The Department of Communities and Local Government has issued
further information on the Government's proposals for the sale of
high value vacant council housing and the reduction of social
rents.
Read the latest update from the DCLG below:
This note provides a brief update on Government's commitments in
respect of the sale of high value council housing and reducing
social rents by 1% for four years from 2016. It also signposts
where further information is available.
HIGH VALUE SOCIAL HOUSING
In line with its manifesto commitment, Government wants to see
local authorities sell their high value housing as it falls vacant,
with the receipt used to build new homes that meet housing need and
fund the discount for extending the Right to Buy to housing
association tenants. Further information is set out in the
policy factsheet.
The
Housing and Planning Bill sets out the framework to deliver
this policy. In particular, clauses 67 to 77 require all local
authorities with a Housing Revenue Account to make an annual
payment in respect of their high value council housing that is
expected to become vacant each year. The payment, to be calculated
using a formula, will be set out in a determination. The advantages
of a formula approach are that it would allow local authorities
flexibility about which vacant properties are sold and provide
certainty about the payment required. Additionally, the Bill
enables councils to enter into an agreement with the Secretary of
State to retain a portion of the receipts in order to build
additional homes to meet housing need. Further information about
the legislation is contained in the
explanatory notes to the Bill.
Following consideration by the House of Commons, the Bill has
been amended so that:
- agreements between the Secretary of State and London local
authorities for the provision of additional homes must specify that
at least two new additional affordable homes are built for every
dwelling that is expected to be sold - recognising the housing
pressures in the capital; and
- the provisions may be commenced as soon as possible after
Royal Assent.
Additionally, it was confirmed that housing only becomes vacant
once it has been occupied and a tenancy comes to an end. Brand new
vacant housing (i.e. that has not yet been occupied) would not fall
within the definition of vacant housing for the purposes of this
policy.
In terms of next steps, the Bill will be considered by the House
of Lords shortly.
We are currently in the process of updating data that will be
used to help set the high value threshold, which will be a key
element of the high value definition. We are also starting to
consider the data that local authorities have supplied about their
housing stock. We are grateful to councils for providing this data,
which will help to inform key aspects of policy, including how
'vacant' is defined and whether certain property types should be
exempt from the definition of high value.
We will consult local authorities on a draft of the
determination. This will set out the formula for calculating
payments in respect of councils' high value vacant housing, and
will also identify the payment to be made. Timing for the
determination will depend on a number of factors including passage
of the Bill through Parliament and the date of Royal Assent.
Meantime, we will continue to engage with local authorities on
this policy, including working with our local authority technical
working group, to ensure effective delivery for Government and
local authorities.
REDUCTION OF SOCIAL RENT
Turning to the social rent changes you will be aware that the
Government made a commitment in the Summer 2015 Budget to reduce
social rents by 1% a year for four years from April 2016 to help
reduce the Housing Benefit bill and cut the deficit. The necessary
statutory provisions to give effect to that commitment for both
local authorities and private registered providers of social
housing in England are contained in the
Welfare Reform and Work Bill currently before Parliament.
The Welfare Reform and Work Bill was introduced in the House of
Commons on 9 July 2015, has been through all stages in that House
and is currently before the House of Lords. Most recently it
was discussed at Lords Report on 27 January. A number of amendments
have been made to the Bill, in both the House of Commons and the
House of Lords. This note does not set out all of those amendments
but highlights a few of the main changes such as:
- the ability for registered providers with rent levels below
"formula" to increase rent to the social rent rate when re-letting
a property;
- providing the Secretary of State with powers, by Regulations,
to allow rent setting for new tenancies in supported housing at up
to 10% above the rate for general needs housing;
- a new "implied terms" clause to help providers comply more
easily with the requirements of the legislation by overriding any
provision of individual tenancy agreements that may prevent
providers from varying the tenancy agreement to reduce rents on the
most appropriate annual timescales; and
- an amendment to Schedule 2 which would give the Secretary of
State the additional option, when granting an exemption from the
rent reduction, of directing that the social rent rate be uplifted
by a specified percentage. This could apply if an exemption
had been grated due to serious financial difficulties.
The Bill is timetabled for Lords Third Reading Report later this
month and subject to the passage of the Bill's final stages, we
anticipate that it will receive Royal Assent in the Spring ahead of
the new financial year. Please note that the Bill requires
savings of 1% over the first relevant year (which commences 1 April
this year for local authority providers). Therefore, a local
authority provider which did not implement a 1% reduction on 1
April would need to make a deeper reduction later in the year in
order to comply.
However, you may be aware that Government has recently announced
that it will put in place aone year exception for all supported
accommodationwhilst the review into Supported Accommodation is
being carried out. Our intention is that all supported
housing as currently set out in the rent standard guidance will
benefit from the one year exception. The exact definition
will be defined in regulations but for the purposes of clarity we
intend that the exception will include, though not necessarily be
limited to:
- domestic violence refuges and other specialist accommodation
based support for domestic violence victims,
- hostels and other accommodation for the homeless,
- sheltered accommodation for older people,
- supported accommodation for young people,
- extra care housing,
- accommodation for people with mental health or drug/alcohol
problems,
- accommodation for people with disabilities,
- accommodation for ex-offenders and people at risk of
offending.
Government has confirmed that alms houses, cooperative housing
associations and community land trusts will also benefit from the
year-long exception.
As we draft the regulations we will be reviewing the definition
in the rent standard, together with other definitions to ensure
that the regulations provide comprehensive coverage and are clear
about what is included. For sheltered and extra care housing, we
would look to refer to the definitions contained in the Housing our
Ageing Population: Panel for Innovation report.
Our expectation therefore is that accommodation subject to the
exception will increase rents by no more than CPI +1%. This is in
addition to an exception for specialised supported housing, also
covered in the rent standard guidance which will be excepted from
the rent reductions completely and for the entire 4 year
period.
As mentioned above Government has announced that providers of
supported housing would be able to set rents at 10% above the
social rent rate (i.e. formula less the appropriate reduction).
During the exception period the intention is that providers will be
able to set new rents at 10% above the 2015/16 formula rate uprated
by CPI+1%.
We are of course aware that providers have raised concerns about
bringing housing benefit for social tenants into line with housing
benefit for people in private housing which will start to take
effect from April 2018. We will put in place the appropriate
protections for those in supported housing. As we work towards
implementation, DWP and DCLG will be working closely together with
the sector to make sure the right protections are in place.
Finally, as usual, the Department will inform you of limit rents
for 2016/17 later this month.
FURTHER INFORMATION
If you have any queries about this note, the high value assets
policy more generally or would like to add/remove addresses from
this distribution list, please email: highvaluevacanthousing@communities.gsi.gov.uk.