A person holds the silhouette of a family house in their hands

Localism Act – What’s In Store for Social Housing?

The Localism Bill received Royal Assent on 15 November and is now known as the Localism Act. Part 7 of the Act will introduce a number of changes to current housing legislation. This article considers those changes which will affect housing associations. Most of these changes will not come into effect until an appointed date still to be specified by order. One reform, the right for shareholder tenants of a landlord organisation to receive financial assistance to buy their own home, will take effect in two months’ time.

Regulation

The TSA will be abolished and its functions transferred to a new regulation committee of the HCA. This takes the position back to what it was in the days of the housing corporation, so how much change there will be in practice remains to be seen.

Of potentially greater impact are the amendments to the regulator’s powers. These are to be reduced so that the regulator will only be permitted to use its monitoring and enforcement powers if it has reasonable grounds to suspect there has been a failure or there is a significant risk that there will be a failure resulting in serious detriment to tenants.

Flexible tenancies

These were heralded in the HCA’s 2011 – 15 Affordable Homes Programme Framework, along with Affordable Rent, which is considered elsewhere in this update. The important points to note are that:-

  • flexible tenancies will be secure tenancies of at least two years
  • they will only apply to new tenancies; existing tenancies may not be converted to flexible tenancies
  • the right to improve a property and to be compensated for improvements will not apply to flexible tenancies
  • flexible tenancies will not have to be made by deed in accordance with s52 Law of Property Act 1925; neither will assured tenancies unless they are for 21 years or more or are shared ownership leases
  • in England only, introductory tenancies that become secure tenancies will become flexible tenancies

In England only, local housing authorities will be required to prepare tenancy strategies which will set out the broad objectives that they will take into account when developing policies on the grant and issue of tenancies. It must include details of the matters that housing associations are to have regard to when framing their own policies on when and to whom they will offer these new fixed-term tenancies.

English local housing authorities will also now be responsible for preparing their own housing allocation schemes. Local authority nominations to Housing Association stock will be covered by the same legal framework.

It remains to be seen whether these changes will have any effect on a Housing Association’s ability to let flexible tenancies where tenants have been nominated by a local authority. We have already seen that where affordable housing is to be provided under section 106 obligations some local authorities are doing all that they can to restrict the ability to let the property on Affordable Rent terms. Housing Associations that are already “on board” with a developer at the time that section 106 agreements are being negotiated would therefore be well advised to take legal advice on the implications of the wording of obligations to ensure that there ability to let flexible tenancies as Affordable Rent properties are not restricted unduly.

Other tenancy changes

  • Assured shorthold tenancies
      • In the future if a Housing Association has granted an Assured Shorthold Tenancy for at least two years that it does not intend to renew it must give at least six months’ notice if it does not intend to grant a further tenancy. It will also be obliged to inform the tenant of how to get help and advice in finding new accommodation
      • Assured Shorthold tenants will have the right to acquire on the same conditions as those on assured tenancies. However, this will only apply to tenancies granted after Clause 143 comes into force or to tenants who have become periodic tenants on the expiration of a fixed term secure tenancy.
      • Landlords will now be required to grant an assured shorthold tenancy following a demoted or family intervention tenancy
  • Succession rights
    • Statutory succession rights will in the future be restricted to spouses and civil partners only. Additional succession rights may be included as an express term of the tenancy.
    • Following a tenant’s death a landlord must give 4 weeks’ notice of termination of the tenancy and may only recover possession if the notice has expired. A new ground for recovery of possession has been inserted into Schedule 2 to the Housing Act 1985: that the person is neither the spouse nor civil partner of the deceased and that the accommodation is more extensive than required.

Housing mobility

On 27 October Grant Shapps launched “Home Swap Direct” – a national scheme allowing social housing tenants who wish to swap to see every available property in the country. The Localism Act will introduce changes designed further to enhance the ability of tenants to move from one area to another:-

  • the housing regulator will have the power to set standards relating to the assistance to be given to tenants to exchange tenancies
  • tenants mutually exchanging property will retain level of security similar to their existing tenancy, even if they are exchanging with some one on a flexible or assured shorthold tenancy
  • the right to refuse a tenancy transfer request will be restricted to grounds now set out in Schedule 14 to the Localism Act
  • in England only tenants who are shareholders of a landlord organisation will now benefit from payments which assist tenants to move from social rented to owner occupied accommodation. This provision will come into force in two months’ time.

Planning update

  • Local finance considerationsPlanning authorities will, in future, be required to have regard to the possibility of the payment of the New Homes Bonus or other government grant and CIL receipts as a material consideration to be taken into account when deciding whether or not to grant planning permission for development.
  • Community Infrastructure Levy (CIL)The government is currently consulting on the possibility of allowing CIL to be used to finance off-site affordable housing provision. On-site provision would continue to be provided via s106 obligations. The closing date for the consultation is 30 December, so any changes would be unlikely to take effect until April 2012 at the earliest. The implications of any changes will be considered in a future update.

For further information, please contact Karen Howe