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HOUSING (AMENDMENT) (No.2) BILL

Explanatory and financial memorandum

INTRODUCTION

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

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

BACKGROUND AND POLICY OBJECTIVES

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

CONSULTATION

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

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

6. On 1 March 2010 the Department published proposals for a Housing and Regeneration Bill which included provision for district councils to promote energy efficiency within their own areas. That provision is now being taken forward in the Housing (Amendment) (No.2) Bill.

OPTIONS CONSIDERED

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

8. Existing legislation requires private landlords to provide their tenants with a range of documentation. While the Bill aims to simplify this requirement, the Department intends to balance that aim with the need for tenants to be properly informed. The Bill would therefore repeal the requirement for statements of tenancy terms to be given to every tenant, while the Department will make subordinate legislation to require landlords to include all necessary information about the terms of the tenancy in the tenant’s rent book. While this requirement would, in theory, apply to all private tenancies created on or after 1 April 2007, the Department recognises that landlords of such tenancies need not be required to issue new rent books when the subordinate legislation comes into operation, provided that they have already given their tenants a statement of tenancy terms in the existing format.

9. Responses to the consult ation on the strategy for the private rented sector were in favour of a statutory scheme for protecting tenants’ rent etc. deposits and resolving disputes in relation to such deposits. In England and Wales, there are three government-approved companies operating insurance-based and custodial tenancy deposit schemes. The Bill makes provision for the introduction of similar arrangements in Northern Ireland offering flexibility to provide for more than one scheme as necessary.

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

11. The Department has power under the Private Tenancies ( Northern Ireland) Order 2006 to determine certain private sector rents. Where changes to the detail of the procedure involved are identified as necessary, an amendment to primary legislation must be made, which normally takes around 12 months. It is therefore intended to take a power in the Bill to makesubordinate legislation capable of modifying the relevant provisions of the Private Tenancies Order. Having due regard to the need for Assembly control over the determination of private sector rents, any subordinate legislation made under the proposed power would be subject to the draft affirmative procedure.

12. Responses to the consult ation on the strategy for the private rented sector were generally in favour of a mandatory registration scheme for all private landlords. The Department feels that the most effective way of achieving its aims of improving the effectiveness of regulation of the private rented sector would be a “light touch” registration scheme. The Bill would therefore enable the Department to make regulations providing for such a scheme.

13. For housing management reasons, it may be undesirable to permit individuals with a history of anti-social behaviour to move to other areas. Existing law therefore permits social landlords to refuse consent to an exchange of tenancies where an order for possession on the grounds of anti-social behaviour has been made against an applicant (or a member of the applicant’s household), or where proceedings for possession have been commenced. However, landlords have no authority to refuse to consent to an exchange where an applicant is the subject of other sanctions relating to anti-social behaviour such as an injunction or anti-social behaviour order. It is therefore proposed to enable social landlords to withhold consent to an application for exchange of tenancies where an injunction or anti-social behaviour order is in force. The alternative would be to risk the spread of anti-social behaviour.

14. For data protection reasons, social landlords and others are often reluctant to share information about sanctions imposed on individuals for anti-social behaviour. The lack of proper legal provision in this area creates a risk of tenancies being awarded to persons who habitually engage in anti-social behaviour or leaving social landlords and others exposed to the risk of breaching data protection legislation. It is therefore proposed to make the necessary provision for sharing information about anti-social behaviour for a range of housing management purposes. Such provision would have the added benefit of supporting the proposal in the Bill to permit social landlords to refuse consent to an application for exchange of tenancies where an injunction or anti-social behaviour order is in force.

15. The proposal to bring the Housing Executive’s homelessness duty to an end where the applicant is no longer eligible for assistance addresses a technical anomaly in existing legislation and is designed to recognise situations where the Housing Executive cannot legally allocate accommodation due to immigration-related legislation, which is an excepted matter. The alternative would be to leave the legislative anomaly in place. However, this is unsatisfactory as it would maintain an unhelpful ambiguity in the law which is of no benefit to the small number of homelessness applicants affected or to the Housing Executive.

16. Houses occupied by members of a single extended family are exempt from the statutory regulation regime for houses in multiple occupation. Where a landlord or other person wishes to claim exemption on this basis, the Bill requires that documentary evidence of the family relationship is provided. This is necessary to prevent unscrupulous landlords from circumventing HMO regulation by claiming a fictitious family relationship. While the Department had considered imposing penalties for failure to provide satisfactory evidence of a family relationship, this would not necessarily help to protect the interests of tenants. Where a family relationship has been claimed and evidence of the relationship is not forthcoming within a reasonable period, all relevant statutory requirements relating to houses in multiple occupation would automatically apply to the property. However, the Bill would allow the regulatory regime to be lifted in cases where the Housing Executive accepts that the regime should not apply or a court has determined that the property is not a house in multiple occupation.

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

18. The proposal in relation to energy efficiency recognises the fact that a number of councils have undertaken a range of actions on energy efficiency and fuel poverty and seeks to formalise this position. Because the Housing Executive is Northern Ireland’s sole Home Energy Conservation Authority, councils will be required to take account of the Housing Executive’s work in this area and to provide the Executive with information to enable it to carry out its Energy Conservation functions.

OVERVIEW

19. The Bill has 17 clauses. A commentary on the provisions follows (comments are not given where the wording is self-explanatory):

COMMENTARY ON CLAUSES

Clause 1: Abolition of statement of tenancy terms

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

Clause 2: Tenancy deposit schemes

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

Clause 3: Power of entry to inspect dwelling-houses

Clause 3 inserts in Article 36 of the Private Tenancies ( Northern Ireland) Order 2006 a new paragraph (1A) which confers powers of entry on persons authorised by district councils to carry out fitness inspections.

Clause 4: Power to modify Articles 42 to 45

Clause 4 inserts in the Private Tenancies ( Northern Ireland) Order 2006 a new Article 45A which enables the Department to make regulations modifying certain provisions of that Order relating to determination of private sector rents.

Clause 5: Registration of landlords

Clause 5 inserts in the Private Tenancies ( Northern Ireland) Order 2006 a new Article 65A which enables the Department to make regulations providing for the registration of private landlords. Such regulations may create new offences in relation to provision of false information, failure to provide evidence of registration, and letting of houses by unregistered persons.

Clause 6: Fixed penalty for certain offences

Clause 6 inserts in the Private Tenancies ( Northern Ireland) Order 2006 a new Article 68A which would allow landlords who appear to have breached the registration regulations or a tenancy deposit scheme the opportunity of avoiding prosecution by payment of a fixed penalty.

Clause 7: Regulations

Clause 7 amends Article 72 of the Private Tenancies ( Northern Ireland) Order 2006 to provide that regulations in relation to tenancy deposit schemes, determination of rents and landlord registration are subject to the draft affirmative resolution procedure by the Assembly.

Clause 8: H ouses in multiple occupation: evidence of family relationship

Clause 8 provides that, where the Housing Executive believes that a house is occupied by two or more qualifying persons who are not all members of the same family, the Executive may serve notice requiring evidence of a family relationship between the occupants to be provided. Where such evidence is not forthcoming, the house would be treated as a house in multiple occupation and subjected to the regulatory regime which applies to such accommodation.

Clause 9: Withholding of consent to mutual exchange of secure tenancies

Clause 9 inserts in Schedule 3A to the Housing ( Northern Ireland) Order 1983 a new ground for landlords to withhold consent to an exchange of tenancies.

Clause 10: Disclosure of information as to orders, etc. in respect of anti-social behaviour

Clause 10 provides that any person may disclose information about certain injunctions, anti-social behaviour orders or orders for possession where such information is required to enable the landlord of a secure tenancy to decide:

Clause 10 also provides that any person may disclose relevant information to the Housing Executive where the information is required to enable the Executive to decide:

Clause 10 also provides that any person may disclose relevant information to a registered housing association to enable the association to decide whether to allocate housing accommodation to any person.

Clause 11: Duty to persons found to be homeless

Clause 11 amends Article 10 of the Housing ( Northern Ireland) Order 1988 to provide that the Housing Executive’s duty under paragraph (2) of that Article to persons found to be homeless shall come to an end if the applicant ceases to be eligible for assistance.

Clause 12: Powers of Executive in relation to energy brokering

Clause 12 enables the Housing Executive to submit for Departmental approval a scheme for making arrangements with energy providers for the supply of electricity, gas or oil to the Executive’s tenants.

Clause 13: Functions of councils in relation to energy efficiency

Clause 13 provides district councils with powers to promote energy efficiency in residential accommodation within their own districts. To ensure coherence within existing activity, councils will be required to take account of work undertaken by the Housing Executive and the Department for Social Development and provide information to the Housing Executive which it needs to carry out its functions as Home Energy Conservation Authority for Northern Ireland.

Clause 14: Repeals

Clause 14 provides for the repeal of the provisions set out in the Schedule to the legislation.

Clause 15: Commencement

Clause 15 enables the Department to make provision by order as to the day or days when clauses 1 to 14 come into operation.

Clause 16: Interpretation

Clause 16 provides for the interpretation of certain expressions used in the Bill.

Clause 17: Short title

Clause 17 provides that when the Bill receives Royal Assent it shall be known as the Housing (Amendment) (No.2) Act ( Northern Ireland ) 2010.

FINANCIAL EFFECTS OF THE BILL

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

HUMAN RIGHTS ISSUES

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

EQUALITY IMPACT ASSESSMENT

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

REGULATORY IMPACT ASSESSMENT

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

LEGISLATIVE COMPETENCE

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

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