Renting Homes: 1 - Status & Security
CCH response
June 2002
Introduction
The CCH is responding to the Law Commission's consultation paper on tenancy reform on behalf of the Housing Co-operative and tenant controlled housing movement. Our view on the proposals may be particularly unique in that we speak from both a tenant and a landlord perspective, and we have organized our comments to reflect that. We have also made a number of points in relation to housing co-ops and tenant controlled organisations.
A The tenant's perspective
1. Why is this being done?
Many public sector housing tenants will be suspicious as to why the review of tenancy agreements is being done. The proposed changes could easily become closely linked to the fraught debates on the transfer of local authority housing stock. The complexity of the consultation document, the inclusion of private tenancies and changes to court proceedings has already led to confusion amongst the active tenants who have come across the consultation document. This confusion will multiply over the next year as more tenants come to hear of the proposed changes. It is also unfortunate that these changes are being proposed at a time when tenants are having to consider a wide raft of other policy matters, such as the future of council housing, rent restructuring, race and housing issues etc.
This is an opportunity to grant housing association tenants an equivalent secure tenancy status, and it might be more appropriate to focus on more limited objectives rather than run the risk of the whole package being rejected due to its complexity.
2. The Law Commission's process
We are surprised that the Law Commission should have entered into a process to change tenancy agreements - which will have enormous ramifications to the lives of tenants - without involving tenants in the development process. The paper refers to a single representative from TAROE on the Advisory Group for the project, but to no other efforts to involve tenants or their representative organisations in the development of the proposals. It is probable that no more than 1% of tenants will have even heard that the Law Commission is considering changes to tenancy agreements before the closing date for consultation, and yet these are the people who will be the recipients of the Law Commission's proposals.
We wonder whether any Government would embark upon a process to alter the terms of mortgage agreements for homeowners without having an extensive and well-publicised consultation process that enabled homeowners to voice their views about proposed changes.
The process should have been to spend at least a year working with tenants groups (with organisations that are experienced at working with tenants groups) from the "bottom up" to investigate what their concerns and priorities were. No consultation paper should have been released until that had happened.
We therefore propose that the project should be shelved until there has been proper and extensive consultation and discussion with tenants.
3. A consumer approach
The paper sidesteps potentially controversial issues such as the Right to Buy and the Right to Manage by stating that the function of the Law Commission is not to make political judgements. However, the Law Commission makes a major political decision by saying that "it is now appropriate for housing law to adopt a more consumer perspective". Clearly there are housing protagonists who believe that tenants should remain passive consumers, but there has been a growing debate about whether tenants should be enabled to be active citizens in relation to their homes and neighbourhoods. For the Law Commission to make a political decision on one side of this debate is inappropriate and outside the remit that they set themselves.
Why is this important? Ensuring that tenants receive a high quality service cannot be guaranteed through consumer legislation, because this assumes that tenants are in a position to take their service requirements elsewhere, which is generally not the case. It is also not possible to guarantee high quality services through Housing Corporation or Audit Commission regulatory or monitoring systems or even through the Housing Ombudsman. The only way to ensure that landlords perform to a high standard is to enable tenants to take decisions over the provision of their housing services to the extent that they want.
The Law Commission claims that their proposals are radical. Our view is that these proposals are institutionalizing a passive "top-down" consumer approach to the tenant-landlord relationship.
If there are to be major changes to tenancy relationships, a right for tenants to participate to the level that they want and to collectively make decisions about their homes and neighbourhoods should be enshrined as a legal right in the tenancy agreement.
4. Changes to possession proceedings
Most of the proposed amendments to possession proceedings will not be seen as beneficial by tenants. Reducing the notice period to two weeks, and getting rid of suspended possession orders will be seen as particularly controversial.
However, we would anticipate that some tenants will be happy about two of the proposed changes:
Anti-social behaviour is an important issue for some tenants. However, the reality in anti-social behaviour cases is that they are always very complex, and require a complex approach. The lack of take-up of Anti-Social Behaviour Orders suggests that the reality on the ground is that a legal response to anti-social behaviour is rarely appropriate. Some tenants will be happy to see easier possession proceedings for anti-social behaviour, because this is a headline grabbing issue, but other tenants will be concerned if possession proceedings (even for anti-social behaviour) take place without due process.
RSL tenants will be happy to see the removal of mandatory grounds for possession.
B The landlord perspective
5. Changes to possession processes
From a landlord perspective, most of the changes proposed relating to possession proceedings are beneficial. In particular, we would anticipate that landlords will believe that the following changes will make life easier for them:
- an immediate notice period for anti-social behaviour cases.
- reduction of the notice period from four to two weeks in other cases.
- changing notices seeking possession and notices to quit to notices for the commencement of legal proceedings, and thereby removing the "tolerated trespasser" situation.
- the administrative legal approach at initial court proceedings, and the removal of suspended possession orders.
- having all rights set out in a clear contractual tenancy.
- the introduction of alternative dispute resolution.
6. Anti-social behaviour
Whilst we would agree that there is a need for anti-social behaviour to be tackled, we would question whether it is always the case that landlords are the best organisations to tackle it, whether they have the resources available to tackle it, and whether it is always the case that anti-social behaviour should be handled through legal action. A wide range of options are available to landlords to tackle anti-social behaviour through non-legal means.
If tenants are in a position to take legal action against a landlord who they consider has not tackled anti-social behaviour appropriately, landlords could find themselves in protracted and complex "ambulance chasing" court cases to determine whether the action that they have taken is appropriate or not. This could be writing a blank cheque to solicitors who have earned a living out of Section 82 Right to Repair claims.
C The Housing Co-op and tenant controlled housing perspective
7. Fully Mutual Housing Co-ops
Our view is that either fully mutual Housing Co-ops should be exempted from the Law Commission's single tenancy proposals or that full mutuality be properly considered and protected in the single tenancy.
In a fully mutual housing co-op, the tenancy is and has to be linked to membership of the co-op, and therefore the nature of a fully mutual housing co-op's tenancy agreement is fundamentally different from a standard tenant/landlord relationship. The governance of a fully mutual housing co-op relies on active membership of its members. The housing co-op movement has outperformed the "mainstream" housing movement (as demonstrated in all the available research). This is because of the active voluntary input of housing co-op members. Because of the community approach of housing co-ops (reliant on active membership of tenants/members), the housing co-op model has enabled publicly funded affordable housing in areas where other solutions would not have worked, such as:
- at Coin Street on the South Bank of the Thames - where affordable housing has only been possible through using a higher density of homes and through the active involvement of local people.
- at Homes for Change Housing Co-op in Manchester - where a mixed use scheme has enabled local residents develop the flagship scheme of the Hulme redevelopment.
- in Redditch, where the local authority has been able to make best use of scarce land resources through developing community orientated local housing co-op schemes.
These developments have been possible because of the active participation of local people and would have been untenable without the fully mutual housing co-op tenancy model.
If fully mutual housing co-ops are to be included in the single tenancy, the following issues will need to be carefully considered:
- clauses will need to be included requiring that tenants become and remain members of the housing co-op throughout their tenancy
- clauses will need to be included that require the tenant/member to comply with the housing co-op's policies, particularly its membership policy
- the Law Commission will need to carefully consider and detail circumstances in which a housing co-op can withdraw the membership from a member, and thereby effectively end their tenancy and how this would be dealt with in a possession proceeding. The subject of whether housing co-op members/tenants should legally have to participate in the running of the co-op (through clauses in tenancy agreement) is one of considerable discussion within the housing co-op movement. It is very uncommon for a housing co-op member to lose their tenancy due to non-participation (we have heard anecdotally of one case from many years ago), but its inclusion in the tenancy agreement sends a signal to new tenants that by signing their housing co-op tenancy agreement they are agreeing to move into a different form of housing where rights are allied to responsibilities. Including fully mutual tenancies within a single tenancy should be an opportunity to clarify this issue.
8. A co-operative tenancy
If there is a desire that a review of tenancy arrangements be genuinely radical, we would suggest that a co-operative form of tenancy be introduced, where tenants are able to collectively determine their own rights from a range of possible rights available. In a fully mutual housing co-op, tenants have a collective right to determine the policies by which the organisation operates. They have to exercise this right in such a way that the organisation will be able to operate effectively as a business. Therefore tenants should have a collective right to determine their rights - particularly whether housing co-op members should have the right to buy their homes.
9. Open Market Value
Some co-ops have developed homes on loans based on Open Market Value - this means that if the co-op defaults on its mortgage, tenants would lose their homes. Whilst this sounds draconian, if tenants have the power to make decisions about their homes, they have the collective ability to prevent loan default (of course, this is the situation that any home owner is in). This method has enabled the development of viable business plans for co-ops to build homes in London and the South-East, and it ensures that co-ops function as effective businesses.
Therefore a mandatory ground for possession for co-ops developed under Open Market Value would have to be landlord loan default.
10. The obligation to issue Type 1 tenancies
A method that has been used to enable tenants to develop housing co-ops has been for larger RSLs to develop properties on behalf of developing housing co-ops. Given that the Housing Corporation will only register a housing co-op if it has received training and has the necessary skills to run the organisation, this has meant that the developing housing co-op cannot register prior to the tenants moving into the properties. This means that they are not in a position to issue tenancies at that time. Therefore, the larger RSL has had to issue assured shorthold tenancies until the housing co-op themselves are able to register with the Housing Corporation. The tenants are happy with this situation because the reason for it is so that they can issue their own tenancies once they become registered.
If all RSLs are obliged to issue Type I tenancies, this will mean that setting up a fully mutual housing co-op through these means will not be possible.
We therefore propose that, if it is decided that RSLs have to issue Type I tenancies, an exception to RSLs having to issue Type I tenancies should be where an RSL develops homes for a prospective co-op, and therefore has to issue Type II tenancies until the co-op is legally able to issue its own tenancies.
Similarly, we would suggest that a mandatory ground for conclusion of a Type II tenancy would be to change to a Type I tenancy.
11. Structured discretion
Fully mutual housing co-ops are used to operating with contractual tenancies, and this presents no problem to us. However, several housing co-operators expressed concern that the proposals are suggesting that all rent arrears court cases will become the subject of the court's discretion, and the proposal of "structured discretion" did little to ease this concern. Housing Co-ops are usually small organisations who take court action only rarely. This means that:
- they are not in the position that larger landlords are in where they can "book" court time for large numbers of court cases, and it usually take several months for a housing co-op to get court dates
- and that they will probably have to spend a disproportionate amount of their resources on legal costs.
Therefore being able to rely on getting possession of properties when there is a clear breach of the tenancy agreement has proved useful to housing co-ops, and in our experience, we know of no possession action taken by housing co-ops that has not been reasonable.
We would suggest that for all possession proceedings to become reliant on court discretion, there would have to be an allied massive improvement in the efficiency of courts.
12. The Right to Manage
We have already referred above to the Law Commission's sidestepping of the Right to Manage issue. The Right to Manage has been a collective right exercised successfully by many local authority tenants and there are no reasons why RSL tenants should not have a Right to Manage. Furthermore, the Right to Manage should be allied to a full spectrum of opportunities for tenants to be involved in the management of their homes to the level of their choice, such as involvement in service reviews.
All Type I tenants should have a Right to Manage and right to participate in the management of their homes to the level of their choice.
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