The Housing (Scotland) Act 2014 in force 1 August 2014

The Housing (Scotland) Act 2014, which received Royal Assent on 1 August 2014 as part of the Scottish Government’s 10-year action plan for housing, will bring about significant changes for social landlords (both local authorities and housing associations).

With the coming into force of the new legislation this week, it is important for social landlords to consider the implications of the new Act for their organisations.

Collette Miller, a Solicitor within Harper Macleod’s Public Sector and Social Housing Team, summarises the key provisions within the Housing (Scotland) Act 2014 for social landlords.

Bye Bye Right to Buy

Section 1 of the Act abolishes tenants’ rights to purchase their homes under the Right to Buy legislation with effect from 1 August 2016. Landlords should carry out impact assessments to inform their long-term business plans and be prepared for a potential influx of RTB applications over the next two years from tenants seeking to exercise their right before its demise.

Allocation of Housing

Part 2 of the Act amends the provisions within the Housing (Scotland) Act1987 in relation to priority allocation of housing. The changes:

• Introduce an obligation on social landlords to give reasonable preference to existing tenants residing in an under-occupied house when allocating housing and remove the statutory priority status for those occupying overcrowded houses, or houses which do not meet the tolerable standard, or those with large families.
• Require social landlords to undertake a consultation process before making or altering their allocations policies, which policies must take account of any local housing strategy and any guidance or regulations issued by Scottish Ministers.
• Permit social landlords to take into account an applicant’s ownership of, or value of, heritable property for the purposes of housing allocation, except in prescribed circumstances, such as where the owner cannot secure entry to the property or where occupation of the property will lead to abuse or endanger the health of the occupants.

It’s an Age Thing

In light of objections from Shelter Scotland and Scotland’s Commissioner for Children and Young People, controversial proposals to take into consideration a person’s age when allocating social housing have been dropped by Scottish Ministers on the grounds that this could lead to unintentional discrimination against young people. It will therefore continue to be the case that social landlords are prevented from considering the age of an applicant as a factor in their allocations policy.

Anti-Social Behaviour

There are several measures within the Act which are aimed at tackling the problem of anti-social tenants:

• Section 7 allows social landlords to introduce a suspension period for housing applications in circumstances where the applicant has acted in an anti-social manner in the locality of their house or towards an employee of the social landlords in the course of making the application. The suspension period can also be used in other circumstances, such as where the applicant has been convicted of an offence committed in the locality of their house, owes rent or has been evicted from a previous tenancy.
• The Act also introduces changes to sections 34 and 35 of the 2001 Act by enabling social landlords to create a Short Scottish Secure Tenancy (SSST) or to convert a tenancy to a SSST where applicants have acted in an anti-social manner within the last three years.
• Part 2 of the Act extends the minimum term of a SSST from six months to one year and allows a further six months extension where further tenancy support is required.
• Where the landlord is seeking to terminate a SSST, it will now be required to notify the tenant of the reason for the action and the tenant will have the opportunity to ask the landlord for a review of its decision.
• Section 14 removes the ‘reasonableness’ test in actions for recovery of possession raised on the grounds that the tenant has been convicted of using the house for immoral or illegal purposes or an offence punishable by imprisonment committed in, or in the locality of, the house within the past year, which could include breach of an ASBO or drugs offences.

Qualifying Periods

The Act introduces a qualifying period of 12 months for tenants wishing to request a joint tenancy or to assign or sub-let their tenancy and requires the joint tenant to have notified the landlord that they are residing in the property before the qualifying period begins. Section 12 of the Act enables the landlord to refuse consent to an assignation or sub-let where the landlord would not have given reasonable preference to that person in the allocation of a tenancy or where it would result in the property being under-occupied.

The Act also increases the qualifying period of six months which currently applies to co-habiting partners succeeding to a tenancy to 12 months and extends this to succeeding family members and carers.

SHR: Transfer of Assets

Under section 67 of the 2010 Act, the Scottish Housing Regulator (SHR) has the power to direct a transfer of a registered social landlord’s assets after consultation with tenants and secured creditors. Section 97 of the 2014 Act provides an exception to the duty to consult where the RSL is in financial jeopardy and urgent action is required. The Act also does away with the SHR’s duty to obtain an independent valuation of the assets to be transferred.

Ballot for Control

RSLs entering into a group structure arrangement with another social landlord are now required to first ballot their tenants, except in limited circumstances where a waiver is granted by the SHR. This is now a pre-condition of the RSL obtaining the consent of the SHR to the group structure arrangement. The Act leaves it for RSLs to determine the approach they take to any tenant engagement process.

The 20-year Itch

The Act introduces the power for Scottish Ministers to make exemptions from the 20-year security rule contained in Section 11 of the Land Tenure Reform (Scotland) Act 1974, which is likely to be used in relation to Scottish Government Shared Equity schemes. This power was introduced to address the problem faced by the Scottish Government’s Help to Buy and LIFT shared equity schemes because of homeowners having the right to redeem the Government’s standard security after 20 years by reference to its original value, rather than to the current property value.

Charging Ahead

Section 85 of the Act gives Scottish Ministers the power to make regulations which would allow RSLs to unilaterally impose a “charge” against an owner-occupier’s property to recover the owner’s share of the cost of common repair works.

The details of this provision, including the conditions which will apply and the form of the charge, have not yet been made clear, so RSLs will need to wait to see what the regulations say, as and when the regulations are made by Scottish Ministers following consultation with key representative bodies.

That’s Not All Folks

The main purpose of this article is to outline the key elements of how the Housing (Scotland) Act 2014 will impact upon local authorities and RSLs in Scotland. For all of the changes which the new legislation introduces, social landlords should familiarise themselves with Parts 1, 2 and 7 of the Act.

Please note that the majority of provisions within the Act have not yet been brought into force and this is expected to happen in a phased basis, following the approach taken to the 2010 Act. The Scottish Government has not given any indication as to when commencement orders will be introduced. However, we will monitor the position and provide updates as and when each of the key provisions come into effect.

The Act also brings with it a great deal of change for the private rented sector, as well as the establishment of a first-tier tribunal for housing disputes, the introduction of a letting agent register and amendments to the repairing standard which applies to private rented sector housing. Accordingly, it will be essential for Private Landlords and Letting Agents to consider how Parts 3, 4, 6 and 7 of the Act will affect their business activity.

If you would like to find out more about the implications of the 2014 Act, please contact Collette Miller, Solicitor on 0141 227 9342 or [email protected].