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The Localism Bill and tenure reform the new flexible tenancies

Localism Bill

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The Localism Bill and tenure reform the new flexible tenancies

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    1. The Localism Bill and tenure reform – the new ‘flexible’ tenancies Nick Billingham Partner and Head of Housing Management Devonshires Solicitors

    2. Localism Bill – the Tenure Provisions Flexible tenancies – local authorities Fixed term assured shorthold tenancies - RPs Tenancy strategies Drafting points for fixed term ASTs What happens at end of fixed term? Transfers Reaction from the sector

    3. Flexible Tenancies From April 2012 – for local authorities Type of secure tenancy Fixed term of not less than 2 years Pre-tenancy notice either before tenancy entered into or before introductory tenancy granted Right to review of landlord’s decision about length of tenancy Tenant’s right to terminate but only if no arrears and no breach

    4. Flexible tenancies – recovery of possession End of fixed term Court must make order for possession if: (1) fixed term at end (2) 6 months “minded to” notice given (3) 2 months notice requiring possession given Tenant’s statutory right to review During the fixed term usual grounds for possession apply

    5. Flexible tenancies – other matters Succession restricted to spouse/civil partner/partner unless express term (all secure tenancies) No right to make improvements or obtain compensation for improvements Flexible tenancy => demoted tenancy => flexible tenancy Flexible tenancy => FIT => flexible tenancy Pinnock/Powell (see later)

    6. Registered Providers – the Fixed Term AST (1) Builds on existing legislation (ss20 and 21 HA 1988) ASTs always fixed terms prior to Housing Act 1996 S137 - additional notice requirements on termination If fixed term AST for not less than 2 years and landlord is RP => landlord must have given 6 months notice that not intending to grant new tenancy at end of term and informing tenant how to obtain advice about the notice (“minded to” notice) In addition to requirement to serve 2 months notice under s21 (the Notice Requiring Possession) to end the tenancy on expiry of the term

    7. Fixed Term AST (2) Right to Acquire extended to cover fixed term ASTs subject to Regulations yet to be published Succession (s17 HA 198) extended to cover fixed term ASTs (only to spouse and civil partner/partner – unless tenancy extends expressly) Section 11 (landlord’s statutory repairing obligations) extended to cover fixed term LA secure tenancies and assured tenancies granted by PRPs of 7 years or more Shared ownership leases (oops!)

    8. Do RPs have to grant flexible tenancies/fixed term ASTs? No RPs (and LAs in relation to flexible tenancies) retain option to continue using lifetime tenancies NB – on grant of new secure tenancies (internal transfers) check succession terms because s134 will restrict succession to exclude members of family for new secure tenants unless tenancy includes an express term

    9. Section 126 “Tenancy Strategies” S126: LHAs obliged to publish a strategy setting out matters which RPs in its district are to have regard to in formulating policies relating to… Kinds of tenancy Circumstances when particular tenancy will be granted Lengths of term Circs in which further tenancy will be granted at end of existing tenancy

    10. Section 126 “Tenancy Strategies” “…have regard to” LHAs cannot prohibit RPs using fixed term ASTs but RPs must have considered LHA’s Tenancy Strategy in drafting own tenancy management policy for 2011-2015 Affordable Rent Grant Framework: “…ultimately for RPs to decide what their own tenancy management policy should be and what types of tenancy they will offer.” Consultation with RPs

    11. Drafting the fixed term tenancy –some issues to consider (1) Restricted grounds for possession with fixed term assured tenancies (including ASTs): no Grounds 6 (redevelopment) and 9 (suitable alternative accommodation) If for a term of more than 3 years => must be drawn up and executed as a deed If term for more than 7 years => must be registered at Land Registry

    12. Drafting the fixed term AST –some issues to consider (2) Abandonment/non-occupation : because fixed term => cannot use notice to quit Forfeiture instead (NOSP plus s146 notice in practice) Repairing obligations – s11 extended (see back) Early termination by tenant – flexible tenancy => statutory intervention. Fixed term AST => none so include surrender clause

    13. What happens at end of fixed term? Ss107D and 137 – Court may not make an order for possession unless (inter alia): 6 month “minded to” notice given stating not intending to grant new tenancy Article 8 Human Rights Act 1998: Pinnock (and now Powell)… Not what Grant Shapps would have wanted

    14. Transfers Coalition drive for mobility Problem of mutual exchanges between fixed term tenants and lifetime tenants (assured/secure) Section 132 ensures that tenants keep highest level of security Surrender and re-grant of tenancy at new property Only protects lifetime tenancies predating Act Landlord can only refuse on same grounds as apply to mutual exchanges (Sch 3 HA 1985)

    15. Reaction from the sector Summary of Responses to “Local decisions: a fairer future for social housing” (Feb 2011)

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