Part XIV
mapping
existing agreements onto the new SCHEME
14.1
In Part III above, we indicated that it
was our intention, so far as possible, to devise proposals that would enable
the existing statutory tenure schemes to be incorporated within our new scheme,
rather than simply create another layer of complexity. In this Part, we outline
how we see the old schemes mapping onto the new. For the secure, assured and
assured shorthold schemes, this process is relatively straightforward, and
largely implicit in how we have developed our scheme. Rent Act protected
tenancies, however, present a greater problem. Our approach in this part is to
consider what adaptations or additions would be necessary to our scheme to
accommodate these tenancies, and then ask whether the advantages of
incorporating Rent Act protected tenancies outweigh the disadvantages of making
special provision for them.
14.2
Our primary concern in this Part is with which new agreements
should the old tenancies be converted into, not with the true transitional
questions of how the conversion will be brought about, although we do make
observations on the latter.
Secure tenancies
and fully assured tenancies let by registered social landlords
14.3
The way in which existing secure tenancies and fully
assured tenancies let by registered social landlords should be dealt with is
effected by the approach to be taken to new lettings by local authorities or
registered social landlords. In Part XI above, we provisionally proposed two
alternatives and asked for views on which was to be preferred.
Compulsory general use of type I agreements
14.4
One option was to require all local authorities and registered
social landlords to let type I agreements, subject to a list of statutory
exceptions. If that alternative is adopted, then the logical approach to
existing tenancies in this category is to simply convert them into type I
agreements. In terms of the level of security enjoyed by occupiers, this would
make little or no difference to secure tenants. As for fully assured tenants,
if we are right to identify the mandatory ground for rent arrears (ground 8) as
the key difference between secure tenancies and fully assured tenancies, then
there would again be no very significant change in the level of security for
fully assured tenants where
(1)
the tenancy is subject to an agreement that the landlord will
not use ground 8, usually as a result of a large scale voluntary transfer of
housing stock from a local authority to a registered social landlord; or
(2)
the landlord, voluntarily but as a matter of general policy,
does not use ground 8.
14.5
We would be grateful
for information particularly from registered social landlords about the
proportion of fully assured tenancies to which ground 8 in reality applies, because its use is not pre-empted by either an
agreement or a policy not to use it.
14.6
There would, on the other hand, be an increase in the level of
security involved for other occupiers who hold fully assured tenancies.
However, ex hypothesi, all new
occupiers in this category would (subject to the exceptions) be given a type I
agreement. The justification for this would, presumably, similarly apply to the
conversion of existing tenancies.
14.7
In addition, adoption of this option would most completely
satisfy the demand for “a single social tenancy”.
It would abolish the perceived unfairness felt by many tenants, where tenants
of local authorities and tenants of housing associations, often in the same
street or estate, have different tenancies with different levels of security.
14.8
On the other hand, we recognise that it may be argued in some
circumstances (although not generally large scale voluntary transfers) that
private lenders have built the use of ground 8 into their assumptions in
lending capital to housing associations. If that were the case, then there would
be a degree of unfairness to the lenders to set off against the perceived
unfairness to occupiers. For this argument to be powerful, however, it would
have to be shown, in relation to the properties in question, first that the
income flow from rents as opposed to the asset value of the pledged assets was
of real significance to the lender, and secondly, that ground 8 really did make
a significant difference to the income flow.
14.9
We provisionally
propose that, if the option to require local authorities and registered social
landlords generally to use type I agreements is adopted, then existing local
authority secure tenancies and registered social landlord fully assured
tenancies should be converted into type I agreements.
Freedom to choose type I or type II agreements
14.10
A second option in relation to use by local authorities and
registered social landlords was that they should be free to use either type I
or type II agreements at will. If this alternative is preferred, then we think
that a similar choice, but protecting the existing level of occupiers’ rights,
should be accommodated in the transfer to the new system.
14.11
The obvious comparator for local authority secure tenants
would remain the type I agreement. It is only by converting existing secure
tenancies into type I agreements that the rights of existing tenants could be
retained.
14.12
xxxOn the other hand, it would be possible to protect
the rights of registered social landlord assured tenants
with an enhanced version of a type II agreement. If the
notice-only basis for repossession were contractually removed from the type II agreement, it would be
similar in the level of security afforded to tenants in the current fully
assured tenancy. Registered social landlords could then choose whether or not
to grant further rights to their existing, as well as their future, occupiers, by granting an
enhanced type II agreement or a type I agreement.
14.13
This option has the disadvantage that it does not address
the perceived unfairness of similar occupiers of similar,
publicly-funded properties enjoying different levels of security, but that is
inherent in the free-choice alternative.
14.14
We provisionally
propose that, if the option
to allow local authorities and registered social
landlords a free choice between type I and type II agreements is adopted,
(1)
existing local authority tenancies should become type I agreements; and
(2)
registered social
landlords should be required to choose whether to give their occupiers, as a minimum, an
enhanced type II agreementwhich does not contain
provision for the landlord to gain
possession on a notice-only basis, or a type I agreement.
Other local
authority and registered social landlord tenants
14.15
Some tenants (and licensees) of local authorities and
registered social landlords are not at present governed by any of the schemes.
According to our proposals in Part IX, some would become type II agreements and
others would remain outside any statutory scheme.
14.16
We provisionally
propose that tenancies and licences granted by local authorities and registered
social landlords which are not presently covered by one of the statutory
schemes (excluding the Protection from Eviction Act 1977) should be converted
into type II tenancies, or remain outside the scheme, according to their
treatment in Part IX above.
Private fully
assured tenancies
14.17
There are a number of private fully assured
tenancies. Many were created by accident between 1989 and 1997, when this was the
“default” private tenancy, as a result of failed attempts to create assured
shorthold tenancies, although we would assume that the bulk of these have now
come to an end. Within this category we would also place private
charitable or other non-registered social landlords, retaining the
distinction we have used elsewhere. The enhanced type II agreement discussed above in
paragraph 14.12 would preserve thebalance of rights
between landlord and tenant.
14.18
We provisionally
propose that
fully assured tenancies, other than those granted by registered social
landlords, should convert into enhanced type II agreements, which do not
contain provision for the landlord to gain possession on the notice-only ground.
Assured shorthold
tenancies
14.19
As a general rule, clearly current assured
shorthold tenancies can readily convert into type II agreements. We suspect
that most assured shortholds confer the minimum possible rights on tenants, and
so can easily be replaced by the basic type II agreement. The possible
abolition of the six months’ moratorium would not of itself seem a sufficient
reason not to convert existing assured shorthold tenancies into type II
agreements.
14.20
However, there will also clearly be cases in which the terms
go beyond the statutory minimum, for example because they are for a fixed term
of 12 months. We see no reason why, in each individual case, the same contractual
enhancements could not be replicated in the replacement type II agreement. We
expect that the large majority of divergences from the minimum would be fixed
term tenancies. These can readily be converted into type II agreements of a
similar term.
14.21
We provisionally
propose that assured shorthold tenancies should convert into type II
agreements, the specific terms of the old tenancy becoming terms of the new
agreement.
Safeguardingthe terms of the old tenancy
14.22
There must be some concern that the conversion of old
tenancies into new ones might be improperly used by landlords (the party
responsible for the written agreement) to take away rights granted in the old
tenancy or impose new obligations on tenants. In large part, the steps that
would need to be taken to avoid this relate to both the legal and the non-legal
aspects of the transition to the new schemes, rather than the mapping exercise
under consideration here. However, it might contribute to clarity in the
conversion process if the terms of the old tenancy could, where possible, be
seen next to the new.
14.23
We ask for views on
whether there should be an addition to the general requirement for writing in
relation to converted tenancies, such that the written agreement should have
appended to it the written agreement constituting the old tenancy, if there was
one.
14.24
In the alternative, we
ask for view on whether the obligation should be for the landlord to provide
the core and compulsory terms under the new scheme, together with a copy of the
old agreement, with a statutory provision that the terms of the old agreement
should apply to all matters not covered by the core and compulsory terms.
14.25
In either case, should
the sanctions for failure by the landlord to provide a copy to the tenant apply
in relation to the old agreement?
Rent Act protected
tenancies
14.26
The principal element relating to Rent Act protected status is
the fair rents system. This would have to be retained, relating only to those
tenants who were in this category, as part of a separate legislative structure
(in the same way as we propose, for instance, in the case of the right to buy).
Consideration of succession rights will be found in our subsequent consultation
paper on succession and transmission of agreements.
14.27
The questions that then arise are whether the “cases” for
possession in the Rent Act 1977 are sufficiently close to the circumstances
allowing for possession we are proposing for the type I agreement. There are
two questions.
(1)
Would
any cases available in Rent Act 1977 be unavailable in our new regime?
(2)
Would any of the circumstances permitting possession available in our new
regime represent a significant weakening of the rights of Rent Act 1977 tenants
because they were not present as cases in that Act?
We consider these
questions in turn.
Do the circumstances permitting possession under the type I agreement cover
all the Rent Act cases?
14.28
Cases
1, 3 and 4 appear to present no problems as they are practically identical to
the grounds being absorbed into our breach of agreement ground.
14.29
Case
2 provides a narrowly defined anti social behaviour ground (it was not modified by the
Housing Act 1996 when changes were made to the anti social grounds found in the Housing Acts 1985
and 1988). It is likely to be narrower than a default nuisance term. This would not be a
problem where the regulated tenancy included an express term on anti social behaviour, as it
would be covered by our term relating to breach of agreement which would be the basis
for seeking possession.
There might, at least in theory, be a problem where the regulated tenancy did not
include an express anti social behaviour term. It appears to us unlikely that a
tenant who has not been evicted for anti social behaviour since 1989
(the point from which new tenancies were assured instead of regulated) is going
to start being a problem now. If this were to happen it would to some extent be the
problem of the landlord who had failed to include such a term in the
agreement (although we acknowledge the possibility that such an omission might have
been deliberate, in that the landlord was relying on the availability of Case 2 to cater for the absence of such a
term. We again think this is more theoretical than likely.) In the
circumstances, it seems reasonable to conclude that case 2 can be accommodated
as a breach of the compulsory term in a type I agreement prohibiting anti
social behaviour.
14.30
Case
5, for tenant’s notice to quit, would be covered by our proposals on occupiers’ notices in Part
X. Depending
on consultees responses on those points, this might mean landlords might lose out on their ability to
repossess in these circumstances. We would not see this as a real problem.
Indeed, since the
passing of the Housing Act 1988 the concern has been to protect regulated
tenants from being edged out to be replaced by new tenants under market rents.
If a landlord wanted to be sure that a tenant would leave, he or she could accept a surrender
of the lease instead of a occupier’s notice to quit.
14.31
Case
6 is about unauthorised assignment and sub-letting. Consideration of this specific
issue will be found in our subsequent consultation paper on succession
and transmission of agreements.
14.32
Case
7 has been repealed.
14.33
Case
10 is about tenants over-charging sub-tenants. We are working on the basis that
the fair rent system will be reproduced in separate legislation. However, we
are not convinced that this ground will need to be reproduced as such in our
new scheme. If
there is an express prohibition on over-charging in the agreement or in any
permission to sub-let, then the problem can be dealt with as a breach of agreement. If
not then we are not sure that the problem is such that it requires any
special treatment.
The effect of sub-letting is something we will return to in our later
consultation paper on succession and transmission of agreements.
14.34
Cases
8, 9, 11 to 18
and 20 are all examples of the type of ground we feel should normally be
replaced by expecting a landlord to grant a type II agreement instead of a type I agreement. This is obviously a
problem in this transitional situation where the landlord already has a
regulated tenant. However, cases 13 and 14 are effectively now redundant as
they refer to fixed terms of 8 and 12 months (or less) respectively, and so
cannot have survived since 1989. It seems similarly increasingly unreasonable
to allow possession on the other cases given at least thirteen years must have
already elapsed since any notice was given under cases 11 to 18 and 20, and given that
even in cases 8 and 9 there is a strong argument that the ground for possession
(only ever a discretionary ground) is now very stale.
14.35
Finally
case 19 is the protected shorthold tenancy ground. We are inclined to assume
that this cannot be worth special provision as we cannot imagine that any have
survived since 1989, given they only have equivalent security to an assured
shorthold tenancy. If there is evidence that there are any left, then it would
make sense to leave consideration of them until detailed transitional
provisions are worked out. However, it would seem logical that they should be
converted to type II agreements instead of type I agreement. In any event, it does not seem at this
stage as if it would be appropriate to try to reproduce case 19 in the type I agreement.
14.36
We ask for information
as to the continued existence of
protected shorthold tenancies.
14.37
Accordingly,
we consider that in effect all of the cases in the Rent Act are covered by the
circumstances allowing for re-possession in a type I agreement.
Would the circumstances permitting possession under the type I agreement
represent a weakening of the rights of Rent Act protected tenants?
14.38
In two respects, the grounds for possession under the type I
agreement might be said to go beyond cases available to landlords under the
Rent Act. First, the domestic
violence ground was never introduced into the Rent Act 1977 when it was created by the
Housing Act 1996. The reason for this was that it only applied to
registered social landlords. Second, the ground on giving false statements to
obtain a tenancy was never part of the Rent Act scheme. However we
suggest that this appears
somewhat stale in relation to surviving regulated tenants.
14.39
If Rent Act protected tenants were to become type I occupiers,
it could be argued that the bases for repossession involving domestic violence
or false statements to obtain the tenancy should be disapplied in relation to
them. But we think that these grounds are of such marginal significance that in
reality tenants would suffer no practical disadvantage even if such special
provision were not made.
Conclusion
14.40
The result of the discussion above would seem to be as
follows. It is possible to convert Rent Act protected tenancies into type I
agreements, so long as the fair rent regime is preserved in a separate
legislative structure, applying only to former Rent Act protected tenants.
Specific provision that they could not be evicted on the basis that they had
been responsible for domestic violence or that they had made a false statement
to obtain the tenancy would not seem to be required.
14.41
It could be argued that making any special provision suggests
that we are not really converting the tenancies at all, merely clothing Rent
Act tenancies in the linguistic cloak of type I agreements. It could also be
suggested that many of those whose residential status is still defined by the
Rent Acts are reaching a stage in their lives where they may be worried by or
resistant to change.
14.42
On the other hand, we do think that our proposed scheme will
bring considerable advantage to both occupiers and landlords, by making the
terms on which they occupy their dwellings clear. Converting the Rent Act
protected tenancies into type I agreements under the new scheme will allow
tenants to obtain all the benefits of the scheme.
14.43
We provisionally
propose that, subject to the preservation of the fair rent system, it would be
desirable to convert Rent Act protected tenancies into type I agreements.
The transition to the new
scheme
14.44
We do not consider it appropriate at this point to try to set
out a detailed scheme of transitional arrangements for the introduction of our
new system and the conversion of old tenancies to new agreements. However, we
offer the following observations, to indicate the underlying approach that we
suggest should be taken to the process.
14.45
First, we suggest that, even though it will be a difficult and
to a degree an expensive task, it would be better if the new system were to be
introduced as a “big bang” single event or process, rather than implementation
taking a considerable period. The sooner that the simplicity and logic of the
new system starts to pay dividends to landlords, occupiers and the courts, the
better.
14.46
Secondly, the conversion of all or most existing tenancies to
new agreements will be an enormous undertaking, requiring individual action by
all of those concerned with renting, from large social landlords to small
private landlords to occupiers of all descriptions. We doubt whether it can
successfully be accomplished without the commitment of significant effort and
resources to a public information and advice campaign.
14.47
Finally, it will be important to make the process of
conversion as automatic and as transparent as possible. Many landlords will no
doubt wish to use the conversion process as an opportunity to revisit the terms
on which they let. That may be a perfectly reasonable response, but we consider
that the process of conversion should be kept as neutral as possible, and not
become enmeshed in a separate process of variation. Depending on the terms of
the agreement, it will of course be possible for landlords to seek occupiers’
agreement to variations in any event. If they do so in order to adopt our model
agreement or the default terms for part C of their agreements, that would be a
desirable development. But it must be done in such a way that occupiers are
clear where they have the right not to agree the variation, and are
appropriately advised. In part, we would expect to see this as an element of
the information and advice campaign mentioned above. But it would also suggest
that a variation at the same time as conversion should carry statutory
information and warnings for occupiers.
14.48
We provisionally
propose that the scheme be introduced as a single exercise, rather than through
a staged programme of change.
