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Privacy statement - Terms and conditions

does greater flexibility mean greater risk?

8 June 2011

The second reading of the Localism Bill, originally published on 13 December 2010, took place in the House of Lords on 7 June 2011. The aim of the Bill is to shift power from central government towards councils and communities. It is designed to empower landlords to make decisions regarding houses in their stock according to the needs of the area. One of the many changes being introduced by the Bill, and a potential area of concern for local housing authorities and registered providers, are the proposed tenancy reforms.

Changes to tenure offered

For local housing authorities, the Bill introduces a new form of secure tenancy - the flexible tenancy, which is granted for a fixed term of at least two years, in addition to the current lifetime tenancies. Lifetime tenancies of existing tenants will not be changed.

With the flexible tenancy, at the end of the fixed term, the tenancy can either become a secure tenancy or a further flexible tenancy for a fixed term.

Concerns and challenges

Whilst this certainly may offer greater flexibility over the types of tenancies offered to social tenants, it also creates a number of concerns and new possible areas of challenge. Such areas of challenge are likely to relate to:

  • why a tenant was offered a fixed term
  • the length of the fixed term offered. Whilst the minimum period will be two years, there is no maximum. The length of tenure offered will depend on many factors, such as whether there are dependant children or if the tenant has support needs
  • why a lifetime tenancy was not offered. Whole life tenancies are still possible and may, for example, be offered where there is long term illness or disability
  • any decision not to offer a renewal at the end of a fixed term tenancy

In effect any decision relating to the granting of a tenancy is open to a public law challenge.

Overcoming/avoiding potential problems

In order to avoid such challenges, clear policies and procedures are paramount. Any departure from them will need to be documented in writing along with the reasons why.

Decisions must be taken transparently and be consistent with new supply commitments. Records of the decision making must be kept and the reasons for the decisions must be communicated. There must be a consideration of issues raised by tenants and such considerations should also be documented. In the event that tenants are not offered a renewal at the end of a fixed term tenancy, they must be offered reasonable advice and assistance.

Tenancy strategy

Under section 126(4) of the Localism Bill, local housing authorities must publish a tenancy strategy within 12 months of s.126 coming into force. The strategy must set out matters to which registered providers are to have regard in formulating policies relating to:

  • types of tenancy they grant
  • circumstances in which particular tenancies are to be granted
  • length of terms
  • circumstances in which a further tenancy is to be granted when the existing tenancy ends

The tenancy strategy must summarise those policies or explain where they may be found. Before adopting a tenancy strategy, or making modifications reflecting a major change of policy, the authority must send a copy of the draft strategy or proposed modification to every housing association in its district and give that provider reasonable opportunity to comment on the proposals.

Under section 127(2), the authority must also consult such other persons as the Secretary of State may by the regulations prescribe and, in the case of an authority that is a London borough council, consult with the Mayor of London.

Further practical issues

The following additional issues will also need to be considered when granting flexible tenancies:

  • if there is going to be no offer of a new term at the end of the fixed term, there must be a six months "minded to" notice
  • during the fixed term a Notice to Quit is of no effect
  • section 139 of the Bill will amend section 13 Landlord and Tenant Act 1985 to extend the repairing obligation contained within section 11 Landlord and Tenant Act 1985 to also cover tenancies granted for a fixed term of seven years or more
  • where the term of the flexible tenancy exceeds three years it must be executed as a deed. Where the term exceeds seven years it must be executed as a deed and be registered at Her Majestys Land Registry
  • rights to manage (whereby lessees take control of the management of a block of flats away from the landlord) and enfranchisement (the process of buying the freehold of a block of flats from a landlord) are available to qualifying tenants of flats under long leases (leases granted for a fixed term of more than 21 years whether or not it can be brought to an end before the end of the term). Sometimes renewal leases where the total renewal exceeds 21 years, including the subsequent lease, may also be included
  • recovery of possession of a fixed term tenancy is somewhat more limited than a periodic tenancy. Some of the grounds for possession in the Housing Act 1985 cannot be used, for example schedule 2 ground 9

Conclusion

Whilst the Localism Bill may well afford local housing authorities with greater flexibility over the types of tenancy offered to their tenants, it also opens up the potential for numerous legal challenges. In order to avoid these potential pitfalls it is imperative that the authority has sound policies and procedures in place to deal with the implementation of the new tenancy regime.

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17Sep

In-house lawyers' update Manchester office

Our next in-house lawyers' sessions will give in-house lawyers the tools and strategies for dealing with some of the problems caused by recent changes to the law.

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25Sep

In-house lawyers' update Nottingham office

Our next in-house lawyers' sessions will give in-house lawyers the tools and strategies for dealing with some of the problems caused by recent changes to the law.

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The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

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