Social Housing (Regulation) Bill - Second Reading, House of Commons, November 2022

  • By Amy Leppänen

Overview

London Councils welcomes the Social Housing (Regulation) Bill and looks forward to working with the Regulator of Social Housing and the government to ensure that these new measures benefit London’s tenants and landlords alike.

The Bill will expand the remit of the Regulator so that it plays a much more proactive regulatory role, particularly in relation to consumer matters such as safety, disrepair and information gathering on performance. The Bill also sets out new powers for the Regulator. However, much of the detail as to how these powers are used will be left up to the Regulator’s discretion.

London Councils believes:

  • The Bill is a welcome step towards improved accountability in the sector. London boroughs are committed to working closely with the Regulator in order to help ensure the highest standard of social housing for London’s 800,000 social housing properties.
  • More work is needed to clarify the Bill’s impact and the exact roles and responsibilities that various bodies including DLUHC, the Regulator, and the Housing Ombudsman will have.
  • The Bill will not help address some of the key underlying factors that impact London’s social housing supply, including underfunding of local government and the chronic undersupply of new social housing in the capital – a key factor in London’s homelessness crisis.

Key implications for boroughs

1. A closer relationship between the Regulator and stock holding local authorities

The Regulator has written to all Registered Providers to encourage action where it is needed in advance of the Bill receiving royal assent. The Regulator has also indicated that it will regularly inspect social landlords with more than 1,000 homes, with performance being tracked by the new consumer standards and tenant satisfaction measures. Consultation with the Regulator on the content of consumer standards is a key next step for London boroughs.

2. Increased accountability across the sector, with a shift in power away from council landlords

Greater capacity for the Regulator to proactively intervene and less reliance on self-reporting will shift power away from landlords and towards the Regulator and tenants. Along with the strengthened Housing Ombudsman and greater emphasis on transparency and performance comparison, tenants will be provided with information and regulatory ‘levers’ which will enable them to hold their council landlords to account.

3. The Bill compliments current work in the sector

The Bill compliments work already being done by London boroughs to improve landlord services and drive up standards. Many social landlords have also committed to improving the openness and transparency of their organisations. The Bill will also aim to ensure that social landlords are responsive to their tenants’ needs, that accountability is strengthened across the sector and that social housing is a safe and desirable place to live.

4. Resource implications

The Bill is likely to come with resource implications, including additional spending on requirements from the new access to information scheme. This comes at a time when local authority Housing Revenue Accounts (HRAs) are under significant financial pressure. The four-year 1% annual rent reduction policy that was in place from 2016/17 left rental income across London HRAs £459 million lower in 2021/22 than would have been if the previous CPI+1% policy had remained in place.

While it is welcome that the government set next year’s rent ceiling at 7% (compared to the 5% set out in the consultation earlier this year), if all London local authorities applied the maximum rent increase next year then income would still be £598 million lower over the next five years than was previously expected if rents had risen in line with CPI+1%. At a time when significant inflation is also creating HRA cost pressures, additional support is needed to help councils raise standards through investment in property conditions, delivering strategic priorities such as building safety and decarbonisation, while maintaining investment in day-to-day services.

London Councils believes that the new responsibilities set out in the Bill should be accompanied by additional funding in order to deliver on these welcome changes. Clarity on the role that fines will play should also be provided to ensure that punitive action doesn’t have unintended effects on the ability of local authority landlords to deliver required changes for their services.

5. The Bill fails to address issues around the supply of homes for social rent

Despite the Green Paper referring to “building a new generation of council homes to help fix the broken housing market”, subsequent documents including the White Paper and the Bill makes no reference to more affordable or social housing. The shortfall of affordable homes is acute, with an estimated 42,500 sub-market homes required in London each year compared to an average of 8,536 affordable homes that have been delivered on average per year since 2015/16. The chronic shortage of social housing in the capital is a key factor in London having the highest homelessness rates in the country, with 150,000 homeless Londoners (including 75,000 children), currently living in temporary accommodation arranged by their local borough. In not addressing this shortfall, the Bill fails to deal with one of the most serious pressures facing Londoners.

Proposed changes in the Bill

1. Greater focus on safety

  • The objectives of the Regulator have been updated to refer expressly to ‘safe’ housing, meaning the Regulator can now set a standard on safety and enforce against it. In order to achieve this objective:
  • Existing consumer standards are being updated to include safety.
  • A requirement has been introduced for landlords to appoint a named individual responsible for Health & Safety.
  • Existing electrical safety standards have been extended to Local Authority Registered Providers.

2. A more proactive role for the Regulator of Social Housing

  • The removal of the ‘serious detriment’ test means that the Regulator will be able to inspect properties with much less justification.
  • The minimum notice period which the regulator is required to provide a Registered Provider for an authorised person to conduct a survey of a property has been reduced.
  • The Regulator of Social Housing and the Housing Ombudsman will be encouraged to work together more so that information can be exchanged more quickly on complaints cases.
  • The Regulator will be expected to set up an Advisory Panel comprised of a range of voices from across the sector, including tenants and landlords. The Regulator and the Advisory Panel will be expected to work together across a wide range of matters connected to the regulation of social housing, including key sector issues and risks, and the design of the new consumer standards.

3. New methods of intervention and enforcement

  • The Regulator will now be able to require landlords to prepare and implement a performance improvement plan when they are failing to meet regulatory standards.
  • The Regulator will be given the power to fine landlords an unlimited amount if regulatory standards are repeatedly breached. So far, the Regulator has indicated little appetite for fining local authorities due to an appreciation of already stretched budgets.

4. Greater information collection and new tenant satisfaction measures

  • The Regulator will be given the power to direct Registered Providers to collect, process and publish information concerning their performance in relation to standards set by the Regulator. This will also enable the Regulator to develop new Tenant Satisfaction Measures (TSMs). In September 2022, the Regulator published the Decision Statement on the final set of TSMs that would come into effect on 1 April 2023.
  • The Regulator will be allowed to set standards for Registered Providers on the provision of information and transparency to their tenants and to the Regulator.
  • The Regulator will be empowered to require third parties to provide documents or information that the Regulator believes to be relevant to its regulatory functions.
Amy Leppänen, Parliamentary Officer