May 2015, the Home Stretch

Andrew Arden QC and Clare Cullen consider the proposals for housing from the three main political parties

Homes for Britain Campaign

The Homes for Britain campaign has a simple message – the next Government must commit to ending the housing crisis within a generation and to publishing a long-term plan to achieve that aim within a year of taking office.

That there is a housing crisis can no longer be ignored. The frustration it causes, which has been bubbling beneath the surface for a long time, was in the public spotlight during the Focus E15 mothers’ campaign a few weeks ago: empty flats in east London were occupied, in part, in protest at the lack of social housing in the area. The media interest in that case may be a cause for optimism – is the housing crisis finally filtering through to the political and media agenda?

 

The scale of the problem

A joint report from KPMG and Shelter, Building the homes we need, A programme for the 2015 government, estimates that 250,000 new homes a year are needed in England alone: in 2013, just under 110,000 were built. Not since 1987 has the number of new homes in England exceeded 200,000 per year; you have to go back to 1977 to exceed 250,000 (see DCLG, Live Table 244). Radical, comprehensive and long-term plans are required if anything like that level is to be achieved again.

The drop in new homes has been largely due to the steady decline in local authority building. In 1978, local authorities were responsible for completing 93,310 new homes; 39% of the total that year. This number declined to 840 by 2013. This wouldn’t necessarily be a problem if housing associations or the private sector had filled the gap but that simply hasn’t happened. Whilst the number of new homes built by housing association has increased, 21,610 in 2013, it is nowhere near the level that local authorities used to provide.

As for the private sector, it has rarely exceeded 150,000 since 1978 (only exceeding between 1987-1989 and in 2007) and has remained below 100,000 since 2009. This is unsurprising. As this blog has previously noted, the private sector will never supply enough “for the very simple reason that the return on investment takes so long – decades – that it is inherently uncertain, vulnerable both to financial market forces and to political shifts in residential landlord-tenant law” (Rent Control to Major Debt).

Any plan for increasing the number of new homes must include new homes within the social housing sector. Despite the changes to Part 6, Housing Act 1996 (introduced by Localism Act 2011), allowing local authorities once more to maintain closed waiting lists, waiting lists remain high (in 2013, just below 1.7 million). It is simply not possible, or economically sound, to rely more and more on private sector housing, which seems to be current policy, to fill the gap. Not only is the private sector not building more homes, but housing those who would traditionally have been accommodated in the social rented sector in private rented accommodation simply results in the benefit bill shooting up, money which could be spent investing in new homes. As set out in Shelter’s report, Bricks or benefits? Rebalancing housing investment, May 2012, reliance on the private sector has increased the cost of housing benefit significantly: it is estimated that if just 8 per cent of housing benefit claimants in private rented housing moved to affordable social homes, the Government would save £200 million.
Public support

It is often suggested that there is insufficient public support for new-build housing, particularly social housing, both because of NIMBY-ism and for public spending reasons. A recent study by the Fabian society, Silent Majority: How the public will support a new wave of social housing, September 2014, suggests otherwise: albeit using a relatively small data set through focus groups, the study found 57% in support and only 15% opposed to new social housing being built; it also found that concerns about NIMBY-ism may be misplaced, although opposition rose to 27% when participants were asked about building social housing in their area but the percentage of those in support remained higher, at 44%, with 23% undecided either way.

There is another reason, not touched on in the Fabian report. The number of adults who are still living in their parents homes – whether having moved back in or never having moved out – is at an all-time high (at any rate in recent times), as a current television programme calls it, The Hotel of Mum and Dad: “since 1996 the UK has seen the number of 20-34 year olds living with their parents grow by 25%, to reach 3.35 million in 2013 – 72% of whom are in work” (Building the homes we need, p.25). Of course, enjoying the company of one’s children for a much longer period of time than used to be the case (when, say, they either did not return from university, or only briefly) is a joy – but not necessarily an unqualified one): there are also frequent reports about how much of their savings parents are spending to help their children into owner-occupation!

This surely provides an incentive for all parties to start putting new homes, including those within the social housing sector, at the top of the political agenda.

 

Policies

The first stage in the Homes for Britain Campaign was the autumn party conferences. So, what are the current proposals of the three main parties to address this issue? We have picked a couple from each.

Conservative

Unsurprisingly, it is the Conservative Party who offer the least by way commitment to building new social housing; if this had been a priority, it would surely have already been addressed: to the contrary, the capital investment funding for social housing was reduced by 60% in the Spending Review in 2010 while the Right to Buy – responsible for a substantial part of the decline in the social housing stock – has been stimulated by increased discounts.

  • Expansion of Help to Buy One policy in which the Government continues to invest is the Help-to-Buy scheme; this applies to first-time buyers under 40 who purchase a new home and operate by way of an equity loan of 20% of the price. It is intended to build 100,000 new homes on brown field sites for this purpose. To encourage developments, they would be exempt from restrictions under s.106, Town and Country Planning Act 1990, agreements. This, however, is not going to do much for those in need of social housing as it is the s.106 agreements which have introduced the requirement for a proportion of social housing in all new developments. In other words, in place of that proportion – which guaranteed that the housing would go to those who qualified for social housing (through social landlord allocation) – the housing will go to those who can find the remaining equity, e. the better off amongst those in need.
  • Further Benefit Cap Benefits will be capped at £23,000 (down from £26,000). Whilst this is not a policy directed at new homes, it is a further attack on those who are potentially the most in need (large families) and some housing associations have already warned of potential knock on effects; if tenants are unable to pay rent due to the application of the benefit cap, housing associations will not have the funds, or will have difficulty accessing funds, to invest in new social housing.

Labour

Labour are seeking to develop a long-term plan to address the housing crisis, broadly in line with the campaign, albeit that there are as yet no real details about how they propose to do so.

  • Target to build 200,000 new homes a year by 2020 This is still short of what is required but at least looks like an attempt to formulate a long-term, sustainable plan. Sir Michael Lyons has been commissioned to lead a review for the party but this has not yet been published.
  • Cap on rent increases This policy was announced earlier this year and was the subject of comment in the post Rent Control to Major Debt. Such a measure could help prevent the housing benefit bill from increasing because of the high costs of rent in the private sector, savings which could then be used to invest in building more homes.

Liberal Democrats

The Liberal Democrats appear to be the most radical in their proposals.

General Election

The proposals are still a long way off what is required. Will the remaining six months before the General Election see the parties fully develop their plans (or be persuaded to formulate a plan) to tackle the housing crisis, or will housing – as it always seems to do – be submerged by other, putatively more pressing issues? What do you think?

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Retaliatory Eviction – a solution?

Andrew Arden QC and Clare Cullen consider the new proposals to deal with retaliatory eviction.

Introduction

This blog has previously commented on retaliatory evictions of assured shorthold tenants (see Retaliatory Eviction”, August 13, 2012, and We shall not be moved, March 18, 2014). The Citizens Advice Bureau’s report, The tenant’s dilemma”, June 2007, proposed giving a judge discretion to “overrule” a section 21 notice where the tenant raised and proved a case of retaliatory eviction. In “Review of Property Conditions in the Private Rented Sector”, February 2014, DCLG suggested that any restriction on a section 21 notice should be reserved for “serious cases of disrepair” only (e.g. category 1 hazards).

Sarah Teather’s Private Members’ Bill (The Tenancies (Reform) Bill 2014-15) is the first active step in this area and, on September 11, 2014, the Government announced that it was supporting the Bill “in principle” albeit that its support is on condition that it “only targets bad landlords and cannot be used by tenants to frustrate legitimate evictions.”

Draft Bill

Notice following action by local authority

The Bill is exclusively concerned with assured shorthold tenants rather than any others who have no – or no real – security. Under its cl.1, if relevant condition is met, a s.21, Housing Act 1988, notice qualifies as retaliatory eviction and, as such, is intended to be wholly ineffective. The condition is that the s.21 notice is given within six months of service by the local authority of one of a number of specified disrepair notices (improvement notice under ss.11 or 12, hazard awareness notice under ss.28 or 29, notice of emergency remedial action under s.40(7), all of Housing Act 2004).

As drafted, the proposal would not be restricted to retaliatory eviction in the context of disrepair; of course, a landlord could always serve a s.8 notice for, e.g., arrears, but if the retaliation is because the tenant has dome something which the landlord does not like, there is no apparent room for manoeuvre. This is probably a good thing but, on the other hand, might incline the courts to come up with their own limits which, in turn, may be risky.

Whether or not for that reason, another problem is that the way the proposal is drafted does not entirely rule out the possibility that the courts will treat the s.21 notice as valid from after the six month period; while this is unlikely, so were some of the decisions on the deposit laws – which effectively gutted the provisions – before their amendment by statute, and it would be preferable to spell out the consequences than to leave them to be explored by the courts.

Disrepair complaint

A second category of retaliatory eviction arises when a s.21 notice is served within six months of a written complaint to the landlord about disrepair in the premises, meaning disrepair within s.11, Landlord and Tenant Act 1985, or premises in such a state as to be prejudicial to the health of the occupants (statutory nuisance). For this provision to take effect there must be either a category 1 or “relevant” category 2 hazard in the premises (to be prescribed). The complaint must have been in writing. The disrepair must not be the tenant’s responsibility (which excludes an act or omission consisting of normal domestic usage of the premises).

The provision is not well drafted: it is left unclear whether the condition has to have existed at the date of the written complaint or as at the date when the notice is issued or even as at the date of hearing.

To prove that a hazard (of either kind) existed, a certificate from the local housing authority will be conclusive evidence but it is also unclear whether a tenant could choose to prove the condition in some other way, e.g. independent, expert evidence. Either way, this is something of a hurdle, but it is exacerbated by a somewhat surprising – not to say unprecedented – provision that the s.21 notice is not prohibited if the landlord does not consider that the relevant condition is met, in which case (lending credibility but probably not certainty to the proposition that independent evidence is admissible) a certificate of the authority confirming the condition appears to be necessary, i.e. the only way to prove the condition. This may be difficult to obtain although ancillary provisions include regulations which (among other matters) must address local authority responses, prescribed form of certificate and what matters are to be treated as the tenant’s responsibility.

Gas Safety and Energy Performance Certificates

Landlords have obligations in relation to gas safety and energy performance, including the supply of certificates to the tenant: no s.21 notice may be served so long as a landlord is in breach of the duty to provide those certificates.

Section 21 notices

It is proposed both that these should be in prescribed form, and that they should have a limited life (six months), the latter presumably so as to end the practice of serving notice immediately after the grant (also see “We shall not be moved”).

Fitness for Human Habitation

Finally, it is proposed to amend s.8, Landlord and Tenant Act 1985, to require shorthold premises to be fit for human habitation at the commencement of the tenancy, and for the landlord to maintain them as such throughout the tenancy – although, oddly, this is not in itself a ground for barring a notice (nor is unfitness under the 1985 Act synonymous either with s.11 or a hazard under the 2004 Act: to the contrary, the 1985 Act adheres to the unsatisfactory unfitness laws which the Housing Health and Safety Rating System replaced).

Comment

The Bill is good news but it badly needs re-drafting and – now that the government has said it will support it – that is something that will be undertaken: how much of the substance of the Bill survives that exercise may, however, be a different question.

Nor does the Bill go far enough: the involvement of the local authority in both the principal provisions means that – as observed in the post We shall not be moved” – it will be something of a postcode lottery; proving the condition for the “complaint” proposal otherwise than through the authority will be costly and public funding will probably not be available and, in any event, buys no more than an additional six months, although the reality may well be less because the six month time limit dates from the notice or complaint, so that notice can be re-served as soon as it is up, which may be only three or four months from when the “bad” (prohibited, retaliatory) notice itself was given.

These criticisms may seem churlish but the danger is that if the proposals are ineffective – because they have not been thought fully through or drafted carefully enough to make them worth operating – it sets back the cause of a much sounder, more protective approach, just because they do not work. The Bill needs much, much more attention – and from supportive hands – before it goes further.

The reality is probably that the Bill will not become law before the next election: its best use may yet be to force the issue of retaliatory eviction onto the agendas of all parties so that, whoever wins, at least some protection against this activity does finally arrive.

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Summertime… but the living ain’t easy!

Andrew Arden QC & Robert Brown

The bedroom tax is now 16 months’ old. Publication of a new report shows that it is not working.

We considered part of the Government’s package of benefit reductions (or “reforms” as the Government insists on calling them) a few months ago, in ‘Being for the benefit of Mr Tight’. One of the key measures is the bedroom tax. To recap, the bedroom tax is implemented by regs A13 and B13 of the Housing Benefit Regulations 2006 (SI 2006/213) (as inserted by the Housing Benefit (Amendment) Regulations 2012 (SI 2012/3040)). It requires local housing authorities to calculate the housing benefit payable to social housing tenants by, inter alia, reference to the number of bedrooms for which the claimant is eligible, defined by the number of occupiers of the property – for instance, a couple are expected to share a bedroom; likewise, two children under the age of 10 are expected to share. If the property contains an extra bedroom, the housing benefit payable is reduced by 14 per cent; if two or more extra bedrooms, by 25 per cent.

As we noted back in April, the impact assessment supporting the amending regulations suggested no great financial savings, maybe even none. The theory behind the bedroom tax was that under-occupied social housing should be freed up in order to allow families to move out of over-crowded housing. As we said then

“In reality, it is not so simple: there are many more cases where an extra bedroom is legitimately required than the Regulations provide for; and, it is outright ignorant to assume that moving is simple or in many cases even possible, especially if a social landlord (offering an affordable rent) does not have (or is not willing to offer) an appropriate, smaller property. Thus, there is no qualification on the reduction that smaller, affordable accommodation is available, or that the local housing authority will make it available. …

“We do not need to rely on our experience of working with social landlords and tenants to know just how exceptional it is to be able to make this sort of home-swap. Not only is it general knowledge but it was also the predictable consequence of an increasingly-capped housing benefit system that more and more private landlords would cease to accommodate tenants dependent on it.”

You no longer need to just take our word for it: DWP has now published an interim report, Evaluation of Removal of the Spare Room Subsidy, which looks at the first six months of the bedroom tax. A final report is promised for 2015 but for now there is much to take from the interim report.

Discretionary housing payments (which, if Government is to be believed, are the solution to any discrimination caused by the bedroom tax) are not sufficient. The interim report notes that some disabled applicants for DHP have failed means tests applied by local authorities, because they are in receipt of disability benefits – even though those benefits are meant to help with some of the extra costs of having a long-term disability or health condition and are not intended to help with housing costs: see Burnip v Birmingham CC [2012] EWCA Civ 629; [2013] H.L.R. 1.

Another concern in relation to DHPs was that some benefit claimants affected by the bedroom tax had either failed to apply for a DHP altogether or failed to provide adequate evidence in support of their application, especially where there was a mental health condition.

Finally, so far as DHPs are concerned, awareness of their availability is too low: over half of those who were affected by the bedroom tax and had not applied for a DHP said that they were not aware of the possibility.

Tenants, meanwhile, are clearly struggling with the financial impacts: 57% say that they have spent less on household essentials, 21% that they have borrowed money from family or friends, 3% have borrowed money via a credit card, while 3% have borrowed money through a pay day loan. The researchers do not appear to have asked tenants whether they had borrowed from a loan shark, but we note that 2% of affected tenants said that they had taken some “other” action, which must raise concerns about the measures to which tenants are being forced to resort.

On the other hand, only 13% of tenants said that they had looked at moving to another social housing property. Just 3% said that they had looked at moving into the private rented sector although those who had done so did appear (according to the report) to have had some success: 1.4% of affected claimants (i.e. half those who had looked into it) moved out of social housing and into the private rented sector. The net result for the HB bill is fairly obvious.

Unsurprisingly, rent arrears have increased. While the interim report was careful not to attribute this directly to the bedroom tax, it is surely the most obvious candidate. The conclusion seems logical: 41% of affected tenants are reported as having paid the full shortfall; if 41% did…

And what does the interim report say about the grand aim of the bedroom tax: incentivising tenants to move to smaller properties and free up space for larger households? Very little, it seems. A mere 4.5% of affected claimants managed to move to a smaller property.

If the Government is concerned about wasted space, it is not even clear that the right people are being targeted. A recent research paper, ‘Quantifying the extent of space shortages: English dwellings’, has concluded that, if the Government wishes to identify oversized homes, the relationship between the number of inhabitants and the number of bedrooms is a poor metric to use. The researchers found that under-occupation was less common in dwellings where HB was paid and that most properties for which HB was paid were undersized when compared with the space standard adopted by the Greater London Authority for new-build homes. The researchers also found that, somewhat counter-intuitively, 75% of households who lost some HB due to the bedroom tax were undersized when compared with the space standard. Based on their analysis, only 19% of those affected by the bedroom tax actually had more space than they needed. One cause of the problem is that properties in the UK are simply too small: the UK has the smallest homes by floor area in Europe. As the research paper concludes

“the vast majority of homes are at or below acceptable space standards. This physical shortcoming has been mitigated by residents having low occupation rates, which are necessary and should not be regarded as a wasteful use of space.”

Assuming that the policy goal is a legitimate one, the bedroom tax fails to achieve it because the brute-force methodology does not identify those properties with excess space.

The future for the bedroom tax is uncertain. Labour have said that they would scrap it, while the Liberal Democrats have undergone a partial change of heart and no longer support its current implementation. Given the damage that is being done to tenants, and to the budgets of social landlords, the real question is whether change can await the final report and the general election.

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Measure Twice, Cut Once

Andrew Arden QC & Robert Brown

As Parliament prepares to amend legislation protecting tenancy deposits, we look at what this means for landlords and tenants and consider the lessons for legislators.

Tenancy deposit legislation: a brief history so far

The idea that a landlord taking a deposit from a tenant was free to do pretty much whatever he chose with the money have been around for a long time. In 1998, the National Association of Citizens Advice Bureaux published its report, Unsafe Deposit, which suggested that 48% of CAB clients surveyed had had a landlord unreasonably withhold some or all of the deposit in the previous five years. The Survey of English Housing for 2001/02 found that 69% of tenants who had not had any or all of their deposit returned felt that money had been unjustifiably withheld. While these figures should be treated with some caution – “after all, they would say that, wouldn’t they?” – they clearly gave rise to justified concern.

The sums involved are far from insignificant. In 2002, 70% of the 2.21 million private rented sector tenants had paid a deposit. The average deposit was around £510 (the equivalent of a month’s rent), leading to a calculation that around £790m was being held in deposits. As we have previously noted, the number of private rented sector tenancies has now risen to 4 million. The English Housing Survey reveals that the average rent in the private rented sector is now £163 per week, or a little over £700 per month. Assuming that the proportion of tenancies in which a deposit has been paid has remained stable at 70%, and assuming that the average deposit still represents a month’s rent, £1,960m is currently being held by way of tenancy deposits. Furthermore, as experience is that it is becoming increasingly common to ask for a deposit of more than one month’s rent (i.e. a second months’ deposit to cover the last month’s rent), the total is likely to be even higher.

The consequences for tenants can be more than just the obvious financial issues: Unsafe Deposit cited cases of households facing considerable hardship and even homelessness through their deposits being withheld, as they had no means to raise a deposit for the next property.

In 2000, a voluntary tenancy deposit scheme was set up by the Independent Housing Ombudsman. Take-up was very slow. In 2002, the Office of the Deputy Prime Minister consulted on this issue in Tenancy money: probity and protection, saying that the failure of landlords to sign up to the voluntary scheme meant that a statutory scheme was being considered. Although a draft Housing Bill was published in March 2003, just a month after the consultation closed, it did not make any provision for tenancy deposits. In December 2003, a Bill was introduced to Parliament but there was still nothing covering tenancy deposits.

It was not until May 2004 that the then Minister for Housing and Planning announced that the Government would be bringing forward amendments to the Bill to cover tenancy deposits. Those amendments did not, however, materialise until a relatively late stage in the Bill’s passage through Parliament which had the unfortunate effect that, while the policy behind the measures had been consulted on, the technical detail of the legislation had not.

The tenancy deposit schemes provisions were ultimately passed as Pt 6, Ch.4, Housing Act 2004. Section 213(1) provided that where a landlord received a tenancy deposit in connection with an assured shorthold tenancy, he had to deal with the deposit in accordance with an authorised scheme. The initial requirements of the scheme had to be complied with within 14 days of receiving the deposit and a landlord had to provide his tenant with certain prescribed information within the same period. The prescribed information is to be found in the Housing (Tenancy Deposits) (Prescribed Information) Order 2007 (SI 2007/797). It includes such matters as the contact details and procedures for the deposit scheme and identifying features of the tenancy.

The sanctions for non-compliance are found in ss.214 & 215. Where a deposit has been paid, but the landlord has failed to deal with it properly, the tenant could apply to the county court. The county court is empowered either to order the landlord to pay the deposit into a custodial scheme or to repay it to the tenant. The court was obliged to order the landlord to pay the tenant a sum equal to three times the amount of the deposit. Section 215 provides that a landlord who had not complied with the requirements relating to a deposit is unable to serve a notice under Housing Act 1988, s.21.

There are two types of tenancy deposit scheme: custodial and insurance. In a custodial scheme, the landlord pays the deposit over to the scheme administrator. The scheme administrator then keeps the deposit until the end of the tenancy, at which point it is returned to the landlord or tenant, as appropriate. In an insurance scheme, the landlord keeps the deposit. At the end of the tenancy, the landlord is required to make the appropriate repayment to the tenant, via the scheme administrator. The scheme administrator is also required to maintain insurance, to cover any shortfall if the landlord does not cooperate. There are authorised schemes of both types.

The tenancy deposit provisions came fully into force on 6 April 2007. They have been the subject of much subsequent litigation. Two Court of Appeal decisions substantially reduced the effect of the protective measures. First, in Tiensia v Vision Enterprises Ltd (t/a Universal Estates) [2010] EWCA Civ 1224; [2012] 1 W.L.R. 94; [2011] H.L.R. 10, the Court of Appeal held that where a landlord has failed to comply with the initial requirements of an authorised scheme, he will not be liable to pay the statutory penalty if the deposit is protected before a county court hears the application under s.214. Secondly, in Gladehurst Properties Ltd v Hashemi [2011] EWCA Civ 604; [2011] H.L.R. 36, it was held that a county court could not order a landlord to pay the statutory penalty if the tenancy had come to an end.

Parliament sought to reverse the effects of both decisions through amendments in Localism Act 2011. The time for complying with the initial requirements of a scheme and for serving the prescribed information was extended from 14 days to 30 days. If the landlord fails to comply within that 30 day period, the county court can award a statutory penalty even if the landlord does subsequently comply. This has the effect of reversing Tiensia. Amendments were also made allowing a tenant to make an application under s.214 after the tenancy had come to an end, thus reversing Hashemi. The statutory penalty was itself amended, however, to give county courts a discretion as to how much to order the landlord to pay to the tenant (within a range of one to three times the deposit).

Litigation around the 2004 Act has not abated. In Superstrike Ltd v Rodgrigues [2013] EWCA Civ 669; [2013] 1 W.L.R. 3848; [2013] H.L.R. 42, the parties had entered into a tenancy on 8 January 2007 (i.e. before the provisions of the 2004 Act came into force) for a term of 364 days. A deposit had been paid by the tenant. In January 2008 (i.e. after the provisions came into force), the fixed term came to an end and a statutory periodic tenancy arose under Housing Act 1988, s.5. The landlords retained the deposit. The Court of Appeal held that this amounted to a new tenancy and that the tenant was to be treated as having paid a deposit at that time. As the landlords had failed to take any steps to comply with the tenancy deposit scheme provisions, they were prevented from relying on a s.21 notice.

Left unclear was what would happen where a fixed term tenancy was entered into after the 2004 Act came into force, and the provisions were properly complied with: did the commencement of the statutory periodic tenancy comprise a new tenancy with the result that the provisions had to be complied with afresh?

As a response, the Government is now bringing forward further amendments to the tenancy deposit schemes legislation, which have been introduced to the Deregulation Bill currently progressing through Parliament.

The Deregulation Bill

At first glance, the Deregulation Bill may seem an odd vehicle for amending the tenancy deposit legislation. That may be so but the long title of the Bill says that it is designed to make “provision for the reduction of burdens resulting from legislation for businesses or other organisations or for individuals.” Those in the business of being landlords will hope that the amendments do relieve them of the considerable burden that Superstrike threw their way.

In its current form, cl.31 of the Bill would introduce four new sections into the 2004 Act, as 215A-215D.

Importantly, the new s.215A provides that the requirements in s.213 will apply to any AST where a deposit was received before 6 April 2007 and a statutory periodic tenancy has arisen on or after that date: that adopts Superstrike. Time for compliance in those circumstances is, however, extended to 90 days from the commencement date of these amendments, during which there is a period of grace the effect of which is that the reversal of Tiensia does not apply, i.e. if the landlord complies within this period, there will – in these Superstrike cases – be no penalty.

The new s.215B will also reduce a landlord’s burdens. It provides that where a deposit has been received in relation to a fixed-term AST and has been dealt with properly, there is no need for the landlord to re-comply where a statutory periodic tenancy arises. The new s.215C makes similar provision where a new fixed-term or contractual period tenancy is entered into.

A wider problem?

It is just over seven years since the tenancy deposit schemes provisions in the 2004 Act came into force. In that time, Parliament has already had to use the Localism Act 2011 to amend the legislation once. The second set of amendments, contained in the Deregulation Bill, are likely to become law soon. These changes have not been caused by some change in policy. The changes have been brought forward because the original legislation was not working as it had been intended to. Having realised this, Parliament attempted to fix the problem in 2011. It is clear from the need for further amendment that this was not successful.

Our intention here is not to criticise the policy – we could argue that it should go further (Shelter’s suggestion, in response to the 2002 consultation, of a single, national custodial scheme which directly collects and holds all deposits has much going for it), but the general thrust of the policy is in the right direction.

The lesson that we would like to see learned from of all of this is that although it is all very well consulting on policy options, it is not enough to ensure good legislation. Housing law is complex. The technical application of the law is, in practice, at least as important as the policy. As we have already noted, there was no consultation on the wording of the tenancy deposit scheme provisions. Hindsight is, of course, 20/20. Nonetheless, we are confident that at least some of the problems that have befallen the tenancy deposit schemes legislation could have been avoided if draft legislation had been made available for public consultation.

It is unfortunate that the Law Commission was not asked to become involved as by the time that it produced the draft Rented Homes Bill in 2006, it was already too late. In any event, while the Law Commission’s involvement would surely have been beneficial, this is not necessarily the type of work that it is designed for. While the Law Commission’s functions include law reform projects, these are invariably substantial, over-arching projects (such as “Renting Homes”). The tenancy deposit legislation called for something a bit different.

What would have been useful in the summer of 2004 is a consultative and advisory body that can focus on specific, discrete legislative topics while remaining able to consider them in the wider context. Perhaps the time has come for a Housing Law Commission? If the Government decides to proceed with legislation tackling retaliatory eviction, it will certainly be necessary to ensure that the legislation is both understandable and effective. Equally, we have previously suggested some areas of possible reform, such as licensing of landlords and letting agents and lettings to students.

You never know, if someone asks nicely we may even be persuaded to participate…

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Rent Control to Major Debt

(with apologies to David Bowie)

ANDREW ARDEN QC AND ROBERT BROWN

With house prices and rents unaffordably sky high, we wonder whether it is not time to think again about a method that was historically successful both for tenants and owner-occupiers – rent control.

As house prices sky-rocket and would-be owner-occupiers drift aimlessly in space with no hope of ever returning home, our thoughts turn wistfully to an era of rent controls when tenants could remain in accommodation at rents that they – and through housing benefit – the state could afford until they had saved enough to buy at a price that was not excessively inflated by scarcity.

When Ed Miliband recently spoke of tenancies with minimum terms of three years during which rent increases would be subject to an upper limit, the landlord lobby started to shriek “rent control” as a term of abuse. Strictly (oh so strictly) rent control in its legal sense referred back to the method of fixing rents abandoned in 1957 which had led to levels that were, we accept, unsustainable; but rent control in its popular sense, meaning controls on rent fixed either by realistic formula or an independent body (the Rent Officer), had much to recommend it and – if we look back now – we can see that it generated (over its tenure: 1965-1988) the climate in which the high rise in owner-occupation could follow

In short, if house-owners can make more money selling than renting, then hey, guess what, that’s what they’ll do. Market rents – under assured tenancies – will always go in only one direction (we won’t bother to say which – as if…!) unless and until building to rent is perceived as producing more profit for the construction industry which, we see historically time and time again, it never does, for the very simple reason that the return on investment takes so long – decades – that it is inherently uncertain, vulnerable both to financial market forces and to political shifts in residential landlord-tenant law.

With rent control, you know what you get; sure, it creates scarcity in the rental market, which is why fair rents (1965-1988) excluded scarcity value, and only functions if accompanied by relatively full security of tenure (1974-1988, following the abolition of the furnished tenancy exception) – i.e. exceptions for, e.g., truly temporary arrangements (holiday lettings, student lettings, fully-serviced lettings) and “personal” lettings (i.e. resident landlords, absentee owner-occupiers).

Traditionally, security has been applied to existing lettings: the flood of evictions would not be tolerable. The shrill cri de coeur of the small buy-to-let landlord is not politically acceptable in the run-up to an election but – if rents are properly set – the consequence is not that they lose money but that they lose the ability to make more each time the market rises and/or to evict in order to sell when that becomes their choix du jour. (Yes, one of us is just back from a holiday in France).

In any event, as an earlier post suggested – ALL IS FORGIVEN: BRING BACK THE FAIR RENT (and slash the social security bill, why don’t you?)! – it is not all or nothing: it would be possible to try out an exemption from security for, say, the landlord who only owns one or two properties (with appropriate definitions to minimise avoidance) while re-introducing fair rents.

There are as many houses beforehand as there are after rent control is introduced, and those which are not re-let are available for sale, at prices that, if not exactly affordable to everyone are a lot more affordable than now and that tenants will be able to save for if not having to pour every last penny into rent.

The point is this: the system worked; yes, there was homelessness, but nothing like today; yes, there were evasions and evictions but, again, nothing like now; just because it is an old system does not make it wrong – rent control didn’t cause the financial collapse – that was caused by bankers not landlords.

In some ways, it was all predictable and maybe even predicted. The Housing Act 1980 foreshadowed the end of protected tenancies – secure private lettings at fair rents – in two ways: it introduced the shorthold ground for possession, a mandatory ground fulfilled by compliance with procedural requirements; and, it introduced a new form of tenancy, in build-to-rent accommodation, based on Landlord and Tenant Act 1954 principles and as such let at market rents – they were called… “assured tenancies”.

This was the now forgotten first incarnation of the assured tenancy, forgotten not least because – and this is part of our core thesis (well, alright, if not thesis then story-line) – build to rent just does not work on any scale significant enough to make an impact. A massive failure, all that survived was the name, handed on like an unused wedding dress to a policy of market rents with no security, under the Housing Act 1988. (There is a tendency to treat assured shortholds as starting with the Housing Act 1996 presumption, but this really served to sweep up the few private landlords who had failed to keep pace with the practice adopted from 1988 by the better-informed).

A recent case in the Court of Appeal (Loveridge v. Lambeth LBC [2013] EWCA Civ 494; [2013] 1 W.L.R. 3390; [2013] H.L.R. 31, now en route to the Supreme Court) served to spotlight the intended effect: housing is as valuable when rented as to an owner-occupier; otherwise, the would-be owner-occupier could always outbid the would-be landlord. Again and again, with less rather than more sophistication than Charlie Brown, policy tries to drive house-building with promises of a rental return; again and again, it fails.

It didn’t work in 1980; it is not working now. Build to rent needs subsidies – and gets them (in the hands of social landlords); even the availability of social housing grants – subsidies – for otherwise unregistered landlords is not making any impact.

Everyone agrees we need more houses and that means building them. Everyone knows that to be sufficient, this means houses for sale. Common sense tells us that if people cannot save to buy, there will not be enough prospective owner-occupiers who can afford to buy, which means that there will be less available. It also tells us that if there is less available, it will cost more. True, house prices in many areas are not rising as fast as the foreign money-fed London market, but they are still rising back towards the peak prices of 2007 (as this chart shows) and the problem of people not being able to afford to buy is far, far from confined to the capital.

As our last post – There may be trouble ahead – focused on, the problem is going to get worse when bank rates start to rise and borrowers have to confront the consequences of unaffordable, major debt (well, at some point we had to justify the title, though we freely admit the title came before the post!).

The Government’s principal attempted solution so far, the Help to Buy Mortgage Guarantee Scheme, has had an effect in enabling some purchasers to get on the housing ladder but as Danny Dorling points out in All that is Solid: The Great Housing Disaster, one of the consequences is to support and possibly further increase house prices (in the first six months of the scheme, applicants were assisted to buy 31 properties valued at over £500,000; one in ten applicants had an annual household income of over £80,000). This in turn may contribute to financial risks (a point the International Monetary Fund recently noted). It will also allow rents to remain high. If rents are high, the housing benefit bill stays high.

The next proposed solution, Affordable Rent to Buy, has some attractive features: Government will provide loans to landlords to enable them to build new houses; and those properties will have to be let out at an “Affordable Rent” (i.e. 80% of market rent) for at least the first seven years. This may provide an opportunity for some would-be purchasers to save money that would otherwise be put towards the rent but it strikes us as falling far short of what is needed. In any event, the developer would be able to sell the property to anyone after seven years. This does not make building to rent profitable; it merely provides public funding to boost the profits of those willing to build for a deferred sale (at minimal risk – the loan will be provided at a low interest rate).

The nettle will of course not be grasped before 2015; we fear it will not be grasped afterwards. If not, then we do not expect to see any change in the current imbalance. Young people now draining their bank balances for rent or living at home hoping to save faster than prices rise may see their prospects disappearing further and further into space. Can you hear me, major debt? It is even a commonplace – “generation rent” will never own. Can you hear me, rent control?

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There may be trouble ahead

Andrew Arden QC and Robert Brown consider the future in store for borrowers and their tenants

The Bank of England’s “Bank Rate” (more commonly referred to as “base rate”) reached an historic low of 0.5% in March 2009. To put it in context, just a year beforehand, it had been 5.25%. Even that pales into insignificance compared to previous high points of 14.875% (October 1989) and 17% (November 1979). Since March 2009, however, it has remained rock-steady at 0.5%. This will not last.

It has been widely predicted that the Bank of England’s Monetary Policy Committee will soon start to raise the base rate. The minutes of the Committee’s May meeting suggest that the decision over whether to raise the rate is becoming more balanced and that some members considered that it might be necessary to start raising the rate earlier than previously expected. While we do not know when a rate rise will happen, it is fairly safe to assume that it will happen in the relatively near future.

What has all of this got to do with housing law? Our interest (sorry!) is what it means for borrowers and other occupiers when the interest rate rise starts to bite which is the point when economic policy will collide with housing law.

As rates rise, so will interest repayments on mortgages. This will affect even those on fixed rates because the rate will come to an end at some point, at which time those borrowers will move over to a tracker rate. Nor is it that far away: lenders are well aware of what is happening and, for a while now, longer periods available at a fixed rate have been less readily available.

Even though there is no reason to think that rates will rise as high as they did during the 1980s and 1990s, this is cause for concern. As pointed out by the Resolution Foundation in a recent briefing note, Mortgaged Future: Modelling household debt affordability and access to financing as interest rates rise,

“the continued debt exposure of many households, along with relatively modest expectations for income growth in the coming years, means that even modest rate rises could spark significant affordability pressures for some.”

Many of these are what has come to be known as “mortgage prisoners”, i.e. they are unable to access further credit (as they could have done before the financial crisis in 2008) and so cannot protect themselves from future rises by re-mortgaging. The Resolution Foundation identified that almost one in ten mortgagors might fall into this category.

A stark illustration of the size of the problem ahead can be found in the results of a new survey published by the HomeOwners Alliance, the 2014 Homeowner Survey which found that one in three homeowners fear that they will find it more difficult to afford payments on their mortgage or other debts if interest rates start to rise. In particular, 64% of those on interest-only mortgages were concerned. This echoes the findings of a 2013 HomeOwners Alliance research publication, On the Edge: Impact on Homeowners of Changes to Interest-Only Mortgages, which found that 400,000 people feared that they would no longer be able to afford their mortgage payments and that 300,000 were worried that they would need to sell their home in order to repay their mortgage.

There may be some crumbs of comfort in the Financial Conduct Authority’s guidance Dealing fairly with interest-only mortgage customers who risk being unable to pay their loan, although this assumes that lenders will follow the guidance which is probably an optimism too far: little attention has been paid by some lenders, especially secondary lenders, to the Pre-Action Protocol for Possession Claims based on Mortgage or Home Purchase Plan Arrears in Respect of Residential Property which requires claimants to identify what alternatives to eviction they have considered (and which therefore contains a similar thrust to the guidance) – see Professor Susan Bright and Dr Lisa Whitehouse, Information, Advice & Representation in Housing Possession Cases.

It is inevitable that there will be an increase in the number of cases where borrowers find themselves in serious difficulty. It is at just such times that occupiers – borrowers themselves and, sometimes, their tenants – are most in need of legal assistance. It is no coincidence that many of the key authorities on mortgage possession defences all have their origins in the last big recession in the early 1990s, e.g.

  • Cheltenham & Gloucester Building Society v Norgan [1996] 1 W.L.R. 343; (1996) 28 H.L.R. 443, CA (proceedings issued May 1990).
  • Bristol and West Building Society v Ellis (1997) 29 H.L.R. 282, CA (proceedings issued August 1990).
  • Rahman v Sterling Credit Ltd [2001] 1 W.L.R. 496; (2001) 33 H.L.R. 708, CA (proceedings issued October 1990).
  • Southern & District Finance plc v Barnes (1995) 27 H.L.R. 691, CA (proceedings issued February, April & October 1993).
  • National & Provincial Building Society v Lloyd (1996) 28 H.L.R. 459, CA (proceedings issued July & August 1994).

The list could easily be five times longer!

What it means in practice – pious aspiration aside – is more and more possession claims. This will be observable in, primarily, two ways. The first will be an increase in the number of claims brought by mortgagees against owner-occupiers; the second, an increase in the number of claims brought by receivers against the tenants of buy-to-let properties.

All is, however, not always lost in either case. Many defences may be available to a borrower, even when in default. The first port of call is usually s.36, Administration of Justice Act 1970 read with s.8, Administration of Justice Act 1973, which between them grant the court power to adjourn the proceedings or suspend possession for such period as the court thinks reasonable. The effect of these provisions is that – at any time prior to the execution of a warrant – the court may adjourn proceedings, suspend the possession order or stay a warrant, if it is satisfied that the borrower is likely to be able to clear the arrears within a reasonable period of time, the starting-point for which is the remainder of the term.

Other arguments may be available under the Unfair Terms in Consumer Contracts Regulations 1999 (notwithstanding the decision in Office of Fair Trading v Abbey National plc [2009] UKSC 6; [2010] 1 A.C. 696) or the Consumer Credit Act 1974 (many mortgages are outside of the protection of the 1974 Act, but not all, and there are unresolved issues about the scope of ss.140A & 140B, which give the court wide powers where there has been an unfair relationship between a creditor and a debtor).

Another option may be to rely on Art.8. At one time, this only offered limited assistance as it had been held in Barclays Bank v Alcorn [2002] EWHC 498 (Ch), that s.36, Administration of Justice Act 1970, struck the right balance of interests and was not inconsistent with the Convention rights under Art.8 or A1/P1, so that the Convention added nothing. The law has, however, moved a long way since then (see Manchester CC v Pinnock [2010] UKSC 45; [2011] 2 A.C. 104; [2011] H.L.R. 7, Hounslow LBC v Powell [2011] UKSC 8; [2011] 2 A.C. 186; [2011] H.L.R. 23, and the obiter comments of Sir Alan Ward in Malik v Fassenfelt [2013] EWCA Civ 798, a case we have written about before): these cases suggest that Art.8 requires specific and individual consideration of the proportionality of a re-possession order in each case not merely recourse to a “balanced” law. We hear of district and circuit judges who are prepared to entertain such arguments –the April 2014 edition of Legal Action (available from LAG) includes a report of a case where a district judge was prepared to accept that Art.8 gave the court a wider discretion that s.36, 1970 Act.

Meanwhile, advisers of tenants who face possession proceedings brought by their landlord’s mortgagee or by receivers appointed by the mortgagee also have a range of possible defences open to them. Not only is the argument that Art.8 is available strong, but there are also more traditional domestic law points that can be taken. Has the correct notice been served? Is the notice valid (even after Taylor v Spencer [2013] EWCA Civ 1600; [2014] H.L.R. 9, there is still scope for challenging many s.21 notices)? Has the right party brought the claim? Is there an issue with any deposit paid for the tenancy? Even if none of these works, there may be some limited assistance to be found in the Mortgage Repossessions (Protection of Tenants etc) Act 2010 which can give tenants up to an extra two months in the property.

There may be trouble ahead; the law may be able to help, if only for a while.

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Being for the benefit of Mr Tight

(with apologies to The Beatles & Sgt Pepper alike)

Andrew Arden QC and Robert Brown consider the Government’s continuing programme of welfare reform and its effects on tenants and landlords

Welfare reform is always contentious, not least because it starts with the euphemism ‘reform’ where what is meant is ‘reduction’. The argument in favour of reduction is characterised by rhetoric, pitting ‘hard-working taxpayers’ against ‘scroungers’ and ‘spongers’or worse. Reduction, in one form or another, has not been off the agenda for many years.

Budget and Spending Review 2010
The present Government has upped the ante. In its June 2010 Budget Statement, it announced ‘£11 billion of welfare reform savings designed to reward work and protect the most vulnerable’, including an intention to

“…introduce a package of reforms to Housing Benefit from April 2011 onwards. This includes changing the percentile of market rents used to calculate Local Housing Allowance rates, and uprating these rates by [Consumer Price Index] from 2013-14, capping the maximum Local Housing Allowance payable for each property size, time-limiting the receipt of full Housing Benefit for claimants who can be expected to look for work, and restricting Housing Benefit for working age claimants in the social rented sector who are occupying a larger property than their household size warrants.”

In its Spending Review of October that year, the Government said that it would focus on ‘reducing welfare costs’ and would promote ‘work and personal responsibility’. It was said that this would save £7 billion a year.

The key elements, in terms of those savings, were directed at changes to Employment and Support Allowance and to Child Benefit, from which total savings of £4.51 billion per year were planned. A further planned change was to cap household benefit payments

“… so that no family can receive more in welfare than median after tax earnings for working households.”

The total planned saving to the welfare bill from the cap was £270 million a year.

The only reform in that Spending Review that was directly aimed at housing benefit was to reduce the amount paid to single claimants. It was anticipated that this would save £215 million a year.

As the programme of reduction has rolled on, however, most of the key changes to housing benefit in the 2010 Budget have been made, while the benefit cap proposed in the Spending Review has itself been implemented through (what is left of) housing benefit.

Bedroom tax
The first of the key changes is the social sector size criteria, also referred to by the Department for Work and Pensions (DWP) as the ‘removal of the spare room subsidy’ and characterised by its critics as the ‘bedroom tax': it is not really a tax but the name has stuck, so we shall use it here.

The bedroom tax is implemented by regs A13 and B13 of the Housing Benefit Regulations 2006 (SI No 213) (as amended). It requires local housing authorities to calculate the housing benefit payable to social housing tenants by, inter alia, reference to the number of bedrooms for which the claimant is eligible, defined by the number of occupiers of the property – for instance, a couple are expected to share a bedroom; likewise, two children under the age of 10 are expected to share. If the property contains an extra bedroom, the housing benefit payable is reduced by 14 per cent; if two or more extra bedrooms, by 25 per cent.

The impact assessment suggests no great financial savings from this, maybe none. The theory behind it is that under-occupied social housing should be freed up in order to allow families to move out of over-crowded housing. In reality, it is not so simple: there are many more cases where an extra bedroom is legitimately required than the Regulations provide for; and, it is outright ignorant to assume that moving is simple or in many cases even possible, especially if a social landlord (offering an affordable rent) does not have (or is not willing to offer) an appropriate, smaller property. Thus, there is no qualification on the reduction that smaller, affordable accommodation is available, or that the local housing authority will make it available.

Of course, it is also economic nonsense: given that most social housing rents have not yet risen to the putatively affordable level of 80 per cent, a move to smaller private rented accommodation is likely to mean an increase in housing benefit (at least until the cap is hit).

As an aside, as a housing policy, it is also dubiously a legitimate purpose for social security legislation (notwithstanding the name). Furthermore, it conflicts with Housing Act 1985 s84 and Sch 2, Grounds 15A (England) and 16 (Wales), ie under-occupation is only a ground for possession – freeing up local authority housing – on the death of a tenant.

Keen to publicise the positive options available to those affected by the bedroom tax, the DWP has launched some information videos.

The videos only serve to highlight the paucity of options. Those affected by the bedroom tax are told in one video that they could either move to a smaller property, find a job or take on extra hours at work (as in that’s their choice, not one for their employers?), or apply for a Discretionary Housing Payment (a payment from a limited pot of money which is, as the name indicates, entirely discretionary and which, largely, veers between a tight-fisted approach at one authority to outright refusal at another; it is also almost invariably provided for only a limited period of time). In another – self-congratulatory – video, DWP have managed to find one housing benefit claimant who had moved to a smaller property. The fact that he is such a rare example of how the policy can work reminds us of the way government criticises campaigners for using isolated cases in place of hard evidence, when lobby groups proffer victims of cuts – welfare, housing, education and health – to make their point for media coverage.

We do not need to rely on our experience of working with social landlords and tenants to know just how exceptional it is to be able to make this sort of home-swap. Not only is it general knowledge but it was also the predictable consequence of an increasingly-capped housing benefit system that more and more private landlords would cease to accommodate tenants dependent on it.

Benefit cap
The second key change to housing benefit is the wider benefit cap. This was set out in the 2010 Spending Review although it was not clear at the time that it would be operated by what is in effect deduction from housing benefit. The cap is governed by Welfare Reform Act 2012 s96 and regs 75A to 75H of the 2006 Regulations. It kicks in where a claimant’s total entitlement to welfare benefits (with only a limited number of disregards) is more than £350.00 per week for single claimants or more than £500.00 per week for all other claimants. The cap reduces the housing benefit payable to that claimant so that the total of (non-disregarded) benefits paid does not exceed £350.00 or £500.00 as the case may be.

Again, this is far from unproblematic. It can lead in some cases to significant reductions: in one case that came before the courts, the claimant’s weekly benefit was reduced by £176.75 per week; this is not the highest we have seen. The effect is heightened in cases of homelessness, where applicants are placed in temporary accommodation. While social housing rents are considerably lower than private sector market rents, this is not true of temporary housing. Much temporary housing does not belong to local authorities, but is rented by them from the private sector and then made available to homeless applicants. It is not uncommon, at least in London, to find rents for temporary accommodation that are three or four times higher than the comparable rent for a secure tenant.

Dissent
Two challenges, by way of judicial review to the reforms have, so far, failed: R (MA) v Secretary of State for Work and Pensions [2014] EWCA Civ 13, on the bedroom tax; and, R (SG) v Secretary of State for Work and Pensions [2014] EWCA Civ 156, on the benefit cap. An appeal against the Court of Appeal’s decision in the latter case has been heard by the Supreme Court yesterday and today, with a telling intervention by Shelter making some of these points, emphasising as a common theme the want of choice available to tenants. The result is keenly awaited and we may return to it in a future post.

Meanwhile, the House of Commons Work and Pensions Committee has this month published a detailed and wide-ranging report, Support for housing costs in the reformed welfare system, containing a number of clear recommendations to the Government none of which is likely to be followed.

The Committee begins by noting a concern that rents in the private sector are becoming unaffordable for housing benefit claimants and that ‘Private sector properties which remain affordable to LHA recipients are increasingly of poor quality’. We touched on the issue of the quality of stock in the private rented sector in a previous post. It is apparent that for many people there is no choice other than to accept substandard housing. Quite simply, it is all that they can afford and if they complain about the condition, they risk being evicted.

Closely connected to affordability, the Committee also notes evidence that housing benefit reforms are actively increasing the level of homelessness in certain parts of the country. There are obvious concerns here for those households that are affected but there are consequences for local housing authority resources as well.

The Committee moves on to consider the bedroom tax.

“We understand the Government’s wish to use social housing stock more efficiently and to reduce overcrowding. However, the SSSC [social sector size criteria] so far seems to be a blunt instrument for achieving this. In many areas there is insufficient smaller social housing stock to which affected tenants can move, meaning that they remain in housing deemed to be too large and pay the SSSC. This is likely to be causing financial hardship to a significant number of households. We recommend that the Government carries out a detailed assessment of the available social housing stock in each local authority area. If there is clear evidence that there is insufficient smaller housing stock and that those who are willing to move cannot do so, the Government should consider allowing affected households more time to find ways of adjusting to the SSSC before the reduction in benefit is applied. Where a household is under-occupying but there is no suitable, reasonable alternative available, the SSSC reduction in benefit should not be applied.”

In other words, contrary to the Government’s apparent expectations, there is no vast, previously untapped, reserve of tenants who merely lack the impetus to push through a move.

The Committee’s report goes on to the size-blindness of the Regulations, eg a room may only be large enough to accommodate one child, yet the Regulations would appear to assume that two children should share it – and the absence of sufficient provision for disabled people. We pause to note that there has been a number of First-tier Tribunal decisions where the application of the bedroom tax has been challenged, both in respect of size and the needs of a disabled claimant. The outcomes appear to vary wildly and there is a marked degree of uncertainty in this area.

The Committee is also critical of the implementation of the benefit cap: a wider exception is called for in cases where disability is involved; and, the Committee draws attention to the difficult issue of temporary accommodation.

“Local authorities often have no option but to use more expensive temporary accommodation to house homeless households. These households often then fall within the scope of the Benefit Cap. We recommend that the Government exempt households in temporary accommodation from the Benefit Cap because these claimants have no choice about where they are housed and few options for reducing their housing costs. Moreover, local authorities often then have to fund the difference between the capped benefit paid and the rent due, and so there is likely to be no overall saving in public funds from the inclusion of these claimants in temporary accommodation within the scope of the Cap.”

Housing benefit is an important resource for many tenants. The proper assessment and distribution of housing benefit is important stuff. Difficulties – substantive and administrative – with benefits have long led to rent arrears, at which point the next stop is a claim for possession. That process is explored in a recent research report from Professor Susan Bright and Dr Lisa Whitehouse, Information, Advice & Representation in Housing Possession Cases. It is inevitable that taking away part of a claimant’s HB, whether under the bedroom tax or the benefit cap, will lead to more tenants in arrears.

The upshot of these reforms is that social landlords and tenants are both faced with difficult decisions as both are left to bear the brunt of aggressive populist posturing masquerading as policy making.

This takes us back to one of the Committee’s crucial recommendations, which is for a

“…full cost-effectiveness analysis of the SSSC policy, taking into account the funding for Discretionary Housing Payments and the additional costs incurred by local authorities and social housing providers as a result of the SSSC, to assess the overall impact of the policy on the public purse.”

It is precisely the analysis that should have been undertaken before the present policy was adopted.

We are left to wonder what the purpose of these reforms really is. The proposed savings – even if realised – are, in the big picture, relatively small: between little and nothing for the bedroom tax and £270 million on the benefit cap, neither of which factors in the consequential costs (increase in DHPs, court costs, homelessness applications, not to mention longer-term consequences to health and education).

It is policy change for the sake of it. Put another way, all that it achieves for the ‘hard-working taxpayer’ is the targeting (of benefit claimants) itself: it makes the former feel better because the latter are feeling worse but does not actually save any amount of expenditure that makes a difference.

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