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Baroness Andrews moved Amendments Nos. 114CB to 114CF:
“( ) are in force on that date,”“(2) For the purposes of the definition of “appropriate national authority” in sub-paragraph (1) a dwelling-house which is partly in England and partly in Wales is to be treated—
On Question, amendments agreed to.
Schedule 10, as amended, agreed to.
Schedule 11 [Service charges: provision of information and designated accounts]:
Lord Bassam of Brighton moved Amendment No. 114CFA:
The noble Lord said: The amendment deals with the exercise by the Secretary of State and Welsh Ministers of the regulation-making powers that they will be given in the Bill to make provision about the service charge information that landlords will have to supply to their tenants. It provides that the first use of this power shall be subject to the affirmative resolution procedure.
It may help the Committee if I set out the background to those regulation-making powers. Section 21 of the Landlord and Tenant Act 1985 currently provides that tenants paying variable service charges are entitled to request certain accounting information about those charges from their landlords. Service charges are the sums that tenants are required to pay to their landlords for things such as the maintenance and repair of the common parts of the buildings and other common areas. However, it was decided that the rights of tenants in this area could and should be improved on. Specifically, it was decided that there was a need to ensure that all service charge payers were provided with a minimum level of transparency about the moneys that they were required to pay and any balances of such funds held on their behalf.
That would be done by prescribing that certain accounting information should be supplied by landlords as a matter of course, within a period of time from the end of each accounting period. Further, that would be backed by a right to withhold service charges where the information was not provided.
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Other related provisions will also be introduced, dealing with the holding of service charge money in designated accounts. Provisions were subsequently included in the Commonhold and Leasehold Reform Act 2002, which set out certain requirements for the service charge statement of accounting and the accompanying accountant’s report. Following extensive consultation with stakeholders about the more detailed requirements for these provisions, it became clear that amendments were needed to new Section 21 of the 1985 Act, in order to ensure that when regulations are made they can provide more effectively for detailed service charge information to be supplied that is more appropriate to different sets of circumstances.
Therefore, the amended Section 21 will now provide a broader framework than under the original proposals for the regulation-making power to be used. In the light of the wider regulation-making power being provided, and following the advice of the Delegated Powers and Regulatory Reform Committee, it is being proposed that the first set of regulations to be made under that power should be subject to the affirmative resolution procedure of both Houses. I beg to move.
On Question, amendment agreed to.
Lord Bassam of Brighton moved Amendment No. 114CFB:
“(7A) The Secretary of State may not make a statutory instrument containing the first regulations made by the Secretary of State under this section unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.
(7B) The Welsh Ministers may not make a statutory instrument containing the first regulations made by the Welsh Ministers under this section unless a draft of the instrument has been laid before, and approved by a resolution of, the National Assembly for Wales.”
On Question, amendment agreed to.
Schedule 11, as amended, agreed to.
Clauses 303 and 304 agreed to.
Schedule 12 [Demolition notices]:
Lord Bassam of Brighton moved Amendment No. 114CG:
“(za) after “final demolition notice”, where it first appears, insert “(“the earlier notice”)”,(zb) after “final demolition notice”, where it appears for a second time, insert “(and no initial demolition notice)”,”The noble Lord said: It will take me a little longer to speak to these amendments, but they are important because they build on a measure that was introduced by the Housing Act 2004 to tackle exploitation of the right-to-buy and compulsory purchase compensation rules by some tenants. They amend Schedule 12 to the Bill, which is given effect by Clause 304, in two different ways.
The 2004 Act enabled landlords to end a tenant’s right to buy a property that was scheduled for demolition—for example, under a regeneration scheme. It did so by adding properties that are to be demolished during the next two years to the exceptions that apply
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The aim of allowing landlords to suspend or end the right to buy in such circumstances was to address a loophole in previous legislation. Prior to the 2004 Act, when a tenant knew that demolition was likely, he or she was able to buy their home under the right to buy at a discount, knowing that it would have to be repurchased using compulsory powers and that they would then be entitled to full market value plus home loss compensation. In other words, they could make a profit at the expense of taxpayers. In areas where the maximum £38,000 right to buy discount was available, a tenant could make a profit of up to £48,000. That affected the financial viability of regeneration schemes. Landlords had to find the money to buy these right-to-buy owners out.
The demolition notice procedure means that landlords can prevent tenants from taking financial advantage of the length of time that it may take to plan and implement a large regeneration scheme. But, of course, there are safeguards for tenants. Landlords must notify them of when and why they intend to demolish. An initial demolition notice expires after five years, and another demolition notice, initial or final, cannot then be served in respect of the same property for a further five years unless the Secretary of State agrees. An initial notice can be extended, but again only with the agreement of the Secretary of State. Similarly, once a final demolition notice has expired, another final notice cannot be served in respect of the same property for five years unless the Secretary of State consents.
If a tenant has incurred conveyancing costs prior to a demolition notice being served, he is entitled to compensation. A final demolition notice cannot be served unless arrangements are in place to acquire any neighbouring properties that might also need to be demolished. These provisions are also available if the landlord employs another body, for example an arm’s-length management organisation, to manage the demolition scheme on his behalf while retaining ownership of the property, but they are not currently available if the landlord sells or transfers the property. Clause 304 and Schedule 12 to the Bill would enable initial or final demolition notices to remain in effect if the landlord sold or transferred the property to another landlord who intended to continue with the demolition plans.
Of course, all the safeguards for tenants that I mentioned earlier will remain in place. This will work as follows. Unless the second landlord serves a continuation notice confirming that he intends to continue with the demolition plans, he will have to
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I turn now to the amendments. As I said, they are designed to do two things. The purpose of Amendments Nos. 114CG and 114CH is to add further provisions to Schedule 5 to the Housing Act 1985 in order to close a loophole which arises from the combined effect of provisions in Schedules 5 and 5A to that Act. The demolition notices scheme envisages that a landlord may serve an initial demolition notice valid for a maximum of five years, and that while the notice is still valid, it may be replaced by a final demolition notice valid for a maximum of two years, giving the landlord an accumulated maximum of seven years during which the right to buy is either suspended or terminated. As I mentioned earlier, once an initial demolition notice has ceased to be in force, there is a five-year ban on serving either a further initial notice or a final notice, unless of course with the consent of the Secretary of State. The ban is imposed by paragraphs 4(2) and (3) of Schedule 5A, while paragraph 15(8) of Schedule 5 provides that once a demolition notice has ceased to be in force for any reason, no further notice may be served within five years unless, again, with the consent of the Secretary of State.
However, at present nothing in Schedule 5A prevents a landlord serving an initial demolition notice immediately after a final notice has ceased to be in force. This means that a landlord who wished to do so could in effect prevent or suspend the right to buy for nine years by serving a final demolition notice for the maximum of two years and then shortly afterwards serving an initial demolition notice lasting a further five years, and finally, just before that notice expires, serving another final demolition notice for two years. The effect of the first two amendments before us is to prevent a landlord doing exactly that. This was not the intention of the Government or of Parliament when it passed the 2004 Act, nor is it clear to tenants that this can be done. The aim of the amendments is to improve the transparency of the process.
The third amendment picks up a suggestion made by London Councils, the representative body of London boroughs. It extends the maximum permitted lifetime to an initial demolition notice from the present five years to seven years. We agree with London Councils that the complexity of some regeneration schemes is such that it takes longer than five years to put them in place. However, we also wish to ensure that tenants are not deprived of the right to buy for longer than is necessary. To us, seven years seems reasonable.
These amendments are designed to make existing provisions work more transparently and effectively to the benefit of tenants and landlords alike, and I hope that Members of the Committee will agree to them. I beg to move.
On Question, amendment agreed to.
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Baroness Andrews moved Amendments Nos. 114CH to 114CJ:
Schedule 12, page 209, line 14, leave out “notice”.” and insert “final demolition notice (or, as the case may be, the initial demolition notice)”.
“(10) In sub-paragraph (8) “initial demolition notice” has the meaning given by paragraph 1 of Schedule 5A (initial demolition notices).””
“ In paragraph 1(4)(b) (initial demolition notices: maximum specified period to carry out demolition) for “five” substitute “seven”.”
On Question, amendments agreed to.
Schedule 12, as amended, agreed to.
4.45 pm
Clause 305 [Review of determination of value]:
Lord Bassam of Brighton moved Amendment No. 114CK:
Clause 305, page 136, line 38, at end insert “of the value of the dwelling-house at the relevant time”
The noble Lord said: Clause 305 amends Section 128 of the Housing Act 1985, introduces new Sections 128A and 128B and makes other consequential amendments to that Act. These changes are designed to make the operation of the right-to-buy valuation procedure more responsive to circumstances. The two amendments that we have tabled are intended to clarify that any fresh determination of value arising from the review procedure introduced by Clause 305 must relate to the date on which the tenant in question applied to exercise his or her right to buy.
The background to Clause 305 and to these amendments is that, at present, wrong valuations based on errors of fact cannot be corrected without court action, which is time-consuming and costly for landlords and tenants alike. Under Section 125 of the Housing Act 1985, when a tenant exercises the right to buy, the landlord must state the price at which it will sell the property to him or her. It must show how it has arrived at that price, which must be based on its assessment of the market value of the property at the time when the tenant applied to exercise the right to buy. If the tenant is dissatisfied with the landlord’s valuation, he may require that the value be determined by a district valuer, an employee of the Valuation Office Agency, a government agency, under Section 128 of the Housing Act 1985. The district valuer’s determination is binding on both sides.
The Valuation Office Agency is concerned that in a few cases every year—usually no more than 10—it is subsequently found that valuations were flawed because of errors of fact. Such errors usually arise because the valuers used a recently sold property for comparison. They do not usually visit that property, but rely on a database. That is where errors can creep in—for example, such a property may be recorded as having two bedrooms when in fact it has three. Both landlord and tenant see all the details on which the district valuer bases the valuation, and one or the other is often able to spot such an error through local knowledge.
Flawed valuations are unfair. If they are too high, the tenant needs an unnecessarily high mortgage or
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The amendments we are looking at today are intended to ensure that if a district valuer reviews a determination of value, he or she revalues the property as it was on the date when the tenant applied for the right to buy. That is in line with the existing provisions that ensure that all right-to-buy valuation issues refer to “the relevant time”—that is, the date of the application.
Clause 305 is intended to allow a right-to-buy valuation by a district valuer to be revised but only if the facts on which it is based are shown to be significantly wrong—and within a reasonable timescale. Now, the only way of doing this is, as I said earlier, via some form of judicial review—an unnecessarily lengthy and costly procedure to correct fact-based errors. I beg to move.
On Question, amendment agreed to.
Lord Bassam of Brighton moved Amendment No. 114CL:
Clause 305, page 137, line 14, after “re-determination” insert “of the value of the dwelling-house at the relevant time”
On Question, amendment agreed to.
Clause 305, as amended, agreed to.
[Amendment No. 114D not moved.]
Baroness Hamwee moved Amendment No. 114E:
“(3A) Ground 8 in Part I of Schedule 2 shall not be used in possession proceedings brought by registered providers of social housing, as defined in section 79 of the Housing and Regeneration Act 2008.”
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The noble Baroness said: This amendment was brought to me by Shelter and is supported by Crisis and the Housing Law Practitioners Association. I understand that the Law Commission has also recently expressed concern about the subject. The short point of the amendment is to allow discretion to the court when an application is made for possession on the ground of rent arrears because of delays in housing benefit.
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