Leasing Schemes and non secure tenancies

Hi

We are planning to introduce a repair and lease scheme but have encountered some legal difficulties over whether a local authority can enter into a lease agreement without creating a secure tenancy.

We understand that the law expects a local authority to grant secure tenancies. However, we were hoping to make use of the exception in paragraph 6, schedule 1, Housing Act 1985 which states that tenancies in dwelling leased to a council on a short term basis are not secure tenancies. The property is let on a non-secure tenancy (in accordance with schedule 1 of the Housing Act 1985) to tenants.

So are members aware of any local authorities that are running a similar repair and lease scheme and the legislation they employ.

Any feedback would be welcome

Forums: 
leasing, rent deposit schemes etc

We are looking at exactly the same thing with our forthcoming lease scheme BUT, and there is always a but in these things, beware of HCA rules if you are planning to use thier money as they haven't grasped the illogic of offering a secure tenancy of at least 2 years on a leased property something that is giving me huge headaches with regard to EDMO legislation (which is slightly different).

Pacian Andrews of the HCA attended our Executive on 12th December and made it clear that the HCA would only accept Affordable Rent Tenancies under the 2013 empty homes funding stream.
Unfortunately the HCA seem to mix up Temporary Social Housing Grant with temporary accommodation so that is not as clear as it might be in the HCA guidance.  But where it says that the funding should not be used for Temporary Social Housing (point 45) I think that should be interpreted (based on what I heard at the Executive) as "we will not fund temporary accommodation with funny local authority forms of tenancy attached".  The fact that the funny local authority forms of tenancy (my description) are those laid down by Parliament does not seem to come into the equation

As you have pointed out, the provision that excludes tenancies in local authority leased accommodatoin from being secure tenancies is in statute.  The wording in Schedule 1 is as follows:

6. A tenancy is not a secure tenancy if—
(a)the dwelling-house has been leased to the landlord with vacant possession for use as temporary housing accommodation,
(b)the terms on which it has been leased include provision for the lessor to obtain vacant possession from the landlord on the expiry of a specified period or when required by the lessor,
(c)the lessor is not a body which is capable of granting secure tenancies, and(
d)the landlord has no interest in the dwelling-house other than under the lease in question or as a mortgagee.

Important to note that if the accommodation meets the above requirements it cannot be a secure tenancy - you don't have the option.
What makes these tenancies unusual is simply the fact that they are not defined in law ie they are not assured or secure or Fair Rent tenancies.  I have heard them called "bare tenancies" and they are governed by the common law.  Some local authority lawyers may not be used to them but there is a good depth of experience in authorities that have used them and presumably too in the dusty tomes that lawyers refer to when they want to know what has gone on at common law.
I have heard of licences being used in temporary accommodation on the basis that the occupant doesn't control it at and can be moved to other accommodaion at the whim of the council: on this interpretation the occupant doesn't have exclusive occupation.. But other councils have not wanted to take the risk - although I believe that there is case law that supports the use of licences (not to hand though!).

Hi David (or anyone else reading),

Please could you clarify if a Local Authority leasing properties on an empty homes leasing scheme can only use the properties as homelessness accommodation, of if they can be let on short term tenancies as the occupants main and reasonably settled home?

We are hoping to lease empty homes as part of area regeneration and the last thing we want is to put a lot of transient or vulnerable residents in the neighbourhood. Neither do we have a great need for TA. I thought I had seen somewhere that they are classed as temporary social housing which is different, but do not know where to refer our Legal to. Thanks, Hannah

Dear Hannah
I'm investigating this and have a call outstanding with a National [Homelessness] Practitioner Support Service. The wording of Schedule 1 to the Housing Act has not changed but this does not prescribe what MUST be a secure tenancy but rather what cannot be a secure tenancy.
Bear in mind that, in principle at least,  the properties in question should be leased, INITIALLY (for the purposes of) temporary accommodation.   
I am pretty sure some authorities have done what you want to do - normally treating the properties as "homeless prevention" after they have been leased but working on the basis that they property was INITIALLY leased "for the purposes of" temporary accommodation.   Whether anyone is going to check up or can prove what the properties were initially leased for is a moot point. Becaue the legislation doesn't requre that the properties have to be USED as temporary accommodation all the time the possbility exists of subsequently letting them out on non-secure tenancies to people who are not owed a duty. This approach has been reported to me anecdotally, but fits in with some interpretations of Schedule 1.  The lease would need to stipulate that the property was to be used for temporary accommodatoin whilst also giving the authority leeway to use it, on occasion, for other purposes. The risk is  that this is seen as a fiction if the
But Flexible Tenancies do seem to be an alternative. I can see various inflexiblities (ironically) with them - you would certainly want to go with a two-year not a five-year arrangement - and if the lease comes to an end in the middle of the fixed term then I guess you would have to decant the tenants to complete their fixed term somewhere else (or maybe that would involve having to restart the term - technical advice needed!). But flexible tenancies aren't secure tenancies, surely, and are available, surely? So I am not sure of the exact meaning of this:

"The opinion was that fixed term tenancies cannot be terminated at the end of the term unless the occupants circumstances have changed. They may be fixed term but still remain secure."

That makes sense if it means that you can't termnate a fixed term tenancy early - to that extent it is "secure" -  but it is not a "secure tenancy" in Housing Act terms.
The other issue that comes into play is how housing benefit subsidy works as assumptions are made about rent levels in the housing benefit regime as it applies to some local authority tenancies.
The HCA funding rules cut across all of this but with Cluster funding you're much better placed to be creative.

Hi David,

Thank you for this clarification.

I will pass this on to our legal team and hope they can word the tenancy appropriately.

Regards,
Hannah Cann

Hello
We have had a lot of discussions about this.
We used vEDMOs to allow us to house tenants under an AST. Our legal team could not identify a way of offering a tenancy on a home which needs to be handed back at the end of a fixed period without it being temporary accommodation. The opinion was that fixed term tenancies cannot be terminated at the end of the term unless the occupants circumstances have changed. They may be fixed term but still remain secure.
However it would seem opinion depends on the area
One area are offering a flexible fixed term under s154 of the Localism Act 2011, another area is using a non-secure tenancy agreement under schedule 6 to offer accommodation for over 5 years. Both these are HCA funded schemes.
However the HCA has told us they won't fund temporary accommodation units as well. (Less than 5 year tenancies, or 2 year under exceptional circumstances).
We have found though that although the edmo application takes a while especially with the 3 month wait the FTT are approving them without site visits as long as they have photos and a statement of support from the owners.
Thanks

Thanks Luke.

Lincs Legal are now telling us the same thing but previous advice has indicated the tenancies would be outside the housing act. It's not very clear. It is for our cluster scheme so we don't need to stick to HCA requirements, but do need to deliver tens of units by March next year!! We may have to look at the voluntary EDMO route as they are already set up to do that.

Cheers, Hannah

A couple of points.

The Council isn't the landlord you are purely acting as the managing agent for an agreed period of time.

For anyone to be a secure tenant both the Landlord and Tenant conditions need to apply as set out in the Housing Act 1985 S7 the Landlord condition and S9 the Tenant condition.

S7 of the Housing Act 1985 in my view doesn't apply as the council isn't the landlord the owner of the property is. The Council is simply managing on the owners behalf for a set period of time on agreed terms.

If by some legal nuance I'm incorrect in my interpretation you can rely on the exceptions set out in Schedule 1 to the Housing Act 1985 as you have identified.