HL Deb 16 September 2004 vol 664 cc1341-4

(1) This section applies where—

  1. (a) a secure tenant has claimed to exercise the right to buy,
  2. (b) before the landlord has made to the tenant such a grant as is required by section 138(1) in respect of the claim, either an initial demolition notice is served on the tenant under Schedule 5A or a final demolition notice is served on him under paragraph 13 of Schedule 5, and
  3. (c) the tenant's claim is established before that notice comes into force under Schedule 5A or paragraph 13 of Schedule 5 (as the case may be).

(2) If, within the period of three months beginning with the date when the notice comes into force ("the operative date"), the tenant serves on the landlord a written notice claiming an amount of compensation under subsection (3), the landlord shall pay that amount to the tenant.

(3) Compensation under this subsection is compensation in respect of expenditure reasonably incurred by the tenant before the operative date in respect of legal and other fees, and other professional costs and expenses, payable in connection with the exercise by him of the right to buy.

(4) A notice under subsection (2) must be accompanied by receipts or other documents showing that the tenant incurred the expenditure in question."

(3) After Schedule 5 to the Act insert, as Schedule 5A, the Schedule set out in Schedule (New Schedule 5A to the Housing Act 1985: initial demolition notices) to this Act.

(4) The amendments made by this section do not apply in any case where the tenant's notice under section 122 of the Act (notice claim to exercise right to buy) was served before the day on which this section comes into force."

On Question, amendment agreed to.

Clause 160, as amended, agreed to.

Clause 161 agreed to.

Clause 162 [Repayment of discount: periods and amounts applicable]:

[Amendment No. 212ZA not moved.]

Clause 162 agreed to.

Clauses 163 and 164 agreed to.

Clause 165 [Right of first refusal for landlord etc.]:

Lord Hanningfield moved Amendment No. 212AA:

Page 114, line 22, leave out first "shall" and insert "may"

The noble Lord said: The amendments in this grouping are all concerned with the idea of right of first refusal on behalf of a social housing provider either in relation to a local authority, an RSL or a housing trust. They are essentially probing in their nature and are designed to raise a number of concerns that we on these Benches have received in relation to this measure.

I believe that the ODPM recently conducted a consultation exercise on the right of first refusal. Therefore, I am sure that the concerns that I shall raise today will be familiar to the Minister, given that they were expressed during the consultation.

In short, we are not convinced that this proposal will address the Government's stated aim of increasing the amount of affordable housing provision. We believe that it would be a waste of resources to purchase units which did not meet the specific housing needs of the local authority or RSL in question.

A fundamental problem is the lack of identified additional funding for buying back units; nor will the additional cost of the procedure be compensated by additional central government funding. The cost of buying back units at current market prices is not more efficient than developing new units. Social housing providers are especially concerned that resources will be expended in notifying other landlords to little or no benefit in terms of additional social housing.

Local authorities will incur substantial costs in administering the scheme, especially given the heavily prescribed procedure. The estimate is that, in implementing this procedure, each local authority would have to employ three extra staff, not to mention the additional costs of accommodation and overheads.

It is not clear that compensation for time lost due to dispute over valuation is built into the process. All the deadlines seem very tight, given the prescribed arrangements and the lack of recognition of delaying factors. There is nothing to stop a landlord who does not accept purchase failing to notify a further appropriate body. A landlord has not only to notify a further authority but to establish that a nomination would be accepted and then issue a notice within the period. In the case of a freeholder selling, it appears that further authorities that are notified have only two weeks in which to consider accepting purchase.

This proposal will not affect current resales which are not covered by the covenant and it offers no prospect for increasing social housing at present. Perhaps a better way forward would be a voluntary scheme, with funding, which allowed the local authority to buy back units that were in short supply. Social housing providers do not wish to be forced into a scheme which would, essentially, expend resources on administration and create additional bureaucracy. I beg to move.

Lord Rooker

Clauses 165, 174, 177 and 181 give local authorities, registered social landlords and housing action trusts which have sold properties at a discount, either under the right-to-buy scheme or through voluntary disposals, a right of first refusal. That means that the owner of a property sold by a social housing landlord who wishes to resell it within 10 years of the sale must first offer it back to the landlord or to another prescribed person.

Having consulted on the proposed procedures and bodies to be prescribed, the Secretary of State will prescribe in regulations a time limit within which such offers must be accepted. If they are not accepted within that time limit, the owner will be free to resell on the open market. The property will be offered at market value. That will be the value agreed between the parties or, if for some reason they are unable to agree, that determined by the district valuer.

The noble Lord's amendment would make it discretionary, rather than mandatory, for landlords to insert the right of first refusal covenant. While that may appear to be a reasonable proposition, it would have the effect of weakening the right of first refusal. If it is not made mandatory, the opportunity to buy back properties may be lost when circumstances and housing need change in a local area. Also, the effect of a landlord not including the right of first refusal covenant is to deprive other social landlords in the area of the chance of being nominated to buy back the property.

The responses to the consultation showed overwhelming support from stakeholders for the principle of the right of first refusal. There is very little support for it to be made discretionary.

Lord Hanningfield

Perhaps the Minister would give an indication of the burden on local authorities. It has been estimated that three additional staff may be needed.

Lord Rooker

My initial view, as the noble Lord said, is that it sounds preposterous as it builds in red tape. I shall take advice on it before the next stage. I cannot see that it should be an onerous burden on well run housing authorities. It is something new; it is to the overall benefit of social housing; and we shall ensure that it is not clogged up with red tape.

Lord Hanningfield

I thank the Minister for that reply. The Minister mentioned red tape and I am sure that the Committee is agreed that we want to minimise burdens on local authorities. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Rooker moved Amendment No. 212AB:

Page 115, leave out lines 45 and 46 and insert— (11) The limitation imposed by a covenant within subsection (2) (whether the covenant is imposed in pursuance of subsection (1) or (8)) is a local land charge. (12) The Chief Land Registrar must enter in the register of title a restriction reflecting the limitation imposed by any such covenant."

The noble Lord said: Clause 165 requires owners who wish to resell their housing in 10 years of them having been brought under a right-to-buy scheme, first to offer them at market value to the former landlord or to another body prescribed by the Secretary of State. That is to allow other social landlords the chance to purchase the property where the former landlord has transferred his remaining interest in that property or connected properties to another body. The Secretary of State will be able to prescribe the time limits within which such offers should be accepted and the circumstances in which the right of first refusal will lapse. He will protect the interests of prospective sellers on which he has consulted.

The aim of the right of first refusal is to provide a means whereby property that is sold under a right-to-buy scheme can revert to the social housing sector without imposing an undue burden on the prospective seller. The amendment is designed to ensure that the right of first refusal is not overlooked.

The right of first refusal will be imposed in all cases where there is a right-to-buy sale, apart from in rural areas, which I shall deal with later. However, the position is different in respect of voluntary disposals. Those can take place only with consent. General consents have been issued by the Secretary of State in relation to disposals by local authorities and indeed by the Housing Corporation in relation to disposals by social landlords, but not by the Secretary of State in relation to housing action trusts because voluntary disposals are very rare in that context.

Generally, it is the case that voluntary disposals should not be on terms that are more generous than right to buy, as that could enable evasion of the right-to-buy scheme. I should also stress that we do not intend that general consents will allow for the exclusion of right of first refusal. As a matter of practice, the right of first refusal will be included in the vast majority of voluntary disposals.

In national parks and in other designated rural areas, it is intended that general consents will allow landlords to choose between a right of first refusal and a restriction requiring sales to be made only to local people. That is intended to preserve existing choice, where restriction is more appropriate for landlords in rural areas. That will not, of course, be the case with housing action trusts which operated only in urban areas.

The purpose of the amendment is to ensure the enforceability of a right of first refusal covenant, where one is imposed, by changing the enforcement provisions so that they are in line with the provisions of the Land Registration Act 2002. I beg to move.

On Question, amendment agreed to.

Clause 165, as amended, agreed to.

1.15 p.m.

Lord Hanningfield moved Amendment No. 212ABA:

After Clause 165, insert the following new clause—