowall, a lawyer in Legal Services at the London Borough of Camden). The group provides a focus of professional expertise with a view to developing networking, training and best practice and contributing to development of the area of law. Thomson Reuters is currently a LLG corporate partner.
What was discussed at the event?
A number of local authority housing lawyers attended the afternoon seminar to listen to presentations by Desmond Kilcoyne and Mathew McDermott of 42 Bedford Row on various aspects of the Housing and Planning Act 2016 (HPA 2016) and to discuss how these were likely to impact on local authorities generally and London-based authorities in particular. For more information on the HPA 2016, see Practice note, Housing and Planning Act 2016: social housing aspects.
The seminar focused on three key aspects of the HPA 2016 relevant to housing lawyers:
- The phasing out of lifetime tenancies and the new secure tenancy regime.
- The sale of vacant higher value housing stock in order to fund the right to buy extension for housing association tenants.
- The “pay to stay” policy which requires high earning social housing tenants to pay full market rents (or a proportion of those market rents) for their accommodation.
It was noted by Desmond that, as a broad policy, the HPA 2016 and its provisions seemed to indicate a shift away from the renting model towards encouraging tenants to purchase their homes under the right to buy regime (see Practice note, Right to buy: the process).
Changes to existing tenancy schemes: phasing out of lifetime tenancies
It was noted that very few London-based local authorities had chosen to adopt flexible tenancies (none of the attendees at the seminar dealt with them) and therefore would be unfamiliar with the similar fixed-term new-style secure tenancy model introduced under the HPA 2016. Desmond quoted figures suggesting that only around 15% of tenants in the UK currently have fixed-term tenancies.
There was considerable discussion around the new requirement that local housing authorities (LHAs) must carry out reviews 6-9 months before the expiry date of a new secure tenancy in order to decide whether or not to grant a new fixed term tenancy to the tenant. It was noted that a failure to undertake such a review within the relevant time limit would result in a default five-year fixed term tenancy being granted under section 86D(2)-(4) of the Housing Act 1985.
The administrative burden associated with undertaking these reviews was likely to be considerable with suggestions that it could cost LHAs £35-£75 million over the next 30 years to finance this procedure.
Another practical point raised was that LHAs would need to overhaul their existing allocation schemes to ensure that the various decisions required to operate the new-style secure tenancy regime would be robustly covered so as to avoid effective challenge by tenants on review.
A question was also asked regarding whether the introduction of new fixed-term secure tenancies would impact on LHAs homelessness duties under section 193 of the Housing Act 1996 and whether they would have been deemed to have discharged their housing duties by offering a potentially short-term tenancy. Desmond suggested that it may mean that LHAs section 193 duties are limited to two years minimum and ten years maximum (the minimum and maximum terms for new-style secure tenancies) and as such it is likely that they may be faced with more frequent applications for assistance under the homelessness regime from the same tenants once their fixed-term tenancies have ended.
Sale of vacant higher value social housing stock to fund right to buy extension for housing association tenants
There was a lot of discussion by those attending about the potential meanings of “higher value” and “vacant”, which are likely to be further defined in regulations expected later this year. Press reports had suggested that “higher value” in London could mean from as little as £340,000, which for many local authorities in attendance would potentially cover the entirety of their housing stock.
Another issue was that any payment to the Secretary of State would be based on an estimate of how many higher value vacant properties a LHA could potentially sell over a year, regardless of whether any assumptions made when calculating the estimate were actually borne out by events. Concern was raised that this could mean that LHAs would be out of pocket as the government would be asking for money “on account”, although there is provision of variation, revocation and reduction of the payment.
“Pay to stay”: rents for high income social housing tenants
Mathew covered the “pay to stay” policy and the government’s intention that the funds raised would go towards reducing the deficit. As with some of the other measures introduced under the HPA 2016, there was discussion as to the meaning of “high income” and whether the amounts of £31,000 per household outside London and £40,000 per London household would result in a considerable number of households being required to pay increased rents.
It was also queried whether capital or interest on capital would be included as “income” for the purposes of the policy. Some attendees suggested that when the relevant regulations on the policy are published they may include a cap on the amount of capital that a tenant can have before being classed as high income. It was also noted that according to a House of Commons briefing paper, unusually there was no plan to exclude the over 65’s from the policy (a group traditionally associated with having larger amounts of capital), which could suggest that it is possible that capital may be included in the “high income” calculation formula.
Thomson Reuters looks forward to building on its existing partnership with LLG.
Lawyers in Local Government: background
LLG was formed in April 2013 by the merger of the Association of Council Secretaries and Solicitors (ACSeS) and Solicitors in Local Government (SLG). LLG members include local government legal or governance officers, Monitoring Officers and their deputies, solicitors, barristers, legal executives, licensed conveyancers and trainees.