Author Archive for Dave

FSA’s repo warning

Published
by
Dave
on 28 November 2008
in Housing law
. 2 Comments

The FSA has issued a warning letter to all mortgage lenders and mortgage administrators advising them to get their houses in order, so to speak, over possession actions and arrears management. This is in line with the rather underdeveloped (publicly at least), but important, FSA regulations on Treating Customers Fairly (which is more like a principle-based agenda than regulation) as well as the recent statement by Darling (discussed here) and the pre-action protocol (discussed here). The letter is wonderfully worded, the meat of which is

… we expect that your firm would want to review its own policies and procedures, to ensure they are compatible with both MCOB and our wider Treating Customers Fairly (‘TCF’) requirements. In particular, we expect Senior Management will want to take the following actions:
• critically review current arrears policy;
• critically review current management practices and procedures; and
• assess whether, in practice, borrowers in arrears are being treated fairly by initiating a review of a sample of cases to assess whether the FSA’s requirements are being met. You will be aware that since March 2008 all firms are expected by the FSA to have appropriate management information or measures in place to test whether they are treating their customers fairly …

But there is also a threat that if they don’t follow that expectation, the FSA will take enforcement action.

[Edit: Radio 4's File on Four programme on 30.11.08 had an interesting take on banks' current approaches including an interview with Derek McConnell of SouthWest Law and Defending Possession Proceedings fame, in which he calls for a review of the law.]

A Curious Footnote

Published
by
Dave
on 13 November 2008
in Housing law
. 0 Comments

Mich-Onyibe v Wandsworth LBC (04/11/08, CA, judgment currently unavailable otherwise than by way of e-flash from Arden Chambers) is a kind of a curious footnote to homelessness law.  Wandsworth accepted that they owed the full Part VII housing duty to Ms Mich-Onyibe.  they offered her a bedsit on the first floor.  She refused it.  She suffered from a variety of health problems including Type 1 diabetes (involving regular seizures), chronic renal failure and claustrophobia.  She said that she couldn’t use the lift to get to the property because of her claustrophobia and she couldn’t use the stairs because of her medical conditions.   Her daughter, who cared for her, could not stay overnight, and her son could not stay at weekends.  The property was also too far from her daughter’s home and the hospital where Ms Mich-Onyibe received treatment.  Wandsworth rejected her refusal and upheld its decision on the s 202 review.

Ms Mich-Onyibe then took a s 204 appeal to the county court and the hearing was heard over three days.  The parties subsequently made repeated requests to the judge for the outcome of the hearing.  Over three months later, the judge dismissed the appeal stating that he would give his reasons later.  He didn’t and it subsequently transpired that the judge had retired.

The Court of Appeal refused to rehear the matter as a second appeal because of the amount of medical evidence and documentation.  They allowed Ms Mich-Onyibe’s appeal, though, on the basis of the failure of the judge to give a reasoned judgment and remitted the matter to the County Court for a further re-hearing.

It’s fair to say that NL has dealt with its fair share of bizarre cases and this one fits within that pantheon.  It’s also fair to say that some judges look as if they’re a fish out of water on s 204 appeals and this can show up in their judgments.  Whether or not that was the case here is difficult to say - it would, however, be interesting to know generically what level and type of training judges have before they sit on homelessness appeals.

And then there is poor Ms Mich-Onyibe who is still waiting for a proper judicial determination of her claim…

New PRS Report

Published
by
Dave
on 25 October 2008
in Housing law
. 0 Comments

Ok, I’m angry again.  It’s really out of character as I’m usually very mild mannered.  Here’s a question: what do you do if you’ve paid a group of people over around 10 years to come up with a series of proposals to regulate renting relationships (ie the Law commission) but you can’t live with their final reports?  Well, you could do nothing, which was the government’s preferred strategy, but a lot of people out there think that the Law Commission’s suggestions were pretty sensible (although I’m in the “some good, some daft” category) and those people are beating the drum.  Alternative strategy: pay somebody else to come up with a report on which you can base your forthcoming Green Paper which rubbishes the other body’s work.  Yes, there is yet another review of private renting, funded by the government and written by a couple of housing policy academics at York University, published yesterday (click here).  Now, its pretty clear that the authors are not lawyers and that shouldn’t be held against them; indeed, its a positive head start.  But you can’t achieve a review of the future regulation of the sector without (say) John Hills’ charming implied put-downs of government ministers and/or Cave’s clear analytical (but dry) reasoning; actually, you can’t really do this kind of a review without understanding the state of the art in basic regulation, something which the Law Commission actually did achieve.  The entire body of the Law Commission’s work on security of tenure is dealt with by misrepresenting it in this new review in a couple of pages of really mind-numbing poverty of thought (see pp 81-2); understandings of regulation, risk and impact are non-existent, and well, I could go on.  Ordinarily, I wouldn’t give this kind of thing the time of day but it is going to be influential in developing the government’s proposals in, brace yourself, the forthcoming Green Paper.

Yet amidst all that negativity, there are some good recommendations which are likely to appeal to readers; it’s just that they’re really rather vague. The authors recommend that there should be a licensing scheme for all landlords, run by an independent body, which would be given on the payment of a cash sum but the landlord could be removed from the scheme if the local authority says so (eg where the landlord is guilty of retailiatory eviction) but these circumstances aren’t really spelled out - the suggestion is that local authorities should start with the worst landlords but this rather begs the question; agents should be encouraged but subject also to mandatory licensing and regulation, seemingly of a more intrusive kind; and, much more importantly, the authors sneak the following into a bullet point

Landlord licence fees could contribute to the development of a housing justice network, which should be effectively linked to the licensing framework. A single property tribunal might be easier for tenants to access, and could be connected to a specialised housing court. The procedures and outcomes from similar models operating in other countries should be scrutinised in detail, so that any good practice lessons could be absorbed. (at p. 113)

(note: the Law Commission did this comparative work).

All of this would have been great if the authors had a feel for regulation, law, and, in a way, real life outside the York closet.  But they don’t.  There is, on the plus side, an interesting discussion of buy-to-let and the types of households living in private renting; but there’s a lot of other stuff on the minus side (eg a poor discussion of the use of private renting to meet homelessness obligations) and a lot of the usual academic self-referencing.

Oh, roll on the Green Paper.

Mortgage possessions protocol

Published
by
Dave
on 23 October 2008
in Housing law
. 10 Comments

The Civil Justice Council has finally published the “Pre-action Protocol for Possession Claims based on Mortgage or Home Purchase Plan Arrears in in Respect of Residential Property” and have done so with an array of press releases (CJC here, HM Treasury here). It comes into effect on November 19. The PM heralded it at question time in the Commons (as to which, see further below). It has considerable potential to go well beyond what has already been announced in terms of support for home owners (eg new rules on support for mortgage interest), but, unless my printer hasn’t printed it out correctly and my computer says no, it doesn’t match that potential. The suspicion must be that, behind the scenes, the parties were playing a lobbying game to reduce its significance - the final version bears little resemblance to the original consultation draft. It’s a toothless dragon.

Why was a protocol needed? Anybody who has acted for a borrower will know anecdotally that lenders have been notoriously slow and unwilling to make arrangements with borrowers, which could go some way to ameliorating the borrowers’ predicament. That chimes with what is “known” more generally about lenders’ practices.

The protocol sets out a set of pre-action principles to be followed prior to bringing a possession action. Importantly, it applies not just to first mortgagees but also second charge mortgagees and the much-maligned sale-leaseback schemes where no interest is paid (para 4.1). So, coverage is broad, which is good. The parties must “act fairly and reasonably with each other in resolving any matter concerning … arrears” (para 2.1(1)) and, as expected, the protocol encourages more pre-action contact between the parties to reach an agreement or to use the court’s time more effectively (para 2.1(2); also para 7.1). There are the usual information sharing requirements and requirements on lenders to advise borrowers to go to the local authority housing department. Additionally, there are provisions requiring lenders to consider reasonable requests from the borrower for a change of payment date (para 5.4); to respond promptly to (but notably not a requirement to consider) a borrower’s proposal for payment (para 5.5) and, if it issues a counter-proposal to give the borrower sufficient time and detail to enable it to be considered and understood (para 5.6). The parties should

take all reasonable steps to discuss with each other, or their representatives, the cause of the arrears, the borrower’s financial circumstances and proposals for repayment of the arrears. (para 5.2)

The lender “should consider” not commencing proceedings where the borrower has applied for mortgage insurance, has a “reasonable expectation of eligibility”, and can cover the excess (para 6.1). The protocol reflects existing CA learning by suggesting that lenders should hold off proceedings if the borrower has taken steps to try and sell the property (paras 6.2-4; and see eg Bristol & West BS v Ellis (1996) 73 P&CR 158). The lenders should also consider holding off proceedings for possession where the borrower has made a claim to the FOS (although it does not need to do so in theory: Mobil Oil v Rawlinson (1981) 43 P&CR 221). where it does not do so, it “should give” notice to the borrower with reasons.

Well, all of this is so hedged around that its practical enforcement is likely to be rather difficult. Even so, it is the silences as always which are significant. And the particular silence concerns the effect of non-compliance. At para 9.1, the following sanction applies:

Parties should be able, if requested by the court, to explain the actions that they have taken to comply with this protocol.

There are, no doubt, gasps at the horror of such a sanction from a lender (more likely from their representative at court) but the sanctions in the consultation draft have been written out of the final version. There is no specific costs sanction as in other pre-action protocols. There is no suggestion that the court can adjourn, strike out, or dismiss the claim as a result of non-compliance, as in the pre-action protocol on rent arrears. There are, of course, the usual general sanctions for non-compliance with protocols in CPR 3.1 and the practice direction on protocols, but it should be remembered that the lenders’ entitlement to costs is most often contractual and not subject to the discretion of the court other than in amount. It has been pointed out to me by another member of the team that it is possible to challenge the lender’s contractual entitlement through the Unfair Terms in Consumer Contracts regs, which, if successful, would bring you within the court’s discretion on costs.

Gordon Brown, in PMQs, said:

New guidance will be given to the judiciary to halt or adjourn court action on repossessions unless alternative options that help the home owner, including extending the terms of the mortgage, changing the mortgage type and deferring payment, have first been fully examined. We are determined to do everything that we can to help home owners avoid repossessions.

I don’t see it, though, in the pre-action protocol (even the Guardian correctly reports the pre-action protocol: here) - maybe he’s referring to the statutory powers under the AJA or perhaps other judicial guidance. Indeed, taken as a whole, the requirements on lenders in the pre-action protocol are not particularly significant as suggested above. The press releases certainly don’t go as far as Brown, noting generally that possession proceedings should be a last resort and that claims shouldn’t normally be made when a settlement is being explored. The CJC press release makes the following point about the purpose of the protocol:

It is designed to encourage parties to exchange information at an early stage, to encourage early settlement of cases or where that cannot be avoided, more efficient case management. It does not alter parties existing rights and obligations.

This effectively repeats the FSA’s Mortgage Code of Business rule 13.3, concerning dealing with customers fairly which deals with pretty similar requirements to those in the pre-action protocol (note 13.3.2(1)(f), which suggests that, where a repossession occurs before all reasonable steps have been taken, this will be evidence of a contravention of the rule of fair dealing in 13.3.1).

I wouldn’t want to suggest that those acting for borrowers in mortgage possession proceedings can’t seek to use the pre-action protocol in their favour, but they will have to be creative in so doing, perhaps also using the MCOB as the basis for a legitimate expectation challenge (although pursuing that will have its own challenges).

One basic question remains: why should lenders be treated differently?

Gentoo in the news (again)

Published
by
Dave
on 14 October 2008
in whatever
. 4 Comments

Gentoo Group Ltd and Peter Walls v Hanratty [2008] EWHC 2328 (QB) is the latest case in the unfortunate saga which comes from the LSVT of Sunderland’s entire housing stock to Sunderland HA, now known as Gentoo. When Gentoo took the housing stock, they did so in the knowledge that it was in substantial need of re-development and the price paid for the stock reflected that. Subsequently, Gentoo engaged in a much wider programme of housing and urban renewal than had previously been planned but the renewal has potentially left Sunderland with a social housing stock deficit because of the number of homelessness applications and more general demand for social housing (Sunderland accepted 418 households as statutorily homeless in 2007/08; and until 2005 at least CLG stats show that there were around 16,000 households on the waiting list, although by 2007 this fell to 1799). Additionally, around the time of the transfer, Sunderland were one of the pioneers of choice-based lettings.  Some locals - tenants and owners - have not been particularly happy about Gentoo’s management of the process.  A BBC report can be accessed here.  A December 2005 Audit Commission inspection, by contrast, was positive about the improvements to the stock, and potential for further improvements (access and customer care, as well as its capital programmes were said to be strengths, at paras 27 & 60).

Now, the case: it is the latest in a line of cases in which Gentoo and their CE (who also transferred from the council) are seeking damages and an injunction against Mr Hanratty (and others, but they had compromised a settlement of damages) for defamation and harassment. Over a few years, it is alleged that Mr Hanratty contributed to a website, Dadsplace and its associated chatroom, which has given rise to the claim.  Mr Justice Eady earlier exercised his discretion to disapply the statutory limitation period in respect of such claims broadly because it now appeared that Mr Hanratty, who had previously denied all responsibility (and had his costs paid by Gentoo), may have been at least partly responsible (judgment here).  Mr Justice Eady noted that “It has proved difficult, time-consuming and expensive for the Claimants to pin down responsibility for the relevant activities, which were carried on anonymously over a period of approximately two years between the summer of 2004 and the summer of 2006.”(para 3). Hanratty was represented at that hearing. This new judgment concerns an application by the Claimants to dispense with jury trial. They are represented by a QC and a junior (as they were at the earlier hearing).  Mr Hanratty is now representing himself. Mr Justice Eady accepted the Claimant’s submission, given the nature and scale of the evidence, as well as the fact that Mr Hanratty is representing himself and could be assisted by the judge in shaping his case, and that a reasoned judgment would assist in formulating grounds for appeal. The trial is listed for 5-8 days.

And here’s the rub. The Claimants are unlikely to see any cash from this application; there apparently haven’t been any website allegations for a while; and the evidence against Mr Hanratty is circumstantial at this stage; so what’s the point? I can readily understand why the organisation and its CE would wish to defend their reputation and halt wrongful publications, of course, but is this the best way to do it?

CBL Guidance - More Thoughts …

Published
by
Dave
on 10 September 2008
in Housing law
. 0 Comments

Well, Nearly Legal asks and the CLG deliver. We posted a note on 12 August, when not much was happening, asking why the new CBL guidance hadn’t seen the light of day (with some scurrilous thoughts), and a couple of weeks later it was published (link here) with no need for transparent envelopes. What’s more, it’s rather more ambitious than the original consultation draft and the CLG should actually be praised for walking the tightrope between the ministerial (and other) zealots on the one hand and, on the other hand, the existing law and practice.

As a result, there’s lots in it for advisors and housing officers/managers - there are reminders of parallel obligations (para 1.6) and continual stress of the need to take those into account in allocation processes (eg paras 4.60 and following concerning choice for disabled people with access needs). One problem is that not much is known about how vulnerable populations fare in the CBL process and compatibility with those other statutory obligations; at the same time, a number of local authorities are developing accessible housing registers, which may or may not impact on CBL processes. Considerable attention is given over in the Code to the identification of such groups and the types of support they might need (paras 5.19 and following).

What is CBL? We finally get an answer at para 2.7, which is worth quoting:

The term “choice based lettings scheme” will be used in this guidance to mean that an authority has adopted allocation policies and procedures which incorporate an advertising scheme.

The principal question with CBL concerns its compatibility with Part 6 as regards reasonable preference. The Code does what it can here to qualm concerns, repeating para 5.9 of the general Allocations code (at para 4.9 of the CBL code), and gives a pretty good statement of the current jurisprudence on this point. There are suggestions that priority cards - which were used by some of the original pilot authorities - may not be the best way of prioritisation (eg para 4.29), although it doesn’t say that they should not be used. On the other hand, the process of backdating applicants in greatest need (where time on the register is the joker) is “not recommended” (para 4.33). There is also an important comment on the limits of the waiting time joker, particularly in high demand areas or where there is a high level of housing need (para 4.47) - one might go further here and say that waiting time on its own is incompatible with Part 6 full stop (and, for those with a long memory, the Cullingworth Committee in 1969 wasn’t wildly happy with this system). But more generally, there is a feeling that there is rather more to be said (and, indeed, might be by the HL in Ahmad).

The policy watchwords with CBL are transparency and mobility. Transparency has a practical bent in terms of giving feedback to “homeseekers” about their chances - in many areas, no doubt the advice is to go elsewhere - but, for advisers, there will now be something to bite on, rather than the often hidden decision-making which used to go on in the grand old days of points schemes. Nowhere is this more apparent than in chapter 6 which concerns partnership arrangements. We don’t know much about RSLs’ allocations policies and practices in general (link here to the Housing Corporation Circular to RSLs), but this is going to be a growth area for JR/ombudsmen as schemes become more transparent and Weaver becomes more clearly embeddded. Chapter 6 of the Code deals with the complexities that may arise between local authorities and RSLs over nominations - note, in particular, para 6.7 about RSL exclusions, information sharing (para 6.12), and monitoring particularly as regards failed nominations (para 6.13-4) - and it also deals with private sector landlords (about which there remains a question as to how a private landlord may be challenged over allocation under Part 6 and 7). There’s nothing there, though, about the review provision in s.167(4A)(d) - the most important, underused (in my experience), and undervalued (there’s no SI supplementing it) right of Part 6 applicants (I still find it difficult to call people homeseekers).

Mobility clearly links with the housing options processes which most local authorities now seem to have in place (and about which there remain concerns about gatekeeping Part 7 applications). There is a general note at paras 4.79-80 and more detailed guidance on structures and processes in regional and sub-regional schemes in chapter 7. Now this is all very good and fine and it may well be entirely appropriate, but concerns must remain about the scope of the contracting out regs (link here). There is an excellent discussion of this issue at chapter 19 of Jan Luba and Liz Davies’ book but is not dealt with in the other books. The Code is rather hazy on this point saying that housing authorities have powers to delegate some of their allocations functions to other bodies but the general question concerns the meaning of the word “functions”. This is an outstanding issue.

Two cheers for CLG?

So what

Published
by
Dave
on 20 August 2008
in Housing law
. 4 Comments

Seven and a half years on, the Law Commission has now completed its work on the reform of housing law with the publication of its final report, Housing: Encouraging Responsible Letting. The Consultation Paper, on which this report is based, voted in favour of a scheme of enforced self-regulation, a scheme with some bite. That has been dropped in this report which now makes various tinkering suggestions such as a national private landlord accreditation scheme and a single code of good housing management practice. The one solid proposal with which everyone can agree (presumably) is the need for a proper regulatory scheme for letting agents. Their major proposal is for the appointment of a housing standards monitor, which sounds a bit school-like. This monitor would have no power beyond the promotion of standards in the sector, to trial various schemes such as a “home condition certificate” (like an mot for private rented property) and development of ADR. It doesn’t have power to do anything about bad standards.

This package of proposals is what the Commission terms “smart regulation” and is designed to include private landlords within that framework (eg through a “stakeholder board”). It all sounds so wonderfully modern, so third way New Labourish, so ultimately ineffective. Whenever policy-makers, including the Law Commission, talk of the private rented sector, there is a mantra that they have to acknowledge that there are many good landlords. That’s fine of course, although we may have a different view on that, but that doesn’t mean that you devise your scheme at the highest denominator. Equally, nobody ever says what a “good landlord” is - do these landlords have to be good all the time or just some of it? I like to think I’m a good cyclist but have been known to lose it when cut up by an arrogant driver. Is a good landlord somebody who refuses to let a property to somebody on housing benefit or gives a tenant notice when the tenant goes on benefits? I could go on.

So what now?  Well, the truth is that, despite many trees being cut down to cater for the Law Commission’s output and the fact that their terms of reference came from the government itself, the government appears to have forgotten about the Law Commission’s work (or, at best, sidelined it). We can all take views about their work, but the fact is that their proposals amount to the only rigorous, sustained treatment and reform of housing law that (I guess) we all feel is necessary. But, nothing has been done and nothing is likely to be done either. Take this responsible letting report - the government must have known (or can be taken to have known) that the Law Commission were doing this work, but they (pre-Flint) commissioned some academics at York to do the same job. The Law Commission had to get their report out now so that it pre-dated that review.

Rather than “so what now”, the question for the Law Commission after seven and a half years is “so what”?  And that must be pretty depressing.

Why are we waiting?

Published
by
Dave
on 12 August 2008
in Housing law
. 3 Comments

Now that it’s the silly season and there’s not much happening out there, there’s an opportunity to reflect on what’s not happening with the Code of Guidance on Choice-Based Lettings, or more accurately, why it hasn’t been issued. Is CLG on the naughty step?

The last Code on allocations was issued in November 2002 in the wake of the Homelessness Act but so much has happened since - allocations have gone regional, there’s been talk of a pan-London allocations scheme, loads more cash has been thrown at CBL, there are concerns about the effect of CBL on vulnerable households, and then there’s accessible housing registers (don’t start me). That’s not mentioning law stuff like the impact of the DDA, the various JRs (with Locata schemes causing problems), and possible contracting out complications.

Last January, CLG issued a draft Code on CBL which was pretty anodyne really but did draw attention to some of the developments (eg regional allocations). We’ve been told since that the new code is just a couple of weeks away from publication but that excuse is wearing a bit thin. I have a degree of empathy with the CBL acolytes and those running these schemes, who are developing them in something of a wasteland of government guidance. My sources (they who must not be named) tell me that a plot is being hatched to amend Part 6 of the 1996 Act and possibly also Part 7. Perhaps that’s what is keeping the Code unpublished; perhaps they’re waiting for Ahmad (NL note on Ahmad here) to be decided by the HL (it’s not being heard until next January). There’s endless possible speculation and scope for conspiracy theory. It would be nice to be told, even if it were by means of a transparent envelope held by the housing minister while taking a photo opportunity.