Welcome to the Social Housing Newsletter December 10

Transcription

1 Welcome to the Social Housing Newsletter December 10 I am delighted to welcome you to our December issue of Housing News. Included in the newsletter are articles on the recent Pinnock case, issues around Designated Rural Areas particularly in relation to shared ownership, selecting partners for development projects and procurement issues arising from that, energy related issues from the Comprehensive Spending Review and the Localism Bill, all of which we know are of particular interest to our clients. We hope you find them interesting and we welcome any feed back, as well as other topics of interest. We have experienced a busy few months in terms of events, particular highlights being our Risk Management event with Acumus; Annual Planning conference in conjunction with UWE and King Sturge; events on sustainability for the sector and the Localism Bill. We thank our clients and contacts for supporting these so well. Events coming up in the New Year are: Solar event on 26 th January, a joint seminar with Alder King and Smith and Williamson. Chartered Institute of Housing conference at Torquay on 6 th April, at which Stephen Clarke the partner who leads our construction team will be speaking. Housing Law seminar on 19 th April in London and 24 th May in Manchester, at which our housing management experts will be presenting. I wish each and every one of you a very Happy Christmas, and thank you for your support over the last year. All best wishes for 2011 and we look forward to working with you again and facing all the challenges together as part of your team. Kind regards Anne Hayward, Head of Social Housing T: E: anne.hayward@

2 Possession Claims Where are we now? Many social housing tenants will now gain greater protection from eviction after the recent Supreme Court ruling in Manchester City Council v Pinnock [2010] UKSC 45. Even in cases where possession is mandatory, the Courts can now take into consideration whether a landlord's decision to take possession was proportionate. Prior to Pinnock Article 8 of the European Convention on Human Rights (ECHR) states that Everyone has the right to respect for his private and family life, his home.... European case law has for some time been saying that anyone at risk of interference with this right, i.e. the landlord seeking possession, should be allowed to have the proportionality of the decision considered, even in cases where the right to possession in domestic law is mandatory. However, our domestic courts did not agree with Europe. Challenges were limited to bringing a public law challenge by way of judicial review which, until the appeal court case of Weaver v London & Quadrant only applied to local authorities. In that case, L & Q was held to be carrying out a public function in its housing management matters. Its decision, therefore, to seek possession could be challenged by way of judicial review. Such a challenge is likely to apply to most housing associations. The proportionality test requires the court to make its own assessment of the facts, deciding whether the action is for a legitimate aim and proportionate. The Pinnock case Mr Pinnock was a secure tenant of the local authority whose tenancy had been demoted because of a series of anti social incidents by his partner and children. He had lived in the property for over 30 years with his partner and five children. Further incidents occurred involving his children and the council sought possession. He argued that the decision to seek possession was disproportionate and violated his right to respect for his home and that the wording of the legislation covering demoted possession orders denied the court the opportunity to consider proportionality. The appeal court rejected the argument however and the Supreme Court decided that courts are required to consider European standards of fairness and so Mr Pinnock was entitled to have the proportionality of seeking possession determined by the court. The court decided that it was proportionate to evict Mr Pinnock. Key points to note It is for the tenant to raise the defence that the landlord's decision to seek possession is disproportionate. The proper forum for the defence to be heard is in the county court. Landlords should therefore be in a position to defend their decision should the need arise. This should be at least from the moment a notice is served. Where Landlords seek possession against vulnerable occupiers they should be able to show that they have taken extra steps to show that their decision is proportionate. A court may decide that a local authority would be required to show why they have not secured alternative accommodation.

3 More Although the appeal by Mr Pinnock involved a demoted tenancy, the decision applies to other tenancies where possession is mandatory. More guidance is expected shortly in the Supreme Court judgment of conjoined appeals in Salford CC v Mullen, due shortly involving introductory and homelessness regimes. Sharon Garrity, Legal Executive T: E: Sharon.garrity@ Slimming FITs and Stealth Taxes The Comprehensive Spending Review has been and gone. The upshot was to unsettle renewable funders and developers alike and, without consultation, to introduce a new energy tax. The change with the most immediate consequences is the restriction of the Feed-in Tariff (the FIT). While the restrictions are not yet seen in effect, we have a pretty clear picture of what will happen. We know that: the FIT will be reduced by 10% in a review of the scheme in 2013 any higher than expected deployment of FIT supported technology before that review will trigger an earlier review (HMG will shortly" say what the trigger is to be) the rules on field arrays will change: government has declared that field arrays should not be allowed to distort the market which implies that we should expect change soon government intends to encourage the FIT to roll out across the country. Despite all that we know about government intentions for the FIT, we do not know two key things. First We do not know if other forms of PV will be left alone until the 2013 review. This particular uncertainty should be dealt with by government urgently. Second We do not know whether the 2013 review and its envisaged 10% efficiency savings can be met by removing field arrays from subsidy at an earlier stage. If they cannot, it would be helpful to know if all forms of installation are under threat.

4 Market reactions to this uncertainty are wholly predictable. Investment for some projects has dried up and that for others is available only in a rapidly-closing window. Development of FIT supported schemes will stall altogether unless the government takes prompt steps to remove the uncertainties. The other main Spending Review announcement affecting the energy market was that the much vaunted energy emissions trading scheme, the Carbon Reduction Commitment (CRC) Scheme, had been brought to an end to be replaced by a tax with the same name. It is hard to know what to think about this extraordinary, last-minute volte face. Large numbers of organisations have spent months and not insignificant resources gearing up for a trading scheme. This was to be a trading scheme in which companies bought allowances, made efficiency improvements and traded on the market. CRC companies were also to be ranked into a league table. Those achieving positions at the top end would recoup all the income government obtained form selling allowances. It will not now happen. There will not be tradable benefits or profits to be derived from having a better profile than the next company. The government has said that it will keep all the proceeds of allowances sales. It has not yet got round to correctly describing this as an energy tax. The justification for this is that the CRC scheme is too complex. Read that again: the reason for doing this is that the CRC scheme is too complex, so government officials and ministers have assiduously repeated. Despite this justification for changing the rules of the CRC so expensively and so late and despite the insistence that the scheme must be made much simpler, the proposed reform will keep those very features that made it so complex: the league table, the different matrices, the calculations of a league-table position against the matrices. The absurdity of this contradiction (absurd because so very blatant) exposes that the reasons given for changing the incentives of the CRC scheme are not the reasons for doing so at all. It also exposes that the changes were made and the explanation given at a time when no-one had time to come up with anything better. Sally Barrett-Williams - Consultant T: E: sally.barrett-williams@

5 Designated Protect Rural Areas The Housing (Right to Enfranchise) (Designated Protected Areas) (England) Order 2009 (the Order ) designated certain parishes in England (generally parishes with a population of 3000 people or less) as protected rural areas, and a list of all affected parishes are contained within this Order. The intention of this Order is to retain affordable housing in rural areas. Whilst the legislation only applies to houses, the Homes and Communities Agency ( HCA ) has extended the requirement to flats. Restricted Staircasing The HCA, through the Capital Funding Guide, require all shared ownership leases granted in a protected rural area to include a restriction on the ability to acquire the provider s interest. This can be done either by limiting staircasing to 80% or by the provider agreeing to buyback the property if the shared owner staircases its ownership to 80% or more and then sells the property. The restriction will also prevent lenders from acquiring the provider s interest through the mortgage protection clause. Loophole The problem with restricting staircasing in house leases is that the leaseholder can use a loophole in the Leasehold Reform Act 1967 which enables leaseholders of houses to acquire the freehold interest regardless of whether there is a restriction in the lease preventing them from being able to do so. The loophole does not affect flats. The Housing (Shared Ownership Leases Exclusion Leasehold Reform Act 1967) Order 2009 was introduced to close this loophole provided the lease contains the fundamental clauses and a specific declaration contained in the legislation. No Grant Funding Properties in protected rural areas will always be designated as being in a protected area. However, nothing in the legislation requires restricted leases to be granted in protected areas, the requirement is contained solely in the Capital Funding Guide. This means that if the property was acquired without grant funding then it is possible to grant unrestricted leases for these units provided that any Section 106 Agreement does not impose such restrictions. Essentially as there is no legislative requirement to grant a restricted lease, providers are free to grant whatever lease they choose, and on the basis the lease does not restrict staircasing, then the loophole will not apply.

6 Summary If property is acquired with grant funding then providers must grant restricted leases. However, if no grant funding was used to acquire the property and there are no restrictions in the Section 106 Agreement then it is possible grant an unrestricted lease if the provider wishes. In Profile Chris Carr, Solicitor (2 yrs PQE) T: E: Chris has been involved in the Social Housing sector for 7 years. He deals with site acquisition both of new sites for associations to develop themselves, and sale to Registered Providers by developers under planning agreements. Chris also deals with Staircasing, re-sales, Right to Buy, disposal of surplus stock, flexible tenure, and the disposal of small areas of land (such as the disposal of garden and excess amenity land to tenants and nearby owners). Chris assists clients with the day to day management of their property portfolios, including assisting with service charge issues, questions over boundary ownership or responsibility for maintenance and variations of leases. Chris has been responsible for providing revised shared ownership leases for our current clients in order to comply with the changes in April Chris has recently successfully completed an Advanced Diploma in Property Law and is now embarking upon a Masters in Law where his dissertation addresses Creating Communities within Affordable Housing Context. Light at the end of the tunnel - The selection of partners for the delivery of development projects and social housing Since the publication of the decision in the infamous case of Jean Auroux and Others v Commune de Roanne in 2007 many legal advisers and the technical press have been preaching doom and gloom. The development world went into something of a tailspin. Around 70 development projects, including some of the largest in the country, were stopped in their tracks. We well remember the headline Disposals of land by contracting authorities will often now be caught by the public procurement regulations. We could never understand the panic. The rules are what they always were. Auroux changed nothing.

7 The position is and always was that contracts for the disposal and acquisition of land (including any buildings on the land) are specifically excluded from the requirements of the Public Contracts Regulations (the Regulations ) which will apply only in the event of a presence of a significant public works contract within the arrangement, for instance the procurement by the contracting authority of building works, such as a new school, leisure centre etc for and to the specific requirements of the contracting authority. The position was clarified by the decision in the subsequent case of Helmut Muller v Bundesantalt fur Immobilienaufgaben in which the European Court of Justice confirmed that the public procurement rules would apply to the award of a development agreement only in the event of the presence of a public works contract, which could be defined as works to be carried out for the contracting authority s immediate economic benefit. If that was not enough to silence the prophets of doom, the opinion of the Advocate General in the recent case of Commission v Spain (Opinion of 14 September 2010) certainly should. The case related to a regime designed to promote urban regeneration in which a developer would be selected by a local authority which would approve the development plans but not pay for any of the works, which would be sold on. It was held that in such an arrangement a public works contract did not exist as the local authority had no pecuniary interest in that it had no obligation to contribute financially or to share any potential loss arising from the project. This opinion should also give some comfort to Registered Providers and others with an interest in the provision of social housing and having concerns as to the implications of the European Commission's reasoned opinion sent to the UK in relation to the development of the Osbaldwick site by York City Council. The Commission expressed the view that the arrangement with the developer constituted a public works concession contract and should have been exposed to competition in accordance with the requirements of the Regulations. In Commission v Spain the Advocate General ruled that a public works concession did not exist because the developer took ownership of the site for onward sale to third parties and was therefore exploiting the site as owner rather than as concessionaire. In the light of this decision it should not be beyond the wit of man to structure a social housing development agreement with a local authority so as to fall outside the requirements of the Regulations. This note is intended to give a brief overview of the latest position on development agreements. If more definitive guidance is required please contact our lead adviser on public procurement law and practice. Bill Bullivant Consultant T: E: bill.bullivant@

8 Recent developments in housing law: the Localism Bill The Localism Bill received its first reading in Parliament on 13 December The Localism Bill (the Bill) sets out some of the commitments of the Coalition Agreement to devolve powers from central to local government, making it easier for councils to carry out the localism agenda and giving local communities more control over their neighbourhood. Key elements of the Bill relating to social housing. Reform of the planning system Abolition of Regional Spacial Strategies Introduction of Community Infrastructure Levy Local plan reform Neighbourhood planning, local referendums and the community right to build Pre-planning application consultation Reform of social housing Social housing allocations reform: allocation schemes Reform of homelessness legislation: bringing the homelessness duty to an end Social housing tenure reform: tenancy strategies and flexible tenancies Reform of council housing finance National homeswap scheme Reform of social housing regulation: the Homes and Communities Agency and a single housing ombudsman. Housing mobility: national homeswap scheme and facilitating moves out of the social rented sector. Other Community right to challenge A date has not yet been announced for the second reading debate of the Localism Bill and, because of the Christmas break, it is unlikely to take place until mid January 2011.

9 The DCLG is currently consulting on other proposals for reform of the social housing system. The consultation Local decisions: a fairer future for social housing is open until 17 January and includes changes on tenure; the management of waiting lists; and the homelessness duty. It covers the introduction of a new 'affordable rent' tenancy and changes to the system of council housing finance. It also includes measures to improve mobility, tackle overcrowding and under-occupation. Cheryl Marsh, Professional Support Laywer T: E:cheryl.marsh@