Does the Localism Act 2011 Restrict Access to Social Housing?

Introduction
In November 2010, the government published a consultation paper entitled Local Decisions: A Fairer Future for Social Housing.¹ The paper put forward proposals to change the way that both temporary and permanent social housing is allocated and dealt with. There is a severe shortage of social accommodation, particularly in London and other urban areas, and the aim of the proposals was to work out how to allocate that accommodation more effectively.

For homelessness applications the main proposal was to enable local authorities to discharge their duties to all homelessness applicants by making an offer of private sector accommodation. The justification was that homeless applicants often remain in unsettled temporary accommodation for a long time before they manage to successfully bid for Council or other social housing accommodation.

For the allocation of social housing the policy objectives were twofold. First, to give local authorities the power to determine for themselves which groups of applicants do or do not qualify for allocation of social housing. Secondly, to take social housing tenants seeking non-priority transfers out of the statutory housing allocation arrangements. In addition to this, the very nature of tenancy that would be offered is to be changed, ending the tenancy for life and introducing “flexible” tenancies.

In this article, I will consider the changes to homelessness law and allocation of housing, the potential problems with the changes, how the changes will work in practice and discuss how these changes restrict access to social housing.

Homelessness

The Localism Act 2011 amends Pt 7 of the Housing Act 1996, the section dealing with homelessness.

Background

Currently, where an applicant satisfies certain conditions the local authority must “secure that accommodation is available for occupation” by the applicant².Those conditions are:

• The applicant must be “eligible” for assistance in terms of their immigration and residence status.³
• They must be homeless or “threatened with homelessness”. An applicant will be homeless if they have no accommodation that is reasonable for them to occupy. An applicant will be “threatened with homelessness” where they will be homeless within 28 days.4
• The applicant must have a “priority need” for accommodation.5 This means that they must have a particular vulnerability, such as having dependent children or are vulnerable due to their health.
• The applicant must not have made themselves homeless intentionally.6 This is where the applicant has caused their own homelessness, for example by not paying their rent and then being evicted due to rent arrears.
• The applicant must have a local connection to the authority they are applying to.7 If they have a local connection to another area then, provided certain conditions are met, they can be referred on to that area for assistance instead.8

Section 193 sets out a number of circumstances where the duty to secure accommodation comes to an end, i.e. is discharged. These include if the applicant refuses an offer of suitable accommodation, so long as the applicant has been informed of the possible consequences of a refusal9 and also acceptance of an offer of accommodation under Pt 6 of the 1996 Act and in certain limited circumstances an offer of private sector accommodation.10 Refusals of suitable offers of accommodation that it is reasonable for the applicant to accept also end the duty.”

Discharge by offer of private accommodation

Local authorities will, once the relevant section of the Localism Act comes into force, be able to discharge their duties by offering accommodation in the private sector.12 Currently, it is open to an applicant to refuse an offer of private rented accommodation13 unless they are a “restricted case”14 but this provision will be removed. Therefore, it will be permissible in all cases for the local authority to discharge its duties by providing accommodation in the private sector.

This fails to take into account particularly vulnerable applicants who may struggle to manage a private sector tenancy. With local authority accommodation, at the moment, housing benefit will generally be paid directly into the rent account. With a private tenancy, housing benefit will generally be paid to the tenant who then has the responsibility of paying the landlord. If a tenant struggles to manage their finances, they can find themselves in difficulty.

Further, if a tenant falls into rent arrears or has other difficulties managing their tenancy, the landlord can seek possession of their property. Local authorities, as public bodies, are subject to general public law requirements and must act fairly in these circumstances. They would be expected to take account of a tenant’s vulnerabilities when deciding what action to take. A private landlord is subject to no such requirements.

There will be certain requirements that must be fulfilled in order for the local authority to make an offer of private accommodation. First, the local authority must provide written advice of the consequences of acceptance and refusal of the offer, and of the applicant’s right of appeal.15 Secondly, the local authority must advise the applicant as to the consequences of a further application within two years.16 Thirdly, the landlord must offer an assured shorthold tenancy with a term of not less than 12 months and the offer must be made under an agreement with the local authority.

The local authority will therefore have to enter into arrangements with private landlords and ensure affordable accommodation can be provided. This is likely to involve a lot of work on the part of the local authority to set up these arrangements but some authorities may build on existing private sector schemes. With caps in housing benefit being brought in, finding affordable accommodation in the private sector is going to be increasingly difficult.

When considering suitability of accommodation, local authorities are allowed to take into account the local circumstances in the area. They must, however, take into account the applicant’s personal circumstances and must consider how location will affect employment, education and healthcare for the applicant and their family. The accommodation must also be affordable for the applicant.17 New regulations on suitability come into force on November 9, 2012.18

An applicant can request a review of the suitability of an offer of accommodation within 21 days of the offer or 21 days from the date the accommodation becomes unsuitable.19 If the review is unsuccessful, the applicant may be able to bring an appeal in the County Court on a point of law.20 If successful in the request for a review or on appeal another offer must be made.

Recently, Newham Council has come under criticism in the press for arranging to accommodate homelessness applicants in receipt of benefits as far away as Stoke-on-Trent. Newham has argued that it cannot afford to accommodate homelessness applicants within the area in private accommodation due to the combination of increasing rents and housing benefit caps. The government in their consultation stated that it:

“considers that it is not acceptable for local authorities to make compulsory placements automatically hundreds of miles away, without having proper regard for the disruption this may cause to those households.”21

The new regulations provide that the following matters are to be taken into account in determining whether, in respect of location, accommodation is suitable for a person:

1. whether the accommodation is situated outside the district of the local housing authority and how far away;
2. the significance of any disruption which would be caused to the employment, caring responsibilities or education of the applicant or their household;
3. access to medical facilities; and
4. access to amenities such as transport, shops and other necessary facilities.22

It may be noted that these factors only have to be taken into account. If Councils are allowed to discharge their duties to all applicants by arranging accommodation within the private sector, this kind of out-of-borough placement, particularly in London where rents are high, is likely to become more commonplace and applicants are going to have to show extremely strong ties to an area to successfully argue that they must be accommodated there.

One difficulty that could occur is where an applicant requests a review of the suitability of accommodation offered (on grounds other than it is a private sector accommodation).23 Will a private landlord be willing to enter into an agreement where potentially a few weeks into the tenancy the local authority could decide, or a court could find, that the accommodation is not in fact suitable and the applicant should be offered alternative accommodation?

Re-applications within two years

Another new provision to be brought in relates to repeat applications. If an applicant accepts an offer of private rented accommodation and re-applies for accommodation or assistance within two years then, so long as they are homeless, eligible for assistance and not homeless intentionally the local authority will be under a duty to secure accommodation regardless of whether the applicant has a priority need.24 This accommodation can again be in the private sector. This provision is helpful, for example, where an applicant initially applies when they have a priority need based on dependent children but those children move out or are adults when the applicant reapplies. However, this could result in a kind of revolving door for applicants and does not ensure settled accommodation.

The local connection provisions25 are also amended, so that if an applicant applies to one local authority, for example Southwark, who accept a duty and provide accommodation, and then within two years becomes homeless again and makes an application to another authority, for example Hackney, Hackney would be able to refer the applicant straight back to Southwark. The only exception is where the applicant or their family would be at risk of domestic violence within Southwark.

This means that even if at the time that the applicant applies to Hackney they have a much greater connection to that area, they can still be referred back to Southwark. Local connection can be determined by a number of different factors including residence in an area, employment or family circumstances. If the applicant has been living in Southwark but working in Hackney and all their family connections and support network are in Hackney it may be much better for that applicant to be housed in Hackney.

Re-definition of “homelessness” and “threatened with homelessness”

One potentially positive change is that an applicant who is reapplying will be considered homeless from the date that a valid s.21 Notice expires. They will be considered as threatened with homelessness as soon as that notice is served26 These are useful provisions. Currently, applicants in private accommodation are left in a difficult position as they are currently not considered as even threatened with homelessness until their landlord has obtained a warrant of eviction and they are actually due to be evicted within 28 days. This means that they may have to wait for their landlord to take possession proceedings and are likely to be ordered to pay their landlord’s legal costs of those proceedings. Further, those proceedings are stressful for both sides.

Allocation

The Localism Act 2011 also amends the allocation of housing provisions contained in Pt 6 of the Housing Act 1996. Unlike the amendments to Pt 7, these changes only apply in England.

Background

Since 2003 most local authorities have operated “choice-based lettings” schemes. These vary from one authority to another but are broadly similar. Under these systems, anyone can apply for accommodation. Their needs will be assessed to determine how great their need for accommodation is and what kind of accommodation is required. The only real restriction to applying for accommodation is based on immigration restrictions.

Applicants then “bid” for accommodation of their choice. The applicants with the highest level of priority who have been registered on the scheme for the longest will be shortlisted to view the property. The applicant with the highest priority will be given first refusal before it is offered to the second, then third and so on.

This system was designed to offer greater choice to applicants and replaced the old housing registers where applicants were placed on a waiting list and offered accommodation when they reached the top of the list. It already offers the local authority quite a lot of flexibility to plan their own policies and procedures based on the needs of the local community.

Preference

Each applicant’s needs are assessed and local authorities are required to give “reasonable preference” to certain groups of people who are considered to have a particularly great need to move.27 These include:

• applicants who are homeless or owed one of the homelessness duties, within the meaning of the Housing Act 1996 Pt 7, as already discussed;
• applicants who are occupying insanitary or overcrowded housing or otherwise living in unsatisfactory housing conditions, and applicants who need to move on medical or welfare grounds; and
• applicants who need to move to a particular area within the borough, where failure to move would cause “hardship”.

The scheme may also award “additional preference” to individual applicants within the above categories with a particularly urgent need to move.

As these applicants are given priority over other applicants, the reality is that other applicants may bid for many years without being successful as there will always be someone with greater priority bidding for accommodation.

Exclusion from allocation scheme currently

Prior to 2003, a local authority could exclude whole classes of applicants from its housing register. This right was removed by the Homelessness Act 2002. Currently, the local authority is not permitted to exclude classes of people, although it can exclude applicants on a case-by-case basis due to their conduct, for example, a history of anti-social behaviour or rent arrears.28 Where a local authority is running an unofficial policy to exclude people with rent arrears without considering each individual case, this can be subject to challenge by judicial review.

It is common for applicants who owe rent arrears to be prevented from bidding for accommodation. Currently, an applicant in rent arrears who is excluded on that basis may be able to challenge their exclusi n by judicial review. If their rent arrears have been caused by benefit problems or they have been making substantial efforts to reduce the arrears then they may well have a good case.29

Changes under the Localism Act

The Localism Act returns local authorities to the position where they can exclude whole classes of applicants, for example, all applicants in rent arrears regardless of the particular circumstances of the individual. The local authority will also have the power to prescribe classes of people who will qualify for social housing. This means that applicants will qualify or be disqualified for social housing based on whether they fall within a particular “class”.30 The only restriction is that the local authority cannot determine that a class of people who are ineligible due to their immigration status will become eligible.

This puts much more power in the hand of an individual authority and could mean that an applicant will or will not qualify for social housing depending on which authority they are applying to. The idea is that it will enable each authority to determine who can qualify based on the particular circumstances in their area. To prevent clear abuse of power by local authorities the Secretary of State has retained the power to prescribe classes of applicants which can be treated as qualifying and to prescribe the criteria which cannot be used to decide which classes of applicants do not qualify. The extent to which this power will be used remains to be seen.31

Given how much scope there is for schemes to vary from one authority to another, housing advisors are going to have to familiarise themselves with the details of each authority they are dealing with to ensure they are giving accurate advice.

Local authorities will be expected to produce new allocation policies. In order to do so, local authorities are going to have to consult with local housing associations and social landlords, and possibly with the local community as a whole. Advisers should therefore be able to get an idea of what “classes” of people an authority is considering excluding from its allocation scheme before the scheme takes effect and may have the opportunity to make representations on this. Many local authorities have already consulted or are currently consulting at the time of writing.

It is worth bearing in mind that the local authority will still be susceptible to general public law principles in formulating and putting into effect the new policies. They must ensure that any decisions they make regarding which “classes” of people are excluded are not unreasonable and the policies must be proportional to their own stated goals. Failure to ensure this may lead to judicial review challenges.

When the schemes are put in place and an applicant is deemed to fall within one of the disqualified classes, they will have to be notified of this in writing. The applicant will have the right to request a review of the decision and must then be informed of the review decision and reasons for that decision. Any challenge beyond this will have to be by way of judicial review. In practical terms, how much of a difference will these changes make? Currently, anyone can apply for accommodation but unless they are given a high level of priority the reality is they may never be successful in obtaining Council accommodation. These changes could substantially reduce the number of applicants accepted to a scheme, meaning that only those who realistically can obtain accommodation will be admitted to the scheme. It does, however, appear to be another nail in the coffin to the concept of a right to a council tenancy.

Transfers

Another big change is to existing social housing tenants seeking a transfer to alternative social housing. Currently, tenants seeking a transfer are treated the same as applicants seeking their first Council home. Their needs are assessed to determine whether they should be given “reasonable preference” or “additional preference”.

The Localism Act will exclude non-priority transfer applicants from allocation schemes. An offer of accommodation to an existing tenant seeking a transfer will not be classified as an “allocation”, meaning that they can be dealt with outside the allocation scheme.32

However, where the applicant is deemed to have a “reasonable preference”, they will be dealt with under the allocation scheme. How these amendments will work in practice remains to be seen, particularly in the light of what will and will not be deemed as a priority by individual authorities. It is likely given changes to housing benefits that tenants who are under-occupying accommodation will be given a high preference for moves.

Flexible tenancies

A major change brought in by the Localism Act enables local authorities to offer “flexible” secure tenancies. Instead of being permanent tenancies, they are fixed-term tenancies for a minimum of two years.33 The government envisaged most local authorities offering terms of at least five years.

As part of the consultations discussed earlier, local authorities are deciding whether they will continue to offer permanent tenancies or start offering flexible tenancies and, if so, the length of tenancy that will be offered. Some authorities are indicating they will offer flexible tenancies for the minimum two years in some cases. Other authorities are taking the view that flexible tenancies will be too much hassle to administer and will damage communities as people will not be settled in an area for long enough to invest in the development of that area.

If a local authority wishes to offer a flexible tenancy it will need to advise the tenant in writing that the tenancy to be offered is a flexible tenancy. The prospective tenant could then request a review of the length of the proposed tenancy but only if the proposed length is not the length set out in that authority’s policies in respect of granting flexible tenancies.

If the local authority does not wish to extend the term of the tenancy, it must give six months’ written notice stating that it does not propose to grant another tenancy on the expiry of the current flexible tenancy. The local authority must set out its reasons for not proposing to grant another tenancy and inform the tenant of their right to request a review of this decision.

Conclusion

Perhaps not surprisingly, it appears that most of the changes brought in by the Localism Act do restrict access to social housing.

An application for homelessness assistance will be even more of a last resort and it is clear that such an application is unlikely to lead to an offer of permanent social housing. Homeless applicants are likely to end up in private accommodation. That accommodation could be far away from the area they are applying to, which could lead to applicants becoming isolated if moved away from their support networks.

Further, it appears that the groups of people applying for social housing will be restricted and many people will find that they no longer qualify for social housing. Even if they do qualify, they may be given a tenancy of just two years. Clearly the right to a social tenancy for life is diminishing.

With people being moved from their local areas or only given short fixed-term tenancies, they may well be less invested in their local community and less willing to contribute to their community and help build a nice area in which to live.

1 Department for Communities and Local Government (CLG), Local Decisions: A Fairer Future for Social Housing (CLG, November 2010).
2 Section 193 of the Housing Act 1996 (as amended).
3 Section 185 of the Housing Act 1996 (as amended).
4 Sections 175-177 of the Housing Act 1996 (as amended).
5 Section 189 of the Housing Act 1996 (as amended).
6 Section 191 of the Housing Act 1996 (as amended).
7 Section 199 of the Housing Act 1996 (as amended). Section 198 of the Housing Act 1996 (as amended).
9 Section 193(5) of the Housing Act 1996 (as amended).
10 Section 193(6) and (7A) of the Housing Act 1996 (as amended). See further below.
11 Section 193(7), (7A) and (7F) of the Housing Act 1996 (as amended).
12 Section 148 of the Localism Act 2011
13 Section 193(7C) of the Housing Act 1996 (as amended).
14 “Restricted cases” are where an applicant would only satisfy the criteria to qualify for assistance under s193 if the local authority has regard to someone in the applicant’s household who is a “restricted person” because they are subject to immigration control.
15 Section 193(7B) of the Housing Act 1996 (as amended).
16 See further below.
17 Homelessness (Suitability of Accommodation) Order 1996, SI 1996/3204.
18 Homelessness (Suitability of Accommodation) (England) Order 2012. 16 Section 202 of the Housing Act 1996 (as amended).
20 Section 204 of the Housing Act 1996 (as amended).
21 CLG, Homelessness (Suitability of Accommodation) (England) Order 2012—Consultation, (May 2012), para.39.
22 Section 2, Homelessness (Suitability of Accommodation) (England) Order 2012.
23 Applicants may move into the accommodation and still challenge suitability: see s.202(1A) of the Housing Act 1996 (as amended).
24 Section 149 of the Localism Act 2011.
25 Section 198 of the Housing Act 1996.
26 Section 149(4) of the Localism Act 2011.
27 Section 167(2) of the Housing Act 1996 (as amended).
28 Section 160A of the Housing Act 1996 (as amended).
29 Although see Babakandi v Westminster CC [2011] EWHC 1756 (Admin) where a challenge to a prevention on bidding for arrears of £222 failed.
30 Section 146 of the Localism Act 2011.
31 The only regulations so far related to members and former members of the armed forces: Allocation of Housing (Qualification Criteria for Armed Forces) (England) Regulations 2012/1869, reg.3(1).
32 Section 145 of the Localism Act 2011.
33 Section 154 of the Localism Act 2011.

This article was first published in Journal of Housing Law – November 2012.

Sara Stephens is a solicitor in Anthony Gold’s Housing & Public Law department. For further information email Sara or call 020 7940 4060.

*Disclaimer: The information on the Anthony Gold website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. It is provided without any representations or warranties, express or implied.*