Mutual Exchange Policy Author I Jekyll Job Title Operations Director Approved by / Date Operations Committee October 2012 Approved by Challenge Group / Date October 2012 Review Date October 2016 Cross Reference with Supporting Successful Tenancies Policy Improvements & Alterations Policy All Staff email sent 2/11/12 Timetable updated 2/11/12 \ 0 www.rfha.org.uk
1.0 Introduction RFH recognises that promoting Mutual Exchanges encourages tenant mobility and supports sustainable communities through best use of housing stock. RFH will respond promptly to all Mutual Exchange applications received, in line with this policy and accompanying procedure. 2. Scope This policy applies only to RFH s non-shorthold assured tenancies. Assured shorthold tenants do not have the right to exchange by way of assignment. Starter tenants do not have the right to exchange in the first 12 months as they are assured shorthold tenants. However, once the first 12 months of the tenancy have elapsed and their tenancy has automatically converted to an assured non-shorthold tenancy they gain the right to exchange. 3. Policy Aims The key aims of this policy are to:- Provide a framework to ensure that mutual exchanges are carried out efficiently and fairly in full compliance with legislation and the tenancy agreement. To comply with and support the Government s nationwide social home swap programme to give council and registered social landlord s tenant a wider choice in where they want to live. Minimise costs to RFH through a comprehensive inspection and approval process prior to and upon exchange taking place. 4. Definitions For the purpose of this policy and accompanying procedure the following definitions apply:- Mutual Exchange is the mechanism that allows tenants of social landlords to exchange their tenancies by assignment. When an exchange is carried out by assignment no tenancy has been created; the original tenancies are still in existence but have changed hands. The only exception to this rule is that succession status is regarded as an attribute of the tenant rather than the tenancy. A successor will retain that status even after being assigned a tenancy on which there has been no succession, and vice versa. The assignment itself does not count as a succession. Assignment is when a tenant gives their interest to another person. The tenancy of the property then continues on the same basis and the new tenant takes on all the rights and responsibilities of the original tenancy. Assured tenants can only assign their tenancy in certain circumstances; by mutual exchange (see above) or under the terms of a court order following the ending of a relationship. 1
5. Right to Exchange All local authority and housing association secure tenants have the qualified right to exchange by way of assignment. Housing association assured tenants do not have this statutory right. However, housing association assured tenants are offered a contractual right of exchange on similar terms to those of secure tenants. All RFH s general needs tenancies are assured non-shorthold. RFH s tenancy agreement grants to tenants the right to assign their tenancy by way of exchange providing that:- The prior consent of RFH is obtained One or more of the grounds for refusal do not apply Any reasonable conditions attached to the consent are complied with Whilst RFH s tenants have a contractual right to exchange, they must not ask for, take or accept any payment in return for assigning their tenancy by way of exchange, nor must they allow or arrange for any other person to do so. The regulatory framework contains a standard on allocations and mutual exchange. There is an expectation from the Regulator that Housing Associations should enable tenants who are interested in a mutual exchange by: taking reasonable steps to publicise the availability of mutual exchange services to which it subscribes subscribing to an internet based mutual exchange service or pay subscriptions of individual tenants who wish to exchange 6. Grounds for Refusing a Mutual Exchange Although both landlords must give their consent to the exchange, the right to mutual exchange for Assured Tenancies is a contractual one and so the landlord has the right to apply whatever reasonable conditions it sees fit in relation to mutual exchange. The grounds on which we could refuse consent are as follows:- Either tenant is subject to a 'Possession Order' There is an outstanding 'Notice of Seeking Possession' in place as a breach of tenancy or proceedings for possession have begun against either tenant The incoming tenant has a history of poor tenancy conduct e.g. persistent non-payment of rent; anti-social behaviour An application has been made to the Court for an Injunction/an Anti-Social Behaviour Order/a Demoted Tenancy Order The exchange would lead to a property becoming over-crowded or under-occupied. RFH will use the Government s property size criteria for working age Housing Benefit claimants to assess whether a property is the correct size for the incoming tenant(s). There are no current adaptations required by the incoming tenant or a family member and the property has been adapted for a disabled person The accommodation is unsuitable for the incoming tenant because it is provided for another type of tenant (e.g. bungalows for the elderly) and the incoming tenant does not meet the eligibility criteria. 2
The tenancy is a Starter or Introductory Tenancy Reasons for withholding consent must be given in writing, within 42 days of the application. If the tenant has broken any term of the tenancy, including, but not limited to, non payment of rent or other housing related debt, unsatisfactory property condition or alterations carried out to the property without consent, then RFH may, at its absolute discretion, grant consent on condition that the tenant pays the outstanding debt and/or remedies any other breaches of the tenancy obligations. In exceptional circumstances, consent may be granted to allow a tenant to exchange with rent arrears or another housing related debt. Examples of such circumstances may include, but are not limited to:- The tenant needs to downsize in order avoid the debt increasing The debt owed is less than the incentive payment the tenant is eligible to receive The tenant has made all reasonable efforts to clear their debt by making and sticking to an agreement to clear the debt or the debt has accrued as a result of circumstances beyond the tenant s control and the tenant has insufficient income to repay it. This affordability assessment will be made independently by Community Law Services. The tenant has been the victim of abuse or domestic violence and the move shall assist in protecting the tenant from future violence or abuse. Any downsizing incentive payment awarded will be used to clear any housing related debts with RFH. 7. Property & Tenancy Conditions There are implications involved with mutual exchanges because, in most cases, each tenant takes on the terms and conditions of the other parties tenancy. In particular, the exchange may result in a change of tenancy type, for example from secure to assured and vice versa. This will consequently alter the tenants rights, in particular the Right to Buy and the Right to Acquire. Section 9 explains the implications of the Localism Act on exchanges between tenants with secure or assured tenancies and tenants who have flexible or fixed term assured shorthold tenancies. The incoming tenant accepts and takes responsibility for the property in its existing condition, including cleanliness, internal decoration, improvements and alterations and any repairs that are the tenant s responsibility. The outgoing tenant is not eligible for any compensation for qualifying improvements they have made to the property as the tenancy is not actually ending, which is a requirement of the Compensation Policy. Although the incoming tenant legally takes on responsibility for the condition of the property and RFH s tenancy conditions, it is important that RFH protects itself. To that end, after the property has been inspected prior to the exchange taking place RFH will:- a) Order any repairs that are RFH s responsibility as Landlord; b) Require the outgoing tenant to remedy things contained in paragraph 8.8 (c); c) Agree with the outgoing tenant any other repairs or reinstatements that are to be carried out by them which are not covered in 8.8 (c) before the exchange takes place. Also, advise the incoming tenant of any such works required and warn them that they will become responsible for them following the exchange if the works have not been carried out; d) Carry out gas and electrical checks on the property; 3
e) Before assignment advise the incoming tenant that they will take on the property in its existing condition and are legally responsible for maintaining any improvements made by the outgoing tenant and carrying out any repairs or reinstatements identified as the tenants responsibility to carry out, which were not carried out by the outgoing tenant prior to the exchange taking place; f) Upon assignment, require the incoming tenant to sign to the effect that they accept the property in its existing condition and are legally responsible for maintaining any improvements made by the outgoing tenant and carrying out any repairs or reinstatements identified as the tenants responsibility to carry out and not carried out by the outgoing tenant prior to the exchange taking place; g) Advise the incoming tenant as to any material changes to their rights and obligations under their incoming tenancy compared to their outgoing tenancy e.g. not having the right to buy. Whilst the incoming tenant takes on responsibility for maintaining any improvements and alterations made to the property with RFH s consent, RFH still has a legal responsibility to maintain and repair any installations that supply heating, water heating, gas, water and electricity including:- Basins, sinks, baths, toilets, flushing system and waste pipes; The electric wiring, gas and water pipes; and Water heaters, fireplaces, fitted fires and central heating. 8. Key Points A mutual exchange will take place through the assignment of an existing tenancy; unless one or more of the tenants has a flexible tenancy or a fixed term assured shorthold tenancy of more than 2 years (see section 9 for further details). Upon being notified of a desired exchange, RFH has to respond formally within the statutory timescale of 42 days otherwise consent is deemed to have been given. The Housing Services Team Manager will be responsible for the day to day implementation of the policy and will approve and authorise all Mutual Exchanges. Tenants and their exchange partners will be required to complete a Mutual Exchange Request. Within 5 working days of receiving a request an acknowledgement will be sent to advise the tenant that investigations will be carried out and a decision reached within the 42 day statutory timescale. Consent can only be withheld if one or more of the grounds contained in Section 6 apply. Investigation of a Mutual Exchange Request will include an inspection to assess the property condition and reference requests to the other landlord. Particular attention will be paid to identifying any improvements or alterations made to the property and ascertaining whether consent was granted with reference being made to the Improvements and Alterations Policy. Applicants who request a Mutual Exchange and their exchange partners will be advised of any changes in their rights and terms of tenancy resulting from an exchange. Particular attention will be drawn to the Right to Buy or Acquire and property condition including improvements and alterations for which they are accepting responsibility. 4
RFH will only give permission for an exchange to take place when the consent of all other landlords involved has been obtained and all the following requirements have been met:- a) A satisfactory report has been received from landlords of other tenants involved in the exchange concerning tenancy conduct including rent payments, anti-social behaviour and property condition. The report should also address any support needs the incoming tenant has. b) Agreement has been reached between landlords that the exchange may go ahead. c) A pre-assignment inspection has been carried out on RFH s property. RFH will insist on the following having been remedied to our satisfaction before the exchange can go ahead:- i. Any works carried out by the tenant that constitute a breach of tenancy ii. Any works carried out by the tenancy that are illegal or breach planning and building consents iii. Any works carried out by the tenant that pose a risk to the health and safety of anyone living in or around the property iv. Any acts of negligence or damage to the property that would be the tenant s responsibility to repair under the tenancy agreement. In addition the following may delay the date of exchange even though they do not in themselves constitute a ground for refusing it:- a) If there are rent arrears (either tenant) b) If there are other debts owed such as rechargeable repairs or court costs (either tenant) If these circumstances continue we may decide to refuse the exchange. If so, an appropriate notice will have been served for breach of tenancy. Within 42 days of the Request to Exchange all applicants will be informed, in writing, whether permission for the exchange has been granted or withheld. The grounds for withholding permission will not be disclosed to all parties. Formal consent to the assignment will be given by the completion and signing of a License to Assign agreement. A Deed of Assignment agreement will be completed and signed to formalise the handover of the tenancy to the incoming tenant. RFH will subscribe to an exchange service to enable tenants to have free access to a nationwide exchange register. This service will be publicised on RFH s website, in reception and in the residents newsletter and handbook. 9. Localism Act 2011: Practical Implications of Tenure Reform on Mutual Exchanges The revised regulatory standards came into effect on 1st April 2012 and the main tenure reform provisions of the Localism Act came into force. The effect of these changes is to allow housing associations and local authority landlords to begin offering fixed term tenancies on social rent as well as affordable rent properties. Mutual exchanges between tenants of social landlords usually take place by deed of assignment where each tenant steps into each other s shoes and takes over the other tenant s tenancy type and terms. New tenancies are not signed. However, the provisions in the Localism Act cover those circumstances where:- 5
At least one of the tenants who wishes to transfer has a secure or assured tenancy, which began before 1st April 2012, and At least one of the tenants has a flexible tenancy or a fixed term assured shorthold tenancy. Such exchanges must be done by surrender and then granting of new tenancies. The new landlord must grant the tenant(s) whose secure or assured tenancy pre-dated 1st April 2012:- A secure tenancy if they are a local authority or An assured (not assured shorthold) tenancy if they are a housing association Existing tenants will therefore retain similar security of tenure to that of their original tenancy. However this protection will only apply to existing tenants tenure, not the level of rent they pay. Therefore if an existing tenant who pays a social rent chooses to exchange with a tenant who pays an affordable rent, they will take on the higher level of rent. These rules do not apply where an existing secure or assured tenant is exchanging with:- Someone with a fixed term tenancy of less than two years Someone with a tenancy at affordable rent, intermediate rent, mortgage rescue properties and shared ownership leases. In summary this means that: Someone with a pre-april 2012 secure or assured tenancy can exchange with any other social housing tenant and be sure of keeping their existing security of tenure If such a tenant wanted to exchange with a tenant who pays affordable rent, there would be no legal guarantee of security of tenure with the new tenancy. The landlord may choose to offer a secure or assured tenancy but that is at the landlord s discretion. Tenants of affordable rent properties have the same right to exchange as other tenants. Providing they are exchanging with another tenant who is not a pre-april 2012 tenant, then the exchange would happen in the normal way, i.e. by deed of assignment. A landlord can refuse an exchange of this nature on any of the grounds set out in Schedule 14 of the Localism Bill (along the same lines as existing grounds for refusing mutual exchanges) and they have 42 days to make that decision. 10. Exchange without Consent In the event that a tenant exchanges properties with another tenant without first gaining the consent of both landlords there are three available options:- Regulate the position by completing procedure retrospectively; Insist that the tenants return to their original houses; or Terminate the tenancies by serving Notice to Quit on the original homes and seek repossession. In most instances the first option will be the most suitable unless there are grounds for refusal under Section3 to the 1985 Housing Act. 6
11. Sustainable Tenancies RFH s Supporting Successful Tenancies Policy will apply to all mutual exchanges. We will make every effort to identify any support needs at the start of tenancy using a support assessment framework. We aim to carry out a home visit for all our new tenants within 3 months of the commencement of tenancy, including those who have become new tenants to RFH by way of exchange. 12. Recording and Monitoring The Housing Services Team Manager will ensure that procedures are being complied with. Once an exchange has taken place the relevant departments will be notified of the new tenant and tenancy records updated accordingly. A central record of all mutual exchanges will be held so that the number of exchanges taking place during each financial year can be established. 13. Review We will normally undertake a review of this policy every three years to check the validity and effectiveness of the policy against changes in legislation and developments in good practice. The policy and procedures will also be reviewed and amended in accordance with any future legislative changes as and when they occur. 7