Right to buy etc: miscellaneous
Section 304 – Exclusion of the right to buy: possession orders
876.Section 304 clarifies the circumstances where section 121(1) of the Housing Act 1985 applies so that a tenant subject to a possession order cannot exercise the right to buy, ensuring that these include a possession order which does not initially specify a date for possession.
Section 305 – Exclusion of the right to buy: demolition notices
877.Section 305 introduces Schedule 13.
Section 306 – Review of determination of value
878.Section 128 to the Housing Act 1985 (“the Act”) provides that where a tenant who has applied for the right to buy is dissatisfied with the valuation provided by his landlord under section 125 of the Act, he may ask the district valuer (an officer of the Valuation Office Agency, a non-profit-making public body) for a determination of value. Section 306 inserts new sections 128A and 128B into the Act to enable a district valuer, either at the request of the landlord or the tenant or on his own initiative, to review a determination of value which appears to have been based on faulty facts. A request or decision to review the original determination must be made within specified time limits, be in writing and set out the reason it is being made. A review may not be undertaken after the sale of the property has been completed. The specified time limits run from the date the landlord serves a notice on the tenant informing him of the determination under section 128. The district valuer will not know when such a notice has been served so provision is made to ensure that the district valuer is made aware of the service of the notice.
Section 307 – Approved lending institutions
879.If a tenant buys his home under the right to buy and then resells it within five years, his former landlord may require him to repay some or all of the discount he received. This obligation is secured by a charge on the property. Usually a right to buy purchaser will rely on a loan by way of mortgage, and the lender will also protect the loan by a charge on the property. Charges are ranked chronologically, and the landlord’s charge would take precedence over the lender’s. However, if the lender is one of those specified in section 156 of the Housing Act 1985 or approved by the Secretary of State under that section (“approved lending institutions”) their charge may take precedence over the discount charge - i.e. they have the first charge on the property, giving them the best security for their loan.
880.Section 307 removes the Secretary of State’s powers under section 156 to specify bodies as approved lending institutions and to revoke that status. The section instead adds “authorised mortgage lenders” to the list in section 156(4) of automatically approved lending institutions. It also adds a definition of authorised mortgage lenders to section 622 of the 1985 Act. These are (i) bodies which are authorised by the Financial Services Authority (FSA) and (ii) European lenders automatically entitled to operate in the United Kingdom. The overall effect is to combine the process of approving lenders for right to buy purposes, currently carried out by the Secretary of State, with the process of authorising lenders carried out by the FSA. “Authorised insurers” and “authorised deposit-takers” are also automatically approved lending institutions under section 156(4) of the Act, and section 316 (see below) amends the definitions of those bodies in section 622 of the Act to conform with the definition of authorised mortgage lender.
Section 308 – Former right to buy flats and other flats: service charge loans
881.Section 308 amends section 450C of the Housing Act 1985 to provide that in regulations made by the Secretary of State (or, in Wales, the Welsh Ministers) regarding loans by landlords to leaseholders to assist in payment of service charges, such loans may be on terms other than an interest bearing loan. The power under section 450C is extended to provide for charging for the services of the district valuer, since it may be appropriate to specify valuation of the flat by a district valuer in regulations. Fees charged by the district valuer are limited to recovery of expenses, and are governed by usual administrative law principles of reasonableness.
Section 309 – Former right to buy and other flats: equity share purchases
882.Section 309 adds a new section 450D to the Housing Act 1985. This provides that the appropriate national authority may provide by regulations that where a local authority is the landlord of a flat let on a long lease to a tenant (commonly known as a leaseholder) who is liable to pay service charges in respect of repairs or improvements to the flat, the landlord may, with the tenant’s agreement, buy an equitable interest (i.e. a share) in the flat in order to help the tenant to pay service charges. The regulations may provide that this power is not available to specified types of landlords, and also how the purchase price is to be calculated (including provisions in respect of discounts, charges for the services of district valuers, and the tenant’s liability for the landlord’s administrative expenses in connection with the purchase). Fees charged by the district valuer are limited to the recovery of expenses and are governed by usual administrative law principles of reasonableness.
Section 310 - Other amendments
883.Section 310 corrects two errors in schedules to the Housing Act 1985 (“the Act”). The first correction, to Schedule 5 to the Act, removes an unintended right of further appeal to the High Court against the decision of a residential property tribunal, where tenants who have been refused the right to buy on the ground that the property is particularly suitable for occupation by elderly persons have appealed to a residential property tribunal. It was intended that the tribunal’s decision should be final; further appeal to the Lands Tribunal is already excluded. A possible right of further appeal to the High Court was inadvertently suggested by interaction between Schedule 5 and section 231 of the Housing Act 1996. The second correction amends a paragraph reference in Schedule 5A to the Act.