The social rented sector

Foundations of landlord and tenant law – part 14

This series is mainly about the private rented sector, as that is the focus of this blog (and my services). However, I think we should take a quick look at the social sector if only to see how this differs from the private rented sector (PRS).

A quick history

The social rented sector has its roots in those almshouses and charitable housing trusts which have been set up by monied persons from the Middle Ages onwards, together with various kinds of philanthropic commercial housing organisations and housing co-operatives.

You know the sort of thing, housing provided for certain classes of people, such as the destitute of Xborough, retired employees of RedWidgets Ltd, or reformed harlots.

At the start of the last century, this was about all there was. Then between about 1920 and 1980 Local Authorities were encouraged to provide housing for low-income residents. This eventually grew to be an important part of their service and a significant sector of rented housing overall.

Sadly since then they have been encouraged to divest themselves of their housing stock, and transfer this function to local housing associations.

So how does it all work and what sort of tenancies do they have?

Well in the social sector, the tenancy type will depend mainly on whether your landlord is a Local Authority or not, and if not, when the tenancy started.

Local Authority housing

Initially, there was not much regulation of Local Authorities as they were considered (naively perhaps) to be ‘model landlords’ and were rather left to run things as they wished.

However this all changed in 1985 when the Housing Act 1985 was passed, and this is the act which now regulates local authority housing, as amended in various ways subsequently.

Under this act, tenancies let by a local authority will in most cases be a ‘secure’ tenancy. It is also possible for these types of tenancies to exist with landlords who are housing actions trusts and some housing co-operatives and types of urban corporation. But they are mostly local authorities.

These tenancies are generally let at a lower rent than tenancies in the PRS and have long-term security of tenure. There are two exceptions to this:

• Introductory tenancies – these are a probationary period where a tenant has to prove himself, during which he has limited security of tenure. They generally last for a year after which the tenant will have a normal secure tenancy.
• Demoted tenancies – this is where a tenant’s rights are reduced by the landlord getting a demotion order from the court. During the time the tenancy is demoted the tenant will have no security of tenure. However, if they behave themselves the tenancy will go back to being secure again.

As with private sector housing, the Thatcher government had a big influence on local authority housing.

First, they introduced the right to buy, during which probably the best of the local authority housing stock was sold off at an undervalue. As local authorities were not able to use the sale money to build new housing, this had the effect of massively reducing the amount of social housing available to needy tenants. We still feel the effect of this today – it is arguably a significant factor in the current housing crisis.

The other factor was the encouragement given to local authorities to sell off their housing stock (such as remained) to separate housing associations. This is why many local authorities no longer have any housing of their own anymore.

Other social housing

This generally means housing owned by ‘registered social landlords’. The phrase Registered Social Landlords used to mean landlords regulated by the Housing Corporation.

However, after a number of changes, the regulatory function is now under the Homes and Communities Agency- an executive non-departmental public body sponsored by the Ministry of Housing, Communities and Local Government – one of its statutory committees is the Regulation Committee, which is responsible for the regulation of social housing.

Find out more about the committees and how it all works here.

Let’s leave the regulatory side and take a look at tenancy types.

Tenancy types

Non-local authority social housing is a mix of the Housing Associations, trusts, co-operatives, and companies.

Most of the tenancies are let out on assured tenancies under the Housing Act 1988, although older tenancies will be protected tenancies under the Rent Act 1977. Before 25 January 1989 Housing Associations could also grant secure tenancies under the 1985 Housing Act so some of these will still remain. But mostly they will be assured tenancies.

Social landlords granting tenancies under the Housing Act 1988 cannot give introductory tenancies but they can instead give assured shorthold tenancies and then convert these to assured by serving a notice on the tenant to that effect. However, they can, if the tenant proves unsatisfactory, apply to the Court for an assured tenancy to be demoted for a period of time, as local authorities can.

Differences between the private and the social rented sectors

• Social housing is owned by either a registered charity or an organisation which is set up to provide housing as a social service, or a local authority
• It will usually be cheaper than housing in the private sector, the cheapest tending to be local authority housing
• Generally, tenants will have long term security of tenure, unless the tenancy is an introductory or a demoted tenancy.
• Social housing providers will generally have waiting lists which people desiring accommodation with them can apply to join. However, they will usually have rather a long wait – which is only (with current policies) going to get longer.

Current Issues

A substantial proportion of Local Authority has now been sold off under the right to buy.  This was intended to empower ordinary people by giving them a chance to own their own home (and turn them into Tory voters in the process).

Worryingly it was not possible, financially, for the Local Authorities to replace the housing sold off so the net effect has been a massive reduction in social housing.

Much of this, it is believed about 40%, has now been sold on to private investors and is now rented out – albeit at significantly higher rents than would have been charged by the social landlord.  As many of the tenants are claiming benefit, this effectively means that the policy has both reduced the social housing available and increased the benefits bill for the taxpayer.

Cheered by the ‘success’ of this (and presumably hopefull for more Tory converts), the government is now looking to extend the right to buy to the rest of the social housing sector, starting with a scheme in the Midlands.

Based on the right to buy track record, I can’t see this doing much to solve the housing crisis.

Council and other social housing was the best solution we ever had to the problem of housing people who cannot afford to buy.  It is a shame it is gradually being destroyed.

That’s all for now on the social housing sector.  Next time I will be looking at some additional regulations.

Almshouse picture  by Maxwell Hamilton