The Housing and Planning Act 2016 – A Review

“The Act will contribute to transforming generation rent into generation buy,” says Housing Minister Brandon Lewis

But critics warn that a diktat on starter homes will not solve the housing crisis

August 17th 2016

The Housing and Planning Bill received Royal Assent on 13th May, the final day of the last parliamentary session, following a lengthy battle of parliamentary ‘ping pong’ between the House of Lords and the House of Commons. The Act only applies to England and includes sections on new homes, rogue landlords, the recovery of abandoned premises, social housing, planning, compulsory purchase, and public authority land. [1]

Despite pressure from the House of Lords concerning the need to incorporate energy efficiency and sustainable drainage into the Act, the Act merely commits the Secretary of State to carrying out a review “of planning legislation, government planning policy and local planning policies concerning sustainable drainage in relation to the development of land” (in paragraph 165) and a review “of any minimum energy performance requirements approved by the Secretary of State under building regulations in relation to dwellings” (in paragraph 171).

In a press release, the Government highlighted three features of the new legislation. Firstly, the Act will “help more people own their own home” by extending the ‘Right to Buy’ to housing association tenants and by placing a statutory duty on local planning authorities to promote the development of starter homes. Secondly, the Act will “get the nation building homes faster” by unlocking brownfield land, supporting custom-build and self-build homes, reforming the compulsory purchase system, speeding up neighbourhood planning, and ensuring that all local planning authorities have a local plan.

Controversy

The third feature of the Act has caused much of the controversy in debates about the Bill. This is the package of measures that, according to the Government, “will ensure the way housing is managed is fair and fit for the future.” The measures include the requirement for social tenants on higher incomes to pay higher rents (the so-called ‘Pay to Stay’ requirement), placing a duty on local councils to consider selling their “higher value housing assets” as they become vacant, and reducing the regulatory controls on private registered providers of housing. The management package also includes measures to tackle rogue landlords and measures to enable local authorities to access data on the private rented sector.

The End of Localism?

Further controversy has focused on the centralising of power under the Act. When the Bill received its second reading in the House of Lords in January, Labour peer Baroness Andrews highlighted the fact that the Bill contained 34 new powers for the Secretary of State whilst Lord Kerslake, chair of the Peabody Housing Association, said that the Secretary of State will have considerable powers to dictate the number of starter homes that local authorities will build, even down to individual schemes. Labour peer Lord McKenzie cited a number of measures which showed that the Government was moving “inexorably away from a planning system anchored in the democratic process of the local community,” whilst Lord Kerslake said the measures amounted to a complete denial of localism. [2]

Affordable Housing and the Right to Buy

There has been an equal amount of controversy concerning the Government’s treatment of affordable housing. Peers expressed concerns in January that starter homes were included in the definition of affordability, pointing out that starter homes were still unaffordable to many people, and that the initiative would lead to a reduction in other forms of affordable housing. Peers also pointed out that the first tranche of buyers would be free to sell their assets after five years at market value. Lady Andrews said: “We will be minting a new generation of property speculators.” Lord Kerslake said the bill promoted home ownership at the expense of social rented housing. Taking into account other measures in the Bill, he said the “only reasonable conclusion is that social housing is being written out of the script.” On the Right to Buy, he pointed out that councils would be required to sell off their “higher value” properties as they become vacant to fund the cost of Right to Buy discounts. Speaking on the same topic, Baroness Blackstone said, “It is, in fact, an unscrupulous assets grab.”

The Local Government Association

The Local Government Association (the body that represents local authorities) expressed similar concerns. It published a briefing paper in March, saying it would like to see the Bill amended “to enable local planning authorities to deliver the number, type and quality of starter homes based on their local assessments of need and viability on a site by site basis, alongside other affordable housing options.” It also sought amendments “to give councils maximum freedom to manage their own housing stock and to locally retain capital receipts for reinvestment in new and existing housing, as a minimum retaining sufficient receipts to replace every home sold.”

Parliamentary Ping Pong

By the beginning of May, the Government was embroiled in what BBC News called “a race against time” in its attempts to enshrine the Bill into law before parliament broke up for the summer. The Government had made a number of concessions after suffering 18 defeats in the House of Lords, but the Bill was now bouncing between the Lords and the Commons. The latest Lords amendments concerned the ‘Pay to Stay’ and ‘Right to Buy’ measures. Housing Minister Brandon Lewis had warned that some of the these amendments were budgetary measures, which meant that the House of Commons would have the final say. However, the Lords persisted, voting to soften the impact of the ‘Pay to Stay’ requirement, and seeking guarantees that high value properties sold off by councils would be replaced by similar homes in the same area. Over to the Commons on Tuesday, 3rd May, and MPs vote to reject 13 Lords amendments. Back to the Lords on Wednesday, 4th May, and the amendments are reinstated. In the following week, the Bill bounces between the Commons on the Monday, Lords on Tuesday, Commons on Wednesday, and Lords also on the Wednesday. The final Lords amendment sought a guarantee of funding from the Government to replace affordable homes. The Government said this would reduce the amount of funding for the Right to Buy discount. The Lords conceded and the Bill was given Royal Assent on Thursday 12th May.

Concessions

Following the final vote, the Local Government Association published another briefing, detailing what it and the Lords had sought to achieve, and what concessions had been made. The retention of capital receipts from the sales of council homes to fund the provision of a replacement property had not been accepted, the only concessions on this point being, firstly, a commitment from the Government that the change in wording from “high value” to “higher value” council property would not be used to raise additional funds from local government; and, secondly, that a levy on “higher value” council property, instead of the sales revenue, would be passed on to the Government. On allowing local councils discretion on the promotion of starter homes, the Government remained firm that this would be a statutory duty, the only concession here being a longer period of time before the property can be sold.

With regard to the sale of council property, the Act now incorporates the requirement that properties sold will be replaced on a one-for-one basis, whilst in London the requirement rises to a two-for-one basis, though in either case there is no guaranteed funding for the replacement. On the ‘Pay to Stay’ requirement, the Government rejected attempts to raise the minimum income threshold, so the threshold stays at the proposed level, meaning people with a household income of £31,000 or more (£40,000 in London) will be expected to pay higher rents. There were some concession here, regarding how the thresholds will rise over time and how the rents will increase; the Government also conceded that an exemption could be made if the costs of administering the scheme outweigh the benefits. Attempts to thwart the Government’s goal of ending lifetime tenancies were defeated, with limited concessions for families with children and the disabled concerning the maximum period of a tenancy. [3]

Delays in Implementation

Given the post-referendum confusion and ministerial reshuffle, the timetable for implementing many of the provisions in the Act is unclear. Speaking at a housing conference in July, officers from the Department of Communities and Local Government (DCLG) indicated that delays are likely in implementing the regulations, determinations and guidance on a number of measures included in the new Act, principally the sale of “higher value” properties, the Right to Buy levy, the Pay to Stay provisions, and the phasing out of lifetime tenancies. Reporting on the conference for 24 Housing, Bill Tanner says that DCLG officers were unable to give a firm date when local authorities could expect to see any guidelines, but suggested that regulations and determinations on the definition of “higher value” property and the Right to Buy levy were unlikely to be decided before September.

Meanwhile, April 2017 has been proposed as the implementation date for the Pay to Stay regulations. However, DCLG officers have been discussing the timetable with the new ministerial team and, according to Bill Tanner, have asked local authorities for evidence of difficulties in implementation by the proposed deadline, “together with evidence of implementation costs and forecasts of additional rental income expected as a result of the agreed income thresholds and tapers.”

Precisely how the Pay to Stay requirement will be implemented remains a mystery, but some of the practical difficulties, as well as the potential impact, have been assessed by Liz Davies and Justine Compton, two barristers specialising in housing law. In an article written for the Legal Action Group, they analyse the social housing provisions in the Act and assess the likely impact, focusing on the depletion of affordable housing stock and the ending of lifetime tenancies. On the Pay to Stay requirement, they say that regulations made under the Act “may ‘require the rent’ to be raised to the whole, or part of, local market rents. Powers may be given to local housing authorities to require tenants to disclose details of their income and to ask HMRC for the same information. If a tenant refuses, and the information cannot be obtained from HMRC, the local housing authority might be required to charge the maximum rent. A tenant who refuses to pay will accrue rent arrears and face possession proceedings. It remains to be seen how regulations can have the effect of, essentially, inserting a new clause into existing tenancy agreements, requiring tenants to disclose their finances.”

The End of Social Housing?

Whilst Liz Davies and Justine Compton describe the Act as “a devastating blow to social housing,” Lord Bob Kerslake, chair of the Peabody Housing Association and also president of the Local Government Association, goes further. In an article written for The Guardian, shortly before the Parliamentary ping pong reached its conclusion, he says: “Over the course of this bill, I have reluctantly come to the conclusion that for the leading figures in this Government, publicly provided, social rented housing is now seen as toxic. This is something that I deeply regret. In time, I believe the Government will come to regret this also. It is simply not possible to deliver the new housing the country needs without building more houses of all types and tenures, including social housing.”

Also writing for the The Guardian, Harry Blain describes the Act as “a direct attack on local government.” The Secretary of State for housing will have 32 new powers under the Act, he says. In particular, chapter four of the Act gives the Housing Secretary “powers to prohibit local authorities from appointing officers to the boards of housing associations, and to curtail council voting rights on those boards. The Housing Secretary is also able to change the meaning of the new affordable home, to define the higher value threshold at which councils must sell their homes, and to decide how much extra rent will be paid by so-called high-income council tenants.”

As for the impact on local authorities: “Most councils expect the Act to result in increased homelessness, longer waiting lists for homes and an increase in spending on housing benefit… Councils are footing the bill for the discounts being given to housing association tenants wanting to buy their homes, and the Local Government Association estimates that forcing councils to sell off homes combined with social rent reductions of 1% a year for the next four years will take £2.2bn from council housing budgets by 2020. The LGA argues that this will make it all but impossible to build replacements for homes sold off.”

In the press release delivered after the Bill received Royal Assent, Housing Minister Brandon Lewis said: “The Act will contribute to transforming generation rent into generation buy.” With homelessness on the increase, there are many in local government and elsewhere who will question the Government’s priorities.

Notes

[1] The Housing and Planning Act 2016 is available as a PDF download from the UK Parliament website.
[2] For a more detailed summary of this House of Lords debate, see the article by Laura Edgar in The Planner, 28/01/2016. See also our previous articles on the Housing and Planning Bill by using the search facility on this website.
[3] For a more detailed analysis of the amendments and their final outcome, see the article by Sophie Barnes in Inside Housing, 19/05/2016.

Photograph

Photograph: Affordable housing at Lower Slackbuie, Inshes, Highlands © Copyright E Sandland and licensed for reuse under this Creative Commons Licence. The Housing and Planning Act 2016 does not affect people in Scotland, Wales and Northern Ireland. In England, however, affordable housing faces an uncertain future. Bob Kerslake, president of the Local Government Association, says there are leading figures in the Government who see social housing as “toxic.”

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