Leaseholders and Housing Association Ballots

– in Westminster Hall at 11:00 am on 24th June 2015.

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Photo of Jim Fitzpatrick Jim Fitzpatrick Labour, Poplar and Limehouse 11:00 am, 24th June 2015

I beg to move,

That this House
has considered leaseholders and housing association ballots.

It is a pleasure to see you presiding over this debate, Mr Owen, and to see the Minister in his place. I and others have had an ongoing, constructive dialogue with him on these matters—on some of them, at least—as will become clear in due course. The title of the debate may be slightly misleading, as I intend to cover leasehold reform as a separate but connected matter to housing association ballots. I have advised the Minister’s office of that, and I am sure the Minister has been forewarned about the shape that my contribution will take.

I raised these matters on 6 March, in the dying days of the previous Parliament, and I welcome the opportunity to put them on the ministerial radar early in this Parliament, although I know the Minister is already aware of them—of the leaseholder issues, in particular. I and others are grateful to the Minister and his officials for arranging a meeting on 8 June about leaseholder matters with Sir Peter Bottomley, me and representatives of the Leasehold Knowledge Partnership. The hon. Gentleman has led on these issues for some time, and I am pleased to be assisting his significant efforts. Mr Martin Boyd and Mr Sebastian O’Kelly, campaigning as the LKP, have made much progress in engaging with the Government, securing charitable status and ensuring that millions of leaseholders have a voice and access to an organisation dedicated to advising and assisting them.

I do not want to labour this point, as I know the Minister’s officials are examining many of the anomalies and weaknesses that we have identified in the existing legislation on leaseholders, but the matters that concern us include the problems with retirement homes and the issues of commonhold versus leasehold and property ownership. Tribunal procedures are supposed to be relatively informal, but can become expensive if the defending freeholder brings high-powered barristers against local residents who are trying to get redress against problems they have identified.

There is also the issue of unscrupulous freeholders and predatory property management companies. The sector is doing a lot to improve its image and the professionalism of property management services, but there are some predatory organisations that prey on vulnerable people and take a lot of money unfairly. There is the issue of forfeiture, which we have discussed in depth with the Minister. There are also recognition issues. Leaseholders often find it difficult to get their association recognised by their property management company or freeholder because of difficulties in securing numbers, identifying the owners of properties and the like.

We have also talked to the Minister about the different roles and responsibilities of the Department for Communities and Local Government and the Ministry of Justice. This policy area has implications for both Departments, so we must look at how well those arrangements are working. I know the Minister is well aware of all those issues, as they were reinforced in our previous meeting. I acknowledge that he has tasked his officials to examine them and to report back. We look forward to continuing our discussions on those issues in due course. If, however, the Minister has anything new he wishes to add, his comments would be welcomed by all who take an interest in leaseholding. I fully accept that his officials have done a lot of work on this matter, and, given that we have had a recent meeting, there is probably not a lot to report back.

The hon. Member for Worthing West, ably assisted by Ms Katherine O’Riordan, has organised another roundtable discussion on leasehold reform on 9 July, to which the Minister and his officials have been invited. They will be very welcome. Such successful forums, which have been taking place in recent years, allow people to share information and experience on these issues.

On the issue of housing association ballots, the Minister may be less informed about the concerns I raised on 6 March; the Deputy Leader of the House responded to that debate, although I am sure he reported back to the Minister. The Minister’s officials will have read Hansard and will be aware of the questions I was asking.

As the Minister knows, hundreds of thousands of tenants in recent decades voted in stock transfer ballots to leave local authority control—i.e. to move the management of their properties from the council to a housing association. Thousands—probably tens of thousands—of my constituents are among those who agreed to do that. The driver was that housing associations are able to modernise and refurbish run-down council properties and raise them above the decency threshold for homes because they can raise the finance, while the rules prevent councils and council housing organisations from doing the same. New kitchens, bathrooms, windows, central heating and security measures were installed. Many of the schemes, including a number in my constituency, were very successful, although not all were.

A number of issues arose. Some are ongoing, such as the quality of work and the materials used, the fact that some people have been overcharged for the work, and transparency. There were recently two contradictory reports on the schemes: the Evening Standard reported on bribery and corruption at a housing association in Hackney, while Inside Housing reported on a positive contract in Brighton that created hundreds of apprenticeships and new jobs. There are different experiences of schemes in different parts of the country. A number of other issues were raised, including the costs and service charges and the appeals procedures. Many tenants were able to resolve such issues with the assistance of their registered social landlord. The Government changed the regulations to level the playing field, in terms of transparency, accounting and information, but not all the concerns were addressed.

In a few cases, the offer promised by some housing associations to entice council tenants to vote for the stock transfer were never fulfilled. In such cases, tenants were powerless to have their complaints resolved. After they have voted to hand over their property to the new landlords, there was and is no mechanism to vote to sack the housing association for poor performance.

Such a sanction exists for the regulators—the Homes and Communities Agency and the housing ombudsman, following complaints of failures, can order mergers and takeovers of failing housing associations, but residents are powerless. Incidentally, leaseholders who exercised their right to buy their council property are powerless and voiceless, as they have no vote when the estates in which they live are transferred unless the local housing associations included them in the consultations, as good registered social landlords did. The Government have introduced a welcome cap on charges, which is a positive change.

My main question to the Minister is about the rights of housing association tenants and whether they should be empowered to sack poorly performing housing associations. Leaseholders in the private sector, despite the anomalies in the recognition procedure, are entitled to a ballot if their property management company lets them down, and they can vote to award their contract to a new company. If it is good enough for the private sector, why cannot it work in the public sector? It is an essential element of consumer protection that customers who are disappointed with a purchase are able to ask for redress, return the goods, seek compensation or purchase alternative products elsewhere, but those who live in housing association properties cannot. I was going to say “social housing”, but of course council tenants can switch initially by stock transfer ballot, which I mentioned. They have an initial choice, but then are locked in; having transferred, they have no further rights.

Obviously, the Minister will publish his housing Bill in this Session; I am not sure when, but he might be able to indicate the timing, even generally. Just as an aside, but an important aside for many of us, I should say that there are real concerns, which have been expressed publicly, about aspects of the Bill, such as the sale of housing association properties under the Government proposals and the economics of whether there will be like-for-like replacement. That issue has been raised by a number of people.

The second anomaly, for me and others in Tower Hamlets, is that of requiring higher-value council properties to be sold. Both those elements will have a huge negative impact on Tower Hamlets; as an inner London borough, all our property is very expensive. However, the three, four and five-bedroom properties, which are absolutely essential for the kind of community we have, are particularly expensive properties. If they go from the social housing stock, that will create major difficulties for local people.

In conclusion, and to go back to my main question about tenants getting control of their estates, may I ask the Minister whether he would be prepared to consider an amendment to his Bill to allow housing association tenants, with all the appropriate safeguards that would be required, to vote to transfer the management of their properties from one housing association to another, or to return to arm’s length management organisation or council housing control?

This is a big issue for many thousands of my constituents. As I say, I have raised it before and it has got quite a bit of interest, because it would be a brand new right for housing association tenants. Clearly, the Government have housing associations in their sight for reforms, and I am eager to hear whether the Minister is interested in this one. I am very grateful for the opportunity to raise these matters and I look forward to the Minister’s response.

Photo of Albert Owen Albert Owen Labour, Ynys Môn

I call the Minister to reply, and I welcome him back to his place.

Photo of Brandon Lewis Brandon Lewis Minister of State (Communities and Local Government) 11:12 am, 24th June 2015

Thank you, Mr Owen, for calling me to speak. It is a pleasure to serve under your chairmanship for my first appearance in Westminster Hall in this Parliament. I appreciate your comments.

I congratulate Jim Fitzpatrick on securing this debate. Both he and my hon. Friend Sir Peter Bottomley work very hard to raise issues for leaseholders and tenants generally; the hon. Gentleman’s particular interest is issues that affect the residents of Tower Hamlets. It is to both their credits that they continue to represent their constituents’ and the wider interests of people across the leaseholder sector. I am keen for us to find some common ground and a way forward, and I appreciated the chance to meet them both a couple of weeks ago; the hon. Gentleman referred to that meeting.

I know that the hon. Gentleman in particular has looked to explore the possibility of creating a new power that, as he outlined, would allow tenants of an underperforming housing association effectively to sack their association. I will express my specific views on that matter in a few moments, but I will say now that we would like to find a solution to the concerns that have been raised within the current framework of powers. That is achievable.

It is, of course, important that tenants are protected and sufficient safeguards are in place. The Localism Act 2011 gave tenants and their representatives the power to hold landlords to account. It enabled recognised tenant panels to play an important role in resolving complaints at a local level, and that was an important development. As the hon. Gentleman outlined, some of the changes have recently led to a big step forward, and we feel that that is right.

Landlord and tenant issues are often local issues. Clearly, the range and seriousness of those issues can vary, and it is right—absolutely right—that tenants are offered a level of protection at the national level as well. However, I am firmly of the view that, where possible, the issues themselves should be sorted out locally using the framework that we have put in place.

If it is clear that complaints cannot be resolved locally, obviously they can be referred by tenants to the housing ombudsman. When the ombudsman finds in favour of a complainant, they can order the landlord to pay compensation or take other steps to provide redress. Furthermore, it is open to the ombudsman or tenants to raise concerns directly with the regulator.

We would not want tenants to jump directly to the ombudsman; as I said, our view is that the vast majority of these issues can and should be resolved locally. The Homes and Communities Agency has a regulatory function, but it does not have the responsibility or power to mediate in or resolve individual cases. However, it will investigate where there is evidence of a breach of regulatory standards, and—in relation to landlord and tenant issues—serious harm. In extreme cases, it has far-reaching powers to intervene where there is evidence of serious mismanagement.

It may be helpful to give the House examples and outline the kinds of approaches that the regulator takes when issues are raised that it judges to be serious. I provide them to demonstrate how seriously the regulator takes its role. In February this year, it was found that a provider broke consumer standards owing to the poor quality of emergency repairs for many tenants over a very long period. A regulatory notice was published, representing the first time that such a finding had been made for widespread service failure. In April, the case took a further step forward when it was found that the underlying cause of the emergency repairs issues was a failure of corporate governance. As a result, the provider in question is now focusing on addressing the issues, and rightly so.

If non-compliance is not addressed, the regulator has statutory duties to intervene formally, which could lead to interventions in the management structure of a particular provider. It is right that the powers available to the regulator should be used only as a last resort. I provide that information to reassure the hon. Gentleman, and others who may read the debate in Hansard, that where issues are serious the regulator can and will take appropriate action.

Having outlined the current approach and the potential impact on housing associations, I want to spend a moment outlining some of the wider options available to housing association tenants themselves. Although it would not be legally possible for tenants to be given the right to sack their housing association, they have other routes to explore that would hand them a much greater degree of control.

Housing association leaseholders in blocks of flats have the right to manage. That enables a group of leaseholders to take over the management functions of their properties. The hon. Gentleman may draw a parallel with his proposals for tenants to have the power to sack their association. One area on which we might slightly disagree is my view that the power of right to manage is enough. The substantial, important difference between the approaches is that under right to manage the properties would still be owned by the housing association, which is different from the ability to manage them and ensure that repairs are done properly. I do not think it possible to draw a complete comparison in the way he outlined today and in previous debates. Leaseholders can also buy the freehold of their blocks of flats—known as enfranchisement—subject to certain criteria. Doing so would give them even greater financial and legal interest.

We have set out a clear policy ambition, which the hon. Gentleman outlined, to give housing association tenants the right to buy their homes to match the social housing opportunities in council housing at the moment and to ensure that everyone in social housing has the same right to buy. Tempting as his invitation to outline the details of the Bill this morning is, he will appreciate that I must ask him to bear with me until we publish the Bill and outline the details behind it in due course. I am hopeful that after the Bill receives Royal Assent, housing association tenants will be able to take the opportunity to move into home ownership.

I will touch on a couple of other points that the hon. Gentleman raised. He asked how the policy would be implemented, as did other hon. Members in an Opposition day debate in the main Chamber a couple of weeks ago. I will be very clear: as we have said all along, there must be one-for-one replacement. I am pleased that the reinvigorated scheme has one-for-one replacement; I am sure that the hon. Gentleman will excuse me for highlighting that we have seen the numbers move from one in 170 under the previous Labour Government to one for one under the reinvigorated scheme. Councils have three years to provide the replacement. If they have not done so by the end of those three years—although the indications at the moment make me confident that they will—the money, with interest, comes back to the HCA, which will provide the homes. It will be one for one.

I must stress our view that a new power to allow tenants of an underperforming housing association to sack their housing association is, with the framework already in place plus what we are looking at with the housing Bill, unnecessary and unworkable. A solution to the concerns raised must be achieved within the current framework. The hon. Gentleman has tempted me to accept an early amendment to a Bill that we have not yet published; I am sure we will discuss his idea later in the year when the Bill is introduced. My officials and I will happily liaise with him on that, but as tempting as his pitch was—and it is probably the first I have had so far—I suspect that we are on a slightly different page.

I hope that the outline I have given has been useful. I again congratulate the hon. Gentleman on bringing this issue to the attention of the House so early in the Parliament; he has made sure that the concerns and thoughts of leaseholders have been aired. I am keen to ensure that tenants know how to resolve their local concerns and that they fully understand and appreciate the powers and opportunities they have. I have to make it clear—the hon. Gentleman will already know this—that I cannot intervene in such matters personally, but I recommend that hon. Members and residents involved in such situations write directly to the regulator if they feel that any regulatory standards are, unfortunately, not being met.

Photo of Albert Owen Albert Owen Labour, Ynys Môn

I am grateful to the Minister. Under the new procedures in Westminster Hall, the Member who brought the debate has a right to reply, should he wish to.

Photo of Jim Fitzpatrick Jim Fitzpatrick Labour, Poplar and Limehouse 11:21 am, 24th June 2015

I thank the Minister for the information he has given, which I am sure we will look at very closely. I know that my local authority, Tower Hamlets Council, is closely engaged in this process. I am not sure whether local councils have a role to play, but because the affected tenants are residents in the borough the council has a moral, if not legal, obligation to engage, and I know it is looking to speak directly to certain housing associations.

I note what the Minister had to say about the Bill. We will look at tabling an amendment in due course and would be grateful if he would consider it at the appropriate time. As he said, we are having ongoing discussions, which will continue, and I look forward to future meetings in due course.

Question put and agreed to.

Sitting suspended.