COMPENSATION

HL Deb 13 October 2004 vol 665 cc348-55

(1) If a third party requests them to do so at any time, the local housing authority must consider whether an amount by way of compensation should be paid to him in respect of any interference with his rights in consequence of an interim or final management order.

(2) The authority must notify the third party of their decision as soon as practicable.

(3) Where the local housing authority decide under subsection (1) that compensation ought to be paid to a third party, they must vary the management scheme contained in the order so as to specify the amount of the compensation to be paid and to make provision as to its payment."

On Question, amendment agreed to.

Clause 124 [Termination of management orders: financial arrangements]:

Lord Rooker moved Amendments Nos. 115 to 117:

Page 89, line 7, leave out from "of" to end of line 12 and insert—

1. "(a) the local housing authority's relevant expenditure, and
2. (b) any amounts of compensation payable to third parties by virtue of decisions of the authority under section (Compensation),

the authority must, as soon as practicable after the termination date, pay the balance to such relevant landlord, or to such relevant landlords in such proportions, as they consider appropriate."

Page 89, line 15, leave out from "of" to end of line 19 and insert—

1. "(a) the authority's relevant expenditure, and
2. (b) any amounts of compensation payable as mentioned in subsection (2)(b),

the difference is recoverable by the authority from such relevant landlord, or such relevant landlords in such proportions, as they consider appropriate."

Page 89, line 21, after "to" insert— (a) a third party, or (b)

On Question, amendments agreed to.

Schedule 7 [Further provisions regarding empty dwelling management orders]:

Baroness Hanham moved Amendment No. 118:

Page 246, line 6, at end insert—

"EDMOS: DUTY TO OBTAIN BEST RENT OR RENT FOR CONSIDERATION

(1) Subject to sub-paragraph (2), any right or interest created by the authority under paragraph 2(c) or 10(3)(c) shall be granted at the best rent or licence fee as is reasonably obtainable in the circumstances.

(2) If the authority considers it appropriate to create an interest or right at less than the best rent or licence fee reasonably obtainable in the circumstances, they may do so but (in addition to the rent or licence fee actually payable by the occupier of the dwelling) they shall pay to the relevant proprietor the difference between the rent or licence fee actually payable to the authority and the rent or licence fee which would be otherwise payable by virtue of sub-paragraph (1).

(3) If the relevant proprietor considers that the local housing authority has created an interest or right otherwise than as is required by sub-paragraph (1), he may apply to the authority for a determination to that effect and the authority shall either determine that the dwelling is the subject of a right or licence which complies with sub-paragraph (1), or if not the amount which is to be paid to the relevant proprietor under sub-paragraph (2).

The noble Baroness said: My Lords, given that we are effectively at Committee stage with regard to the section on empty dwelling management orders, as they were only introduced at the last stage, I hope the Minister will allow me a bit of leeway with these amendments, which are designed to probe the particular aspect of EDMOs relating to rent.

It is argued that there should be a specific obligation on the authority to obtain the best rent reasonably obtainable when letting or licensing a dwelling. There is currently no such obligation. There is an issue as to whether the authority will be letting to council tenants—that is, operating as a social landlord—or operating in the private sector. The schedule suggests the latter. Will the Minister tell us whether these EDMOs will be operated by a social landlord, or whether the local authority will expect them to be let within the private sector? Whichever way this is going, but particularly if they were to be let within the private sector, there is no obligation on the authority to obtain the best rent, and it is our view that there should be.

This is particularly relevant if the local authority carries out significant works prior to letting. One of the reasons why a property may be taken into ownership as an EDMO is that it has been lying empty and becoming derelict. Surely by securing the market rate for any property subsequently let out under this scheme, a local authority would be able to channel funds back into any outlay, thereby reducing the cost pressures of taking over these properties.

Our amendment specifies that a local authority is only under an obligation to obtain the best rent where it is "reasonably obtainable in the circumstances". That allows authorities with properties in areas of low demand to tailor their expectations of the rent that should be received accordingly, and would cover the areas in the north, mentioned by the Minister at the last stage, where there are large areas of terraced property that is empty for no good reason, and would be taken by the local authority to be let as a social landlord.

Will any further guidelines be issued to local authorities regarding whom they should allow to take over the properties subject to EDMOs, or will it be left entirely to the discretion of the relevant local authority?

Amendment No. 118 would place on an authority a duty to obtain the best possible rent. Amendment No. 119 would effectively create an appeal system whereby the owner of a property that was subject to an EDMO could appeal to the residential property tribunal in circumstances where the authority was clearly not obtaining the best rent possible.

I stress that these amendments are probing, even at this stage, and I hope that the Minister will be able to respond to them in that context. I beg to move.

7.15 p.m.

Lord Rooker

My Lords, I can respond in wholly positive ways to the points that the noble Baroness has made. First, the amendments are not necessary. That is good news, as I shall explain. For a final empty dwelling management order—I refuse to use the acronyms—the local authority must set out how it intends to manage the dwelling in a management scheme in accordance with paragraph 13 of Schedule 7.

Paragraph 13(3)(c) requires the authority to include details of the … rent … the dwelling might … be expected to fetch on the open market", while paragraph 13(3)(d) requires details of the … rent … the authority will seek to obtain". Where the amount of the rent payable is less than the open market rent, the management scheme must account for the difference. Paragraph 13(3)(g) provides that the local authority may charge a rent that is less than the open market rent, but it must make up any shortfall out of its own resources.

For an interim empty dwelling management order, there is no requirement to set out a management scheme. However, because the local authority cannot grant a tenancy without the consent of the relevant proprietor, it would have to secure the proprietor's agreement regarding the management of the dwelling, including any rent level—in other words, the proprietor has to approve the new tenant.

Paragraph 26 of Schedule 7 sets out the rights of appeal to the residential property tribunal in relation to empty dwelling management orders. There is a right of appeal against the terms of the final empty dwelling management order, including the terms of a management scheme, and there is a right of appeal against the terms of an interim empty dwelling management order. We do not consider that Amendment No. 119 would add anything useful to those appeal rights.

Baroness Hanham

My Lords, I am never minded to be totally satisfied until I have had a chance to look at what has been said, but the Minister's reply certainly goes a long way towards meeting our concerns.

Will the Minister be kind enough to go back one step? If the local authority has to have the approval of the proprietor, will the proprietor be able to object to the local authority passing the property to a registered social landlord, for example to rent out to somebody on the waiting list or elsewhere, and insist that the property is rented in the private sector?

Lord Rooker

My Lords, as far as I can see, the proprietor has a veto over the tenant. The management order might contain something about the management of the property to an RSL, but my understanding is that the actual tenancy has to be approved by the proprietor.

Baroness Hanham

I thank the Minister for his response to those amendments. I beg leave to withdraw.

Amendment, by leave, withdrawn.

[Amendment No. 119 not moved.]

Clause 128 [Making of interim EDMOs]:

Baroness Hanham moved Amendment No. 120:

Page 93, line 33, at end insert ", and (c) to give him a reasonable opportunity to make representations as to why an interim EDMO should not be made.

The noble Baroness said: My Lords, the EDMO is a considerable interference with the property owner's rights. Before such an order is made, the relevant person should be given the opportunity to make representations as to why the order should not be made, which may bring to the local housing authority's attention the reasons why the order should not be pursued at a particular moment. The purpose of the preliminary notice is to ascertain what steps the recipient is going to take. He may not want to do so for perfectly good reasons, and he should be given the chance to explain these to a local authority, so that they can be properly considered. For example, there might be plans to convert the dwelling to non-residential accommodation, and there must therefore be a period allowed to the relevant proprietor, and a chance given, to inform the authority of the reasons why an order should not be made in circumstances such as these. I beg to move.

Lord Rooker

My Lords, I may come back on this. I do not get the noble Baroness's point about non-residential use. The idea of bringing these empty dwellings into use is to provide homes for people, so I am not quite sure about non-residential use.

Baroness Hanham

My Lords, as we understand it, a property that has been empty for some time is a residential property none the less. But there is nothing to stop an owner putting in a planning application to change its use. It might be unusual but it could happen. In a two-storey property, for example, the owner might want to change the bottom storey into a shop. That was my drift. It is possible that an owner or proprietor might want an opportunity to put such an application forward.

Lord Rooker

My Lords, we are talking about an owner who has left a place empty and probably derelict for years, depriving people of homes, and suddenly wants to do something with it. The whole idea of this process is to get the owner to do something with it. If the owner is given a wake-up call, an empty dwelling management order may not be necessary.

Clause l28(3)(b) requires that the local authority must ascertain what steps, if any, the relevant proprietor is taking or intends to take to secure occupation of the dwelling. Clause 128(4) requires that the local authority must take into account the rights of the relevant proprietor—that is right, because the ownership is not transferring. In addition, the residential property tribunal must be satisfied that the local authority has complied with these requirements and may refuse to authorise the making of an order if it considers that the local authority has not done so.

Taken together—this is about rights of appeal—it is inherent in the existing clause that the relevant proprietor will be given an opportunity to set out reasons why the dwelling should not be subject to an interim empty dwelling management order. If it is because they want to do something with it, they should get it occupied and then it will not be empty. That is good news for everybody.

Baroness Hanham

My Lords, I am grateful for the Minister's reply, which answers my questions. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Hanham moved Amendment No. 121:

Page 93, line 36, after "rights" insert ", wishes and intentions"

The noble Baroness said: My Lords, it is our view that the residential property tribunal should not just consider the rights of the relevant proprietor when deciding whether to give authorisation for an order to be made but should also take account of the wishes of that person and what they intend to do in relation to the property. This order is a form of expropriation and a full balancing act needs to be carried out. By confining this to a person's rights, an unnecessary restriction is placed on the matters which the property tribunal should take into account. That is the purpose of the amendment—in fact, I think the Minister may have answered it last time. I beg to move.

Lord Rooker

My Lords, if I have answered this, I will sit down. I object to the word "expropriation", because it is a misreading of what we are attempting to do. The ownership of the properties will not change, and I always take expropriation to mean that. We are talking about empty dwellings.

If the relevant proprietor has expressed an intention to do something that would ultimately secure occupation of the dwelling, the local authority would not be inclined to pursue the matter. If it did, the residential property tribunal would never authorise it. If the relevant proprietor simply expressed an intention to keep the dwelling unoccupied, the local authority would be quite within its rights to make the order, all other things being equal. So I cannot really see that the amendment would add anything useful to the wording in Clause 128(4). The amendment is linked to Amendments Nos. 128 and 136, which we shall come to shortly.

Baroness Hanham

My Lords, once again, this was almost covered in the previous response. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Hanningfield moved Amendment No. 122:

Page 93, line 38, leave out subsection (5).

The noble Lord said: My Lords, as the Bill stands, a local housing authority is expressly authorised to make an interim empty dwelling management order even though there might be a pending appeal against the order of the RPT to the Lands Tribunal.

It is important that the full appeal process should be exhausted before an EDMO is made. There may, for example, be an important point of law involved. In order to appeal, permission must be given by either the RPT or the Lands Tribunal. This is a significant safeguard against the possible abuse of the appeal procedure. The order should not come into force until the end of the appeal process. It is unlikely that there will be much urgency to override the full appeal process. I beg to move.

Lord Rooker

My Lords, Amendment No. 122 would remove subsection (5) of Clause 128. This provides that the interim empty dwelling management order may be made despite any pending appeal to the Lands Tribunal against the decision of the residential property tribunal to authorise the making of the order. We see no good reason why an interim empty dwelling management order should not come into operation as soon as it is authorised.

The amendment amounts to a charter to delay even further the bringing back into use of a property which will already have been unoccupied for at least six months, and probably a good deal longer. I ask colleagues to remember that while an interim empty dwelling management order is in force, the local authority cannot grant any right of occupation unless the relevant proprietor consents. No final empty dwelling management order can come into effect until either the relevant proprietor agrees the management scheme or that scheme has been determined by the residential property tribunal. So the relevant proprietor's interests are hardly affected by the coming into effect of the empty dwelling management order.

The residential property tribunal will have the power to order a stay on any order authorising an interim empty dwelling management order in a case where there is genuine merit to an appeal. There are powers in Clause 213 to enable this to happen. If an appeal to the Lands Tribunal is subsequently made, it would be within the jurisdiction of the Lands Tribunal to revoke the order if that is the decision of the tribunal.

Lord Hanningfield

My Lords, I was not wanting to delay appeals but to make certain that there was fairness and that the proper process took place. Again, I shall read what the Minister has said, and if we need to come back to it, we will. I thank him for his reply and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Rooker moved Amendment No. 123:

Page 94, line 10, at end insert— ( ) in paragraph 7(6)—

1. (i) paragraphs (aa) and (ab) do not apply, and
2. (ii) paragraph (a) is to be read as referring instead to Part 4 of Schedule 7:"

On Question, amendment agreed to.

Clause 129 [Authorisation to make interim EDMOs]:

Lord Bassam of Brighton moved Amendment No. 124:

Page 94, line 24, leave out "the prescribed period of time" and insert "6 months or such longer period as may be prescribed"

The noble Lord said: My Lords, Clause 129 permits a residential property tribunal to authorise the making of an interim empty dwelling management order if it is satisfied that the dwelling has been occupied for a period of time prescribed in regulations. We will consult about what time period is appropriate to be specified in the regulations, but are certain that it will be a minimum of six months.

The Delegated Powers and Regulatory Reform Committee recommends in its 28th report that the regulations should be subject to the affirmative route. The reason was that in its view, the nature of empty dwelling management orders would be radically changed if the prescribed period were to be specified as very short.

This amendment will define the prescribed period as being at least six months or such longer period as may be prescribed by order of the appropriate national authority. Setting out on the face of the Bill a requirement that a dwelling must be unoccupied for a minimum period of six months before an interim empty dwelling management order can be approved addresses the committee's central concern. It retains flexibility to increase this period if the outcome of our consultations is that a longer period would be appropriate. But specifying a longer period would not alter the fundamental nature of empty dwelling management orders so the negative route is, in our judgment, correct.

I shall briefly address the other amendments in the group. Amendment Nos. 127, 132 and 133 all relate to matters that must be demonstrated by a local authority before a residential property tribunal can authorise an application to make an interim empty dwelling management order. All of the matters to which the amendments relate are to be the subject of secondary legislation. They are matters on which we intend to consult in detail before making regulations. I am happy to give an undertaking that we will consider the points made in drafting the actual wording in the regulations. I beg to move.

Baroness Maddock

My Lords, I shall speak to Amendments Nos. 127, 132 and 133, which have been grouped with Amendment No. 124. I listened to what the Minister said about them.

When we debated the empty dwellings management orders in Committee, I congratulated the Government on them. I declare an interest as patron of the Empty Homes Agency. Much play was made of the fact that a lot of work would be done voluntarily, involving a lot of persuasion, and that an EDMO would be the last resort. However, there is no mention in the Bill of the voluntary aspect. Amendment No. 127 would incorporate into the Bill the idea that much of the work would be voluntary; that is, local authorities working with people to persuade them to do things, with an EDMO being the last resort. That is the purpose of the amendment.

Amendments Nos. 132 and 133 would amend Clause 129(6), which lists grounds on which an owner could avoid an EDMO. Interestingly, paragraph (e) refers to an owner who is "genuinely" trying to sell the property, but paragraphs (c) and (d), which deal with repairs and planning applications, make no reference to genuine attempts. The amendments would tidy up that part of the clause and that is the spirit in which I tabled them.

On Question, amendment agreed to.

Lord Davies of Oldham

My Lords, I beg to move that further consideration on Report be now adjourned. In moving the Motion I suggest that the Report stage begin again not before 8.32 p.m.

Moved accordingly, and, on Question, Motion agreed to.