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This Memorandum refers to the Housing (Amendment) Bill as amended at consideration stage in the Northern Ireland Assembly on 21 February 2011 (Bill 32/09)

HOUSING (AMENDMENT) bill

EXPLANATORY AND FINANCIAL MEMORANDUM

INTRODUCTION

1. This Explanatory and Financial Memorandum has been prepared by the Department for Social Development (“the Department”) in order to assist the reader of the Bill and to help inform debate on it. It does not form part of the Bill and has not been endorsed by the Assembly.

2. The Memorandum needs to be read in conjunction with the Bill. It does not, and is not meant to be, a comprehensive description of the Bill. So where a clause or part of a clause or schedule does not seem to require an explanation or comment, none is given.

BACKGROUND AND POLICY OBJECTIVES

3. The purpose of the Bill is to enable better regulation of the private rented sector, provide new tools to tackle fuel poverty, promote effective housing management and clarify existing law in respect of homelessness.

CONSULTATION

4. On 7 December 2009, the Department published a consultation document on proposals for new housing legislation. The Department’s officials subsequently discussed the proposals with relevant stakeholders at a series of events organised by the Department and the voluntary sector. There were around forty responses to the consultation, many of them very detailed, from a wide range of bodies including the Housing Executive, housing associations, district councils and the community and voluntary sectors.

5. The consultation document highlighted the fact that a number of proposals for new legislation had been set out in “Building Sound Foundations”, the Department’s strategy for the private rented sector which was published on 15 May 2009. Around forty responses were received to that consultation.

6. On 1 March 2010 the Department published proposals for a Housing and Regeneration Bill which included provision for district councils to promote energy efficiency within their own areas. That provision is now being taken forward in the Housing (Amendment) Bill.

OPTIONS CONSIDERED

7. The consultation paper published in December 2009 set out recommendations and asked a number of detailed questions about the desirability of implementing the various proposals and the best to way to achieve the intended aims. The possible options were fully explored at that stage and the provisions of the Bill broadly reflect the views of consultees. Similarly, the strategy for the private rented sector published in May 2009 sought views on a range of proposals and the provisions of the Bill relating to that sector broadly reflect the views of consultees.

8. The Bill would repeal the requirement for statements of tenancy terms to be given to every tenant, and enable the Department to make subordinate legislation to require landlords to include all necessary information about the terms of the tenancy in the tenant’s rent book. While this requirement would, in theory, apply to all private tenancies created on or after 1 April 2007, the Department recognises that landlords of such tenancies need not be required to issue new rent books when the subordinate legislation comes into operation, provided that they have already given their tenants a statement of tenancy terms in the existing format.

9. In England and Wales, there are three government-approved companies operating insurance-based and custodial tenancy deposit schemes . The Bill makes provision for the introduction of similar arrangements in Northern Ireland offering flexibility to provide for more than one scheme as necessary.

10. In response to the consult ation on the strategy for the private rented sector, district councils highlighted the need for a power to enter dwelling houses to carry out fitness inspections under Article 36 of the Private Tenancies ( Northern Ireland) Order 2006. While it could be argued that councils already have powers of entry under section 98 of the Local Government Act ( Northern Ireland) 1972, councils which responded to the consultation identified a preference for a stand-alone power of entry attached to their power to conduct fitness inspections.

11. The proposal to bring the Housing Executive’s homelessness duty to an end where the applicant is no longer eligible for assistance addresses a technical anomaly in existing legislation and is designed to recognise situations where the Housing Executive cannot legally allocate accommodation due to immigration-related legislation, which is an excepted matter. To leave the legislative anomaly in place would perpetuate a situation in which the Housing Executive is in breach of immigration legislation if it allocates accommodation, and may be in breach of homelessness legislation if it does not. Where it is not clear that the homelessness duty has come to an end, applicants may not be able to access the statutory review procedure. By formally bringing the duty to an end in such cases, the proposal would ensure that applicants have access to reviews and appeals.

12. Houses occupied by members of a single extended family are exempt from the statutory regulation regime for houses in multiple occupation (“HMOs”). Where a landlord or other person wishes to claim exemption on this basis, the Bill would require documentary evidence of the family relationship to be provided. This is necessary to prevent unscrupulous landlords from circumventing HMO regulation by claiming a fictitious family relationship. While the Department had considered imposing penalties for failure to provide satisfactory evidence of a family relationship, this would not necessarily help to protect the interests of tenants. It is therefore intended that, where a family relationship has been claimed and evidence of the relationship is not forthcoming within a reasonable period, all relevant statutory requirements relating to HMOs would automatically apply to the property.

13. The proposal to enable the Housing Executive to broker energy at a discounted price for tenants reflects a recommendation by the Fuel Poverty Taskforce set up by the Department to consider ways of assisting vulnerable households most affected by the rise in domestic fuel costs. An alternative approach would be to allow landlords to purchase fuel for re-sale to tenants. However, this would be impractical due to issues around storage costs and debt recovery.

14. The obsolete requirement for registered housing associations to show a “ rent surplus fund ” in their accounts could be abolished administratively but the repeal of Article 37 of the Housing ( Northern Ireland) Order 1992 would help to keep the legislation up to date.

OVERVIEW

19. The Bill has 27 clauses. A commentary on the provisions follows (comments are not given where the wording is self-explanatory):

COMMENTARY ON CLAUSES

Clause 1: Abolition of statement of tenancy terms

Clause 1 repeals Article 4 of the Private Tenancies ( Northern Ireland) Order 2006. This effectively abolishes the requirement in regulations made under that Article for private landlords to provide tenants with a separate statement of tenancy terms.

Clause 2: Tenancy deposit schemes

Clause 2 inserts in the Private Tenancies (Northern Ireland) Order 2006 a new Article 5A, which enables the Department to make regulations providing for schemes to safeguard deposits paid by tenants in the private rented sector, and a new Article 5B which places on private landlords certain obligations relating to such schemes.

Clause 3: Length of notice to quit

Clause 3 amends Article 14 of the Private Tenancies (Northern Ireland) Order 2006 to provide that the existing 4 week period for giving notice to quit in respect of a tenancy in the private rented sector shall remain 4 weeks if the tenancy has not been in existence for more than 5 years but shall be increased to 8 weeks if the tenancy has been in existence for between 5 and 10 years, and to 12 weeks if the tenancy has been in existence for more than 10 years.

Clause 4: Power of entry to inspect dwelling-houses

Clause 4 inserts in Article 36 of the Private Tenancies ( Northern Ireland) Order 2006 a new paragraph (1A) which confers powers of entry on persons authorised by district councils to carry out fitness inspections.

Clause 5: Power to modify Articles 42 to 45

Clause 5 inserts in the Private Tenancies ( Northern Ireland) Order 2006 a new Article 45A which enables the Department to make regulations modifying certain provisions of that Order relating to determination of private sector rents.

Clause 6: Disclosure of information

Clause 6 inserts new Articles 64A and 64B in the Private Tenancies ( Northern Ireland) Order 2006 which provides for the Department of Finance and Personnel and the Housing Executive to share certain information with district councils to enable or assist councils to carry out their functions in relation to the private rented sector.

Clause 7: Registration of landlords

Clause 7 inserts in the Private Tenancies ( Northern Ireland) Order 2006 a new Article 65A which enables the Department to make regulations providing for the registration of private landlords. This clause would create new offences in relation to provision of false information and failure to provide evidence of registration, and would also allow the courts to order persons convicted of letting of houses while unregistered to register as landlords.

Clause 8: Fixed penalty for certain offences

Clause 8 inserts in the Private Tenancies ( Northern Ireland) Order 2006 a new Article 68A which would allow landlords who appear to have breached the registration regulations or a tenancy deposit scheme the opportunity of avoiding prosecution by payment of a fixed penalty.

Clause 9: Regulations

Clause 9 amends Article 72 of the Private Tenancies ( Northern Ireland) Order 2006 to provide that regulations in relation to tenancy deposit schemes, determination of rents and landlord registration are subject to the draft affirmative resolution procedure by the Assembly. Regulations in relation to tenancy deposit and landlord registration must be laid within 18 months of the Bill receiving Royal Assent.

Clause 10: H ouses in multiple occupation: evidence of family relationship

Clause 10 provides that, where the Housing Executive believes that a house is occupied by two or more qualifying persons who are not all members of the same family, the Executive may serve notice requiring evidence of a family relationship between the occupants to be provided. Where satisfactory documentary evidence is not forthcoming, the house would be treated as a house in multiple occupation and subjected to the regulatory regime which applies to such accommodation.

Clause 11: Houses in multiple occupation: increase in fine for failure to register

Clause 11 amends Article 75L of the Housing ( Northern Ireland) Order 1992 to increase to £20,000 the maximum fine for contravening the provisions of the scheme for registration of houses in multiple occupation.

Clause 12: Withholding of consent to mutual exchange of secure tenancies

Clause 12 inserts in Schedule 3A to the Housing ( Northern Ireland) Order 1983 new grounds for withholding consent to an exchange of tenancies. This would allow the Housing Executive and registered housing associations to withhold consent to exchanges of tenancies between their tenants where certain orders or injunctions relating to anti-social behaviour are in force or pending against a party to an exchange or a person residing with them, or a party to such an exchange or a person residing with them has been convicted of certain offences.

Clause 13: Disclosure of information as to orders, etc. in respect of anti-social behaviour

Clause 13 provides that any person may disclose information about certain orders or injunctions relating to anti-social behaviour where such information is required to enable the landlord of a secure tenancy to decide:

Clause 13 also provides that any person may disclose relevant information to the Housing Executive where the information is required to enable the Executive to decide:

Clause 13 also provides that any person may disclose relevant information to a registered housing association to enable the association to decide whether to allocate housing accommodation to any person.

Clause 14: Possession orders: conduct causing nuisance or annoyance

Clause 14 amends Article 29 of the Housing (Northern Ireland) Order 1983 to ensure that, where a court is considering whether to make an order for possession of a secure tenancy on the grounds of conduct causing nuisance or annoyance, the court must take into account the effect that the nuisance or annoyance has had and the likely effect that it would have if continued or repeated. Clause 14 would also require the court to consider the likely impact of a possession order on the tenant and any person residing with the tenant.

Clause 15: Abandoned tenancies

Clause 15 amends Article 41 of the Housing ( Northern Ireland) Order 1983 to remove the legal requirement for the Housing Executive and registered housing associations to enter abandoned properties before an abandonment notice can be served. The Housing Executive and registered housing associations would continue to have power to enter such premises where this is necessary to make them secure.

Clause 16: Duty to persons found to be homeless

Clause 16 amends Article 10 of the Housing ( Northern Ireland) Order 1988 to provide that the Housing Executive’s duty under paragraph (2) of that Article to persons found to be homeless shall come to an end if the applicant ceases to be eligible for assistance.

Clause 17: Abolition of rent surplus fund

Clause 17 repeals Article 37 of the Housing (Northern Ireland) Order 1992 (with a consequential amendment to Article 20(2) of that Order) in order to abolish the requirement for registered housing associations to show a “rent surplus fund” in their accounts.

Clause 18: Service of documents

Clause 18 amends Article 104 of the Housing ( Northern Ireland) Order 1992 to provide that the Housing Executive or a registered housing association may legally serve any document by sending it by ordinary post.

Clause 19: Functions of Executive in relation to energy brokering

Clause 19 enables the Housing Executive to submit for Departmental approval a scheme for making arrangements with energy providers for the supply of electricity, gas, oil or other means of producing energy to the Executive’s tenants.

Clause 20: Functions of Executive in relation to community safety

Clause 20 enables the Housing Executive to take such action for enhancing community safety in any area as is compatible with the proper exercise of its functions in that area.

Clause 21: Power of Executive to enter into arrangements with other statutory authorities

Clause 21 enables the Department to make regulations providing for the Housing Executive to enter into partnership arrangements with statutory bodies if such arrangements are likely to lead to an improvement in the way in which the Executive’s functions or any housing related functions of the other bodies are exercised.

Clause 22: Indemnification of members and officers of Executive

Clause 22 enables the Department to make provision by order for the Housing Executive to provide indemnities to its members and staff whose official duties require them to be involved in the governance of external companies or other bodies and could be personally liable in the event of a company becoming insolvent.

Clause 23: Functions of councils in relation to energy efficiency

Clause 23 provides district councils with powers to promote energy efficiency in residential accommodation within their own districts. To ensure coherence within existing activity, councils will be required to take account of work undertaken by the Housing Executive and the Department for Social Development and provide information to the Housing Executive which it needs to carry out its functions as Home Energy Conservation Authority for Northern Ireland.

Clause 24: Repeals

Clause 24 provides for the repeal of the provisions set out in the Schedule to the legislation.

Clause 25: Commencement

Clause 25 provides for clauses 2, 7 and 9 to come into operation on Royal Assent and enables the Department to make provision by order as to the day or days when clauses 1, 3, 4, 5, 6, 8 and 10 to 24 come into operation.

Clause 26: Interpretation

Clause 26 provides for the interpretation of certain expressions used in the Bill.

Clause 27: Short title

Clause 27 provides that when the Bill receives Royal Assent it shall be known as the Housing (Amendment) Act ( Northern Ireland ) 2011.

FINANCIAL EFFECTS OF THE BILL

20. Some of the proposals relating to the private rented sector may have financial implications.

HUMAN RIGHTS ISSUES

21. The provisions of the Bill are compatible with the Convention on Human Rights.

EQUALITY IMPACT ASSESSMENT

22. A screening exercise was undertaken on the proposals in accordance with section 75 of the Northern Ireland Act 1998 and did not identify any issues adversely affecting any section 75 groups.

REGULATORY IMPACT ASSESSMENT

23. The provisions in the Bill for the Department to make regulations providing for schemes to safeguard tenancy deposits and provide for the registration of landlords will affect private landlords. The detail of these schemes will be developed in consultation with stakeholders, including organisations representing the interests of landlords in Northern Ireland.

LEGISLATIVE COMPETENCE

24. The Minister for Social Development had made the following statement under section 9 of the Northern Ireland Act 1998:

“In my view the Housing (Amendment) Bill would be within the legislative competence of the Northern Ireland Assembly.”