26th February 2016
Housing and Planning Bill 2016 – Local Authority Challenges
We at Bevan Brittan are currently running a series of training roadshows alerting local authority clients to the latest news on the Housing and Planning Bill – and the potential challenges it may bring.
With only two months until the Bill is expected to be passed, we highlight some of the key issues and concerns which have come out of these seminar discussions so far.
That these discounted homes aimed at under 40s are likely to hit delivery of new “traditional” affordable homes (estimated 71 lost for every 100 SHs) is well-publicised, but it is less understood that:
– No CIL or S106 contributions are payable for SHs built on “under-utilised or unviable” land (yet to be defined by the detailed regulations), reducing LPA revenue from the 1,000,000 SHs the government expects by 2020.
– Greater flexibility on commuted sums may leave councils with extra cash but no land on which to construct new units.
– Contrary to expectation, many developers prefer to sell traditional affordable homes to housing associations to forward-fund their wider developments and avoid competition with their own first-time buyer products – potentially prompting a rush of planning applications ahead of Bill implementation?
Vacant “high value” stock
Only affecting HRA-holding councils, the levy each pays to the government will be calculated annually by reference to the market value of high-value housing “expected to become vacant during the financial year”, potentially leading to:
– Difficulties in predicting which units may be vacated in 12 months’ time, especially those with rolling tenancies.
– Councils selling other properties to fund the levy amount set a year earlier, not necessarily those high-value homes identified if they do not become vacant as expected.
“Pay to Stay”
Councils will need to apply rent increases to “high-income social tenants”, now confirmed as households with relatively modest combined incomes over £30,000 (£40,000 in London), raising concerns that:
– Couples earning even the “living wage” working 40 hours per week plus modest overtime could be pushed into the high-income bracket.
– Rent “tapering” is essential, to avoid severe rent hikes when overtime or wage increases tip tenants over the fixed threshold.
– The “administrative costs” which councils can retain from rent increases, which must otherwise be handed over to the Treasury, may not cover the considerable work of regularly assessing household incomes and recovering additional rents.
Councils will be required to consider banning and rent payment orders against those considered rogue landlords, with potential to impose penalties of up to £30,000, and to contribute to a new national “rogues register”.
Unhelpfully, there is currently no indication of what represents a “rogue landlord” or a “banning order offense” – making it difficult to assess whether councils can expect penalty windfalls.
Fixed term tenancies
Set to replace lifetime tenancies, councils will be able to grant new tenancies for fixed terms of between two and five years, with an option to renew or terminate within the final six months of the term – and only three months following expiry to evict on a “no blame” basis. From discussions, it seems clear that:
– Most councils will grant five-year tenancies if only to avoid the administrative burden of biannual renewals – potentially defeating the government’s objective of short-term social lettings.
– Housing teams will need to carefully diarise tenancy expiry dates – to avoid tenancies being unintentionally renewed for a further five years.
Reflecting the government’s view that local plans are key to housing delivery, the Secretary of State’s powers to intervene where LPAs have failed to adopt an updated plan by early 2017 are wide-ranging:
– The SoS may prepare or revise a local plan, submit it to independent examination, or consider its adoption.
– Alternatively, the SoS may delegate these powers to the Mayor of London or a combined authority, which may seek to align local plans across its region.
Needless to say, the SoS’s costs of exercising these powers, and those of any independent examiner, will be borne by the LPA.
Planning application competition
The Bill allows the SoS to introduce competition into the processing of planning applications, by appointing “designated persons” (presumed to be others LPAs or planning consultants, although details awaited) to process applications and compile recommendation reports. The relevant LPA would still make the ultimate decision, but lose considerable control over the determination process.
Bevan Brittan is running further seminars on the Housing and Planning Bill at our various offices, aimed at local authorities: 1 March 2016 (Leeds), 17 March (Bristol), 12 April (London) and 28 April (Leeds). Please contact Lilly Drakoulakou on email@example.com or 0370 194 1241 for more information.
By Andrew Shaw, Partner, Bevan Brittan LLP