Posted: 11/12/2020
The Government’s long-awaited social housing white paper, ‘The Charter for Social Housing Residents’, was published on 17 November 2020. It promises widespread reform to social housing regulation, the quality standards applicable to social homes and the relationships between social housing residents and their landlords.
Within this briefing, we look specifically at issues arising from the white paper that are exclusive to local authority providers. Our more detailed general review of the white paper in full can be found here.
In April 2020, local authority providers became subject to one of the economic standards set by the Regulator of Social Housing (the Regulator). The 156 stock-owning local authorities are now required to demonstrate compliance with the rent standard.
Local authority providers, like their private registered provider counterparts, have always been subject to the consumer standards. However, as you’ll be aware, the Regulator does not currently have a proactive role in monitoring providers’ compliance with those standards. The Regulator can currently only use its regulatory and enforcement powers in respect of a breach of the consumer standards where the ‘serious detriment test’ has been met. For instance, where a provider has failed to meet one or more of the standards and the Regulator has grounds to suspect that the failure has caused ‘serious detriment’ to the provider’s tenants or potential tenants, or that, if it does not intervene, there is a significant risk that the failure would do so.
The recent Consumer Regulation Review (the Review) focused more strongly on local authority providers; seven out of 15 of the serious detriment findings it uncovered related to local authorities. While there is an expectation that local authority providers would make self-referrals for breaches of the serious detriment test, this Review demonstrated that many of the referrals were actually made by third parties.
The Review also placed a renewed emphasis on the contractual arrangements entered into by local authority providers. It reiterated that arrangements with managing agents or third parties such as arms-length management organisations (ALMOs) do not absolve local authority providers from the need to ensure compliance with regulatory requirements.
So what changes will the white paper bring?
Perhaps the most important change being brought in by the white paper is a swing back to proactive regulation of the consumer standards. It proposes to abolish the ‘serious detriment’ threshold and introduce a new regime whereby the Regulator will inspect all registered providers, including local authority providers, every four years on compliance with the consumer standards. The white paper also proposes a full review of the consumer standards, which will include an explicit requirement for local authority providers to self-refer breaches of the consumer standards to encourage greater transparency.
It remains to be seen whether all providers will receive a grading on consumer standards compliance similar to the system used for private registered providers when being assessed under the Governance and Financial Viability Standard. However, it is clear this will be a change in approach for local authorities as local authority providers have not previously had such direct engagement with the Regulator.
All registered providers, including local authorities, will also have to report on the new tenant satisfaction measures which the Regulator has been tasked with developing. Again, this is something that local authority providers have not been required to measure or report on previously.
Local authorities will need to identify a suitable ‘named person’ who will be responsible for consumer standards compliance, as well as a ‘named person’ who will be responsible for ensuring compliance with health and safety obligations.
As mentioned above, there has been recent focus from the Regulator on local authority providers and their contractual arrangements with ALMOs, tenant management organisations and other third parties. The white paper emphasises that any such arrangements should not constrain the Regulator in exercising its powers.
The proposal is to legislate so that provisions in contracts between local authority providers and managing agents, including ALMOs and tenant management organisations (TMOs), would be deemed void if they attempted to hinder the Regulator in the exercise of its powers. Local authorities should review their existing agreements to ensure they do not contain provisions that may be caught by this change.
One concern following on from the Grenfell tragedy was whether there was a lack of clarity on the respective roles and responsibilities of the local authority landlord and TMO. The white paper proposes that a review of the statutory Right to Manage guidance should be undertaken, to ensure oversight of TMOs is effective and transparent.
An information gathering exercise on how allocation schemes work in practice was announced in the green paper. The white paper confirms the findings of this exercise will be published and considered shortly to ensure that housing is allocated in the “fairest way possible” and how access to suitable homes for disabled people can be improved. It anticipates that this will include provisions around local authorities and housing associations working together to achieve this aim.
Finally, the white paper includes encouragement for local authorities to “make the most” of the removal of local authority borrowing caps in order to build more affordable homes – it states that the Government wants to “see a step change in local authority delivery”. It proposes that this will be supported by consideration of greater flexibilities on how local authorities can use receipts from Right to Buy sales. Local authorities are also encouraged to share their experience and good practice in housebuilding.
Most of the intentions set out in the white paper will require further consultation and legislative changes in order to implement them in practice. The anticipated timescales for these changes are not clear, although the Regulator has commented recently that the Government is keen to find the earliest possible slot in the parliamentary agenda.
In the meantime, local authority providers may wish to consider some steps they can begin taking now in preparation:
If you would like to discuss the white paper proposals or regulatory requirements for local authority providers in more detail, please do get in touch.
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