Section 61 - Restriction of "registered social landlord" system to Wales

111.     This section operates so as to retain Part 1 of the Housing Act 1996 ("the 1996 Act"), but to restrict its application to Wales.

112.     It does this by amending certain provisions of Part 1 of the 1996 Act.

113.     Subsection (1) introduces the amendments in the following subsections and retitles Part 1 of the 1996 Act "Social Rented Sector in Wales"

114.     Subsection (2) inserts into the 1996 Act a new section A1. This describes the new purpose of Chapter 1 which is that it "provides for the registration of social landlords in Wales".

115.     Subsection (3) substitutes "the Welsh Ministers" for references to "the Relevant Authority" in section 1 of the 1996 Act, and omits subsections (1A) and (1B) of that section.

116.     Subsection (4) inserts a new section 1A after section 1 of the 1996 Act. This new section defines "Welsh body" as a charity whose address is in Wales and which is registered with the Charity Commission, or an industrial and provident society whose registered office is in Wales, or a Companies Act company whose registered office is in Wales.

117.     Subsection (5) amends section 2 of the 1996 Act to restrict eligibility for registration to bodies that are:

• Welsh, and

• Principally concerned with Welsh housing (and a new subsection (2A) is inserted to give power to Welsh Ministers to decide when a body is principally concerned with Welsh housing).

118.     Subsections (6) to (8) set out a number of consequential amendments.

119.     Subsection (9) refers to sections 62 and 63 which make consequential amendments.

Section 62 - References to Welsh Ministers

120.     This section sets out in a table those provisions of the 1996 Act where "Welsh Ministers" is to be substituted for references to the "Secretary of State". These amendments are consequential on section 61.

Section 63 - References to National Assembly for Wales

121.     This section sets out in a table those provisions of the 1996 Act where "the National Assembly for Wales" is to be substituted for references to the "either House of Parliament" principally to reflect the effects of section 61.

Section 64 - Dissolution of Housing Corporation

122.     This section provides for the dissolution of the Housing Corporation by order of the Secretary of State. Subsection (2) provides that the Secretary of State may by order make consequential amendments of enactments referring to it.

Section 65 - Transfer schemes

123.     This section provides that the Secretary of State may make one or more schemes for the transfer of the Housing Corporation's property, rights or liabilities to the regulator, the HCA or the Secretary of State.

Section 66 - Interim arrangements

124.     This section confers on the Secretary of State the power to require the Housing Corporation to provide staff, premises, facilities or other assistance to the regulator or the HCA. This mirrors the provisions at section 53 allowing the Secretary of State to require the same of the Urban Regeneration Agency or the Commission for New Towns.

Section 67 - Transitional arrangements

125.     This section permits the Secretary of State by order to transfer functions of the Housing Corporation to the regulator, the HCA, or both jointly or concurrently. This order may make provision in relation to English but not Welsh registered social landlords which is similar to any provision made by Part 2 of the Bill. This power would allow the regulator to maintain the current system through transitional arrangements for the period after its establishment but before the new regulatory system is fully in force; for example, before it had consulted on standards.

Social housing

Section 68 - Basic principle

126.     This section defines social housing for the purposes of this Act. Under this Act registered providers (defined at section 80) are primarily regulated in respect of their provision of social housing. The definition ensures that registered bodies will not be regulated in respect of their other activities, e.g. provision of housing for sale on the open market.

127.     Subsection (1) explains that there are two types of social housing - (a) low cost rental accommodation (defined by section 69) and (b) low cost home ownership accommodation (defined by section 70).

128.     Subsection (2) states that accommodation which becomes "social housing" by satisfying subsection (1)(a) or (b) remains "social housing" unless an event specified in sections 73 to 76 occurs (e.g. sale to a tenant, expiry of a lease or disposal with the regulator's consent). This subsection ensures that, once designated as social housing, accommodation continues to be social housing and subject to the regulator's standards (e.g. on rents and management) and enforcement powers unless one of the specified events occurs.

129.     Subsection (3) refers to section 77 which ensures that certain accommodation is to be treated as "social housing" whether or not it satisfies subsection (1)(a) or (b). This will ensure that accommodation provided by existing RSLs is designated as "social housing" even if, for example, rents are not below market rents. This will ensure that homes subject to regulation under the existing regulation system remain regulated under the new system.

Section 69 - Low cost rental

130.     This section defines low cost rental accommodation. Low cost rental accommodation is one of the two types of social housing referred to in section 69. This section now defines this by reference to a rent below the market rate (paragraph (b)) and rules designed to ensure that the accommodation is made available to people whose needs may not be adequately served by the commercial market. This might, for example, be for reasons of affordability, specialised/adapted housing, security of tenure or vulnerability (paragraph (c)).

Section 70 - Low cost home ownership

131.     This section defines low cost home ownership accommodation.

132.     Subsection (1) defines low cost home ownership accommodation as that which meets two conditions.

133.     Condition 1 is that accommodation is made available on the basis of a shared ownership arrangement, an equity percentage arrangement or shared ownership trust.

134.     Condition 2 is that the accommodation is aimed at people whose needs may not be adequately served by the commercial market. This could, for example, be for reasons of affordability, specialised/adapted housing, security of tenure or vulnerability.

135.     Subsection (4) defines "shared ownership arrangements" as arrangements under a lease which:

• is granted on the purchase of an initial share, the price of which is calculated by reference to a percentage of the value of the accommodation or the cost of providing it; and

• provides that the tenant (i.e. the purchaser), or the tenant's personal representative, is entitled to a sum calculated by reference to the value of the accommodation. This means that when the property is sold, the purchaser is entitled to a sum in proportion to the share he or she has purchased.

136.     This description is intended to capture traditional shared ownership schemes, such as the current New Build HomeBuy scheme, also described as "part-buy, part-rent", where the purchaser buys a share in a property, and pays rent to the freeholder on the unowned share.

137.     Subsection (5) defines "equity percentage arrangements". These work on similar principles to traditional shared ownership but do not involve a shared ownership lease. The key features are that the owner of the property sells it (conveys it) to the purchaser in exchange for:

• an initial sum equivalent to a percentage of the value of the property at the time of sale, and

• an agreement to pay further sums also calculated by reference to a percentage of the value of the property, and

• the liability to make any payments under this arrangement is secured by a mortgage.

138.     Subsection (6) defines "shared ownership trusts" as having the same meaning as in Schedule 9 to the Finance Act 2003.

139.     Subsection (7) allows the Secretary of State to make regulations amending the definition of low cost home ownership accommodation, or any of the sub-categories specified in that definition. This is to ensure that innovative low cost home ownership schemes, not anticipated here, can be brought within the scope of regulation.

Section 71 - Shared ownership low cost rental

140.     This section makes it clear that accommodation which satisfies both the definitions of low cost rental accommodation and low cost shared ownership accommodation is to be treated as low cost shared ownership accommodation. This clarification is necessary because shared ownership arrangements will generally include the payment of a sub-market rent on the share retained by the registered provider, and will also have eligibility criteria which will mean that they satisfy the definition of low cost rental as well as that of low cost shared ownership.

Section 72 - Regulations

141.     Subsection (1) allows the Secretary of State to make regulations providing that specified property (or a specified class of property) is or is not to be treated as social housing. This allows the Secretary of State to ensure, for example, that all homes funded through public investment are designated as social housing. This is necessary to allow decisions on the classification of new types of social housing (in particular low cost home ownership arrangements) which are likely to be developed in future.

142.     Subsection (2) states that the regulations may provide for property to be social housing despite not satisfying section 68(1)(a) or (b) - i.e. not meeting the definitions of low cost rental accommodation or low cost home ownership accommodation where the Secretary of State thinks the property is of a kind, or is provided in circumstances, that serve the needs of a group whose needs are not adequately served by the commercial housing market. This may, for example, cover housing for vulnerable people.

143.     Subsection (3) states that the regulations:

• may override section 68(2)

• are subject to section 68(3) and section 77

• are subject to sections 69 and 70 (but may clarify doubt about the application of those sections).

144.     Paragraph (a) means that the Secretary of State can make regulations which specify that certain property is not social housing, even if it had previously satisfied section 68(1)(a) or (b). This power is necessary to correct any errors of classification that become apparent over time.

145.     Paragraph (b) means that the regulations cannot override sections 68(3) and 77 which ensure that homes currently regulated by the Housing Corporation under the 1996 Act are regulated under the new system.

146.     Paragraph (c) means that the regulations can clarify the application of the definitions of low cost rental and low cost home ownership, but cannot fundamentally alter them. However section 70(7) separately allows the Secretary of State to make regulations amending the definition of low cost home ownership.

147.     Subsection (4) states that the regulations may make provision by reference to-

• the opinion of the regulator or another specified person;

• designation, agreement or other action by the regulator or another specified person.

148.     This could, for example, include property funded under an agreement with the HCA and designated by the HCA as social housing.

Section 73 - Leaving the social housing stock: sale

149.     This section states that a dwelling ceases to be social housing if it is sold to the tenant.

150.     Subsections (2) and (3) state that the low cost rental accommodation and shared ownership accommodation are "sold to the tenant" when the tenant exercises a statutory or contractual right and as a result becomes the owner of either the freehold or the leasehold previously owned by the registered provider.

151.     Subsection (4) states that low cost home ownership accommodation of the equity percentage kind is "sold to the tenant" when the buyer exercises a statutory or contractual right as the result of which the equity percentage arrangements come to an end.

152.     Subsection (5) states that low cost home ownership accommodation of the shared ownership trust kind comes to an end when the purchaser exercises a statutory or contractual right as a result of which the trust comes to an end.

Section 74 - Leaving the social housing stock: expired lease

153.     This section states that a dwelling ceases to be social housing if the provider holds a leasehold interest in the dwelling, and the leasehold interest expires.

154.     Subsection (2) makes it clear that a lease from an associate or subsidiary of the provider is disregarded.

Section 75 - Leaving the social housing stock: disposal with consent

155.     This section states that a dwelling ceases to be social housing if it is disposed of with the regulator's consent in accordance with Chapter 5 or certain other statutory provisions.

Section 76 - Leaving the social housing stock: regulator's direction

156.     This section allows the regulator to direct that a specific dwelling which has ceased to be low cost rental accommodation or low cost home ownership accommodation is to cease to be social housing.

157.     The regulator may make a direction only on the application of the provider.

Section 77 - Housing stock under Housing Act 1996

158.     This section ensures that properties owned by an RSL immediately before the coming into force of section 68 are defined as social housing under this Act.

159.     Subsection (2) clarifies that such properties are social housing even if they do not satisfy the definitions of low cost rental or low cost home ownership accommodation in sections 69 and 70. As with other social housing, it remains social housing until an event specified in sections 73 to 76 (sales to tenants, expiry of lease, disposal with regulator's consent, etc) occurs.

160.     Subsections (3) to (8) provide that the following types of property where they are in existence on the date section 61 comes into force, are only to be treated as social housing if they were purchased, constructed or renovated by means of specified grants:

(a)     market-let accommodation;

(b)     student accommodation;

(c)     care homes providing nursing care;

(d)     asylum seeker Home Office contracted accommodation; and

(e)     other property specified in regulations by the Secretary of State.

161.     These exemptions continue the approach currently taken by the Housing Corporation to regulating the existing housing stock of RSLs registered with the Corporation. This will ensure that housing which is not social housing and has not previously been directly regulated by the Corporation should not be caught by regulation in future.

Other key concepts

Section 78 - Regulator of Social Housing

162.     Section 78 specifies that in Part 2 the Office for Tenants and Social Landlords (established under section 81) is referred to as "the regulator".

Section 79 - English bodies

163.     This section provides a definition of "English body". An English body is either:

• a charity registered with the Charity Commission whose registered address is in England, or

• an industrial and provident society whose registered office is in England, or

• a company whose registered office is in England, or

• a community land trust which owns land in England, or

• any other person, whether or not a corporate body under the law of the United Kingdom, that is not a Welsh body, and that makes available, or intends to make available, accommodation in England. (The definition of "Welsh body", inserted by section 61(4), applies here.)

• Community Land Trusts are defined for the purpose of including them in section 79 as English bodies. The definition specifies some key attributes of Community Land Trusts which are English bodies.

• A local community is an area where individuals wish to work and live in a specified area or already live and work there.

Section 80 - Provider of social housing

164.     This section refers to the fact that Chapter 3 that establishes the register of providers of social housing.

165.     It specifies that persons listed on the register under the provisions of Chapter 3 are referred to in this Part as "registered providers", and in other primary or secondary legislation as "registered providers of social housing".

Chapter 2 - The Social Housing Regulator

Constitution

Section 81 - Establishment

166.     This section establishes the regulator, which is to be responsible for carrying out the functions of the social housing regulator as set out in this Act.

Section 82 - Membership

167.     This section provides for the membership of the regulator. The regulator is to consist of not fewer than four members and up to a maximum of 11 members (including the Chair who is appointed by the Secretary of State) and a Chief Executive (appointed under section 84). The Secretary of State must consult the Chair before appointing other members. Subsection (4) makes clear that former members of the Housing Corporation can become members of the regulator.

Section 83 - Tenure

168.     This section sets out the tenure of appointment of appointed members and the circumstances where the Secretary of State may dismiss a member (e.g. absence, bankruptcy or misbehaviour). Appointment terms cannot exceed 5 years although members may be reappointed for additional terms. Members can resign by written notice to the Secretary of State.

Section 84 - Chief executive

169.     This section sets out the appointment process of a Chief Executive. The first Chief Executive will be directly appointed by the Secretary of State after consulting the Chair. Subsequent appointments will be made by the regulator subject to approval by the Secretary of State.

Section 85 - Other staff

170.     This section provides the regulator with the power to appoint employees.

Proceedings

Section 86 - Fundamental objectives

171.     Section 86 sets out the fundamental objectives of the regulator. These objectives are separately identified in subsections (2) to (11). The regulator must perform its functions with a view to achieving these objectives so far as possible.

172.     Subsection (2) specifies the first objective: to encourage and support a supply of well-managed social housing of appropriate quality sufficient to meet reasonable demands. Social housing is defined in Section 68(1).

173.     Subsection (3) specifies the second objective: to ensure that actual or potential tenants of social housing have an appropriate degree of choice and protection.

174.     Subsection (4) specifies the third objective: to ensure that tenants have the opportunity to be involved in the management of their social housing.

175.     Subsection (5) specifies the fourth objective: to ensure the efficient, effective and economic performance of landlord functions by registered providers of social housing.

176.     Subsection (6) specifies the fifth objective: to ensure that registered providers are financially viable and properly managed.

177.     Subsection (7) specifies the sixth objective: to encourage registered providers of social housing to contribute to the environmental, social and economic well-being of the areas in which their property is situated.

178.     Subsection (8) specifies the seventh objective: to encourage investment in social housing, including by promoting the availability of financial services to registered providers of social housing.

179.     Subsection (9) specifies the eighth objective: to avoid creating either as a direct or indirect consequence of its actions an unreasonable burden on public funds.

180.     Subsection (10) specifies the ninth objective: to guard against the misuse of public funds.

181.     Subsection (11) specifies the tenth objective: to regulate in such a way as to minimise administrative burdens, consistent with its ability to achieve its other objectives.

182.      Subsection (12) provides that this will include compliance with the regulators' Compliance Code issued under the provisions of the Legislative and Regulatory Reform Act 2006.

183.     Subsection (13) indicates that there is no significance to the order in which the objectives are listed in the section. It is for the regulator to balance these objectives in carrying out each of its functions as it deems appropriate.

Sections 87 and 88 - Procedure and conflict of interest

184.     Section 87 provides for the regulator to determine its own procedure and for the manner in which its procedure is made public. Section 88 states that this procedure must include arrangements for dealing with conflicts of interest of members, employees or members of committees and sub-committees.

Sections 89 and 90 - Committees and delegation

185.     Sections 89 and 90 enable the regulator to authorise a committee, a sub-committee, a member or an employee to exercise a function on its behalf. All committees or sub-committees will need to include at least one member of the regulator (but may also include non-members).

Section 91 - Seal

186.     This section provides that a document executed under the seal is to be regarded as valid unless the contrary is shown, and that the seal may be authenticated by any person authorised to so do or by a member.

Section 92 - Annual report

187.     This section requires the regulator to prepare and publish an annual report, as soon as is reasonably practicable after the end of each financial year. The contents must be a report on the performance of its functions during the preceding financial year. In particular, it will include a statement of the regulator's accounts, and specify any direction that the regulator has been given by the Secretary of State during the preceding year under section 197. The regulator's annual report shall include a general description of complaints made to it during the year about the performance of registered providers and of how those complaints have been dealt with. Having prepared the report, the regulator will send a copy of the report to the Secretary of State, who will then lay a copy before Parliament.

Powers

Section 93 - General

188.     This section gives the regulator power to do anything it thinks necessary or expedient for the purpose of, or in connection with, the performance of a function conferred on it by this Part, or another enactment. In particular the regulator may do anything it thinks appropriate for advancing its fundamental objectives.

Section 94 - Studies

189.     This section gives the regulator a power to commission studies or to carry them out itself with the objective of improving the economy, efficiency and effectiveness of registered providers. Where the regulator carries out or commissions such studies, it may publish a report.

Section 95 - Financial assistance

190.     This section gives the regulator a power to give financial assistance in certain circumstances.

191.     Subsection (1) gives the regulator power to give financial assistance in connection with research, guidance, best practice and tenant involvement.

192.     Subsection (2) sets out a range of means by which the regulator may give financial assistance, including grant, loan, or the defraying of expenditure on behalf of a person. Subsection (2)(d) notes that the regulator may also give financial assistance in any other way, with the specified exceptions of purchasing loan or share capital of a body corporate or the giving of a guarantee or indemnity.

193.     Subsection (3) gives the regulator a separate power to give financial assistance to a registered provider by lending money or giving a guarantee or indemnity. Such assistance may only be given with the consent of the Secretary of State (subsection (4)) given with the approval of the Treasury.