2 Gray's Inn Square Chambers - Seminar Notes 03.11.05 James Holmes-Milner

2 Gray's Inn Square Chambers

Seminar Notes 03.11.05 James Holmes‑Milner

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Seminar notes 23.11.05 sub-section
Housing Act 2004 - Overview, Part II

speaker: James Holmes-Milner

Sub Index
(click on a topic to jump to relevant section)
	Part 5 - Home information packs
	Part 6 - Other provisions
	Part 7 - Supplementary & miscellaneous provisions
	Commencement provisions

Main Index

Part 5 - Home Information Packs

Home Information Packs

Home information packs have arrived. They are defined as “a collection of documents relating to the property being sold, or the terms on which it is being offered for sale”.

The actual content will be prescribed in regulations made under section 163. It may include or even consist of electronic documents. Subsection (5) gives an indication of the sort of information that is likely to be considered relevant and includes

the terms of sale;

evidence of title;

information in public registers that is relevant to the property, such as replies to local searches;

information on the physical condition of the property – Home Condition Reports carried out by “Home Inspectors”;

information on the energy efficiency of the property;

any warranties and guarantees on the property;

information concerning service charges and other taxes and charges affecting the property;

replies to standard preliminary enquiries made on behalf of buyers.

This is information that is, for the most part, obtained by or on behalf of buyers or sellers under the current system. An item which, under current arrangements, is not normally available but which is intended to be included in the pack is information about the energy efficiency of the property. This will contribute towards the implementation of EU Directive 2002/91/EC (Energy Performance of Buildings Directive) which requires member states to introduce requirements for energy performance certificates and to ensure that these are made available by the owner to prospective buyers when properties are sold.

Section 154 provides that where a residential property is on the market in England or Wales, the duties described in sections 155, 156, 157 and 158 apply to each “responsible person” who markets it. However, a property that is being sold subject to a tenancy does not have to be marketed with a home information pack.

Generally, a person becomes responsible when he puts a property “on the market” or makes public the fact that the property is “on the market”. That means either the seller or his/her estate agent.

A seller is not required to have a home information pack where there is another responsible person and the seller reasonably believes that this person is in possession of a compliant pack.

However, individuals who market their own homes without the services of an estate agent will be responsible for their own actions.

An estate agent becomes responsible when he first puts the property on the market or, if it is already on the market, makes public the fact that it is on the market. The responsibility of an estate agent ceases when his contract with the seller is terminated and he stops taking action which makes public the fact that the property is on the market.

Main Index

Those duties are:

Under section 155, the duty to have a compliant home information pack in the possession or control of the “responsible person”. The duty does not apply to sellers in cases where an estate agent is responsible for marketing the property and where the seller reasonably believes that the estate agent has a home information pack that complies with the regulations in his possession or under his control.

Under section 156, the duty to provide copy of home information pack on request to a potential buyer where he makes a request for one. Nothing in the Act stops estate agents from making available general particulars or other descriptions of the property that they are marketing on the seller's behalf.

Section 157 permits a seller to decline to provide a copy of the home information pack if the potential buyer has failed to comply with one or both of the following conditions:

the payment of a reasonable charge for making a copy of the pack and sending it;

ii)

the acceptance of specified terms relating to the use and onward disclosure of copies of home information pack documents.

Section 158 imposes a duty to ensure authenticity of documents in other situations. Where a responsible person provides a potential buyer with a copy of the home information pack or of any document (or part of a document) included in it, or allows him to inspect it, it must be an “authentic” copy.

10.

The “responsible person” is under a duty to provide a copy of the pack within the “permitted period”. In most cases this period is 14 days from the date of the request.

11.

There are 3 circumstances in which the responsible person may turn down a request for a copy of the home information pack without breaching any duty.

The first of these is where there are reasonable grounds to believe that the person making the request cannot afford the property. For example, the agent might know the financial circumstances of the person in question or the seller may want to exclude people who cannot demonstrate that they have arranged an “in principle” mortgage.

The second applies where the responsible person believes that the person making the request is not really interested in buying this particular property or one like it. An example of this might be a journalist posing as a buyer in order to see the home information pack relating to a celebrity’s home. Another example might be a request for a copy from someone who the estate agent knows to be a habitual time waster.

The third arises if it is believed that the potential buyer is not a person to whom the seller would wish to sell the property.

12.

The enforcement of home information pack duties is to be carried out by local weights and measures authorities (who act through trading standards officers). Enforcement powers include the powers to:

require the production of any document included in a home information pack for inspection;

take copies;

give penalty charge notices (£200?);

provide advice or a warning in most cases;

give a formal caution.

13.

Section 170 gives potential buyers the right to take action against any responsible person who has not complied with the home information pack duty in section 156 to provide a copy of a prescribed document in response to a request. If a potential buyer has not been given a copy of the pack in response to a request, he may commission his own version of a pack document and recover from the responsible person the reasonable costs of doing so. In order to recover costs in this way, the following conditions must be satisfied:

The property is on the market, or the potential buyer and seller are in negotiations for the sale of the property.

The potential buyer has not been provided with an authentic copy of the document. An authentic document is one which forms part of the most recent home information pack and complies with any regulations made under section 163 on content.

14.

Any breach of the home information pack duties by a person acting as estate agent may be notified to the Office of Fair Trading (“OFT”) which can exercise its powers under the Estate Agents Act 1979 to prohibit unfit persons from doing estate agency work and to issue warnings.

Main Index

Part 6 - Other Provisions

Extending the Period Of Introductory Tenancies

15.

Section 179 introduces new sections 125A and 125B into the Housing Act 1996. It sets out the conditions under which the duration of an introductory tenancy may be increased by 6 months and the procedure by which the decision to do so may be reviewed.

16.

Landlords will be able to assess the suitability of an introductory tenant, including in cases of anti-social behaviour, for an additional period. The new provisions only apply to new introductory tenancies granted after this section comes into force.

Extension of qualifying period for right to buy

17.

At present, the Right to Buy (“RTB”)does not arise unless the tenant has occupied accommodation under a public sector tenancy (ie armed forces accommodation or as a tenant of one of the classes of public sector landlord specified in Schedule 4 to the 1985 Act) for a period of at least 2 years. This section will extend the qualifying period from 2 years to 5 years.

18.

The amount of discount for which they will qualify under section 129 of the 1985 Act will be equal to their current discount entitlement after 5 years.

Repayment of discounts

19.

At present, if a person who has exercised the RTB wishes to resell the property within 3 years of acquiring it, he or she is required to repay to the former landlord all or some of the RTB discount which they received. Section 185 of the Housing Act 2004 extends this period from 3 years to 5 years, in respect of both the RTB and the Rent to Mortgage (“RTM”)schemes.

20.

Section 185 also makes 3 other separate changes:

Firstly, it makes clear that former landlords have discretion as to whether or not to demand repayment of discount on early resale within the specified period in relation to purchases under both the RTB and RTM schemes. This discretion is also available in relation to people who bought their properties before the coming into force of this section, and who are subject to a 3-year discount repayment period that has not yet ended.

Secondly, it changes the calculation of the amount of discount to be repaid from a flat-rate basis to a percentage basis, in relation to the RTB only.

Thirdly, it changes the repayment taper (ie the amount by which the level of discount which has to be repaid is reduced after each complete year since purchase) from one third per year to one fifth per year, in respect of both the RTB and the RTM schemes.

Main Index

Discretion to waive repayment of discount

21.

Guidance will be issued as to the circumstances in which it is considered appropriate for a former landlord to agree to forego payment of part or all of the discount due for repayment, and will encompass situations where to waive repayment would alleviate potential hardship, e.g. where a buyer wishes to resell for reasons of severe illness, or sudden bereavement, or relationship breakdown (especially in cases of domestic violence).

Recoupment

22.

A new section 155A is inserted into the Housing Act 1996. It applies to RTB sales only and recoups for the public purse a proportion of any appreciation in the value of a property originally sold with the benefit of discount, which is resold during the period within which the former landlord may demand repayment of some or all of that discount. However, it will also benefit RTB purchasers whose property has fallen in value, as the amount they will have to repay will be reduced.

23.

Section 155A provides that the maximum amount that the former landlord may demand (subject to the repayment taper) is that percentage of the resale price which is equal to the discount to which the tenant was entitled at the time of the original sale, where that discount is expressed as a percentage of the value of the property at that time. For example, if a tenant received discount equivalent to 10 per cent of the RTB sale price, the landlord may demand repayment of 10 per cent of the property's resale value.

24.

Section 155A also provides that the amount of discount to be repaid shall be a percentage of the resale value of the property. Section 186 inserts new section 155C, under which the resale value will be treated as net of the value of any improvements made by the current owner after acquiring the property and before disposing of it.

25.

Section 188 requires that a covenant be inserted into all conveyances or grants to tenants requiring that, during the period of 10 years from the date of the conveyance or grant, the tenant purchaser (or any successor in title) must make an offer of first refusal to his former landlord, or such other person as the Secretary of State prescribes, before he can make a relevant disposal of the property.

26.

Such a covenant will be a local land charge and must be entered into the property's register of title by the Chief Land Registrar. This means that the covenant cannot be overlooked when resale is under consideration.

Main Index

Exchange of secure tenancies

27.

Section 191 introduces a new Ground 2A into Schedule 3 of the Housing Act 1985. The landlord of a secure tenant may refuse an application if a specified type of injunction, an anti-social behaviour order or a possession order granted on the grounds of nuisance is in force or if court action to obtain such an order or a demolition order is pending against the tenant, the proposed assignee or a person who resides with either of them.

28.

A demotion order is an order obtained under provisions inserted in the Housing Act 1985 and the Housing Act 1988 by the Anti-Social Behaviour Act 2003, which ends a secure or an assured tenancy and replaces it with a demoted tenancy, which is essentially a probationary tenancy.

29.

An anti-social behaviour order is an order obtained under the Crime and Disorder Act 1998, which places specified limitations on the conduct of the individual against whom it is made.

Protected sites to include sites for Gypsies

30.

Section 209 amends section 1 of the Caravan Sites Act 1968 to extend the meaning of “protected site” to include sites owned by County Councils providing accommodation for Gypsies. This will mean that sections 2-4 of the Caravan Sites Act 1968 will apply to these sites and the occupiers of them:

the requirement for minimum length of notice in section 2,

the protection from unlawful eviction and harassment contained in section 3,

provision for the suspension of eviction orders in section 4.

Extension of protection from harassment for occupiers of mobile homes

31.

Section 210 amends section 3 of the Caravan Sites Act 1968 to give mobile home occupiers equivalent protection to that given to tenants in conventional housing against harassment and unlawful eviction.

32.

Section 210(3) makes it an offence for a site owner or his agent to do acts likely to interfere with an occupier's peace and comfort or to persistently withhold services if he knows or has reasonable cause to believe this will cause the occupier to leave his home, or to refrain from exercising any right or pursuing any remedy. It enables local authorities to prosecute for harassment without needing to prove an actual intention on the part of the site owner (or agent) to harass.

Main Index

Suspension of eviction orders

33.

Section 4 of the Caravan Sites Act 1968 gives discretion to the courts to suspend eviction orders made in respect of most privately owned caravan sites. Section 205 extends this discretion to local authority owned and managed caravan sites, allowing the courts to suspend any order for periods of up to 12 months at a time.

Tenancy deposit schemes

34.

TDS schemes will have two main purposes:

to safeguard tenancy deposits paid in connection with an assured shorthold tenancy; and

to facilitate the resolution of disputes arising in connection with such deposits.

35.

A tenancy deposit is “money, in the form of cash or otherwise, intended to be held as security against an assured shorthold tenants’ performance of his obligations or the discharge of his liabilities in connection with the tenancy”.

36.

Section 212(1) places a duty on the appropriate national authority to make arrangements to ensure that one or more tenancy deposit schemes (TDSs) are established to safeguard deposit monies paid in connection with assured shorthold tenancies.

37.

Key features:

There will be a scheme administrator to set up and manage a TDS.

Schemes are expected to be self-financing.

On commencement all landlords and their agents will be required to ensure that any deposit required in relation to an assured shorthold tenancy is safeguarded by a tenancy deposit scheme.

No contracting out.

The tenant can apply to the court for an order requiring the landlord to repay the deposit or to pay it into a TDS in default. If default is established the court must order the person holding the deposit:

to repay the deposit to the applicant; or

ii)

to pay it into an authorised custodial scheme within 14 days of the order being made; and

iii)

to pay the applicant an amount equivalent to 3 times the deposit.

The landlord may not serve a notice under section 21 of the Housing Act 1988 at any time where a deposit is not being safeguarded in a TDS.

Ditto if the deposit is held in a form which cannot be lawfully required, i.e. it consists of something other than money.

Main Index

Disabled facilities grant: caravans

38.

Section 224 extends eligibility for Disabled Facilities Grant (“DFGs”) to all those occupying caravans. A DFG is a mandatory grant administered by local authorities under Part 1 of the Housing Grants, Construction and Regeneration Act 1996. It is available for adaptations that enable disabled occupants to live more independently in their homes.

Housing needs assessment

39.

Section 225 requires local housing authorities to review the accommodation needs of “gypsies and travellers” in their district when carrying out reviews of housing needs under s 8 of the Housing Act 1985.

40.

Section 225(1) states that the gypsies and travellers who reside in an area (ie who currently live there), or who resort to an area (ie who pass through from time to time) will have their needs assessed.

Main Index

Part 7 - Supplementary and Final Provisions

41.

Section 233 allows the appropriate national authority to approve, or approve a modification to, codes of practice in relation to the management of HMOs. Failure to comply with an approved code may be used in evidence in any proceedings before a court or a tribunal.

42.

Section 234 provides that the appropriate national authority may make regulations with the aim of securing satisfactory standards of management in HMOs. Failure to comply with the regulations is a criminal offence, subject to a level 5 (maximum £5,000) fine.

43.

Section 235 allows an LHA to require the production of documentation that the authority might need to carry out its functions under Parts 1 to 4 of the Act and to investigate whether an offence committed under those Parts in relation to any premises.

44.

Section 237 allows an LHA to use information that it has obtained for housing benefit or council tax purposes in order to carry out its functions under Parts 1 to 4 of this Act.

45.

Section 238 makes it an offence to knowingly or recklessly supply false or misleading information under Parts 1 to 4 or Part 7 of the Act, or to another person who will then use that information under Parts 1 to 4 or Part 7 of the Act. The maximum penalty on summary conviction is a fine not exceeding level 5 on the statutory scale (currently £5,000).

46.

Section 239 gives an LHA powers of access to properties in pursuance of its duties under Parts 1 to 4 and Part 7 of the Act.

47.

Section 240 enables a Justice of the Peace to issue a warrant authorising entry to premises for the purposes of an inspection under section 4, an inspection to determine whether any functions under Parts 1 to 4 of Part 7 of the Act should be exercised.

Main Index