Shapps unveils radical shake-up for social housing regulation

The Housing Minister has set out in greater detail how a revamped system of regulation for social housing will work following the abolition of the Tenant Services Authority in last week's "bonfire of the quangos".

Grant Shapps argued that consumer protection and economic regulation of the sector needed different levels and styles of regulation, “not a cumbersome bureaucratic approach directed from central government”.

A review commissioned by the minister recommended that a new independent statutory committee should sit within the Homes and Communities Agency, legally separated from the HCA’s investment functions. The committee – whose members will be appointed by the Secretary of State for Communities and Local Government – will take on what remains of the TSA’s regulatory powers.

In relation to the economic regulation of housing, the committee’s focus will be on delivering value for money and ensuring lender confidence is maintained.

The review’s starting point is that there should be minimal legislative change for regulation ensuring associations are financially viable and well governed, and ensuring taxpayers’ funds are not misused and there are no unreasonable burdens on the taxpayer. The regulator will be expected to be “more proactive than is currently the case on ensuring value for money in the sector”.

It will also base its approach on activities such as: requiring greater transparency and consistency in the provision of cost information; using the consents regime to support the provision of new affordable housing within a framework supported by government; reviewing structural barriers to efficiency and looking to remove these where possible; encouraging a wider range of social housing providers to increase competition for future public investment; and encouraging innovative private sector funding arrangements to deliver new affordable housing.

The application of economic regulation to local authorities is to be addressed in the context of reforms to the housing revenue account, and so did not form part of the review.

According to the DCLG’s review, the role of consumer regulation should meanwhile be “refocused on setting clear service standards for social landlords and addressing serious failures against those standards”.

Key elements of what is dubbed a localist solution for social housing regulation will be:

• Tenants panels, or equivalent bodies, will be able to hold landlords to account over the quality of their housing. But the review added: “We concluded that there were good reasons not to make local authority scrutiny committees a formal part of tenant scrutiny as this would increase the control of the state over private sector housing associations and would introduce a degree of prescription into tenant scrutiny that could override what can be achieved by tenants and landlords working together in the manner that best suits them”
• The existing tenant involvement and empowerment standard should be strengthened through a direction to the regulator to make clear an expectation that landlords should welcome scrutiny via a tenant panel or equivalent panel “as well as encourage their role in handling complaints”
• Landlords will under a clear regulatory obligation to provide timely, useful performance information to tenants. “This could be included in the proposed government direction to the regulator on tenant involvement”. The regulator’s power to require landlords to send it an annual report on their involvement should be repealed. There will be an obligation, however, to publish an annual report for tenants.
• Tenants should contact MPs, councillors or a tenant panel once the landlord’s complaint procedure has been exhausted. “MPs/councillors/tenants panels should intervene in order to attempt to resolve the problem and only then refer the complaint on to the ombudsmen if the matter cannot be resolved”
• There will be an enhanced role for the ombudsmen in “the small number of cases where complaints cannot be satisfactorily resolved locally”. The ombudsmen will be expected to have regard to national and locally negotiated standards. “Where there is evidence that a landlord has not complied with these standards, the ombudsmen could recommend that a landlord takes action to address the problem”. Ombudsmen will be the sole government bodies dealing with individual complaints.
• The role of the committee on consumer regulation will be “limited to setting overarching standards of service for landlords and addressing serious failures where local measures have not a provided a solution”. The regulator will only be able to exercise its monitoring and enforcement powers if, in its opinion, there are reasonable grounds to suspect there has been – or that there is a risk of – a breach of standards resulting in “serious detriment” to tenants. The regulator will have regard to the severity and the extent of the impact.
• Evidence for serious failures will come from: the nature and volume of complaints; performance information; local intelligence (where councils become aware of problems, for example); evidence from other expert bodies; and whistle blowing. The decision on whether to intervene will remain with the regulator, which will be free to commission inspections from the open market.
• There will be no changes to the existing range of enforcement powers available to the regulator. The opportunity for landlords to give a voluntary undertaking will be retained.

The Housing Minister said: "Social tenants know when things are going wrong with homes in their area. And when this happens, they want to be able to fix the problems quickly and easily, not sit around waiting for a remote inspection regime run from Whitehall.

"That's why we're changing how this is done. Consumer protection is going local – tenants will now be able to hold landlords to account with the help of their local representatives, and though panels that they set up and control themselves.”

In other developments, the review recommended that the best practice work currently done by the TSA should cease and that its work actively promoting tenant empowerment should be scaled back, pending the outcomes of the Tenant Empowerment Programme Review.

The authority’s data collection activity should also “be significantly reduced and streamlined to focus more clearly on its needs as a regulator”, while its power to issue codes of practice relating to its consumer protection standards (as yet not deployed) should be repealed.

The report suggested that there is a strong ‘in principle’ case for regulation being largely or wholly funded through fees on regulated landlords in future.

The various structural recommendations made in the review would mainly involve amendments to the Housing and Regeneration Act 2008. It is expected that these changes will be made through the Localism Bill this autumn.

A copy of the review of social housing regulation can be downloaded here.