The law of unintended consequences (or, why everyone needs a housing lawyer)

As you might have noticed, the Housing and Planning Bill had its last day in Committee today in the House of Commons. It was the 15th and 16th (penultimate and final, respectively) sessions. Surely, you might think, this would be the fag-end of the Bill. What controversial material could still fall to be considered? If you had taken that view, then you would be wrong.

Late on Tuesday, the government put down two new clauses and a new schedule (New Clauses 32 and 33, New Schedule 4, available here). These are a very, very big deal.

The amendments will prevent the grant of new periodic secure tenancies (subject to very limited exceptions, mostly to be set out in secondary legislation) and replace them with fixed term tenancies of between 2 and 5 years. These fixed term tenancies largely follow the model of the flexible tenancy, i.e. a right to a review of the length of term, right to review at the end of the fixed term). Succession is also changed so that the spouse or civil partner only succeeds to a five year fixed term tenancy.

This isn’t the place for a line-by-line analysis since I rather suspect the clauses will need substantial amendment and I’m already quite tired. But one point did strike me as worthy of note.

If you are a LA which decides to grant a fixed term tenancy of three years or less, you can now avoid the RTB entirely. You see, the RTB doesn’t arise until you’ve been a tenant for three years (s.119(A1), HA 1985 – England only). So, if you grant for three years or less and then don’t renew it, the RTB can never arise.

The Members of the Housing and Planning Bill Committee put this problem to the Minister earlier today (Hansard isn’t up yet, so you’ll have to watch it online – full disclosure, I’m the housing lawyer mentioned by Dr Blackman-Woods MP) and, bless him, he didn’t really understand the problem he’d created (he was more interested in going on about Frank Field living in a council house – a problem (if it is a problem) which can be addressed by pay to stay, not messing with security of tenure).

This ignorance isn’t entirely surprising. There is no coherent approach to housing policy and the government seems to design policies to contradict itself. moreover, very few people (and obviously not the Minister) remember that one of the main reasons for creating secure tenancies under the Housing Act 1980 was precisely to facilitate the RTB (some authorities threatened to evict anyone trying to claim RTB, hence statutory security was needed). RTB is inherently linked to security of term.

There is a further RTB problem. Even if your LA grants a tenancy of five years so that the RTB has arisen (after the third year) and you exercise it before being evicted at the end of the five years, you will only get the minimum discount. This is because the additional discount (1% p.a. for houses or 2% p.a. for flats) only arises after the fifth year (s.129, HA 1985). So, a five year tenancy which is not renewed means you’ll never get the “length of occupation” discount.

Now, please don’t misunderstand me. I dislike the RTB and would gladly see it abolished. But I rather suspect the government did not intend this outcome. But this mess is all their own fault – if you drop in a major change like this on the last possible day, then of course you’ll do a bad job. Moreover, if you’re going to try a reform like this, you really need to get proper (probably external) advice about how to do it.

The Bill comes back for Report Stage early in 2016. Perhaps by then the government will have thought about this problem. Maybe we could even have some consultation on this spectacularly important change.* Or is that asking too much?

 

 

*And the problem that appears to exist with recovering possession of the fixed term tenancies arising on succession – no forfeiture clause in this form of tenancy – see our post here.

 

 

About J

J is a barrister. He considers housing law to be the single greatest kind of law known to humankind and finds it very odd that so few people share this view.
Posted in Housing law - All, right-to-buy, secure-tenancy.

40 Comments

  1. Also in the amendments were an opposition proposal to make the minimum fixed term of an Assured Shorthold Tenancy 36 months (!) from April 2018 ,which seems to have gone under the radar.
    I note that a ‘fitness for habitation’ proposal has also been added which appears to prevent a landlord from letting a property that has a category 1 hazard, coming into force 3 months after the Bill receives Royal Assent.
    You could almost think they’re throwing everything in and seeing what sticks (or goes unnoticed).

    • I helped with both the s.8 amendment and the AST amendment. As the Labour team made clear during debate, they were not designed to be pushed to a vote, but to allow a discussion about the issues. The longer AST one was particularly interesting as there seemed to be cross party support for looking at barriers to longer tenancies (both in terms of freeholder constraints on leaseholders and underletting and mortgage company practice).

    • As J points out, these were both Labour amendments (with a helping hand from J). They were not taken to a vote. They were also (in my less than humble view) both very sensible proposals…

    • NL also helped with drafting (and catching my errors). He’s just generally helpful. Frankly, both amendments are also very sensible.

  2. Another unintended consequence…
    Incentive for an unscrupulous relative to bump off their nan before April and get a home for life?

    • An assignment would be effective to pass the tenancy (Peabody v Higgins) without assent. Whether a provision in the tenancy requiring consent to assignment is enforceable is a separate issue.

    • True… Would still operate under HA 1985 s.91(3)(c), if entitled to succeed, otherwise not possible be reason of s.91(1).

      But arguably only under statutory provisions for succession, rather than any contractual ones (second succession, range of possible successors). And post Localism Act, that is spouse/civil partner only. As spouse/CP would still be able to succeed to a non-fixed term secure tenancy, it would be rather pointless.

    • I was assuming that the relative would succeed on nan’s death. I don’t think that there’s a distinction for the purposes of assignment in post-2012 tenancies between “partners” and other family members given a contractual right to succeed. s91(3)(c) refers to “a person who would be qualified to succeed”; and that expression applies equally to both categories of successor.

      “Second successors”, on the other hand, are completely outwith the statutory succession provisions. They can neither take a succession or an assignment. The contractual term may also be ultra vires, unless the Allocation Policy provides for it.

    • Oops; forget I said the second paragraph. Contractual second successors *are* qualified to succeed under 86A(4), and therefore entitled to take an assignment.

    • I thought that would have to be the case – either all purely contractual successions are out or all in. And the word I am wondering about is ‘qualified’, rather than, say, ‘entitled’ – which would clearly encompass contractual successors. Not checked the case law though, so I’m probably way out.

    • “Qualified” is the word in all relevant subsections. T can assign to someone “who would be qualified to succeed”; and contractual successors (within 86A) are all “qualified to succeed”.

    • Ok, s.86A(2)(b), yes, you are right.

      Though how many LAs tenancy agreements still provide for non-statutory successions is an open question – and I’ll bet fewer still will do once this bill goes through. Most that I know of in SE have removed most non-statutory succession.

    • Great chat guys. I was only thinking about assignment to those qualified to succeed (without assent) and had the foresight to consult a housing lawyer before sharpening the hatchet.

  3. Working for a RP landlord I have not been following the Loc Auth story closely, but a couple of points come to mind:

    – If I leave my Loc Auth fixed term after three years I lose the Right to Buy that house / flat. Does the RTB scheme still allow me to claim time served elsewhere as counting to the qualification period? If so can I take my banked three years to the unsuspecting RSL who gets me out of B&B following my eviction?

    – If I have a three year tenancy and the right to exchange, can I not extend my period by exchanging? Is the surrender and re-grant approach subject to the min term? If yes then I exchange with my neighbour before the end of my term, an exchange that can only be refused under the statutory grounds. I then exchange back. Sounds like a plan.

    Also sounds too good to be true. Plerase tell me why it is.

    • Inasmuch as there are answers to these questions, they are in the flexible tenancy provisions in the Localism Act. To some extent, all that the H&P Bill amends do is make flexible tenancies compulsory.

    • See s157 Localism Act for fixed terms . Surrender and regrant. Have I missed something?

    • I don’t think you mean s.157. That simply provides that a secure (non flexible) tenant can obtain a secure tenancy on mutual exchange.

    • It’s s158-9, not s157, and applies only to exchanges between a tenant with full security (lifetime tenancy or assured tenancy) on the one hand and a tenant(s) with only a flexible tenancy or AST on the other. The *intention* was to protect the tenant who had full security on exchange. Why they chose to make it a surrender/regrant, when the usual exchange is by way of mutual assignment, Dog (in this case Pickles) only knows. It isn’t necessary to enable the protection to be effective.

      That said: provided your neighbour has a lifetime tenancy, that might work. If not, then the conditions of s158 aren’t satisfied.

      On your first query; a PRP tenant brings banked years into LA accommodation for the purpose of RTB (HA85 Sch 4 para 7). Subject to the detailed provisions of the VRTB (which I’ve had no occasion to investigate), I would assume that what is sauce for the goose is sauce for the gander.

  4. Giles, you open a can of worms (and some exceedingly) grubby ones by saying the H&P Bill has unintended / unforeseen consequences and even by focusing on late amendments too.

    The Pay (MORE) to Stay element DOES affect the pensioner in England and that will become a huge issue and saw Labour tabling an amendment to it as they correctly saw this is NOT a welfare benefit issue or a HB reform issue both of which would apply GB and UK wide; rather it is a rent reform and only affects England …which is why it DOES affect the English pensioner…who just so happen to make up 28% of all social tenant households…YET…the CIH, NHF and other housing responses to the H&P Bill all failed to mention as they erroneously presumed pensioners would be exempt as they are in all HB and welfare benefit reforms…which Pay (MORE) to Stay is not!

    Still all you housing lawyers will welcome the additional housing and homeless law cases the eviction of pensioners under pay MORE to stay will mean! Still that means instead of advising nan to be wary of her siblings and being bumped off in the perfect murder, you will need to have plenty of hobknobs and stale victoria sponges to hand when they come a calling.

  5. Unintended?
    If RTB discounts for PR properties are being funded by sales of LA properties, wouldn’t it make sense for a policy to evict LA tenants and refuse their RTB, so it frees up more properties to sell off to fund RTB?

    • I think you credit them with a cunning far beyond the reality. The political implications for the Tories killing the RTB are so adverse that I can’t imagine this is anything other than a balls-up.

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  7. Mark, I agree. As the Tories wish to get rid of social housing as fast as they can, this could free up 20% of LA rented units every year for consideration for potential sale under the sale of highest value LA homes policy, thus increasing receipts to subsidise RP RTB discounts. In addition to the cost of eviction, it will also add to increasing HB costs and homelessness costs. Will their impact assessment take account of all of these costs? How long till they introduce major changes to Homelessness legislation ?

  8. This close to Xmas discussions on sauces are equally depressing for both goose and gander. Thanks for nudge over correct section of the Parochialism Act.

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  13. Currently RTB is only for secure tenants (or assured tenants post stock-transfer with preserved RTB). So the new 3-year flexible LA tenants would be automatically excluded without LAs having to play any tricks on them. I am guessing this requirement will be amended to include Housing Association tenants, who are either on Assured or AST tenancies, since the main point of this Bill is to allow HA tenants buy their homes.

    The qualifying 3 year period has to be with a RSL on any type of tenancy whatsoever. All that matters is the status of the landlord, not the type of tenancy.

    VRTB is a very strange concept, considering how contentious the process can get following mistakes or delays on the part of the landlord.

    • No, not exactly. Flexible tenancies are secure tenancies, but for a fixed 2-5 year term, so there is no issue with a 3 year term council tenancy qualifying for RTB (minimum discount).

      The HA RTB is ‘voluntary’ (and not legislated for in the Bill).

    • I was afraid you were going to say this. I thought the whole point of secure tenancies was that they were supposed to be …err.. secure?

      2-year long tenancy departs too much from the natural meaning of the word ‘secure’ IMHO.

      Are decisions to evict tenants after the end of such 2-5 year tenancy made arbitrarily? Is there no way of challenging them? No wonder housing allocations officers think they are Gods.

    • Secure is a legislative term, not a natural one. There is a review procedure for any decision not to renew. And court must be satisfied review conducted properly, on public law and human rights principles.

  14. In your blog you don’t mention what happens to joint tenancies if one partner does. I assumed if the bill goes through as is,
    the remaining joint tenant would suceed through survivorship and would still be entitled to a lifetime tenancy with no fixed term. Am I correct?

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