Northern Ireland Assembly Flax Flower Logo

Committee for Finance and Personnel

Defective Premises
(Landlord's Liability)
Bill (NIA Bill 5/00)

Report on the Committee Stage

Ordered by the Committee for Finance and Personnel to be printed Tuesday 20 March 2001 Report: 4/00/R (Committee for Finance and Personnel)

COMMITTEE FOR FINANCE AND PERSONNEL:
MEMBERSHIP AND POWERS

Powers

The Committee for Finance and Personnel is a Statutory Departmental Committee established in accordance with paragraphs 8 and 9 of Strand One of the Belfast Agreement and under Standing Order No. 45 of the Northern Ireland Assembly. The Committee has a scrutiny, policy development and consultation role with respect to the Department of Finance and Personnel and has a role in the initiation of legislation.

The Committee has the power to:

Membership

The Committee was established on 29 November 1999 with eleven members, including a Chairperson and Deputy Chairperson and a quorum of five members.

The membership of the Committee is as follows:

Table of Contents
Introduction
 Deliberations of the Committee

Appendices
 Appendix 1- Minutes of Proceedings of the Committee Relating to the Report
 Appendix 2- Minutes of Evidence of the Committee
 Appendix 3- Annexes to the Minutes of Evidence

REPORT 4/00
(COMMITTEE FOR FINANCE AND PERSONNEL)

REPORT ON THE DEFECTIVE PREMISES (LANDLORDS LIABILITY)
Bill (NIA Bill 5/00)

INTRODUCTION

1. General

1.1 The Committee for Finance and Personnel met on the dates given in paragraph 3.1 to consider the Defective Premises (Landlords Liability) Bill (NIA Bill 5/00) that was referred to the Committee on 16 October 2000 for consideration under Standing Order 31 (1) of The Northern Ireland Assembly.

1.2 The Committee had before it the Defective Premises (Landlords Liability) Bill (NIA Bill 5/00) and the Explanatory and Financial Memorandum to the Bill, as introduced. Ms Eileen Regan and Mr Malachy Finnegan, Research and Library Services, NI Assembly and Mr. Percy Johnston, Legal Adviser, NI Assembly provided advice to the Committee on the Bill.

1.3 The Minister in charge of the Bill, Mr Mark Durkan MLA, Minister of Finance and Personnel, made the following statement under Section 9 of the Northern Ireland Act 1998.

"In my view the Defective Premises (Landlords Liability) Bill would be within the legislative competence of the Northern Ireland Assembly."

2. Extension of Committee Stage

2.1 The Committee Stage of the Defective Premises (Landlords Liability) Bill began on 24 October 2000 and the Committee agreed that the Committee Stage should be extended to 27 April 2001 owing to the weight of the legislative burden on the Committee and the priorities identified by the Minister of Finance and Personnel. The Committee made the following motion seeking an extension to the Committee Stage of the Bill.

"That in accordance with Standing Order 31 (4) the period referred to in Standing Order 31 (2) be extended to Friday, 27 April 2001 in relation to the Committee Stage of the Defective Premises (Landlords Liability) Bill (NIA 5/00)."

The motion was passed by the Assembly on 20 November 2000.

3. Meetings Held

3.1 The Committee considered the Defective Premises (Landlords Liability) Bill on the following dates.

Date

Subject/Witnesses

23 January 2001

Briefing by Department (Office of Law Reform Official)

30 January 2001

Evidence Session:

(1) Mr. John McCorkey and Mr. Dan Kennedy (Chartered Institute of Environmental Health - Northern Ireland Centre)

(2) Ms. Janet Hunter and Ms. Pauline Brannigan (Housing Rights Centre)

13 February 2001

Committee Consideration

27 February 2001

Evidence Session: Mrs. Ethne Harkness (Law Reform Advisory Committee)

6 March 2001

Formal Scrutiny (Long Title and Clauses 1&2, 4-6).

13 March 2001

Formal Scrutiny (Clause 3).

20 March 2001

Consideration of Report

4. Evidence

4.1 The following bodies made written submissions in response to an invitation from the Committee or wrote independently to the Committee in connection with the Defective Premises (Landlords Liability) Bill:

4.2 Other bodies invited to make submissions were:

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DELIBERATIONS OF THE COMMITTEE

5. Introduction

5.1 The Committee gave detailed consideration to each part of the Defective Premises (Landlords Liability) Bill over a number of meetings and concluded its deliberations with a clause-by-clause scrutiny on 6 and 13 March 2001 when the parts of the Bill were formally agreed. The decisions made and the parts of the Bill where substantial clarification was required and amendments were considered are given below. The record of the Committee's deliberations can be found in Appendix 1 - Minutes of Proceedings and Appendix 2 - Minutes of Evidence.

5.2 The Committee noted that there was an inconsistency in the wording of the Explanatory and Financial Memorandum (EFM) where it related to Clause 1.2. Referring to the Bill, paragraph 7 of the EFM stated that "It will thus cover lawful visitors, the tenant..". However, when dealing with Clause 1.2 the EFM stated that it "...may include the tenant himself..". This was raised with the Office of Law Reform, which accepted that there was a potential ambiguity and that the word "may" ought to be used in both instances. The Committee was content that this change should be made to paragraph 7 of the Explanatory and Financial Memorandum.

6. Clause by Clause Consideration

6.1 There were no issues raised by the witnesses in respect of clauses 1 and 2. Members themselves had no concerns about these clauses and agreed that they should be recommended to the Assembly for approval.

6.2 In giving evidence to the Committee, both the Chartered Institute of Environmental Health and the Housing Rights Service raised concerns about Clause 3 of the Bill. Their concerns were essentially the same, ie, that the Clause exempted landlords of both restricted and regulated tenancies from the main provisions of the Bill. In effect, the additional liability provided by the Bill (by placing a duty of care upon landlords to all persons who might reasonably be expected to be affected by defects in the state of the premises) does not extend to landlords of restricted and regulated tenancies. The Office of Law Reform explained that the decision to include these exemptions had been based largely upon advice provided by the Law Reform Advisory Committee (LRAC).

6.3 The LRAC had argued that landlords holding restricted or regulated tenancies would face an onerous duty if the additional burden imposed by the legislation was applied to them. During further consultations with the Office of Law Reform, it also emerged that the Department of Social Development had commenced a major review of the private rented sector with a view to conducting a thorough analysis of the Rent Order 1978 in relation to protected tenancies. The Committee was advised that the intention behind the review was to improve, inter alia, the state of the private rented sector.

6.4 The Office of Law Reform also advised the Committee that the primary purpose of the Bill was to address the issue of liability in tort. It was designed to clarify and extend the current ambit of a landlord's liability but could not focus on imposing repair obligations on a landlord.

6.5 Mrs. E Harkness gave evidence to the Committee on behalf of the Law Reform Advisory Committee. She indicated that the LRAC had been influenced and persuaded by representations from the Housing Executive. The LRAC had concluded that there would be a problem of equity should the extended liability provided for in the Bill be imposed on landlords of restricted and regulated tenancies owing to the low return they received from the rental income. The LRAC had not considered the broader issue of housing rights, nor, was it trying to improve the quality of the housing stock. The focus of its consideration was restricted to the limits of liability in the event of an accident causing injury or damage. The LRAC had identified an anomaly between the Defective Premises Act 1972 (GB) and the Defective Premises (NI) Order 1975 and had endeavoured to remedy the anomaly.

6.6 The Committee concluded that this Bill was not an appropriate vehicle for addressing shortcomings in the quality of properties in the private rented sector. Members noted the advice from the Assembly's Legal Adviser that, while grants were available to landlords of restricted and regulated tenancies to undertake repairs, recent reductions in the scale of these grants mean that they were not sufficient to enable a meaningful level of refurbishment to be undertaken. The Committee concluded that it would not be appropriate to apply the additional liability envisaged by the Bill to such landlords in the present circumstances.

6.7 The Committee was, however, agreed that this was an undesirable outcome to their consideration of the Bill. Members were deeply concerned that the tenants of restricted and regulated tenancies, together with anyone who visited their properties, were disadvantaged in terms of the legal redress available to them, should an injury or damage occur as a result of defects in such properties. The Committee concluded that this situation was unsatisfactory in the longer term.

6.8 The Committee agreed that Clause 3 should be recommended to the Assembly for approval.

6.9 There were no issues raised by the witnesses in respect of clauses 4, 5 and 6. Members themselves had no concerns about these clauses and agreed that they should be recommended to the Assembly for approval.

6.10 The Committee concluded that their concerns about the exemptions in respect of liability afforded to landlords of restricted and regulated tenancies should be formally conveyed to the review of the private rented sector being undertaken by the Department of Social Development. The Committee further agreed that the Chairman should take the matter forward by drawing these concerns to the attention of the Committee for Social Development.

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APPENDIX 1

MINUTES OF PROCEEDINGS OF THE COMMITTEE RELATING TO THE REPORT

Minutes of Proceedings of the Committee that relate to the Report on the Defective Premises (Landlord's Liability) Bill are given below:

Date: Subject/Witnesses:
23 January 2001 Briefing by Office of Law Reform - Office of Law Reform Officials
30 January 2001 Evidence Session with Chartered Institute of Environmental Health (Northern Ireland Centre) and Housing Rights Service
13 February 2001 Committee Consideration
27 February 2001 Briefing by Law Reform Advisory Committee on Clause 3
06 March 2001 Clause-by-Clause scrutiny with Office of Law Reform
13 March 2001 Clause-by-Clause scrutiny with Office of Law Reform
20 March 2001 Consideration of Report

COMMITTEE FOR FINANCE AND PERSONNEL
MINUTES OF PROCEEDINGS

[EXTRACT RELATING TO THE REPORT]

THIRTY EIGHTH MEETING
TUESDAY, 23 JANUARY 2001
COMMITTEE ROOM 144, PARLIAMENT BUILDINGS

Present:
Mr Francie Molloy (Chairman)
Mr Alex Attwood
Mr Billy Bell
Mr Seamus Close
Mr Nigel Dodds
Mr Derek Hussey
Ms Patricia Lewsley
Mr Alex Maskey
Mr Peter Robinson MP
Mr Peter Weir

Apologies:
Mr James Leslie (Deputy Chairman)

In attendence: Mr Martin Wilson (Principal Clerk)
Mr Peter Hughes (Clerk)
Ms Edel Gillen (Executive Support)
Ms Sharon Bowman (Administrative Support)

The Chairman declared the meeting open at 2.30 p.m. The meeting was held in public session.

Defective Premises Bill (Landlord's Liability) Bill

Mr Michael Foster, Office of Law Reform briefed the Committee on the Bill. No issues were raised. The Evidence session will take place next Tuesday.

FRANCIE MOLLOY
Chairman

COMMITTEE FOR FINANCE AND PERSONNEL
MINUTES OF PROCEEDINGS

[EXTRACT RELATING TO THE REPORT]

THIRTY NINTH MEETING
TUESDAY, 30 JANUARY 2001
COMMITTEE ROOM 144, PARLIAMENT BUILDINGS

Present:
Mr James Leslie (Deputy Chairperson)
Mr Alex Attwood
Mr Billy Bell
Mr Seamus Close
Mr Nigel Dodds
Mr Derek Hussey
Ms Patricia Lewsley
Mr Alex Maskey
Mr Peter Robinson MP
Mr Peter Weir

Apologies:
Mr Francie Molloy (Chairperson)

In attendence:
Mr Martin Wilson (Principal Clerk)
Mr Peter Hughes (Clerk)
Ms Edel Gillen (Executive Support)
Ms Sharon Bowman (Administrative Support)

The Deputy Chairman took the Chair due to the absence of the Chairman and declared the meeting open at 2.30 p.m. The meeting was held in public session.

Defective Premises Bill (Landlord's Liability) Bill (NIA Bill 5/00)
The Committee took evidence from Mr John McCorkey and Mr Dan Kennedy of the Chartered Institute of Environmental Health (Northern Ireland Centre); and from Ms Janet Hunter and Ms Pauline Brannigan of the Housing Rights Centre. The representatives welcomed the Bill but expressed concerns about certain provisions, with particular reference to the exclusion of restricted or regulated tenancies.

FRANCIE MOLLOY
Chairman

COMMITTEE FOR FINANCE AND PERSONNEL
MINUTES OF PROCEEDINGS

[EXTRACT RELATING TO THE REPORT]

FORTY SECOND MEETING
TUESDAY, 13 FEBRUARY 2001
COMMITTEE ROOM 144, PARLIAMENT BUILDINGS

Present:
Mr Francie Molloy (Chairperson)
Mr James Leslie (Deputy Chairperson)
Mr Nigel Dodds
Mr Derek Hussey
Ms Patricia Lewsley
Mr Alex Maskey
Mr Peter Weir

Apologies:
none.

In attendence:
Mr Martin Wilson (Principal Clerk)
Mr Peter Hughes (Clerk)
Ms Edel Gillen (Executive Support)
Ms Sharon Bowman (Administrative Support)

The Chairman declared the meeting open at 2.17 p.m. The meeting was held in open session.

Defective Premises (Landlords' Liability) Bill
The Chairman asked Members to declare any interest in relation to the Defective Premises (Landlords' Liability) Bill.
Interest: Mr James Leslie declared an interest in a tenanted property.
The Committee continued its consideration of Clause 3 of the Bill.

Resolved: That a representative of the Law Reform Advisory Committee (LRAC) be invited to speak to the Committee on the LRAC's consideration of the proposed Bill. And that a copy of the LRAC report on the Bill be provided to members.

FRANCIE MOLLOY
Chairman

COMMITTEE FOR FINANCE AND PERSONNEL
MINUTES OF PROCEEDINGS

[EXTRACT RELATING TO THE REPORT]

FORTY FIFTH MEETING
TUESDAY 27 FEBRUARY 2001
COMMITTEE ROOM 144, PARLIAMENT BUILDINGS

Present:
Mr Francie Molloy (Chairperson)
Mr James Leslie (Deputy Chairperson)
Mr Billy Bell
Mr N Dodds
Mr D Hussey
Ms Patricia Lewsley
Mr Peter Weir

Apologies:
Mr Peter Robinson MP

In attendance:
Mr Martin Wilson (Principal Clerk)
Mr Peter Hughes (Clerk)
Mr Joe Sloan (Assistant Clerk)
Ms Edel Gillen (Executive Support)
Ms Sharon Bowman (Administrative Support)

The Chairman declared the meeting open at 2.51 p.m. The meeting was held in open session.

Defective Premises (Landlords' Liability Bill)

Mrs. Ethne Harkness, Law Reform Advisory Committee (LRAC) briefed the Committee on the considerations made by LRAC in relation to Clause 3 of the Bill on Restricted and Regulated Premises.

The Committee deliberated.

Resolved: That the Clerk write to the Department to seek clarification on landlords' duties in Clause 1(2). That the Clerk express the Committee's concerns on the excluded tenancies in Clause 3(1) and 3(2) and ask for expansion on the argument that led to their exclusion and the assumption of an onerous duty on those landlords. That the Clerk ask for a view from the Department that the lack of obligation on private landlords to make repairs may make it unlikely that they will be carried out. That the Office of Law Reform (OLR) is asked to comment on the potential effects of the Draft Bill in relation to financial implications, Targeting Social Need, Equal Opportunities and Human Rights.

FRANCIE MOLLOY
Chairman

COMMITTEE FOR FINANCE AND PERSONNEL
MINUTES OF PROCEEDINGS

[EXTRACT RELATING TO THE REPORT]

FORTY SIXTH MEETING
TUESDAY 6 MARCH 2001
COMMITTEE ROOM 144, PARLIAMENT BUILDINGS

Present:
Mr Francie Molloy (Chairperson)
Mr James Leslie (Deputy Chairperson)
Mr Alex Attwood
Mr Seamus Close
Mr Billy Bell
Mr N Dodds
Mr D Hussey
Mr Alex Maskey
Mr Peter Weir

Apologies:
Ms Patricia Lewsley

In attendance:
Mr Martin Wilson (Principal Clerk)
Mr Peter Hughes (Clerk)
Mr Joe Sloan (Assistant Clerk)
Ms Edel Gillen (Executive Support)
Ms Sharon Bowman (Administrative Support)

The Chairman declared the meeting open at 2.39 p.m. The initial part of the meeting was held in closed session.

Defective Premises (Landlords' Liability) Bill

Mr James Leslie MLA had declared an interest.

Mr Michael Foster and Mr Neil Lambe from the Office of Law Reform attended the meeting and were questioned on Clause 3 of Bill regarding exemption of Restricted and Regulated tenancies.

The Committee deliberated.

Resolved: That the Committee recommends Clause 1 to the Assembly.
That the Committee recommends Clause 2 to the Assembly.
That the Committee recommends Clause 4 to the Assembly.
That the Committee recommends Clause 5 to the Assembly.
That the Committee recommends Clause 6 to the Assembly.

Resolved: That the Committee will give further consideration to Clause 3.

FRANCIE MOLLOY
Chairman

COMMITTEE FOR FINANCE AND PERSONNEL
MINUTES OF PROCEEDINGS

[EXTRACT RELATING TO THE REPORT]

FORTY SEVENTH MEETING
TUESDAY 13 MARCH 2001
COMMITTEE ROOM 144, PARLIAMENT BUILDINGS

Present:
Mr Francie Molloy (Chairperson)
Mr James Leslie (Deputy Chairperson)
Mr Alex Attwood
Mr Seamus Close
Mr Nigel Dodds
Ms Patricia Lewsley
Mr Peter Weir

Apologies:
Mr Billy Bell and Mr Alex Maskey

In attendance:
Mr Martin Wilson (Principal Clerk)
Mr Peter Hughes (Clerk)
Mr Joe Sloan (Assistant Clerk)
Ms Edel Gillen (Executive Support)
Ms Sharon Bowman (Administrative Support)

The Chairman declared the meeting open at 2.35 p.m.

1. Defective Premises (Landlords' Liability) Bill (NIA 5/00)
Mr James Leslie MLA had declared an interest.
Mr Michael Foster from the Office of Law Reform attended the meeting and answered further questions on Clause 3 of the Defective Premises (Landlords' Liability) Bill.

The Committee deliberated.
Resolved: That the Committee reports to the Assembly that it is content with Clause 3 of the Bill.
Resolved: That the Committee raises concerns regarding the Housing Bill with the Committee for Social Development.

FRANCIE MOLLOY
Chairman

COMMITTEE FOR FINANCE AND PERSONNEL
MINUTES OF PROCEEDINGS

[EXTRACT RELATING TO THE REPORT]

FORTY EIGHTH MEETING
TUESDAY 20 MARCH 2001
SENATE CHAMBER, PARLIAMENT BUILDINGS

Present:
Mr Francie Molloy (Chairperson)
Mr James Leslie (Deputy Chairperson)
Mr Alex Attwood
Mr Billy Bell
Mr Seamus Close
Mr Nigel Dodds
Mr Derek Hussey
Ms Patricia Lewsley
Mr Alex Maskey
Mr Peter Robinson MP
Mr Peter Weir

Apologies:
None

In attendance:
Mr Martin Wilson (Principal Clerk)
Mr Peter Hughes (Clerk)
Mr Joe Sloan (Assistant Clerk)
Ms Edel Gillen (Executive Support)
Ms Sharon Bowman (Administrative Support)

The Chairman declared the meeting open at 2.38 p.m. This session was held in private.

Defective Premises (Landlords' Liability) Bill (NIA 5/00)

Mr James Leslie MLA had declared an interest.

The Committee considered the draft report and agreed a number of amendments.

Resolved: That the Committee ordered the draft report to be printed.

FRANCIE MOLLOY
Chairman

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APPENDIX 2

MINUTES OF EVIDENCE

TUESDAY 30 JANUARY 2001

Members present:
Mr B Bell (Acting Chairperson)
Mr Attwood
Mr Close
Mr Dodds
Mr Hussey
Ms Lewsley
Mr Maskey
Mr P Robinson
Mr Weir

Witnesses:
Mr J Corkey ) Chartered Institute
Mr D Kennedy ) of Environmental Health

1.
The Chairperson: This is a public evidence session, so I ask everyone to switch off mobile telephones and pagers because they affect the recording of proceedings. I welcome Mr Corkey and Mr Kennedy to the Finance and Personnel Committee.

2.
Mr Kennedy: I shall make a brief introduction and then hand over to my colleague for the main presentation. I am chairman of the Northern Ireland Centre of the Chartered Institute of Environmental Health (CIEH). I am here to support Mr Corkey and to give a brief introduction to the institute.

3.
The Chartered Institute of Environmental Health is made up of 9,000 members throughout the UK who, by and large, work in local authorities to enforce public health and environmental health legislation. The main aim of the chartered institute is to enhance, promote and maintain environmental and public health. To that end, the chartered institute's professional body lobbies Government and drafts responses to consultation documents issued by the various Government departments in England and Wales, and its sister organisation does the same in Scotland. The Northern Ireland Centre is one of 17 branches and centres throughout the UK. Environmental health officers work mainly in local authorities, but some work in the private sector or in central Government.

4.
We would thank the Committee for allowing the Northern Ireland Centre the opportunity to give evidence. We would welcome further opportunities to help the Assembly where possible in its endeavours.

5.
Mr Corkey: I stress that these comments are solely the views of the Northern Ireland Centre of the CIEH. The Chartered Institute broadly welcomes the proposals in the draft Bill and feels that it is appropriate to remove the immunity currently afforded to landlords in relation to their duty of care to their tenants and to others. We feel that this course of action is of particular importance because of the limited repair options available in Northern Ireland compared with England and Wales. I will expand on this point later if you wish me to.

6.
The Chairperson: For the benefit of the Committee, could you let us know to which clauses of the Bill you are referring?

7.
Mr Corkey: We are interested in clause 3; it is the only clause to which we will refer.

8.
The chartered institute is concerned that protected tenancies have been excluded from the Bill. I am referring to regulated and restricted tenancies as covered by the Rent (Northern Ireland) Order 1978. We note from paragraph 9 of the Explanatory and Financial Memorandum that the Department alleges that landlords of protected tenancies would

"face an onerous duty if the legislation was applied to them."

9.
Apart from the fact that this focuses on the needs of the landlord rather than those of the tenant, the chartered institute feels that it is an exaggeration and may be inaccurate. Although rents in the protected sector are controlled by Government, people living in regulated tenancies can request the district council to serve a certificate of disrepair on the landlord for which the landlord can claim a non-means-tested repairs grant of 90%. I would stress that that facility is not available to any other landlords in the private rented sector.

10.
With regard to restricted tenancies, the Chartered Institute acknowledges that the legally recoverable rent cannot provide any meaningful return for the landlord. However, there does not appear to be any significant legislative or financial impediment that would prevent a landlord from transferring his property from a restricted tenancy to a regulated tenancy. By way of explanation, I should say that, where a dwelling let under a restricted tenancy is fit for human habitation under the Housing (Northern Ireland) Order 1981, as amended, the landlord may apply to the district council at no charge, and the dwelling will automatically be regulated. If, on the other hand, the house is unfit for human habitation, the landlord will automatically qualify for a grant from the Northern Ireland Housing Executive to make it fit.

11.
If restricted tenancies are excluded from the Bill, it will be a further disincentive for landlords to carry out essential repairs to properties. Paragraph 3.4.3 of the Law Reform Advisory Committee report 7/98, whose recommendations the Department seeks to implement in the Bill, states that most protected tenants would be:

"unlikely to welcome the extensive disruption involved in carrying out the work".

12.
Although it is not clear whether the Department took that comment into account when deciding to exclude protected tenancies from the Bill, the Chartered Institute of Environmental Health considers that there is no evidence to suggest that protected tenants are less likely to want repairs carried out to their properties than other people living in the privately rented sector.

13.
It might be helpful if I were to explain the views of the Chartered Institute of Environmental Health on the proposals, from a practical perspective. The Chartered Institute of Environmental Health believes that it is unfair, indeed iniquitous, that, for example, an affluent person renting a modern apartment should have access to such civil protection, while an elderly widow living in a terraced house as either a regulated or restricted tenant should be denied it. The Chartered Institute of Environmental Health therefore requests that the Committee make representations to the Department that the Bill apply to both regulated and restricted tenancies.

14.
The Chairperson: Are there any questions from the Committee?

15.
Mr Dodds: You referred to the Law Reform Advisory Committee's report, and I agree with you that it is odd to suggest that tenants would not welcome disruption caused by improvement to their living conditions. What is the rationale for the exclusion of protected tenancies? Where does it come from? From a common-sense point of view, it does not seem from what you are saying that there is much rationale or sense behind it.

16.
Mr Corkey: The rationale, as I understand it, is that it would be perceived to be onerous on landlords because the rent in such properties is controlled. That would appear to be the only basis. In restricted tenancies, the rent is controlled at what would have been the value in 1978, which is little or nothing. At a first look, it would appear to be inappropriate to restricted tenancies. However, there is nothing to stop a restricted tenancy being made a regulated tenancy, if a landlord so desires. A regulated tenancy is still under statutory control, but the rent is more in line with Housing Executive rent and provides the landlord with a more meaningful return on his property.

17.
Mr Dodds: You referred to the fact that landlords have access to a mandatory 90% mandatory repairs grant from the Housing Executive. The Department of Social Development is bringing forward proposals for a new Housing Bill. Will that access change as a result of that Bill? Do you have any knowledge of that?

18.
Mr Corkey: We have not yet seen the proposals. Legislation is moving towards a discretionary grant. I cannot say how that will relate to the repairs grant, which relates specifically to certificates of disrepair and public health notices.

19.
The Chairperson: I see that there are no more questions. Thank you very much for coming along. This is a public session, and if you wish to remain in the meeting, you may do so.

MINUTES OF EVIDENCE
TUESDAY 30 JANUARY 2001

Members present:
Mr B Bell (Acting Chairperson)
Mr Close
Mr Dodds
Mr Hussey
Ms Lewsley
Mr Weir

Witnesses:
Ms P Brannigan ) Housing Rights Service
Ms J Hunter )

20.
The Acting Chairperson: I invite Ms Hunter and Ms Brannigan to start their presentation.

21.

Ms Hunter: We work with the Housing Rights Service. It is a voluntary agency that, among other things, provides advice to members of the public who are experiencing housing problems. Last year we helped around 5,000 individuals who were having housing problems. About 15% of those would have been people living in defective premises who were having trouble getting repairs done. Almost all of those would be in the rented sector and quite a high percentage would be in the private rented sector.

22.
That explains our background and the parameters of our knowledge. We certainly do not claim to be legal experts, so go easy on the legal questions. On a daily basis we seek to advise tenants and remedy defects. We would certainly be looking at the legislation as a potential tool to help us help those living in premises with defects have those matters corrected.

23.
In principle, given our background, we are supportive of the Bill and the proposal to extend the liability of landlords. However we were concerned, shocked even, to see that it contains a proposal to exclude those tenants living in the controlled sector, which is how we would normally refer to restricted and regulated tenancies.

24.
Our view is that the basic principle of duty of care should apply in any traditional landlord/tenant relationship, irrespective of the nature of the tenancy. We have no great insight into why the exclusion in clause 3 was contained in the Bill. Our understanding is that it is to do with concerns that it might be placing too onerous a burden on landlords. It is really just to echo the arguments put forward by the environmental health people. We feel that the Bill does not place an onerous duty on landlords. It does not require them to bring properties to palatial standards, but simply ensure that their properties are safe for people to live in, which we think is to a fairly basic standard.

25.
Likewise, we do not consider that there is any financial or legal impediment to them doing that because, as Mr Corkey from Health and Environmental Services pointed out, grants are available to landlords should they wish to bring their properties up to standard. The rents payable are similar to those on Housing Executive properties. Therefore, you could have a situation where two tenants would be paying exactly the same rent, but enjoying very different rights under this legislation. We do not really accept the arguments put forward in the Explanatory and Financial Memorandum. It is obvious why the Bill should include protected tenancies.

26.
The controlled sector is probably one of the areas in which the Bill has potential for the greatest positive impact. The private rented sector has the highest level of unfitness in Northern Ireland - around 17%, compared with 7% on average. That is an area in which the Bill could prove very useful in trying to improve conditions. We would have thought that would have been in keeping with Government housing policy. As it currently stands, this clause is going to exclude at least 7,000 properties, which is about a quarter of the private rented sector. The people living in that sector have very few remedies available to them if their premises are defective.

27.

They do not enjoy the same remedies as people living in Housing Executive or Housing Association properties, or as would be available in England the Wales. If the Bill is implemented in its present form, it will exacerbate the situation and those people will be further disadvantaged.

28.
Finally, it is important that we consider the people who live in these properties. We are probably talking about areas in Belfast like North Parade and Sandymount Street. Traditionally, they are older properties and the people living in them are long-standing residents who are often very elderly. The crux of the issue is that, should we enact the Bill in its present form, it will conflict with the Government's stated policy objectives of targeting social need and on issues of equality.

29.
Our understanding is that section 75 of the Northern Ireland Act 1998 requires government departments, when they are introducing policies, to examine whether there is likely to be a discriminatory impact on any community group, for example, the elderly. Our opinion is, and there are several documents issued by the Department and the Housing Executive that would confirm this, that most of the people who live in that sector are elderly and on low and static incomes. Therefore that particular clause would have a discriminatory impact on older people.

30.
We are also aware that older people on low incomes are identified as vulnerable and in particular social need, and that would also be against policy objectives in that respect. Targeting social need is about more than just spending money, and that is one area where Government policy would have an adverse effect on targeting social need. If we were to remove clause 3(1)(a) and (b), that would have a much more positive impact on older people living in the community.

31.
Ms Brannigan: Ms Hunter has covered most of what we came here to say. One of the main issues concerned the people who live in the properties, and how this would affect them. Many of them are elderly people living on low incomes and finding it very difficult to get their landlords to carry out repairs. In many cases, landlords are reluctant to do repairs in the private rented sector. We do not know why because grants are available. A lot of elderly people are living in properties that are totally unfit. Therefore, we cannot afford to overlook the type of people living in those properties.

32.
Mr Hussey: The average level of unfitness is 17% in the private rented sector. You said that the average is 7.2%. Is that in respect of Northern Ireland?

33.
Ms Hunter: Yes. That is taken from the 1996 survey on house conditions.

34.
Mr Dodds: What was the extent of the consultation that may or may not have taken place between the Department and your own organisation, or others? What discussions took place on the issue?

35.
Ms Hunter: There have been none until today. This is the first opportunity that we have had to comment on the issue. In 1994, the Law Reform Advisory Committee (LRAC) wrote to us saying that it was considering options for reform in that area, and, in particular, it was considering introducing provisions similar to the Defective Premises Act, which had been enacted in England and Wales in 1972. The LRAC questioned whether we would support that.

36.
We replied that we would support it in principle and we believed that there was a need for reform. However, we had no further opportunity to comment on today's proposals, which appear to have been formulated a couple of years ago. Had we been able to engage in the debate at that stage, we would have made the point a lot earlier.

37.
The Acting Chairperson: Ladies, thank you for coming and for your presentation.

MINUTES OF EVIDENCE

TUESDAY 27 FEBRUARY 2000

Members present:
Mr Molloy (Chairperson)
Mr Leslie (Deputy Chairperson)
Mr B Bell
Mr Dodds
Ms Lewsley
Mr Hussey
Mr Weir

Witnesses:
Mrs Ethne Harkness ) Law Reform Advisory Committee for Northern Ireland

38.
The Chairperson: You are very welcome. Do you wish to open, Mrs Harkness?

39.
Mrs Harkness: There may be some confusion about my role today. I am here as a member of the Law Reform Advisory Committee (LRAC) which published a report on defective premises in 1998. I was a member of that committee as an academic lawyer and senior lecturer in the Faculty of Law at Queen's University. At that time the committee was made up of lawyers and some lay people who worked on a part-time basis and looked at particular aspects of civil law that were referred to them.

40.
I am not quite sure what aspects of the report the Committee wanted to consider this afternoon. Are there any particular issues to which the Committee wanted to draw attention?

41.
The Committee Clerk: The Committee received evidence from the Housing Rights Service and the Chartered Institute of Environmental Health (Northern Ireland Centre) and in both instances concerns were raised about the exemption in clause 3 for landlords of tenancies which were either restricted or regulated. The Office of Law Reform had previously indicated to the Committee that that decision was based on advice from the LRAC. We need to determine whether or not the Committee is content to continue with that exemption and it is that issue on which you have been asked to comment.

42.
Mrs Harkness: When you say whether or not "the Committee" was content to continue with that exemption, do you mean this Committee as opposed to the LRAC?

43.
The Committee Clerk: Yes.

44.
Mrs Harkness: The LRAC has not addressed this issue since the report was published in 1998. This Bill comes from the Department and was not attached to our report.

45.
We did consider exempting certain types of tenancies. On balance we decided to exempt restricted and regulated tenancies. We were influenced and persuaded by representations from the Housing Executive. What decided us was the fact that the rents payable, particularly on restricted tenancies but also on regulated tenancies, were so low that we did not think there was an equity between imposing an extended liability on those landlords and the return they received from the rental income. The issue of equity was the main influence.

46.
Mr Hussey: I will apologise now that I may have to leave the meeting early. Landlords come to the Housing Executive looking for grant aid for upgrades, so does the Executive have a vested interest? Landlords could expect a higher income from upgraded premises, and a person likely to be renting that accommodation would probably be claiming housing benefit, for which the Housing Executive has responsibility.

47.
Mrs Harkness: That is a valid point. The LRAC felt persuaded by the Housing Executive argument in terms of the amount of the return. We looked at the issue in a narrow way. The committee's brief was not in the broad context of housing law reform but in the narrow context of the Defective Premises (Northern Ireland) Order 1975 which followed corresponding legislation in England (Defective Premises Act 1972).

48.
In our jurisdiction we did not repeat the contents of section 4 and by 1998 we were saying that the time had come for us to take on board the 1972 legislation. The Committee is probably aware that the reason given in 1974 was the number of bomb-damaged properties. We decided that that was no longer a consideration and we could go some way towards making the reform. The issue of low returns was raised and we were persuaded not to extend the liability to those premises.

49.
I see the merit in the point being made about vested interests. As far as I remember, it was not something the committee addressed, although we were aware that the Housing Executive had its role to play.

50.
Ms Lewsley: I cannot understand the argument that if a landlord is applying for a grant, it costs him nothing to upgrade a property and so it is irrelevant how much money he gets in the first place. However, if he re-let the property, he could ask for a higher rent. Most people living in these properties are elderly or disabled, the most vulnerable members of society.

51.
The LRAC has not looked at this report since 1998. Would their advice at that time meet all current requirements on human rights and equality of treatment? Would the legislation stand up?

52.
Mrs Harkness: The brief of the LRAC has to be set in the context of the time at which it was doing this work and the parameters of the issues it was examining. The members of the LRAC were not examining the broader issue of housing rights and nor were we trying to improve the quality of the housing stock. Our brief was to assess the limits of the liability following an accident. We identified an anomaly between the Defective Premises Act 1972 and the Defective Premises (Northern Ireland) Order 1975. We endeavoured to remedy that anomaly.

53.
Much broader social issues are obviously involved. However, in 1998 that was not the concern of the LRAC.

54.
Mr Leslie: I will have to reveal my ignorance of the meaning of "regulated" tenancies and "restricted" tenancies. If a tenancy or a protected low rent falls within the meaning of either a regulated tenancy or a restricted tenancy, is it the case that when the property is renovated, presumably by use of a grant, it then falls outside the scope of the regulation or the restriction, thereby enabling the rent to be increased or not increased? This is where my uncertainties stem from. If you improve a property and are able to raise the rent, it seems to me that there is no reason why you should not be made to do so.

55.
If the rent cannot be increased, even though the property has been improved, that situation is materially different. I assume that this is the aim of clause 3. Can you enlighten us on that?

56.
Mrs Harkness: I do not know if "enlighten" is the word. I think the point you are making is whether a regulated tenancy remains as such for ever, or whether it can come out of that category and therefore cease to be regulated. If I frame the question in that way, I do not think I can answer it - or at least I would not want to be bound by my answer. My understanding is that restricted tenancies are fixed at the minimal rent that is now payable.

57.
In regulated tenancies, there is a procedure where the rent can be increased. However, my understanding is that even if it is increased, it will still be subject to a maximum which is below market rents. That would lead you to think that these tenancies will be exempted if this proposal goes ahead. If these tenancies are regulated, they will remain regulated until that process is changed.

58.
Mr Leslie: I assume that when a 100% grant is awarded, the situation is marginal, depending on how far the rent can be increased. If the grant is less than 100% and the landowner has to put equity in as well, I think it is a material loss rather than a marginal one. How widespread is this, and what rent values are we talking about?

59.
Mrs Harkness: At the time of the research restricted tenancies with a rent of about £1 per week were being discussed. These were ancient tenancies. I do not have figures for regulated tenancies but we were talking about rents that were below the Housing Executive's equivalent property rents. Given that the Housing Executive's rents were subsidised to some degree, the theory was that those were lower than market rate tenancies. I do not feel qualified to answer your specific query with any authority.

60.
Mr Weir: You said that you did not have the figures for this, but is there any information about the percentage of tenancies that would be either regulated or restricted?

61.
Mrs Harkness: I can quote some figures for 1996 when the research was carried out. Although the figures are not in percentage terms, with over 500 registered tenancies there was reason to believe that the same number was unregistered.

62.
Mr Weir: Are those restricted?

63.
Mrs Harkness: Those are restricted, with tiny rents, of which there may be up to 1,000. Our figures indicated some 7,500 regulated tenancies. In terms of scale, that compares with Housing Executive tenancies at that time of 147,000. We were told that private tenancies may be about 15,000. The other category was Housing Association tenancies, for which I do not have the figures.

64.
Mr Weir: Are regulated and restricted tenancies an "overhang" of a past era, because new regulated and restricted tenancies do not come onto the market? You said there were some 7,500 regulated tenancies in 1996. Has there been any research on how that is changing over time? Do you have any figures for, say, five years earlier? Is this a disappearing market?

65.
Mrs Harkness: I have no recollection of figures like that at the time. Regulated tenancies are thought of as a dying breed. However, I do not have figures to indicate that that happened before 1996.

66.
Mr Weir: Nothing new is coming onto the market, although there is the potential for this because of grants. The flow will be one way in that regard, and my query concerns the scale of that flow.

67.
Mrs Harkness: Many of the tenants of these properties were elderly people who may not have wanted the disruption of repair work. They may have been in a social position where they did not have many visitors who could have been injured. There was no demand from these people.

68.
Mr Dodds: Did the committee do any work on the equivalent legislation in Great Britain? Legislation was changed on the mainland and I wonder if any comparisons were made.

69.
Mrs Harkness: No empirical research was conducted. However, the problem of low rents was no longer as relevant in Great Britain as it was here. Great Britain had an across-the-board procedure for setting fair rents. They had a readily available procedure for better rental income working. They did not have this specific problem.

70.
Mr Dodds: You said that the LRAC dealt with restricted and regulated tenancies in narrow terms.

71.
The Explanatory and Financial Memorandum relies heavily on the LRAC's report, and refers to it repeatedly. Did you draw up the report in the knowledge that the Department would use it as a basis for legislation? Are you comfortable with the conclusions that have been drawn from your work?

72.
Mrs Harkness: I cannot speak for the LRAC but I expect that it would be content to the extent that what the LRAC recommended is now being implemented. However, if you are asking whether the LRAC might have welcomed a broader brief - or might welcome such a broader brief now - I cannot answer that.

73. Mr B Bell: Was it the Defective Premises (Northern Ireland) Order 1975 that allowed landlords to increase rents by 2·5 times the rateable valuation?

74. Mrs Harkness: No. That was the Rent (Northern Ireland) Order 1978. I was referring to the Defective Premises (Northern Ireland) Order 1975.

75.
Mr B Bell: That clarifies the position.

76.
Mrs Harkness: The 2·5% increase came from the Rent (Northern Ireland) Order 1978, and that was the source of my statement that if there were an increase in rent, it would still be within a fairly low maximum figure.

77.
Mr B Bell: You mentioned that the market for that type of house was dying. That was because many of the houses were in redevelopment areas and were eventually demolished. However, the private rental market is thriving and the situation is different now.

78.
The Chairperson: Could there be a similar situation in a few years' time when the new rent rates come into being?

79.
Mrs Harkness: Over a period of time - potentially a long time - the problem of restricted and regulated tenancies will wither away. However, if we take positive action, the situation could be resolved more quickly.

80.
The Chairperson: You mentioned the narrow brief given to the LRAC. What was the Advisory Committee's role? Was it to deal with the landlord and the repair, or with the tenant and the defectiveness?

81.
Mrs Harkness: The LRAC was not starting off from the standpoint of one scenario or the other. It was neutral. The LRAC took the perspective of lawyers. It viewed it as a legal anomaly that was created by the Defective Premises Order. It examined whether it should be remedied. That might also be the root of the narrow brief.

82.
The Chairperson: Thank you.

The Committee rose at 3.20 pm.

MINUTES OF EVIDENCE

TUESDAY 6 MARCH

Members present:
Mr Molloy (Chairperson)
Mr Leslie (Deputy Chairperson)
Mr B Bell
Mr Close
Mr Dodds
Mr Hussey
Mr Weir

Witnesses:
Mr M Foster ) Office of Law Reform
Mr N Lambe )
Mr P Johnston ) Assembly Legal Advisor
Clause 1 (Landlord's duty of care by virtue of obligation to repair premises demised)

83.
The Committee Clerk: I would like to remind members that clause 1 creates a landlord's duty of care, where his or her premises are let under a tenancy agreement and the landlord has a contractual obligation to maintain or repair the premises. The landlord's described duty extends to all persons who reasonably might be affected by the premises' defects including the tenant, visitors, passers-by or neighbours, et cetera. The clause requires the landlord to

"take such care as is reasonable in all the circumstances to see that they are reasonably safe from personal injury or from damage to their property"

84.
The Housing Rights Service expressed concerns about a perceived lack of clear guidance, especially the way in which the draft Bill's Explanatory and Financial Memorandum defines "all persons who might reasonably be affected by defects". Paragraph 7 of the explanatory and financial memorandum states

"It will thus cover lawful visitors, the tenant, passers-by, neighbouring occupiers and their families and guests."

However, the specific commentary on clause 1(2) states

"This may include the tenant himself, visitors, passers-by or neighbours."

85.
Mr M Foster: As I stated in a letter to the Committee, it is quite right to highlight the potential ambiguity of the definition at paragraph 7 of the explanatory and financial memorandum and its comparison with the commentary and clauses. For the record, the correct version contains the word "may". The test as set down in the Bill is on the standard of reasonableness and it does, therefore, lay down a discretionary aspect. Technically speaking, the definition using the word "will" will probably be the case in practice. The word "may" will usually include such people, and lawful visitors will always fall within this ambit as might passers-by, neighbouring occupiers and their families and guests. In theory, under the terms of the Bill all these groups could be called "trespassers", but it is highly unlikely that this would happen.

86.
The test, as set out in this way, is designed specifically to not include trespassers, and they make a test for them to show in court that they would be reasonably effected. That is a difficult one for them to reach.

87.
I also pointed out in the letter that in the 25 or so years of this particular test, which is worded in the same terms in the Defective Premises Act 1972, there has not been any case law unearthed to show that this test has worked in a unsatisfactory way.

88.
The Chairperson: With regard to lawful visitors, there were some previous cases where people were unlawful visitors.

89.
Mr M Foster: An unlawful visitor by definition is actually a trespasser. The Occupiers' Liability (Northern Ireland) Order 1987 deals specifically with those cases and sets down a much less rigorous test on an occupier for a trespasser or, if you like, an unlawful visitor to his property. The remit of this particular Bill is that it is hoped not to include a trespasser, and trespassers should not be able to avail themselves of the wider test and the higher duty of care.

90.
The Committee Clerk: There is no need for an amendment to the clause itself.

91.
Mr M Foster: No.

92.
The Committee Clerk: The amendment will be to the explanatory memorandum.

93.
Mr M Foster: Yes.

94.
The Committee Clerk: Therefore, subject to the Committee's agreement that there is no amendment proposed by the Committee, it would be appropriate for the Committee to conclude that there would be a recommendation to the Assembly that clause 1 should be accepted.

Clause 1 agreed to.

Clause 2 (Application of this Act where landlord has right of entry to carry out repairs)

95.

The Committee Clerk: Chairman, there is no issue in clause 2. Clause 2 further prescribes the scope of a landlord's duty of care as created in clause 1. It establishes that such a duty arises only where the landlord has an expressed or implied right of entry under a tenancy agreement to carry out maintenance or repairs as if he were under an obligation to the tenant to remain or repair (as stated in subsection (1)).

96.
There were no matters raised with the Committee by the witnesses, and the Committee has not raised any difficulty or issue regarding clause 2. Subject to that continuing to be the Committee's view, Chairperson, it would be a matter for the Committee to recommend clause 2 to the Assembly.

Clause 2 agreed to.

Clause 3 (Tenancies to which this Act applies)

97.
The Committee Clerk: This clause is probably the most significant issue as far as the Committee is concerned. I will not attempt to cover it all, because it is set out in the documents. It is also set out in the letter.

98.
This clause sets out some exemptions in the way that the Bill will operate. For example, it excludes or exempts landlords of a regulated tenancy, landlords of a restricted tenancy or landlords of a tenancy granted a lease for a term of more than 50 years, or landlords of a tenancy with a lease under which the rent payable is either a yearly amount of less than £1 or peppercorn rent, et cetera.

99.
As far as the Committee is concerned, the issue is the exemption as it applies to restricted tenancies or regulated tenancies. This issue was raised by the Chartered Institute of Environmental Health and the Housing Rights Service who both expressed concerns about the way in which this exemption would work.

100.
These concerns have been relayed to the Office of Law Reform and there is, as Members are aware, a very comprehensive response from that Office explaining why the exemptions were included. You may wish, Chairperson, to ask the Office of Law Reform to briefly rehearse that, but I think it is an issue that Members will wish to address.

101.
The Chairperson: OK.

102.
Mr M Foster: When the Office of Law Reform was examining the issue relating to restricted and regulated tenancies it was initially faced with two arguments. First, the Law Reform Advisory Committee, whose report is implemented by this Bill, had concluded, based on its consultation process, that both regulated and restricted tenancies should be outside the scope of any extended ambit for a landlord and his liability. Largely speaking, the advisory committee formed this view following an analysis given to it by the Northern Ireland Housing Executive (NIHE). The NIHE contended that to place a duty of care on landlords of regulated and restricted tenancies in these wider circumstances would provide them with an onerous duty.

103.
There are two types of tenancies, and it is important to distinguish between them - they are both protected tenancies set out under the terms of the Rent (Northern Ireland) Order 1978. Restricted tenancy is the poor relative of the two.

104.
Most restricted tenancies are in a fairly poor state of repair at the moment and the landlords who own the properties are restricted in the amount of rent they can charge. The average rent for a restricted tenancy is £1 a week, although it varies by a small amount. These figures were set at 1978 levels and, under the terms of the legislation, are unable to be changed.

105.
Regulated tenancies are in a slightly better position in that they allow for slightly higher rents. The level was set in 1978 at two and a half times the net annual value (NAV) of the house, which would have taken into account the yearly rent. The cut-off point in terms of whether a house was determined to be a regulated or restricted tenancy was £60 NAV. Therefore, in theory, the lowest amount of rent which a regulated landlord could charge would be two and a half times £60, which is £150 per year. There is scope for that to be increased. A landlord of a regulated tenancy can apply to a rent assessment committee to have it raised, but the upper limit for any increase is placed at those levels which Housing Executive tenancies of a similar nature can charge.

106.
The argument, which the Housing Executive put forward in its response was that because Housing Executive tenancies maintain a substantial subsidy there is no way that a regulated landlord could charge a rent which would come close to the market value. To impose a duty of care on landlords who already have only a very modest, or indeed in many cases almost zero, financial interest in their properties could be construed as quite onerous.

107.
When we looked at that, we felt that that was not reason enough to exempt landlords of such groups. We were familiar with the views espoused by the Chief Environmental Health Group who, very valiantly put forward the argument that there are financial inducements in place for a regulated and restricted landlord to improve their property.

108.
A summary of the view of both the Chief Environmental Health Group and Housing Rights Services is that there should be no financial impediment for such landlords to upgrade their property to levels of repair which might be considered to be more satisfactory than they currently are. However, several reasons emanated from that which led us to conclude that at this stage it would probably be inadvisable for us to adopt regulated and restricted tenancies within the ambit of the liability.

109.
At the moment there is a review being initiated by the Department for Social Development (DSD). The proposal for that review is based on the fact that the private control sector, which regulated and restricted tenancies both fall into, is in a fairly poor state at the moment. There is a higher state of disrepair in the private control sector, especially when compared to the uncontrolled sector, and indeed the social housing sector. There are difficulties in terms of the financial inducements available. Turning to page 4 of the letter these inducements are outlined. In the context of the DSD review the point has been made that while there are financial inducements available to regulated and restricted tenancies, in many situations these will not be enough to repair a property correctly. In many cases a landlord will still be faced with quite a large capital contribution if the repairs are going to take it up to the levels required.

110.
This has to be looked at in the context of the limited repair enforcement options available in this jurisdiction, as compared to England and Wales. The argument that the DSD is espousing in its review of this area is that the whole issue of regulated and restricted tenancies needs to be carefully redressed.

111.
There has been quite a divergence in policy from that existing in England and Wales where there is a different system for protected tenancies and there are many different inducements and regulations in place. The divergence in policy is not only in relation to the repair issues which can be enforced upon a landlord, but also that landlords of such properties can raise their rents up to market rent levels. Therefore, they are have a very different set of circumstances than regulated and restricted landlords and tenants are faced with in this jurisdiction.

112.
The issue in relation to this Bill as coming from the perspective of the Department of Finance and Personnel and in particular the Office of Law Reform, was that we are faced with a situation where we have no ambit in terms of housing law per se. We cannot put forward a Bill that will impose repair obligations upon landlords. Nor can we put forward a Bill that aids in improving the financial situation, grants and other inducements that are available. In the absence of this, the net effect will be that if we were to extend liability to regulated and restricted tenancies we would be imposing an extra liability, but there would be no back-up enforcement powers to make sure it was done. Potentially, the result of this is an increase in insurance premiums for landlords of both regulated and restricted tenancies without any fair and proper mechanisms to enable them to get their properties to the correct state and level of repair.

113.
It is an unusual situation in that private uncontrolled landlords, who can charge open market rents, are going to be in a position whereby they can afford to subsume any small increase in insurance premiums, which this extended ambit will possibly give to them. Most of their properties are in a better state of repair than those in regulated and restricted tenancies. On the other hand you have a regulated or restricted tenant, or restricted landlord, whose rent in many circumstances will be barely sufficient to cover the existing insurance premium on the property. He will be faced with this extra liability. The insurance companies are going to factor that into their insurance premiums, and it is going to result in a rise in their insurance premiums but in the absence of any proper enforcement powers, and any proper and re-evaluated systems of grants and inducements for properties to be brought up to the correct standard.

114.
Basically, the DSD review aims to look at and address all of these issues and is on a timetable where it hopes to issue a consultation paper in September of this year. A working group is currently being set up to deal with the various issues, and the Department has identified the various options and issues which the private control sector raises.

115.
It was our assessment that it would be unwise for us to impose this extra liability on landlords of such properties in the context of a wider review of regulated and restricted tenancies generally. It may well be that the DSD review will ultimately lead to a radical overhaul of the regulated and restricted tenancy system, in which case one of the options is for better systems of enforcement and more widely available grants. Obviously in that context this liability could be revisited and could be imposed at a further date.

116.
The other option is that regulated and restricted tenancies will become a thing of the past, and there will be a completely different system of protected tenancies drawn up - possibly similar to that which currently exists in England and Wales where there are better grants and opportunities for landlords to achieve a fair market rent. If that were the case, then this option would automatically fall outside the scope of the Bill. It was our assessment that we would not wish to impose liability on both groups at this time given the fact that there is a wider ongoing review of protected tenancies generally.

117.
Mr Close: I have a couple of points to make. What about the tenant? This seems to be totally focused on the landlord's perspective. One could get the impression that landlords were a bunch of charitable institutions providing houses for people with no reward whatsoever - God help them.

118.
The reality is somewhat different. We are talking about human beings living in houses, which in most cases are substantially lacking. We have a responsibility to rectify those faults. To suggest that this may happen some time in the future is something I have difficulty with, because I recognise that there is a problem in the system.

119.
We have a responsibility to our constituents to put right those faults. The mechanism for doing so is currently in front of us in this Bill, and to turn a blind eye to it or to put it on the long finger would be fundamentally wrong. Surely from a socially conscious viewpoint it would be wrong to look to the landlord first. We should look to the tenant first.

120.
Mr M Foster: First, this Bill is not specifically designed to deal with a landlord/tenant relationship. It is designed to deal with plaintiffs and defendants. The scope of this Bill is fairly and squarely set in the context of what happens when damage occurs. There is no mechanism within this Bill to enforce landlords to repair their existing property.

121.
Mr Close: If the property is in a bad state of repair, is it more likely that there will be a plaintiff?

122.
Mr M Foster: Yes.

123.
Mr Close: The plaintiff might not necessarily be the tenant. I accept that. However, the tenant will benefit from the faults or potential faults being put right.

124.
Mr M Foster: The net effect of this Bill will be in situations where there is an absence of enforcement and repairing obligations. It will probably not have effect in regulated and restricted tenancies. Landlords have already stated - both in the letter to you and in the oral evidence - that current financial inducements are in no way sufficient to get the properties up to the required standards. This is subject to the Chief Environmental Health Group's view of this. At the moment whilst there are financial inducements and grants available in many cases, especially in the properties you have mentioned at the worst level of repairs, they are in no way sufficient to get the properties up to the required standards. There is a maximum of £5,500 set for a grant in any circumstances and for many of these properties that is grossly insufficient.

125.
You referred to the fact that landlords are not charitable organisations, which I fully accept. However, in terms of restricted tenancies they may argue that they are charitable organisations. They can only command a rent of £1 per week. They experience extreme difficulties in selling their property, not just on the basis of their disrepair but also because the tenants who live in those houses are very much protected. Landlords cannot sell properties with tenants in them. There is a right of survivorship, which lasts for three generations.

126.
It could be argued that it is very much the thrust of this Bill that we are not coming from a landlord's perspective. We are dealing with maybe 500 tenancies. The Bill will cover upwards of 200,000 tenancies. Those landlords could rightly argue that they are already under a fairly severe liability as it is, and to further increase this without any financial grants being available - when I say "without", obviously there are some financial grants available, but they are wholly unsatisfactory - would be onerous. At the moment this is part of the issue which the DSD review is aiming to address.

127.
I am anxious to convey that we are not dealing there with landlords and tenants, enforcement responsibilities, grants, the systems or the whole issue of restrictions laws as they stand. We are dealing with a situation where damage has occurred and where a potential loophole currently exists.

128.
Returning to the very basics of this Bill, at the moment there are four, possibly five, potential plaintiffs in any case where damages or injuries occur. There is a tenant, a lawful visitor, a passer-by, a neighbour and possibly a trespasser. Currently a landlord of any property - and I am not just restricting this to the protected tenancy sector - is favoured in law by a degree of immunity that he currently receives.

129.
A good example is that a neighbour can only sue in the tort of private nuisance. The case law has shown quite categorically that it is not possible to claim damages for personal injury. Therefore, if a neighbour is injured by a piece of masonry falling off the next-door neighbour's house, he does not have an action. That particular Bill will give him an action.

130.
If a neighbour's guest or family member have any injury on that property, they have absolutely no action, whether it be damage to property or personal injury. A lawful visitor must show that a landlord had notice of the thing that caused the injury. That is being removed, and the test is being widened to include those times when they should have known, in all the circumstances of the case, of the defect.

131.
To say that this Bill is coming from a landlord's perspective is not wholly inaccurate, but it is very much focused on giving extra rights and responsibilities not just to tenants, but the wide range of potential plaintiffs that currently exists under the law.

132.
Mr Close: It is still excluding those properties that are most likely to cause the problem.

133.
Mr M Foster: Yes, I accept that point. However, even if we do impose that liability now, it is going to place landlords of such properties in an impossible situation. They do not currently have the incentive to get the properties into the full state of repair. They can barely afford the net increases in their insurance premiums, as it is. That gives some balance of the landlords' position.

134.
We have appreciated that, in the wider sector, tenants would have been in a more vulnerable position, but it could be legitimately argued that many of the landlords are already in such a position.

135.
Mr Hussey: Thank you, Chairperson, and my apologies for not being here at the beginning. I think that Mr Close has been reading my notes. Is there no duty of care to the tenant? What about the tenant's rights? Are they going to have to wait for the DSD review?

136.
You mentioned that regulated and restricted selling might cause difficulty for landlords. How did those properties get into their present state of disrepair? We are now looking at payback - it is time that those properties are properly looked after by the landlords. To leave those two particular groups out would be an absolute scandal. I maintain that all landlords should be treated in the same way in that particular instance.

137.
You mentioned the likelihood of higher premiums. That is tough luck, because people have a right to be properly covered in a proper way. The higher likelihood of damage or injury probably comes from those particular tenancies. The property deserves the attention from the landlords that will ensure that the tenant, the neighbours, the passer-by, the visitors, or whoever, that there is less likelihood of damage or injury being caused to them. If we left them out, that would not happen.

138.
Mr Foster: I can see the force in that argument and that was obviously one of our concerns, but that does not take us away from the fact that there are no enforcement provisions coming from this.

139.
The Department of Finance and Personnel and the Office of Law Reform, has no ambit in relation to housing law. I accept the point that if that is the case, why are we bringing this forward at this stage? It is because the protected controlled sector only adds up to a small portion of the tenancies available in Northern Ireland.

140.
I take your point - it seems that our waiting for a DSD review of the control sector only perpetuates the problems which arise for tenants or any of the potential plaintiffs. My answer would be that, even with this Bill, we will not be much further - probably no further - down the road in getting proper housing for those types of people, because if the remit of a landlord's liability were extended, it would not necessarily lead him to -

141.
Mr Hussey: Earlier you talked about incentive. Where was the incentive? I would argue that because of a lack of incentive - perhaps because of the nature of the rents charged, et cetera - landlords did not pay as much attention as they should have done to those properties.

142.
Where is the encouragement? Where is the incentive if they are kept out of the Bill that we are considering? The incentive would be there if they were included with the other types of tenancy - a block on tenancies and the responsibility of landlords. It is a bit like the voluntary wearing of seat belts. It was voluntary, it became enforceable, but it was more easily enforced when it became a statutory requirement, because people had got used to it and had adapted to it. I would argue that the same would apply to the types of tenancies which you propose to exclude.

143.
Mr M Foster: Representatives of the insurance industry have indicated that they would see modest increase in insurance premiums. If a landlord of a restricted tenancy charged a rent of £1 per week, an increase of £5 or £10 in your insurance premiums per month could theoretically be quite an onerous rise.

144.
I suggest that the incentive to repair property over £5 or £10 per month would pale to insignificance beside the amount of money required to get those properties into the necessary state of repair. In the absence of proper financial inducements - there are financial inducements -

145.
Mr Hussey: Again, you are coming at it from the landlord's point of view. Could you look at it from the tenant's point of view?

146.
Mr M Foster: Absolutely.

147.
Mr Hussey: I am sorry, but you are not.

148.
Mr M Foster: From a tenant's perspective, one of the other parts of the Northern Ireland Housing Executive's argument was that many of the tenants of the restricted tenancies are elderly. A valid point is that they probably would not appreciate the extensive disruption to their lives which would be necessary to force landlords to get their properties up to the required level. In many cases it would result in the tenants' having to be re-housed.

149.
Mr Hussey: Let us not forget the Housing Executive's vested interest as a grant-aiding body.

150.
Mr Foster: I appreciate that.

151.
Mr Hussey: There is the possibility that if rents had to be upped a wee bit the Housing Executive has a vested interest in the housing benefits.

152.
Mr Leslie: How can they be upped?

153.
Mr Hussey: If there is an increase in rent.

154.
Mr M Foster: But they cannot be upped.

155.
Mr Hussey: Can rent not be upped?

156.
Mr M Foster: No, it is set.

157.
Mr Hussey: For those particular tenants?

158.
Mr M Foster: There can be no increase.

159.
Mr Hussey: Can it be increased if, at a future stage, that tenant moves on?

160.
Mr Dodds: I have just two questions, the first of which is fairly straightforward. You mentioned the DSD review. This discussion has proved how timely and welcome the review is, and the matter must be looked into extremely carefully. You said that it was possible for us to say that we should press ahead after the review, but also that we could return to the issue and deal with it. What mechanism do you envisage being employed? Would you do it with another piece of legislation? How would it be done?

161.
Mr M Foster: If the review under the Department for Social Development leads to a change, there will be a housing Bill. This could very easily be inserted into the Bill.

162.
Mr Dodds: It would not be difficult to include issues relating to plaintiffs and defendants in a housing Bill, although they are primarily the remit of the Office of Law Reform? I have noticed that when such issues arise between Departments there is always the cry that something is not in "our remit", but someone else's. Do you not see its inclusion in a housing Bill as an issue?

163.
Mr M Foster: No. Section 4 of the Defective Premises Act 1972, which this basically replicates, was included in a wider Bill relating to housing.

164.
Mr Dodds: As you rightly say, this does not just deal with tenants, but covers passers-by and lawful visitors. You can understand the argument that, at present, tenants, some of them elderly or otherwise disadvantaged, are benefitng from very low rents, therefore this type of landlords' liability may not be in their interest.

165.
However, let us take the example of a passer-by who is injured by a piece of masonry which has fallen from a building. If it fell from number two, a property which does not come under such a tenancy, he would receive damages. However, if it fell off the house next door, he would not. The nature of the tenancy does not concern him, for he has been injured. It is pure chance that the masonry happens to have fallen from an house whose owner is exempted from liability. How do you explain this?

166. Mr Foster: Passers-by will not make use of this Act, since they already have much wider rights.

167.
Mr Dodds: What about lawful visitors?

168.
Mr M Foster: One of the valid arguments against the proposals relating to restricted tenancies is that if they are accepted, and if an injury occurs to a lawful visitor, the injured party already has rights under the Occupiers' Liability (Northern Ireland) Act 1957. However, we are not creating any new rights but extending the current ambit of landlords' liability. It will, therefore, be easier for a lawful visitor to show his case. The key issue is actual notice. At the moment there is slightly more contention since, because actual notice has to be shown, a landlord might be able to claim he had not been informed of a defect.

169.
Mr Dodds: But a lawful visitor or passer-by would still have to show actual notice in those cases?

170.
Mr M Foster: That is correct.

171.
The Chairperson: My understanding is that this Bill deals with liability. It has nothing to do with the condition of houses.

172.
Mr Foster: That is correct.

173.
The Chairperson: You said that the landlords' insurance costs could increase. Surely, the tenants' insurance costs for normal contents cover would also go up. Is that correct?

174.
Mr M Foster: The Department for Social Development has made the point in its review that tenants of such properties are finding it difficult to get property insurance at the moment. That is in the pot for them to look at. Perhaps I am not getting the point across to members particularly well, but, if and when the DSD review goes through, it will lead to a radical overhaul of the whole system. We might be putting the cart before the horse if we were to rush to impose liability on those people only for a review to radically reform the system or improve it so that the liability would be welcomed and would not be too onerous.

175.
Mr Leslie: Are there any circumstances in which a regulated rent can be increased?

176.
Mr M Foster: No. For example, in England and Wales, there are regulated tenancies of a sort. They have different names but, in principle, they offer the same types of security of tenure and the same rights. The difference is that there can be an increase in the rent for a regulated tenancy in this jurisdiction, but it must be a one-off increase. The rent is set at the 1978 level, which is two and a half times the NAV, however a regulated tenant can go to a rent assessment committee and have the rent raised to Housing Executive level. The difficulty with that procedure, as it exists at present, is that there can be a waiting period of 12 to 16 weeks before the application is processed. During that time a landlord can only charge rent of £1 a week. Clearly that constitutes a major lack of incentive for people to do this. That is one of the key criticisms arising from this review.

177.
Mr Close: You said that the 1978 level is two and a half times the NAV. When there is a revaluation of domestic properties, will the new NAV be set at a figure applied by the landlord for the rent.

178.
Mr M Foster: I do not know.

179.
Mr Close: Would this be a reasonable assumption?

180.
Mr Foster: Yes. It is possible.

181.
Mr Close: If a landlord found himself outside the scope of this rule, would he be getting a bigger rent?

182.
Mr M Foster: Yes.

183.
Mr Close: Would he still be avoiding liability?

184.
Mr Foster: Perhaps not.

185.
The Chairperson: We will now hear the views of Mr Percy Johnston, one of the Assembly's legal advisers. If the Committee were to recommend the removal of the exemption of restricted and unregulated tenancies, what would be the consequences?

186.
Mr Johnston: First, to make such an amendment to the Bill would not constitute legislative in competence. Secondly, it does not interfere with the text of the Rent (Northern Ireland) Order 1978. Mr M Foster has spoken at length about the working of the Rent Order, and its restrictive operation. The inclusion or exclusion of restricted and regulated tenancies from the scope of this Bill would have no effect on the text of the Rent Order, and nor would their inclusion. I endorse what has been said about the practical difficulties that would be involved.

187.
Mr Hussey asked how it is that these properties are allowed to deteriorate so badly. Some of the properties were inherited by people who did not want them, however they were passed on to them by their family, with their standard 1978-pegged rent rates. They now sit as a liability, and some of the rents may not even be collected, because it is hardly worth doing so. Therefore, the properties are left virtually abandoned. That might be a side issue, but, in textual terms, this Bill has no effect on the Rent Order.

188.
The Chairperson: Would the removal of these exemptions have any other knock-on effects on this Bill or any other one?

189.
Mr Johnston: No. Some Members have pointed out that there are grants available to fix these wrecks. I have examined the levels of grants awarded. Since 1996, these grants have been reduced from a maximum figure of £5,500 and a minimum of £500.

190.
The grant is classed in terms of the "eligible amount", and then an appropriate percentage of the relevant amount is awarded. Therefore, you will not always receive the full "eligible amount", you might receive a percentage of that amount.

191.
The mandatory grants available are very, very small in the lower hundreds of pounds, and this fact might influence the thinking of those who say "But the landlord can get grants".

192.
Mr M Foster: I am concerned that, if we were to include restricted and regulated tenancies in the Bill, we would be duty bound to stop this Bill and to carry out further consultation on the basis of this wider inclusion. We carried out consultation in the belief that regulated and restricted tenancies would be kept out of the loop, especially given the fact that we were aware, from quite an early stage, that the Department of Social Development would be reviewing the whole area.

193.
On a practical level, this might allow us to catch up with the DSD review, but it would not address the position of the other 180,000 tenancies, which this Bill hopes to encompass. Specifically, and perhaps crucially, we hope that one of the by-products of this Bill will be that private landlords who charge bigger rents, and who are in a better position to maintain and carry out the repairs, will be caught. If this Bill were stopped so that the DSD review can be taken into account, there might be a knock-on effect on the rest of the provisions. It could be a couple of years before the results of the review are incorporated into legislation.

194.
The Chairperson: The benefits to the tenants in the larger stock would outweigh the restrictions?

195.
Mr M Foster: We hope so. This review is looking at issues that Members raised about the condition of the private controlled sector, particularly in relation to the situations that tenants find themselves in. Unfortunately, this Bill, even if it included regulated and restricted tenancies, would probably do very little on a practical level to alleviate that problem.

196.
The Chairperson: Is it the case that the Bill only comes into play if somebody is injured, and that it will have no effect on housing conditions?

197.
Mr M Foster: Yes. This Bill looks at the extent of landlords' liability after damage has occurred, rather than beforehand. We hope, of course, that this emphasis on liability might encourage certain landlords to buck up their ideas and to improve their properties. However, given the grants available for regulated and restricted tenancies, it is highly unlikely that it is those landlords who will be "bucked up" by this change.

198.
The Chairperson: If a landlord were to renovate a house with a restricted tenancy, could he then increase the rent?

199.
Mr M Foster: A restricted tenancy can be uplifted to a regulated tenancy, but the amounts of money involved are crucial. Restricted tenancies are held for those properties in the worst state of repair. The grants are so inadequate that there is little, if any, incentive to carry out renovations. In many cases landlords of restricted tenancies have a position similar to that of a ground landlord ¾ they maintain very little control over the property, save for the fact that they actually own it. It would be very difficult for a landlord to sell such a property.

200.
The Chairperson: What type of property are we talking about? Are you referring to old trusts?

201.
Mr M Foster: These properties date back to the end of the First World War, when the system of rent restriction was established. The right of survivorship lasts for three generations, therefore, many restricted tenancies are being phased out. For instance, in 1990 there were 1,200 restricted tenancies, and now there are only 500, therefore, in 10 years time there may be no such tenancies left. That said, the DSD review is welcome because here are radical problems with the private control sector at present. My point is that this Bill will do little, if anything - and probably nothing - to re-address those issues.

202.
Mr Hussey: I do not like the inference in this debate that the greater good has to outweigh the other factors. A similar argument was tossed in front of us when we were discussing building regulations.

203.
Mr Dodds: I was wondering where I had heard that argument before.

204.
Mr B Bell: I would accept Mr Hussey's argument if it helped the tenants concerned. However, I do not say how it could make any difference. In the past, I have been on a rent assessment panel, and I could be responsible for striking some of those rents that you are talking about. It was a major advance for both landlords and tenants because it was the only time that they got repairs done.

205.
Now there is no chance of getting repairs done. Mr Hussey and Mr Close were highlighting the fact that the tenant would not benefit from the Bill. However, this Bill is not intended to benefit the tenant; it is concerned with the liability of the landlord. It does not involve building regulations.

206.
Approximately 15 years ago, there was one landlord who was very disgusted because he could not get his rent, and when he did get it the tenants wanted extra repairs to be carried out. He was at his wits end, so he went down the Shankill Road to a homeless hostel in Carrick Hill and asked one of the down-and-out tramps if he wanted a row of houses. He told the tramp that he simply had to collect the rent from the tenants, then he took him to a solicitor and signed the houses over to him. That is how he got rid of them.

207.
It is a serious problem and the Bill will not help the tenant.

208.
Mr M Foster: If this Bill could serve that purpose, we would not hesitate to include it.

209.
The Chairperson: It is not concerned with housing policy, it is deals with liability and that is where the difficulty arises. One would hope that the landlord would not avoid carrying out repairs. I agree with Mr Hussey that if it would be different if it were aimed at improving the housing stock, but we need housing regulations to do that. This Bill deals only with landlords' liability, and if we try to include landlords of restricted tenancies within the scope of this Bill we could create difficulties.

210.
Mr Close: What will they do if we excluded restricted tenancies?

211.
The Chairperson: We would have to carry through this Bill through in the Assembly. We do not yet know if this is possible and whether there will be any knock-on effects. If it is unenforceable, where do we stand?

212.
Mr Close: I am asking what these landlords are going to do?

213.
Mr M Foster: On a practical level, we have carried out consultation based on a policy that exempts regulated and restricted tenancies. If we are now going to include restricted tenancies in the scope of the Bill, we are duty bound to consult, for a second time, the groups concerned. We would have to tell them that we have reassessed the position at a scrutiny stage, the Bill has been put on hold and that we are minded to include regulated and restricted tenancies. We would also have to invite people to submit their views before going through the whole process again.

214.
Mr Hussey: When did the original period of consultation take place?

215.
Mr M Foster: In 1998. This legislation would have been introduced in 1975 had it not been for the fact that a high number of properties were damaged as a result of the troubles. Since then, the concept has not changed but, obviously, there has been a radical change in social housing conditions and in the wider political context.

216.
Mr Dodds: The Department of Finance and Personnel has told us before that, if a policy were changed, they would have to carry out consultation for a second time. Does this mean that the Committee is not in a position to make recommendations to the Assembly which are different from the Department's line. If there is a difference of opinion between the Committee and the Department, will there always have to be another consultation period lasting a year or whatever length is necessary.

217.
Mr M Foster: No, but this is a very substantial shift in policy. We have made it quite clear that we hoped to exempt regulated and restricted tenancies and the Law Reform Advisory Committee's report also advocated such exemptions. Perhaps it would be unfair to impose liability on such groups who are aware that they are currently exempted.

218.
Mr Dodds: Unless we carry out the consultation?

219.
Mr M Foster: That would not take us much further in terms of the Bill's effect. We cannot enforce issues.

220.
Mr Dodds: That is a different issue. On the issue of consultation, when we come to look at issues, if the Committee take a different view on a proposal, the Department will argue that if the Committee wants to make a recommendation which differs from the Department's view, a new series of consultations will have to be carried out before the Bill can proceed. This would delay the whole process for a year. The Department would argue that it is better to proceed with the Bill as it stands and to address the issue in a different piece of legislation. That happened when we discussed the Government Resources and Accounts Bill and the Building Regulations.

221.
Can the Committee be restricted in that way? The Committee is part of the consultative process - it forms a view and, at the end of the day, the Assembly takes a view as a legislature. The way in which this argument is deployed worries me. This argument promotes the attitude that if we want to make a change, the passage of the Bill be delayed, therefore it is better to proceed now and address the issue later. That argument could be deployed in regard to every potential major change.

222.
Mr M Foster: I accept that point.

223.
Mr Dodds: Should the consultation process not involve seeking the view on whether restrictive and regulated tenancies should be exempt, rather than the Department giving its final view, with the result that consultation has to be carried out again if we take a slightly different view. Surely, the consultation should be focused on the issue involved?

224.
Mr M Foster: I accept that point. In this case, the Department of Finance and Personnel is taking the view that because the DSD review is much wider and has greater practical ramifications for the private controlled sector, we would not want to step on anyone's toes by pre-empting the outcome of that review and enforcing liability on such groups. The Department of Finance and Personnel and the Committee members are unanimous in welcoming the DSD review because the level of disrepair among houses in the private controlled sector has created a grave situation. However, the basic tenet of this Bill is that, on a practical level, we can do very little to alleviate that situation.

225.
The Chairperson: This Committee's concern is that, if the Department does not move the Bill, the process is over. It is not our Bill. If it simply moves it, it is still wiped out in a sense. The Department decides whether or not to hold a consultation.

226.
The Committee Clerk: On the question of whether a new round of consultation is needed, I agree with Mr Dodds - I do not quite understand the concept being put forward by the Office of Law Reform. A consultation is a consultation, and, as a result of that process, the Department will take certain decisions. Just because you make a particular decision, you should not have to carry out further consultation.

227.
The Bill is the Minister's responsibility, and it is the Department's responsibility to carry out consultations. If the Committee recommended changes to the Bill - and a Committee can do no more than recommend - it would be for the Department and the Minister to decide whether to introduce the Bill for its Consideration Stage.

228.
Mr Hussey: Further to that, there is almost a suggestion that, if the original consultation did not take into consideration the points that we are now discussing, it was restricted and, therefore, flawed.

229.
The Chairperson: We have come to the point where we must make a decision. We can either take fresh evidence from other bodies, such as the Housing Executive, and from those who have already given evidence in the consultation process. Alternatively, we could simply put forward a recommendation that we do not exempt the two sections.

230.
Mr Close: Do we know with whom the Law Reform Advisory Committee consulted?

231.
The Chairperson: Yes.

232.
Mr Close: Do we know?

233.
The Chairperson: I think so. We have a list of the bodies consulted.

234.
Mr Dodds: We are here to take evidence and ask questions, and, presumably we have completed that process now. Perhaps we should reflect on this matter and come back to it next week rather than making a decision immediately. The folks who are here have given us the benefit of their views and have answered questions. That is far as we can take it with them today.

235.
Mr Bell: Yes. I think so.

236.
The Committee Clerk: Clauses 4, 5 and 6 are not the subject of any concern or dispute. Would members be happy to go through them quickly so that when we return to the Bill we are left with just one issue to deal with?

Clause 4 (Interpretation)

237.
The Committee Clerk: Clause 4 provides a definition of key terms and concepts used throughout the draft Bill. These definitions set down the breadth or scope of the Bill. No witness to the Committee nor any member has raised any concern about this clause. The question is, Mr Chairman, are members agreed that the Committee will recommend clause 4 to the Assembly.

Clause 4 agreed to.

Clause 5 (Application to the Crown)

238.
The Committee Clerk: No issue has arisen in relation to clause 5. Clause 5 prescribes the crown's liability under the draft Bill and states that the Crown is liable as a landlord to the full extent authorised or permitted by the constitutional laws of Northern Ireland and to the extent prescribed by the Crown Proceedings Act of 1947. Again no concerns were raised by any witnesses nor any Committee member. Are Members content to recommend clause 5 to the Assembly?

Clause 5 agreed to.

Clause 6 (Short title and commencement)

239.
The Committee Clerk: Finally clause 6 is, as usual, the short title and commencement clause. It states that it is the official citation of the statute and that the statute shall become effective 12 months after it receives Royal Assent. No concern was raised about this clause, either by witnesses or members, and it is again a matter of recommending clause 6 to the Assembly, if the Committee agrees.

Clause 6 agreed to.

MINUTES OF EVIDENCE

13 MARCH 2001

Members present:
Mr Molloy (Chairperson)
Mr Leslie (Deputy Chairperson)
Mr Attwood
Mr Close
Mr Dodds
Ms Lewsley
Mr Weir

Witnesses:
Mr Michael Foster ) Office of Law Reform

240.
The Committee Clerk: That now brings us to the Defective Premises Bill. You may recall that last week we completed our consideration of all clauses in the Bill, except for clause 3. Whilst all of the information had been provided to the Committee, members decided to take an extra week to mull it over in order to reach a final conclusion. The outstanding issue concerns the exemption in clause 3 respecting tenancies in restricted and regulated categories.

241.
I have set out the issues for the Committee in the table numbered tab 3 in the folder. On the left are the arguments put forward by the Office of Law Reform (OLR) and the Law Reform Advisory Committee as to why those exemptions should remain in the Bill. The arguments given by the Chartered Institute of Environmental Health and the Housing Rights Service are set out in the right hand column. I also took the opportunity to pass the table to the OLR. Mr Foster has commented on some of the issues in the attached e-mail, particularly with regard to the argument that these exemptions should be taken out of the Bill. It is now up to members to consider and reach a decision on that matter.

242.
Mr Leslie: I had some sympathy with the OLR and with all due respect I did not think that the Clerk's summary table accurately reflected the points made, particularly in relation to restricted and regulated tenancies.

243.
The Committee Clerk: My intention was to put forward the arguments as they were presented to the Committee and Mr Foster from the OLR has filled in some of the underlying arguments. Mr Foster is available to the Committee if further information is required.

244.
Mr Weir: The Department for Social Development is conducting a review which may resolve some of these issues. Do we know when that review group is due to report?

245.
Mr Foster: A working review group for the Department for Social Development is, I understand, being constituted at the moment and its provisional timetable is to issue a consultation document on the matter in September of this year, dealing with the whole area of private controlled rented accommodation.

246.
The Chairperson: Do you have any other questions? We have discussed the issues involved and it comes down to the question of whether the term defective premises refers to liability as opposed to housing conditions for the purposes of this legislation.

247.
The argument put forward by the OLR is that this is a Bill which deals with liability in tort and is not intended to introduce a mechanism for improving property. The Bill does not cover the condition of the house or the living accommodation within that house, though it applies to the people's rights to claim accordingly.

248.
The Chairperson: On that basis, the exemptions will actually stand in that situation because it does not actually relate to the condition of the housing.

249.
Mr Close: The part that I have greatest difficulty with is its conception and perception. This is addressed and commented on in the letter. At present the Bill may discriminate against the elderly and the less affluent members of our society - but only in a conceptual way. I have huge difficulties with the fact that it appears that way. This apparent discrimination against the elderly and the poorest in society is the very stick that could be used to beat us all. People will say "You just ignored us. It did not really matter about us." and they will not see beyond that. Whereas, if we tried to change this instrument in such a way as to remove that conception, we would have the best of all worlds. Although we are generally aware of that difficulty I have not heard arguments which address this problem.

250.
Mr Leslie: If you want to hear an argument the other way, I will give you one. I do not agree that the Bill discriminates in that way. Why do people choose to live in these properties? It is because they pay a very low rent, which they are statutorily entitled to pay in perpetuity. They have a right to go and live somewhere else.

251.
The landlord gains no benefit from the situation at all. He would like to be able to do something with these properties, but he cannot because of the restrictions placed on them. It seems to me that it is entirely voluntary for people to stay in that situation. I do not think this Bill discriminates against people. I think that the general state of the law relating to these premises discriminates against both the landlord and the tenant. They are both seriously disadvantaged.

252.
If you wanted to live in premises which provide the facilities and standards unavailable in these, you would pay £70 per week instead of £1 per week. This is the choice that one has. Most landlords would be absolutely delighted to sort out these premises and get the rent up from £1 per week to the market level of £60 - £80. To me, that is the argument.

253.
We need to keep focused on the very narrow remit of this Bill. I agree that there is a bigger issue there, but it is not for us to solve. We could not solve it with this Bill anyway.

254.
Mr Close: Try to tell some of the people there that they have a choice and that all they have to do is move somewhere else.

255.
Mr Leslie: If that is so, they can apply to the Housing Executive like anyone else. They are not required to carry on living there if they can show that the housing is totally unsatisfactory, which in some of these cases should be easy enough. I think that people live in these premises because they have got used to them.

256.
Mr Close: Though and practice are different things. I could refer to a number of my constituents whose situation is not as simple as that, or they do not see it as being as simple as that.

257.
Ms Lewsley: Elderly people may have lived in an area for a long time and feel reluctant to move because of their sense of belonging to a community. Also, some of the waiting lists are horrendous in the areas these people might want to move to.

258.
Mr Leslie: There are not waiting lists in Ballymoney.

259.
Ms Lewsley: Not everyone want to move to Ballymoney.

260.
The Chairperson: We must concentrate on the purpose of the Bill. Its purpose is not to improve the housing stock; its purpose is to deal with a landlord's liability. The next Bill or housing review might address housing conditions. There is confusion between the two.

261.
Ms Lewsley: We cannot allow the Bill to discriminate against the elderly or the less affluent in society in the matter of liability.

262.
Mr Leslie: It does not discriminate on the grounds of human rights as regards liability.

263.
Mr Foster: Part of the argument advanced to the OLR and the Law Reform Advisory Committee was that many tenants would not appreciate the upheaval involved if landlords were forced to carry out such repairs.

264.
The landlord's position also had to be taken into account.

265.
We have received clear advice that imposing another obligation on landlords, who are already carrying a disproportionate burden on their properties, will involve human rights issues. Increasing that burden might contravene human rights legislation. That advice had to be taken into account when striking a balance.

266.
Ultimately, the Bill does not focus on landlords and tenants; it focuses on plaintiffs and defendants. To say that the Bill will, theoretically, discriminate against an elderly person is in only partly correct. If an elderly person's property is outside the terms of the Bill, the Lord Chief Justice, to take an extreme example, could enter that person's property, suffer an injury, and not be able to take advantage of the Bill as it stands.

267.
I repeat: the Bill is not about landlords and tenants; it is about plaintiffs and defendants. Statistically, someone from a less affluent section of society might theoretically be in more danger of being injured on a restricted property. There is, however, no way of proving that to be the case.

268.
Mr Weir: The issue of restricted and regulated tenancies must be resolved. The Department for Social Development's review will deal with it more comprehensively than we can.

269.
The Bill deals with restricted and regulated tenancies. It is inequitable to place the same burden on landlords who receive a much smaller rent. A reasonable case could be made that, as this is inequitable, it might constitute a breach of human rights.

270.
It could be argued that clause 3 means that defendants on regulated or restricted tenancies would have slightly less rights than others. Tenants would, however, be paying lower rent.

271.
Removing the restriction in clause 3 would create an inequity as far as landlords are concerned. The best way of resolving the matter is through the Department for Social Development's review. There is no perfect solution, but clause 3, as it presently stands, is the best way forward.

272.
The Chairperson: The Committee should go along with the exemptions. It should send a record of the issues raised to the Department for Social Development to be used in its review. The Committee could make that clear to the Assembly. We should raise issues to which our intention has been drawn and say that this Bill will not deal with them.

273.
Mr Dodds: Much has been made of landlords having access to repair grants. If available, they would reduce the cost to the landlord of carrying out repairs. From your evidence, Mr Foster, it seems that grants are not, at present, sufficient to deal with the problem. If this stipulation were introduced, insurance premiums would rise slightly, and landlords would say, "I shall pay it, and that is the end of the matter" - and complain. However, the Bill would not result in their carrying out any work.

274.
Mr Foster: Absolutely not. The current level of grants - and the grant system itself - need to be radically overhauled. This has been accepted in the Department for Social Development's proposals for the current review.

275.
Mr Weir: Faced with being compelled to upgrade, the landlord might simply say that he is no longer prepared to rent out the premises.

276.
Mr Foster: I am not entirely sure that the Rent (Northern Ireland) Order 1978 would allow him to do that. However, since no authority or body has enforcement powers to encourage the landlord of a restricted or regulated tenancy to carry out such repairs, the obligation would be in many ways merely nominal. In practice, it would raise landlords' insurance premiums. We must remember that their properties, which will not be in as good a state of repair as others, will possibly be saddled with higher payments.

277.
Mr Close: Would an amendment ameliorate the situation?

278.
Mr Foster: No.

279.
Mr Close: Has that not been considered?

280.
Mr Foster: On the contrary. The Department of Finance and Personnel and members of the Law Reform Advisory Committee have expressed such a concern. The OLR and the Law Reform Advisory Committee were agreed that we would do everything within our remit to improve the privately controlled sector, and we have looked at every alternative. However, the situation with grant regulations and the lack of enforcement regarding the extension of liability to landlords without giving them any proportionate rights in return mean that our hands are tied.

281.
That has been our focus. Had we been able to reword the legislation or had we been able to give a different slant, we would have. However, we could not.

282. The Chairperson: Does the Committee agree to clause 3, and that we send a report of the issues raised to the Department for Social Development for its review?

Clause 3 agreed to.

Members indicated assent.

283.
That concludes the Committee's consideration of the Bill.

APPENDIX 3
top

ANNEXES TO THE MINUTES OF EVIDENCE

The Annexes to the Minutes of Evidence of the Committee that were submitted to the Committee as evidence on the Defective Premises (Landlord's Liability) Bill are given below.

Annex 1:
Written submission by The Chartered Institute of Environmental Health, Northern Ireland Centre dated 19 January 2001
Annex 2:
Written submission by Housing Rights Service dated 19 January 2001.

ANNEX 3:
Written submissions by the Office of Law Reform, Department of Finance and Personnel

ANNEX 1

COMMITTEE FOR FINANCE AND PERSONNEL
INQUIRY INTO DEFECTIVE PREMISES
(LANDLORD'S LIABILITY) BILL (NIA 5/00)

WRITTEN SUBMISSION BY:
THE CHARTERED INSTITUTE OF ENVIRONMENTAL HEALTH,
NORTHERN IRELAND CENTRE

25 January 2001

Summary

The CIEH broadly welcomes the Department's objective of bringing Northern Ireland Civil Law into line with that of England and Wales.

The limited repair options available locally, compared to those of England and Wales, are particularly relevant in light of these proposals.

The CIEH believes that people living in regulated and restricted tenancies under The Rent (NI) Order 1978 should enjoy the same civil protection as others living in the privately rented sector.

Comments

Paragraph 1

The CIEH welcomes the Department's objective of introducing legislation to bring Northern Ireland broadly into line with England and Wales regarding a landlord's duty of care to anyone ".who might be reasonably expected to be affected by defects in the state of his premises".

Paragraph 2

The CIEH has previously expressed concern to the Department of the Environment (NI) regarding the shortfall in repair options available locally compared to other areas of the United Kingdom. In particular the provisions of Section 190 of The Housing Act 1985, which allow Local Authorities to require landlords to carry out repairs in dwellings that are in disrepair but not unfit, were never enacted in Northern Ireland legislation. The net effect of this is that, in the majority of privately rented houses, unless a defect is giving rise to a statutory nuisance under the Public Health Act then neither the district council nor the Northern Ireland Housing Executive can require the landlord to effect repairs. Whilst the proposed Bill does not provide an enforcement mechanism for disrepair it does nonetheless afford some tenants a civil remedy that was previously denied to them where their landlord had failed to properly maintain their premises.

Paragraph 3

The CIEH are concerned however that the Bill seeks to exclude protected tenancies from these provisions. Although landlords of regulated tenancies are limited to a legally recoverable rent, that is set by the Rent Officer, they do enjoy advantages. For example, work carried out under a Certificate of Disrepair in respect of a regulated tenancy attracts a non-means tested mandatory repairs grant of 90% from the Housing Executive. In addition, restricted tenancies, which are relatively few in number, will qualify for a mandatory grant if they are unfit or, where they are fit, will automatically be regulated on application to a District Council The CIEH are therefore of the view that the suggestion in the Department's Explanatory Memorandum that ".landlords holding restricted or regulated tenancies (with the meaning of The Rent (NI) Order 1978) would face an onerous duty if the legislation was applied to them." is unfounded. It would also be the view of CIEH that the exclusion of unfit restricted tenancies would further discourage landlords from carrying out the necessary repairs to make their properties fit.

Paragraph 4

In light of the above therefore it is the view of the Northern Ireland Centre of the Chartered Institute of Environmental Health that the provisions of the Bill should apply to rented properties generally, including both regulated and restricted tenancies.

ANNEX 2

COMMITTEE FOR FINANCE AND PERSONNEL
INQUIRY INTO DEFECTIVE PREMISES
(LANDLORD'S LIABILITY) BILL (NIA 5/00)

WRITTEN SUBMISSION BY:
HOUSING RIGHTS SERVICE

19 January 2001

1. Housing Rights Service is a voluntary organisation providing independent advice, information and training on housing issues in Northern Ireland. Established in 1963, the organisation provides advice to approximately 5000 individuals and families each year who are experiencing housing problems. The majority of our clients are tenants living in either, the private or the social rented sector. Last year 15% of all the enquiries received were in relation to problems getting outstanding repairs completed by landlords. Our response to this document has therefore been informed by our practical experience of providing advice on this issue to tenants and is from the perspective of an agency which would aim to use the legislation to assist tenants to have defects remedied.

2. Housing Rights Service is in agreement with the overall purpose of this Bill. The organisation would however appreciate if our comments in relation to the following clauses could be considered when the members of the Committee for Finance & Personnel undertake their detailed scrutiny of the Bill.

3. Clause 1 Landlord's duty of care by virtue of obligation to repair premises demised

Housing Rights Service considers there is a need for clearer guidance on the definition of "all persons who might reasonably be affected by defects" (page 1, Subsection (2), line 7). The guidance on this Clause (provided on page 2; para 7 and page 3; commentary on Clause 1 of the Explanatory and Financial Memorandum) appears to be conflicting. The former reference states that "all persons who might reasonably be expected to be affected by defects" WILL cover lawful visitors, the tenant, passers by, neighbours etc. The latter states only that it MAY cover these groups.

4. Clause 3 Tenancies to which this Act applies

Housing Rights Service is extremely disappointed to note that the legislation proposes to exclude from the Act, tenancies which are restricted or regulated within the meaning of the Rent (Northern Ireland) Order 1978 and considers this to be a flaw in the Bill. Paragraph 9 of the Explanatory Memorandum suggests the rationale for excluding such tenancies is the low level of recoverable rents from such properties and the onerous burden the additional liability would place on the landlords. Whilst we accept that rent levels for restricted tenancies are very low there is, in our view, no impediment to prevent landlords from accessing the grants which are available to undertake the necessary work to bring these properties up to standard and subsequently applying to have these tenancy regulated. The rent levels for regulated tenancies are determined, on application, by the Rent Assessment Committee. This Committee assesses the appropriate rent for any regulated tenancy using the same scheme used by the Housing Executive to calculate the rental levels for their properties. A tenant living in a regulated property will therefore be paying exactly the same rent as a tenant of a Housing Executive property with similar characteristics but be excluded from the remedies offered by this legislation. The most recent House Condition Survey confirmed that levels of disrepair are significantly higher within the private rented sector and this would appear therefore to be the sector in which the Act could have most potential for application. There is not in our opinion legitimate justification for distinguishing between the various sectors and thus preventing those people who live in controlled tenancies from enjoying the additional rights afforded by this Act. (Typically many controlled tenancies are occupied by older people. Should the Committee decide to exclude these tenancies they should satisfy themselves that this decision will not discriminate against older people by having an adverse impact on this group.)

5. Clause 4 Interpretation

The detail contained in this Clause will be of central importance when applying the Act in practice. We consider therefore that it is vital that the definitions provided of the key words are clear and unambiguous. We do not consider that, the definition of "tenancy" (as it is presently drafted) meets these criteria. The meaning of subsections (2) and (3) of this Clause in particular would benefit from greater clarity - are for example contractual licences intended to be covered by the provisions of this Act? The Explanatory Memorandum offers no additional explanation to aid interpretation of this Clause.

6. General

In addition to the above comments on the specific clauses contained in the Bill, we would make the following general comments.

6.1 The Bill does not specify a time limit within which the landlord would be expected to have defects remedied. Housing Rights Service feel this would be a useful addition to the Bill.

6.2 The Bill does not expressly qualify the landlord's right of entry. Housing Rights Service would welcome the inclusion of a term requiring the landlord to provide the tenant with reasonable notice and feel this would help to address the human rights issues associated with possession and peaceful enjoyment of property which are correctly identified in paragraph 18 of the Explanatory Memorandum.

7. Should you wish to discuss any of the points contained in this response, please contact:

Janet Hunter
Housing Rights Service
72 North Street
BELFAST
BT1 1LD

Tel: (028) 9024 5640 Fax: (028) 9031 2200

Email: janet@housing-rights.org.uk

ANNEX 3

COMMITTEE FOR FINANCE AND PERSONNEL
INQUIRY INTO DEFECTIVE PREMISES
(LANDLORD'S LIABILITY) BILL (NIA 5/00)

WRITTEN SUBMISSION BY:
THE OFFICE OF LAW REFORM
DEPARTMENT OF FINANCE AND PERSONNEL

Briefing Paper

Clause 3:

Clause 3 contains a number of exemptions from the proposed extension of a landlord's liability for failure to repair defective premises.

Subsection 1 (c) and (d) are safeguards against liability being imposed upon the owner of either a ground rent or a nominal rent. It was the view from consultation that as such landlords do not maintain any degree of control save for what is normally a small sum levied each year, they should be specifically excluded from the proposed reform. A ground landlord rarely, if ever, will have any power to enter premises and never will have repair obligations. There were no contrary views to this proposed course of action.

Subsection 1 (a) and (b) relate to a proposed exemption for the landlords of regulated and restricted tenancies under the terms of the Rent (NI) Order 1978. In terms of the arguments for and against exemption this particular issue did attract contrasting views.

The Law Reform Advisory Committee who issued the report on this area of law recommended that owners of such tenancies be exempted. The Committee is (and was at the time of its consideration of the topic) a highly respected independent law reform body which has the remit to keep the civil law of Northern Ireland under review and to make recommendations for its reform. During the period when it considered this item, it was chaired for part of that time by the current Lord Chief Justice for Northern Ireland, Sir Robert Carswell and latterly during that period by Mr Justic Girvan. Members on that Committee past and present include or have included eminent Judges, senior QC's, very experienced solicitors, Professors of Law and former Heads of the Northern Ireland Civil Service. In short, its recommendations are always treated with the utmost respect by Government and it would only be in unusual circumstances where full implementation of its report would not be given full consideration.

The Committee advocated the exemption for tenancies of this nature. It felt that on balance arguments put forward principally by the Northern Ireland Housing Executive which outlined significant concerns about extending liability to such tenancies, were enough to tip the scales in favour of its recommendation.

Rents under restricted tenancies are tied to that payable prior to the Rent (NI) Order 1978 coming into effect. The Housing Executive was therefore of the view that the level of recoverable rents would be grossly insufficient to finance the works which would be necessary in order to prevent a potential breach of the proposed legislation. It also felt that most of the tenants would be unlikely to welcome the extensive disruption which would be necessary in order to finance the works.

Regulated tenancies are defined in Article 7 of the Rent Order. The limit of recoverable rent in respect of a regulated tenancy is provided for in Part V of the Order and is limited in effect to the amount which would be charged by the Executive if it was the landlord of the subject dwelling. The NIHE note that bearing in mind rent levels for Executive properties contain a substantial degree of subsidy, the rent recoverable clearly may be much less than the market rent. If further noted that Article 41 of that Order already imposes a repairing obligation on landlords of such dwellings and the NIHE felt it would be unfair to impose a duty of care in respect of all disrepair, especially given the amount of recoverable rent.

Paragraphs 3.4.3 and 3.4.4 of the Committee's report outline these as its premier reasons for advocating an exemption of this group of tenancies in any reforms.

The contrary view is given by Mr John Corkey of the Chief Environmental Health officers Group. In relation to rent restriction legislation he has concerns about the exemption proposals. He notes that the rationale for exclusion at this stage is based primarily on the presumption that landlords would face an onerous duty in the light of recoverable rents. However, his view is that any unfit dwellings qualify for a Renovation Grant and that the NIHE has powers for dealing with unfit dwellings by serving a grant aided repair notice. He also notes that where a dwelling let under a restricted tenancy meets the fitness standard it will be converted into a regulated tenancy on the application of the landlord.

Another issue raised relates to the fact that a landlord's statutory repair obligation under the Rent Order in respect of a regulated tenancy can be enforced by the District Council, but that the necessary works will attract a mandatory 90% repair grant from NIHE.

In short his argument is that although the level of recoverable rent in such tenancies is limited by statute, there are financial inducements available to landlords to effect repairs and there are circumstances where the landlord can avoid repair obligations under the Order.

Such arguments are indeed valid ones. However, it is clear that they also involve issues which go much wider than the limited extension of a landlords liability for failure to repair defective premises proposed by this Bill. A closer examination of the issues being raised by both NIHE and the Environmental Health Group reveals fundamental concerns as to the operation of current legislation such as the Rent Order in the field of protected tenancies of this nature.

Such matters go beyond the scope of this Bill and indeed would not be a matter for the Department of Finance and Personnel. The line which the Office of Law Reform has taken in relation to the exemptions is that on balance it would be preferable for a review of social housing and protected tenancies to be carried out by the appropriate Department before extending this albeit limited reform to regulated and restricted tenancies. In other words the exemption will keep the current system as it is but can clearly be revisited if and when a wider review of such matters is considered. It is understood that such a review is being undertaken by the Department of Social Development and in the light of its examination wider reforms of the law in relation to liability could presumably flow.

This particular issue is one which was always going to attract polarised views. Those with tenants interests at heart clearly welcome the overall thrust of the Bill and are pressing for the inclusion of all tenancies in the proposed extension of liability. In terms of the overall policy in the Bill the vast majority of all landlords will have to keep their property in good repair in order to comply with the scheme. Failure to do so will risk an increased chance of liability. Landlords on the other hand will obviously be on the other side of the debate. They are reluctant for change of any kind although accept in principle the fact that the current law is in their favour, certainly in comparison to England and Wales. In exempting landlords of restricted and regulated tenancies the Committee sought to strike a small balance towards the arguments of those with landlord responsibilities.

In the meantime therefore, it is the view that the Committee's recommendation for such exemptions as contained in clause 3 is the correct one to take at this time as it maintains the status quo in relation to the small proportion of regulated and restricted tenancies, but does bring the law into line with that in England and Wales in relation to all other landlord-tenant relationships. In addition there is no doubt from both sides of the argument that the extension of liability to such tenancies would have serious implications for landlords of same, and to do so outside of reform along wider lines as mentioned above would, perhaps, be inadvisable.

COMMITTEE FOR FINANCE AND PERSONNEL
INQUIRY INTO DEFECTIVE PREMISES
(LANDLORD'S LIABILITY) BILL (NIA 5/00)

WRITTEN SUBMISSION BY:
DEPARTMENT OF FINANCE AND PERSONNEL

2 March 2001

Thank you for your letter of 27 February outlining matters of concern which have been raised during the Committee's consideration of the above Bill. I have brought these matters to the attention of OLR officials and the following paragraphs outline their response:-

"(a) Clause 1(2)

Mr Wilson has noted that there appears to be a lack of clear guidance in the Explanatory and Financial Memorandum for the Bill on the definition of "all persons who might reasonably be affected by defects". He notes that paragraph 7 of the EFM states "It will thus cover lawful visitors, the tenant, passers by, neighbouring occupiers and their families and guests". He goes on to note that the commentary at clause 1(2) states that it "may include the tenant himself, visitors, passers-by or neighbours". He seeks clarification as to which version as correct and further of a discretion has been introduced, then why has it been so.

Mr Wilson is quite right in raising this potential ambiguity and I can provide the necessary clarification. The correct version should be "may" include. In clause 1(2) there is an explicit test set down, that being the test of reasonableness. Potential plaintiffs will have to show that they could reasonably be expected to be affected by defects in the property. In practice this normally will include lawful visitors, the tenant, passers by, neighbouring occupiers and their families and guests, but in theory this may not in every conceivable case be so. The test as set out, which will give a discretion to a judge, is considered to be of benefit because it will have the advantage of making it extremely difficult for a trespasser to satisfy the test of reasonableness. In theory, a neighbour or a passer by or a visitor could be a trespasser, so obviously whilst the test will normally apply to them, in theory at least, the test is a discretionary one. Members of the Committee will wish to be aware that the test mirrors that applying in England and Wales. In the 25 or more years which this particular liability has been in place in that jurisdiction, not one single piece of case law has been unearthed in relation to this test, which would certainly seem to imply that it has worked well.

OLR will be content to advise the amendment of the reference to "will" at paragraph 7 of the EFM in due course.

(b) Clause 3(1) and 3(2)

Mr Wilson notes that certain tenancies are excluded in the draft Bill. There appears to be no contention for an exemption for ground rent and nominal rent landlords but the Committee has expressed concerns that regulated and restricted tenancies are exempted and has asked OLR to further expand on why the Northern Ireland Housing Executive's arguments tipped the scales in favour of the Law Reform Advisory Committee's recommendation. A further request is for some discussion on the views of the Chief Environmental Health Officers Group as well as highlighting relevant current law in England and Wales.

Several issues arise each of which OLR will try to deal with in turn.

First of all, the Office of Law Reform was persuaded by the Northern Ireland Housing Executive's arguments in relation to regulated and restricted tenancies. That in no way implies that we accepted all of its arguments. The Executive argued also that the removal of actual notice, the current test under the Occupiers Liability Act 1957, could place the NIHE in an onerous position. It felt that it could result in a higher number of false claims. However, evidence from other consultees revealed that they did not consider this to be the case and the evidence from England and Wales had shown there to be little, if any, rise in fraudulent claims. In other words, we looked at the NIHE's argument, persuasive as it was, but balanced against other views and other evidence available, the balance shifted away from that perspective.

A similar procedure was used in relation to its arguments on regulated and restricted tenancies. In relation to restricted tenancies the Executive's view was that it would be unreasonable to apply the thrust of the Bill to such tenancies for two reasons. First, the levels of recoverable rents would be grossly insufficient to finance works which could be necessary in order to prevent potential breach. Secondly, it felt that most of the tenants (many of whom have lived in the premises all of their lives) would be unlikely to welcome the extensive disruption which could be necessary in order to carry out such works. Given that rents are set at levels existing in 1978 (which were already very low) the Executive concluded that the burden would be too great.

In relation to regulated tenancies the view was voiced by the Housing Executive that the limit of recoverable rent is limited to 2 and a half times the NAV but that a rent can be increased on application by the landlord. However the limit to that is fixed at Housing Executive rent levels and given that they contain a substantial subsidy, the rents are much lower than what could be achieved on the open market.

The contrary view is provided by the Chief Environmental Health Officers Group. It has welcomed the overall thrust of the Bill but has raised concerns as to the exemptions for restricted and regulated tenancies. It notes that there are limited repair options available in Northern Ireland, unlike in England and Wales where the Housing Act 1985 allows District Councils to serve a notice on a landlord to carry out repairs where the property is in disrepair but not unfit. These powers were never extended to Northern Ireland. It has noted that whilst the rents for restricted tenancies are undoubtedly low (averaging in many cases at £1 per week), there are other financial inducements available for landlords to effect repairs. It also goes further to say that the exclusion of such tenancies from the Bill may discourage landlords from carrying out repairs which could materially benefit their tenants.

This Group in relation to restricted tenancies note that they were so designated not on the basis of disrepair but by virtue of their NAV. Any that are unfit will automatically qualify for a renovation grant.

These arguments are valid ones and, prima facie, persuasive. There are certainly available opportunities for a restricted tenancy to be converted into a regulated tenancy thus attracting a higher level of rent. However it is also clear that they raise issues which go much wider than the limited extension of a landlords liability for failure to repair defective premises. Fundamental concerns are clearly being raised in relation to housing law generally and the operation of the Rent Order 1978 in relation to protected tenancies. In addition, some of its arguments in relation to the level of grants available fail to take into consideration the fact that in some cases, even with such grants, a large capital contribution will need to be made by the landlord.

The difficulties which arise from the Office of Law Reform's perspective, and therefore DFP's perspective are in relation to the remit of this Bill. The CEHG's response focuses largely on the landlord -tenant relationship and is set in the context of current housing law and the particular issue of protected tenancies as currently existing under the Rent Order 1978. The Bill itself is entirely intended to fall squarely within the remit of the Office of Law Reform in relation to liability in tort. In other words, OLR, and indeed DFP, does not have a remit in terms of housing law or protected tenancies. This Bill is designed to deal with the situation when damage or injury has already occurred and focuses not so much on the landlord -tenant relationship, but more specifically on the plaintiff-defendant relationship. It is designed to clarify and extend the current ambit of a landlord's liability and does not, and indeed cannot, focus on imposing repair obligations on a landlord. Clearly it would be hoped that the extension of a landlord's existing liability may have a positive effect on landlord repairs but there is no obligation as such for them to do so, especially when consideration is given to the lack of repair obligations currently available in this jurisdiction.

In relation to protected tenancies it would be the existing view of the Office of Law Reform that on balance the exemptions should remain for several reasons. First, the LRAC advocated it. Secondly, there are concerns that in the absence of any enforcement powers on regulated and restricted landlords to carry out repair obligations, the imposition of liability of this nature on them could well result in a significant rise in their insurance premiums, which for both types of landlords, and restricted ones in particular, could be too onerous. That said, these two reasons taken in isolation arguably may not be sufficient to tip the balance in favour of exemption. We accept the rationale in relation to financial inducements available and taken alone that would probably have persuaded us to not so exempt such landlords. However, we were concerned that in the absence of clear guidelines in relation to enforcement powers, to extend liability to such landlords probably wouldn't achieve the objective of getting repairs done, and would have increased their insurance premiums on property which they do not receive a significant income. The scales tipped in favour of exemption when we realised that there is currently a review of the private rented sector being undertaken by the Department of Social Development. This review, commenced in September 2000 of which OLR were aware prior to introduction of this Bill, aims to conduct a thorough analysis of the 1978 Order in relation to protected tenancies with a view to clearly improving, inter alia, the state of the privately rented sector. Obviously part of that review will address issues such as enforcement, levels of rents, repairs etc. The review notes that the main problem facing landlords is the difficulty in financing repairs from the low rents available to them if their property is in bad condition.

As also noted in the review a restricted property may provide a rental income of under £1 per week which is unlikely to cover even the buildings insurance on the property. Yet the bigger the gap between the current rental value of the house and its value after improvement work, the higher the cost to the landlord under the current grants regulations. In theory a landlord can receive a full grant if the work to the property is not substantial, in other words work which will have no material effect on the rent. However, if a property is to be substantially improved in order to allow it to convert from restricted to regulated, a very large capital contribution will be required by the owner. It could be argued that this serves to undermine efforts to reduce unfitness and improve conditions in the controlled sector.

The review therefore notes that in order to bring about any marked improvement in the condition of restricted and poorer regulated properties, the impact of grants regulations will need to be addressed.

The review advocates various options to address these issues and these are fairly technical and detailed but include, inter alia, other methods of aiding landlords of such tenancies to carry out repairs and the introduction of measures to decontrol the sector, effectively eventually removing all protected tenancies and placing responsibility for repair enforcement and rent assessment within local authority control.

Clearly this is a huge undertaking on behalf of DSD and one which should undoubtedly change the way in which tenancies of this nature are dealt with. Given this review and the concerns contained within it in relation to repair obligations and the onerous duties potentially facing landlords, it was the view of the OLR to "hold fire" in relation to such tenancies. It did not seem to us to be appropriate to impose extended liability on landlords of such properties at a time when the sector in which they operate is under review and when despite theoretical inducements being available for them to carry out repairs, the view elucidated in the review identifies situations where repairing premises to the necessary level is clearly onerous.

Obviously the impact of the exemption as it exists will be very much dependent on the outcome of DSD's review. If moves are made to decontrol the sector with the eventual abolition of protected tenancies of this nature coupled with enhanced enforcement powers and repair duties and the presumed amendment or repeal of the Rent Order, then this exemption will be automatically repealed. If other options are considered which have the effect of aiding the sector with the result that liability of this nature would not present any difficulties, then similarly the exemption currently existing could be revisited. However, in the meantime, it is the OLR view that an exemption as contained in clause 3 is the safest option at the present time.

That could well raise the valid question as to what is the point of introducing such a Bill at this time. Why not wait until the review by DSD is completed and work in tandem with that Department? The answer lies in the fact that currently a landlord enjoys a degree of immunity in relation to the scope of his liability. In effect a loophole has arisen. To best illustrate this I give a practical example of how the current law allows a landlord to escape liability and to how this Bill will effectively close the loophole.

Currently a landlord must have actual notice of the defect which caused the damage. This is now removed. Currently a landlord is liable to

(1) the tenant, in contract, for breach of any express or implied condition of fitness or covenant to repair;

(2) to lawful visitors under the 1957 Act for negligent failure to carry out his express or implied repairs;

(3) to passers-by in the tort of public nuisance, provided that he has a contractual power or duty to carry out repairs;

(4) to neighbours in the tort of private nuisance, provided he has a contractual power or duty to carry out repairs.

The new provisions will widen this ambit. Tenants and lawful visitors will benefit from the removal of the necessity for actual notice. Passers-by are already adequately protected but neighbours and their families and guests will find this Bill helpful. In particular a neighbours claim in private nuisance is narrower than in public nuisance. Whereas anyone suffering special damage can sue in public nuisance, only the occupier is able to sue in private nuisance. Thus a neighbour could sue but his wife, family and lawful guest could not. In addition although private nuisance enables the occupier to sue for damage to property, it is doubtful whether damages for personal injury would be recoverable. Hence the Bill materially widens the ambit of a landlord's liability by including such groups (presuming they are able to satisfy the reasonableness test) and giving them an adequate remedy.

If we had decided to wait for the review process by DSD to be completed, other tenancies, which cover the vast majority in Northern Ireland (there remain around 500 restricted and 7000 regulated tenancies, compared with over 150,000 NIHE and Housing Association Tenancies and well over 20,000 private uncontrolled tenancies) would continue to fall within this technical legal loophole. The potential benefit of proceeding without restricted and regulated tenancies was considered to outweigh the theoretical burdens which leaving them out at this stage would bring.

Mr Wilson is entirely correct in his assertion that the levels of disrepair appear to be higher within the private rented sector. He is further accurate in stating that unless there is an obligation on a landlord to carry out repairs, it is unlikely they will be carried out. CEHG along with the Housing Rights Service has legitimately argued that tenants of restricted and regulated tenancies are at a disadvantage in terms of the existing law. It could equally be argued however that so are landlords of such properties, who importantly, and unlike their uncontrolled counterparts in the private sector are not making any reasonable level of income on their property. This Bill is not the vehicle upon which housing repair obligations can be enforced on a landlord; nor is it one which can address the undoubted difficulties which both landlords and tenants of such properties currently have to live with. It is clear that the private controlled sector is in an unsatisfactory state of affairs but it will take much more than this Bill to improve things and DSD are clearly alive to the problem, and the outcome of its review will hopefully start a process to address the difficulties.

It is hoped that this fairly detailed analysis of the situation which the Office of Law Reform has faced in sponsoring this Bill goes some way to explain the various strands which we took on board in deciding, on balance, for the exemptions in clauses 3(1) and (2).

Mr Wilson has also asked in relation to this issue for the relevant current law in England and Wales to be highlighted. The legislation which exists in relation to the private rented sector in GB is very different from that in this jurisdiction. There are three types of tenancy - regulated, assured and assured shorthold.

Most private tenancies entered into before 15 January 1989 are regulated tenancies under the Rent Act 1977. The tenant has long term security of tenure and both landlord and tenants have the right to have a fair rent fixed by an independent rent officer, who acts independently of local and central government. Fair rents are set with regard to the age, character, locality and state of repair of the dwelling, while disregarding any premium resulting from a scarcity of similar accommodation in the area. A fair rent is therefore what a landlord could achieve in a market in which the supply of, and demand for, accommodation are in balance. In setting a fair rent a rent officer must ignore any disrepair for which the tenant is responsible and any improvements that the tenant has made which he was not required to make within the terms of the tenancy. If either landlord or tenant is unhappy there is an appeal procedure to a rent assessment committee. The difference is clear in comparison to Northern Ireland regulated tenancies - whilst such tenancies can only be at the same level as NIHE rents in properties of a similar nature in England and Wales they are set much closer to market value.

Private tenancies which began after 15 January 1989 are assured tenancies and such were introduced to encourage lettings by allowing landlords to charge a full market rent. A rent assessment committee can decide what rent a landlord could reasonably expect for the property if he was letting it on the open market under a new tenancy on the same terms.

A shorthold tenancy is an assured tenancy whose term is fixed or fixed and subject to contractual periodic renewal. Similar procedures in relation to levels of rent apply as to assured tenancies.

Even a brief examination of the private rented sectors of GB and NI is sufficient to reveal the fundamental differences that exist. Primary legislation in NI has not kept pace with that in GB and the decision to produce the Rent Order 1977 rather than adopt and implement recommendations contained in a 1975 report on the area seems to have signalled the start of the divergence of policy. Again, this issue falls outside of the remit of this Bill and is the subject of the DSD-led review.

(c) Potential Effects of the Draft Bill

Mr Wilson asks several questions in relation to potential effects of the Bill. In relation to the financial effects it has been stated that these should be minimal. This is seen to be the case as a result of consultation. For example, representatives of the insurance industry have considered that the extension of an existing liability for landlords should only result in a small increase in property insurance premiums. Therefore the cost to the majority of landlords whose property is generally considered to be low risk in terms of defects will be marginal. For those who deal with social housing, such as NIHE and Housing Association, those groups already have sophisticated and well established levels of control and systems of checks and inspections on their properties. It is unlikely that this widening of the ambit of liability will materially affect such organisations.

Clearly, however, if regulated and restricted tenancies where included, the financial effects of the Bill may be subject to further consideration. In such houses where the risk of liability occurring may well be higher, an increase in insurance may be greater. Given that in particular the income of many restricted tenancy landlords is barely sufficient to cover existing premiums the financial effects could be greater for such people. Similar arguments to a lesser extent could apply to owners of regulated tenancies.

The anticipated costs in relation to rent level increases as a result of the legislation has been similarly monitored. Again, representatives of the insurance industry noted that as they would anticipate only a small increase in insurance premiums in most instances, the only conceivable increase in rent levels would be if such a small rise was passed on by the landlord. In relation to social housing, no increases in terms of rent are anticipated. Private controlled tenants cannot have their rents increased by law.

In terms of administering and policing the new provisions, due to the nature of the Bill and its focus on the plaintiff - defendant relationship as opposed to the landlord - tenant relationship, for the legislation to take effect, there will have to be damage (the Bill as noted deals with liability which will occur after an event). At this stage the "victim" will take the decision to sue the defendant (landlord) and therefore the "policing" and administration of the Bill would be carried out by the courts. In England and Wales there has been no reported significant increase in terms of claims, although a modest increase may be anticipated as a wider group of plaintiffs has been created by the Bill. The costs are not anticipated by the insurance industry to be significant.

(d) Potential Effects on New TSN

Mr Wilson notes that clause 3(1) excludes tenancies where the occupants are likely to be elderly, and feels that this may lead to perpetuating the social exclusion of these individuals. He asks whether the Office of Law Reform is satisfied that the exclusion of restricted tenancies will facilitate the implementation of TSN.

This raises difficult questions. The Bill focuses on plaintiffs and defendants, not tenants and landlords. Clearly tenants however may be plaintiffs, although as has already been pointed out so are others, such as passers by, visitors, neighbours and their families and visitors. To apply the TSN guidelines to such a wide group of potential benefactors would represent a difficult and perhaps even an impossible task. There could be only limited and perhaps not entirely accurate means of knowing the levels of social need and social exclusion of the wide range of potential plaintiffs.

If the Bill focused on landlords and tenants and dealt with issues such as repair obligations and enforcement of such then clearly an exemption of this nature would not be facilitating new TSN. However, as has been perhaps exhaustively pointed out above, the scope of this Bill does not include such matters. The DSD review will hopefully take account of the fact that there are elderly individuals in such tenancies and clearly they will be aiming to facilitate TSN in bringing forward any changes to this particular sector.

(e) Potential Effects of Equal Opportunities

A similar rationale applies in relation to equal opportunities. It would be exceptionally difficult to consider the potential impact of excluding certain tenancies on S75 groups given that the potential benefactors could theoretically include any of those groups.

(f) Potential Effects on Human Rights

The Bill touches on human rights issues. Prima facie it would appear to fall within the proposition in Article 1 of the First Protocol of the Convention whereby every natural or legal person is entitled to the peaceful enjoyment of his possessions. Measures which interfere with property rights must have a legitimate aim and must strike a fair balance between the rights of individuals and the general interest of the community in order that no individual bears an excessive or disproportionate burden.

It is the view of the Office of Law Reform confirmed by Departmental Solicitors that the extension of a landlords duty of care to cover those who might reasonably be expected to be affected by defects in the state of premises is a legitimate aim. Effectively the obligations of a landlord are being widened but the landlord may be in a position to off set these obligations, for example by extending insurance cover. The benefit to tenants and third parties is thus considered proportionate to the interference with a landlord's rights."

I hope this reply will aid the Committee's consideration of the Bill. If you have any further queries please contact me in the first instance.

NORMAN IRWIN

COMMITTEE FOR FINANCE AND PERSONNEL
INQUIRY INTO DEFECTIVE PREMISES
(LANDLORD'S LIABILITY) BILL (NIA 5/00)

WRITTEN SUBMISSION BY:
THE OFFICE OF LAW REFORM
DEPARTMENT OF FINANCE AND PERSONNEL

9 MARCH 2001

You have stated that "landlords in both categories have access to repair grants" as a reason for omission of the exemptions. You will recall that at the meeting both I and indeed Percy Johnston alerted members to the limitations of the current grants system. At present in theory a landlord can receive a full grant if the work to property is not substantial, and will thus have no material affect on the rent. However if a property is for instance to be substantially improved to allow it to be "upgraded" to a regulated tenancy, a very large capital contribution is necessary from the owner. DSD in its review has noted that this serves to undermine efforts to reduce unfitness and improve conditions of restricted and poorer regulated tenancies. Clearly the grants regulations need to be addressed which is part of DSD's remit. However, I am not entirely sure that if your table is left as it is that this point will be fully appreciated by members.

I am not entirely sure what you mean when you say restricted and regulated tenancies can be recategorised. Obviously a restricted tenancy can be converted into a regulated tenancy if it meets fitness standards but the point outlined above severely hinders such a move. For a regulated tenancy to be recategorised, given the protections existing for a tenant, and the successional nature of the tenancies, a much more difficult and uncertain procedure is involved.

You are correct in noting that the high number of unfit properties in the privately owned sector needs to be addressed. This Bill is highly unlikely to be the vehicle for such an improvement in the controlled sector. I think I made the point that if a landlord of such a property is faced with a choice between insurance premiums rising by a modest amount or having to undertake major repairs at a high cost to himself given the current inadequacies of the grants systems, it is clear that he will take the lesser of the two evils, especially in the absence of any enforcement powers. As the current Rent Order provisions give a tenant such protected status, and landlords have extreme difficulties should they wish to sell the property, there is very little incentive for them to carry out potentially expensive repairs. Again, I make the point that this Bill will not achieve that aim, and I think that to include this as an upshot of omitting the exemptions is perhaps potentially misleading.

It is DSD and not DRD who are carrying you the review of the sector.

The Bill may at present discriminate against the elderly and less affluent members of society but only in a conceptual way. At present they still have clear avenues to address any injury or damage caused by defective premises under the Occupiers Liability Act 1957. It is unlikely that this Bill will greatly affect them in a positive way. However, theoretically as you rightly point out it could lead to disruption in the perhaps unlikely event of landlords carrying out major repairs. We must remember that many of these tenants are content to live in less than adequate premises. The benefits (security of tenure, the right for the tenancy to pass down generations and the extremely low level of rent they need to pay) perhaps outweigh the burdens.

In any case, it could be clearly argued that the imposition of such liability may discriminate against landlords if it were imposed. You quite rightly point out that there may be human rights issues for landlords if exemptions were omitted and it could well be that this point would outweigh the issue of conceptual potential discrimination against less affluent members of society.

I think all these points need to be considered in this context of a DSD review. I think that OLR, DFP,members of the Committee and all those who gave evidence to them are ad idemthat we would welcome any change in the law which could benefit the private controlled sector and therefore the less affluent members of our society. I think I have probably pressed home the point that the remit of this Bill does not seek to radically change housing law as it currently stands. To attempt to do so would be in many ways be ultra vires for OLR and DFP. DSD has clearly recognised the difficulty in the sector and its review will no doubt address the issues which perhaps some members of the Committee would like to see addressed by this Bill. That unfortunately is not possible and it is the prevailing view of OLR that the exemptions should stand given the current state of the sector but clearly it could be revisited if, as one would hope, a Housing Bill advocating a radical overhaul of the sector was considered by the Assembly.

I hope this short response helps to encapsulate our view and is helpful to your further consideration of this clause. I have no problem with you sharing the contents of this E-mail with the Committee members if you feel it would aid the process and if you have any further queries please let me know.

MICHAEL FOSTER

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