The Localism Act 2011 and Affordable Rent Tenancies
The Localism Act 2011 (‘the Act”) received Royal Assent on 15 November 2011. It has been publicised by the coalition government as a means to “shift power from central government back into the hands of individuals, communities and councils”.
The Act makes a number of wide ranging changes to local government law and planning including the creation of a power of “general competence” changes to governance and standards and the introduction of a duty to hold a local referendum. The Act also contains a number of provisions relating to housing and will form the platform for the new flexible and affordable housing products.
Tenancy Strategies and the Localism Act
Section 150 of the Act as provides that each local authority in England must prepare and publish a strategy (“a tenancy strategy”) setting out the matters to which RPs of social housing in its district are to have regard in formulating policies.
Section 150(3) provides that each local housing authority must have regard to its tenancy strategy in exercising its housing management functions. Section 150(4) provides that the housing authority must publish its tenancy strategy before the end of the period of 12 months beginning with the day in which Section 150 comes into force.
Section 151 provides that before adopting a tenancy strategy a draft (or any proposed modification to an existing tenancy strategy) the Local Authority must send it to every RP of social housing for its district and that the RP must have a reasonable opportunity to comment on the proposals. The local authority in preparing its strategy must have regard to its current allocation scheme and its current homelessness strategy.
The Flexible Tenancy Regime and Local Authorities
As the name suggests, a flexible secure tenancy is a form of tenure which will not be granted for life and is more flexible in nature. This is of course a complete change of direction to that adopted over the last few decades whereby local authority tenants have been granted secure tenancies which may only be terminated by proving one of the grounds in Schedule 2 of the Housing Act 1985 or if the tenants cease to occupy the property as their only or principal home. Furthermore succession rights have traditionally meant that the sons and daughters of local authority tenants could enjoy a secure tenancy for their lifetimes too.
The aim of the introduction of “flexible secure tenancies” is to allow local authorities to manage their stock more effectively and to ensure that the occupation of social housing reflects actual need.
Before granting a flexible tenancy, local authorities will be required to serve written notice on a proposed tenant informing the tenant that a flexible tenancy is to be created. It is envisaged that the notice will set out the length of the term to be granted to the tenant as prior to the commencement of the tenancy the tenant may request a review of the length of the tenancy if it does not appear to comply with the local authority’s tenancy strategy. If the tenant requests a review, the local authority is required to notify the tenant of their decision in writing and give reasons if they intend to uphold the original decision in relation to the length of the term.
Affordable Rent Tenancies
RPs will be able to grant fixed term tenancies in the form of assured shorthold tenancies which will be known as “Affordable Rent Assured Tenancies”. The TSA will be replaced by the Homes and Communities Agency, but affordable rent tenancies will be governed by the tenancy standard which will be set by the regulation committee of the HCA. Much of the law in relation to affordable tenancies is not contained in the Act at all, and it is necessary to look elsewhere (e.g. the Housing Act 1988).
Legislation requires that a landlord of affordable rent properties funded by the HCA must be a RP of social housing and therefore subject to TSA regulation. In reality, many RPs of social housing have already been granting assured shorthold tenancies (for example intermediate rent tenancies) albeit outside the more formal framework which is now proposed.
Changes have already been made to the to the rent and tenure components of the TSA tenancy standard to allow RPs to grant affordable tenancies. A consultation took place earlier this year- “Affordable Rent – Revisions to the Tenancy Standard”. The consultation closed on 2 March 2011 and changes were implemented to the Tenancy Standard in late April 2011. The changes effectively allow Registered Providers to calculate rent on an affordable rent basis and to grant tenancies which do not offer the maximum possible security of tenure.
There is likely to be a further amendment to the Standard in April 2012 to allow fixed term tenancies in most or all relets could almost certainly lead to judicial review challenge.
