LGIU Briefing | Housing and Planning Act 2016

LGIU Policy Briefing

23 May 2016

Housing and Planning Act 2016

Sheila Camp and Andrew Ross, LGiU associates

Summary

The Housing and Planning Bill has completed all its parliamentary stages and is now law, having received royal assent on 12 May 2016. The new Act consists of 8 Parts:

Part 1: New Homes in England

Part 2: Rogue landlords and letting agents in England

Part 3: Recovering abandoned premises in England

Part 4: Social housing in England

Part 5: Housing, estate agents and rent charges: other changes

Part 6: Planning in England

Part 7: Compulsory purchase etc

Part 8: General

This briefing summarises and comments on the key provisions  of the Act.

Planning

Agreed amendments

Following the House of Lords committee and report stages, the following amendments were incorporated into the Housing and Planning Bill, which has now received Royal Assent. The House of Commons Librarybriefing paper on the Lords amendments provides more detail (and links to Hansard) of the House of Lords debates and the ping pong stage between the Lords and the House of Commons. The LGA has published a summary briefing of the amendments. Both documents are sources for the information below.

Powers to intervene in local plan making

The Secretary of State will be able to prepare a local development scheme for a local planning authority (LPA) and to direct an authority to bring that scheme into effect. This will allow the government to fulfil its intention to intervene in the local plan making process in designated authorities. These authorities (according to the technical consultation summarised in the LGiU briefing Planning Update Spring 2016) might include councils that do not have a plan or up-to-date policies, and those that have higher housing pressure and/or where intervention would have the greatest impact in accelerating local plan production.

Permission in principle

There are a number of amendments relating to permission in principle. These include:

  • restricting the qualifying documents that allow for granting permission in principle to local plans, registers and neighbourhood plans (the RTPI says it helped to secure this amendment to ensure that the Act does not grant ‘blanket permission’ via any document created by the Secretary of State)
  • enabling LPAs to revoke or modify the permission in principle granted by local plans or registers ‘where they consider it expedient to do so’
  • clarifying that permission in principle lasts for five years if the permission is designated, for example in a local plan, or three years if granted via an application by a developer
  • ensuring that fracking development cannot be granted permission in principle.

Alternative provision of planning services: pilots

The Act clears the way for introducing pilot schemes for competition in the processing (but not the determining) of applications for planning permission. An agreed amendment provides a safeguard that the pilots will last for a maximum of five years, and further clarification that no advice from designated persons will be binding for LPAs. There is also now a requirement for the Secretary of State to consult on the regulations for the pilots, and that he/she has a duty to bring the evaluation of the pilots to Parliament when it is complete.

Affordable housing contributions on small-scale sites in rural areas

Following an amendment the Act will exclude rural exception sites, national parks and areas of outstanding natural beauty from the small sites affordable housing exemption (where developers of sites with10 dwellings or fewer are not required to make an affordable housing contribution). However, this will not take effect until a consultation on the definition of a rural area, and on the regulations and conditions that will be required, is complete. Baroness Royall argued that the amendment is necessary because most development in rural areas is fewer than ten units.

[Note that at the same time as the Act received Royal Assent, the government won a Court of Appeal challenge to a previous High Court decision regarding affordable housing contributions from small scale development. The High Court had quashed the policy, but the Court of Appeal overturned that ruling. The Government welcomed the decision, confirming that ‘builders developing sites of fewer than 10 homes will no longer have to make an affordable homes contribution that should instead fall to those building much larger developments’. The consultation on exempting rural sites will proceed. It has amended the Planning Practice Guidance to reflect this legal victory. The consultation on exempting rural sites will proceed, but has not yet been published.]

Compulsory purchase

There were 90 government amendments to the compulsory purchase section (Part 7) of the Bill. These are too detailed to set out here, but a summary is available in the House of Commons Library briefing paper on the Lords amendments.

Rejected amendments that may still lead to change

The Lords proposed an amendment to restore the zero-carbon housing standard that the government abolished last year. This proposal was rejected by the government, although it agreed to review the minimum housing energy performance regulations as an alternative.

The Lords also proposed an amendment that would have made it compulsory for developers to include sustainable drainage systems in new developments. This amendment was withdrawn after the government agreed to carry out a review of existing planning policy and flooding.

Another amendment that would have inserted into the bill a ‘neighbourhood right of appeal’ against housing applications that weren’t in line with the policies of an emerging or completed neighbourhood plan was also rejected. However, the government left the door ajar for examining this issue further by acknowledging the advantages of an approach ‘based on the existing call-in system’. Baroness Williams expressed a willingness on behalf of the government to ‘look at this issue further’.

What’s happening when

The legislation enacted by Royal Assent of the Act will take effect at different times.

Immediate

  • Regulations to allow for pilot schemes to be set up to test the use of competition from alternative providers for processes planning applications
  • Setting timescales for neighbourhood planning decisions
  • Requiring councils to keep registers of certain types of land (brownfield)

Two months after Royal Assent

  • Permission in principle

Beyond two months

  • Most of the other elements of the Act will come into force later in the year, and will be specified in future regulations yet to be published (the legal website Outlaw says that ‘a number of regulations are likely to be made in October’)

Comment

On the day that the Housing and Planning Bill received Royal Assent, an email plopped into my inbox titled ‘Kill the Housing Bill – Join the Demonstration!’. The Bill may now be law, but this controversial Act (the government lost twice as many votes on the bill as it did on all its other legislation last year combined) looks set to continue to divide opinion.

On planning, the most significant Lords amendment to be rejected by the government related to starter homes. In its consultation on starter homes, the government wants 20 per cent of all homes in new developments to be discounted starter homes for first-time buyers. But the Lords amendment proposed giving local authorities the freedom to meet ‘part or all of the starter homes requirement through delivery of alternative forms of affordable home ownership’.

This amendment was withdrawn by its proponent Lord Kerslake following assurances by the Conservative peer Baroness Williams that the government is ‘completely committed’ to ensuring a range of housing tenures come forward through the planning system (and a reminder that starter homes are a manifesto commitment). Lord Kerslake has maintained that, in his view, leading figures in the government see pubic, social rented housing as ‘toxic’.

Melanie Leech, Chief Executive of the British Property Federation, welcomed the clarity the Act would bring to how the starter homes initiative will work in practice. But she sounded a note of warning [£ paywall]:

‘The fact that the regulations are still yet to be laid, however, casts into significant doubt whether the government will be able to achieve its promise of 200,000 [starter] homes by 2020.’

This caution is significant because the two measures against which the government wants this Act to be judged are increases in housebuilding and home ownership. Warnings that the Act may actually lead to a further loss of affordable housing overall – 180,000 in the next five years according to Shelter – and therefore make it harder for people to buy, mean that local authorities are already having to brace themselves for further reforms, as set out in the Queen’s Speech.

There is, of course, going to be further planning legislation, as set out in the Queen’s Speech – the Neighbourhood Planning and Infrastructure Bill. Watch this space.

Housing

Part 2: Rogue landlords and letting agents in England

This Part of the Act deals with matters covered by the government’s consultation paper “Tackling rogue landlords and improving the private rental sector” (see LGIU Briefing of 10 September 2015). It enacts suggestions made in the consultation paper, in particular introducing::

Banning orders – orders banning a person from letting or managing property in England or acting as a letting agent. The legal provisions for making a banning order are set out. Someone subject to a banning order would also not be able to hold an HMO licence and would be prohibited from disposing of properties to family members and other close associates. Local authorities will be able to make management orders to arrange for such properties to be managed either on a temporary or permanent basis

Banning order offences – to be defined by the Secretary of State by regulation – will be criminal offences

Establishing a database of rogue landlords and letting agents – although the Secretary of State is responsible for establishing the data base, it falls to local councils to maintain, update and edit it. Every authority will have access to it

Rent repayment orders – these will enable a tenant to recover rent paid to a landlord found guilty of specified offences including breaching a banning order or improvement notice, illegal eviction and certain offences under the Housing Act 2004. A local housing authority may also apply for the order.

Part 3: Recovering abandoned premises in England

This Part makes changes to the current procedures for landlords to recover abandoned properties. Landlords will be able to legally recover their property without needing a court order providing that a certain amount of rent (specified in the Bill) is owing and the landlord has served a series of warning notices.

Part 4: Social housing in England

Implementing the Right to Buy on a voluntary basis

This Part of the Act gives legal force to a deal struck between the government and the National Housing Federation that Right to Buy for housing association tenants would be introduced on a voluntary basis in return for full compensation for the discounts incurred. In essence, it enables the Secretary of State to pay grant to cover the cost of the discount to “private registered providers” who offer Right to Buy. It does not stipulate where the grant is coming from – that is covered by the next Chapter.

Vacant higher value local authority housing

The Secretary of State is empowered to require local housing authorities to make a payment to government calculated by reference to the market value of their “higher value” housing stock. They will have a duty to consider selling such property when it becomes vacant. There is the possibility of the payment to government being reduced by agreement, provided the use of the money is approved, for example to enable it to lead on new build housing. In London, any agreement with a London borough must require the authority to replace any higher value home sold with 2 “affordable homes” (to be defined by regulation). Elsewhere, a government amendment provides for any home sold to be replaced with “at least one new affordab

It is implicit that this levy on local authorities will be used to reimburse housing associations for RTB discounts but no costings have been provided by government. The Public Accounts Committee have just issued a scathing report on this, arguing that the whole proposal is based on guesswork.

High income social tenants: mandatory rents

The Act empowers the Secretary of State to set the rent for high income local authority tenants. “High income” is £40,000 for a household in London and £30,000 elsewhere. When the high income tag no longer applies, rent will revert to the current social rent.

Council landlords will be able to require their tenants to declare their income and landlords will able to access HMRC data for verification purposes. Any increased income to local authorities from the higher rents must be paid over to government.

The policy is voluntary for housing associations; associations who “choose to operate a policy for high income tenants will be able to determine the level of rent payable by their tenants” and will be able to access HMRC data.

Reducing regulation of Social Housing Etc

 A part of the NHF’s deal with government on RTB was that the regulation of housing associations would be reduced. The changes are being made progressively but included in the Act is removal of the need for an association to obtain consent to disposal of property. Also removed is the power of the HCA to recover finance for social housing if that housing is sold outside the social sector as a result of a lender recouping their loans or if the landlord is wound up or put into administration.

Insolvency of Registered Providers of Social Housing

 This sets out a special administration regime for private registered providers of social housing that are at risk of entering insolvency proceedings. The overall objective is to ensure that the housing remains in the social sector, either by its sale as a going concern or by breaking up the stock and transferring it to other registered providers.

The Act attempts to introduce an insolvency procedure which gives sufficient assurances to lenders but does not by implication, involve further regulation by the HCA.

Secure Tenancies Etc.

 These provisions – not in the original Bill – apply only to secure tenancies ( plus minor changes for introductory, demoted and family intervention tenancies); thus, council tenants are affected but not to the great majority of housing association tenants.

 The provisions aim to phase out “tenancies for life” otherwise known as security of tenure and replace them with fixed term secure tenancies of between 2 and 5 years. However, for disabled people the fixed term can be up to 10 years and for families with children under 9 years old until the child’s 19th birthday. At the end of any fixed term, the tenancy would be reviewed and could be renewed for a further fixed term. The regime would apply to new tenancies, except where an existing secure tenant is required to move by their landlord.

Schedule 7 contains the amendments to existing legislation needed to bring about these changes. It also provides for the continuation of introductory tenancies. A further change is that someone on a fixed term secure tenancy cannot claim the right to improve the property and claim compensation.

Schedule 8 changes succession rights so that family members other than partners lose their automatic right to succeed to the tenancy if they have lived with the deceased tenant for the previous 12 months.

Although these changes to security of tenure do not apply to housing associations, the government has said it hopes they will be introduced on a voluntary basis.

Part 5: Housing, estate agents and rent charges: other changes

This is a ragbag of measures which do not easily fit elsewhere in the Bill

Assessment of accommodation needs

This clause makes it clear that, when assessing housing needs, local authorities must make provision for everyone living in or resorting to their area – the separate references to Gypsies and Travellers are removed.

Licences for HMO and other rented accommodation: additional tests

This clause amends the existing “fitness” test by stipulating that a licence applicant should not be bankrupt and should be entitled to remain in the UK.

Financial penalty as alternative to prosecution under Housing Act 2004

These clauses enable local councils to impose a financial penalty as an alternative to prosecution for Housing Act offences. Again, this was proposed in the August consultation paper.

Tenancy deposit and other information

This enables a local housing authority to use certain tenancy deposit information to investigate potential Housing Act offences and empowers the Secretary of State to make regulations extending the purposes for which other information can be used.

Estate agents: lead enforcement authority

This makes the Secretary of State the lead enforcement authority for enforcing estate agent legislation, though they are empowered to arrange for a trading standards authority to carry out their duties.

Enfranchisement and extension of long leases

This makes changes to the calculation of costs for enfranchisement and lease extension.

Redemption price for rent charges

Similarly, this changes the cost to rent payer for redeeming a rentcharge.

Comment

The Act has been criticised as signalling the end of social housing and certainly represents a sea change in government attitudes to its purpose. Social housing is seen as a scarce commodity to be used sparingly, rather than providing a home where a household has security and can put down roots. Home ownership, more explicitly than ever, is seen as the only worthwhile route to a secure home. Despite the House of Lords making concerted attempts to change certain parts of the Act whilst it was still a Bill – in fact, they defeated the government forces in the Lords 11 times – the final version which became law on 12 May 2016 survived largely intact.

Particular targets for their Lordships were the use of receipts from the levy on the estimated sale of higher value council homes, fixed term tenancies and “pay to stay”, together with issues dealt with in the planning briefing.

The use of the levy on local councils to fund RTB for housing associations has been criticised on the grounds that

  • it is unfair as it only applies to stock-holding councils
  • there is no definition of “higher value” – some London authorities argue that any newly built home could be deemed “higher value” and question the rationale for a new build programme if this applies.
  • it is uncosted and there is no guarantee that sufficient funds will be generated to fund RTB discounts or, conversely, that enough housing association tenants will exercise RTB to use the funds generated. In the latter case, the levy would remain as part of central government funds

Fixed term tenancies were criticised as being “damaging to family life and communities”, but fit with the government’s idea that social housing may only be “needed” by a household in the short term.

“Pay to stay” – the requirement for council landlords to charge higher income tenants higher rents – has been modified somewhat from the initial proposal that tenants with a household income of over £30,000 (£40,000 in London) pay up to market rent. A taper of 15p in the pound for every pound over the income level has been introduced; only taxable income will be assessed; and the income thresholds will be uprated annually.

Housing associations are excluded from pay to stay, fixed term tenancies and statutory RTB; this is in line with the government’s avowed intention to have the Office for National Statistics reverse their previous ruling that associations are public bodies.

Only time will tell if the new Act really does sound the death knell for social housing; more likely is that it will oversee a steady decline in the council sector of traditional local authority homes whilst spurring councils to seek innovative ways of providing homes which are outside the Act’s ambit.

Related briefings
Housing and Planning Bill update
Planning update Spring 2016
On Your Radar April-May 2016

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