The social network

The government's reforms to social housing promise significant upheaval. Scott Greenwood analyses the man changes.

In November 2010, the Department for Communities and Local Government launched a consultation paper proposing some important changes to social housing, including regulation and tenure.  The consultation period lasted until 17 January 2011. In the interim, the government introduced the Localism Bill which aims to incorporate the proposals contained in the consultation paper.

The main regulatory proposal is for the abolition of the Tenant Services Authority, with its powers and duties to be transferred to the Homes and Communities Agency. The TSA was introduced by the previous Labour government via the Housing and Regeneration Act as they were concerned that social housing had too much regulation and there was a need for greater independence via the concept of co-regulation. The new coalition government seems to be of the view that by transferring powers to the HCA, this will free up registered housing providers' independence further from regulation, with only failing RHPs being intervened by regulatory control. We will have to wait and see. One of the concerns with independence when the Housing Corporation was in existence, was how RSLs can be regulated by the same body that provides the funding. This argument must surely come back around.

The other big change is the introduction to new tenancies of the Fixed (flexible) Term Tenancy and a new Affordable Rent Tenancy. Historically, Government has always been concerned with the issue of supply and demand in social housing. They have seen tenure as a way to attempt to control this. The Housing Act 1988 introduced the AST with a view to influencing the private sector to provide housing and thereby freeing up the demand to the public sector for social housing. Years later, came the Labour Government consultation on the types of tenure in English Law (lead by the Law Commission under Professor Partington) with a draft proposed bill which aimed to introduce two types of tenure: Standard and Secure Tenancies. That draft bill never progressed, as some academics were of the view that the aim to reduce some 19 different types of tenure to just two, was highly ambitious and very complex.

The present coalition government has expressed concerns in the press that tenants in the social housing sector hold tenancies for life, which is preventing their progression to home ownership. They see the solution to this is to introduce, the Fixed Term tenancy and also the Affordable Rent tenancy for new tenants in the sector.

The proposal in the Bill is to allow local authorities to grant a Fixed (flexible) Term tenancy for a minimum period of two years. The circumstances when such a tenancy may be granted must be set out by the local authority in a new Tenancy Strategy. In the strategy will be guidance to other social landlords (housing associations) as to when they may grant fixed term tenancies. Before granting the tenancy, the authority will be required to serve on the tenant, a notice proposing the fixed term. If the proposed term does not comply with the tenancy strategy, the tenant may request a review of the term proposed. If the authority does not intend to grant a new tenancy at the end of the fixed term; then it is required that at least six months before the expiry of the term, they serve a notice to that effect to the tenant setting out their reasons and providing the tenant with the right to review that decision.

Before seeking possession, the authority will be required to serve on the tenant a further two month’s notice stating they require possession. Provided the notice is served, the court can only refuse to grant a possession order if the local authority failed to carry out the review, or the decision on the review is wrong in law.

The Bill also sets out the right of RHPs to grant an Affordable Rent Tenancy. These will be a fixed term Assured Shorthold tenancy and will be governed by the Tenancy Standard, under regulatory guidance set down by the HCA. The terms will be up to a period of two years with the rent set at 80% of market rent. The government’s reasoning for 80% rent setting on such tenancies is that the rental income will assist RHPs with their development funding.

Initially, these types of tenancy are intended for empty properties and then available to the remainder of an RHP's stock. If the landlord does not intend to grant a further tenancy at the end of the fixed term, then it must serve a notice on the tenant six months before the expiry of the tenancy confirming this. Failure of the landlord to do this prevents it seeking possession under section 21 of the Housing Act 1988 (accelerated possession.)

We will have to wait to see the response to the tenure proposals after the consultation period has closed. Early indication in the housing press is that the proposals are not popular with social landlords and a number of tenant lawyers are of the view that if these changes come into effect, they may well conflict with the Human Rights Act.

Scott Greenwood is a specialist in local government law.