by Barry Denyer-Green
The Local Government and Housing Act 1989 radically reforms the way in which local government carries out its business; it also makes significant changes to the system of grants for the improvement of private housing and gives effect to a wide range of amendments to housing and landlord and tenant legislation of far-reaching importance.
The first six Parts of the Act, which are concerned with local government organisation and finance, are considered in outline at the end of this article; Part VII — Renewal Areas, Part VIII — Renovations Grants and Part IX — Miscellaneous and General are considered in more detail.
Many provisions of the Act will come into force from time to time by commencement orders; others are already in force, eg a number in Parts IV and VI and some sections in Part IX. However, several provisions take effect from April 1 1990: they include those in Parts I, II and V and some in Parts VI, VII, VIII and IX.
Renewal areas
By section 89 in Part VII, a local housing authority may declare a “renewal area”. They must be satisfied that the living conditions in an area within their district consisting primarily of housing accommodation are unsatisfactory and that those conditions can most effectively be dealt with by declaring the area to be a renewal area.
A report is first prepared for the authority dealing with the following matters:
(a) the living conditions in the area concerned;
(b) the ways in which those conditions may be improved;
(c) the powers available to the authority if the area is declared a renewal area;
(d) the authority’s detailed proposals for the exercise of those powers;
(e) the costs of the proposals; and the financial resources available.
Certain conditions as to the number of dwellings, the proportion of privately owned dwellings, the physical condition and other relevant conditions are to be specified by an order to be made by the Secretary of State for the Environment (s 90).
The steps that a local housing authority must take following the declaration of a renewal area and the information that must be published are laid down in sections 91 and 92. In such an area a local housing authority has as objectives the improvement or repair of the premises, the proper and effective management and use of housing accommodation and the well-being of the persons for the time being residing in the area (s 93(3)). They have powers to acquire land on which premises consisting of or including housing accommodation or which forms part of the curtilage of any such premises (s 93(2)). There are additional powers to provide housing accommodation, carry out works and make agreements with housing associations for the discharge of any of their functions to carry out works.
The power to declare a renewal area replaces the provisions of the Housing Act 1985 regarding housing action areas and general improvement areas, which cannot be declared after April 1.
Renewal grants
The existing provisions for a repairs grant, an intermediate grant or an improvement grant are being replaced by powers in Part VIII of the Act to make renovation grants (s 101(5)).
- A renovation grant will be available for the improvement or repair of a dwelling or for the provision of dwellings by the conversion of a house or other building.
- A common parts grant will be available for the improvement or repair of the common parts of a building.
- A disabled facilities grant will be available for the provision of facilities for a disabled person in a dwelling or in the common parts of a building.
- An HMO grant will be available for the improvement or repair of housing in multiple occupation or for the provision of a house in multiple occupation by the conversion of a house or other building: see general section 101(1) and (2).
With the exception of the “disabled facilities grant”, a local housing authority will not be able to entertain an application for a grant unless they are satisfied that, at the date of the application, the dwelling, common parts, house or building concerned was provided by construction or conversion not less than 10 years previously: see section 103. The Secretary of State for the Environment has power to vary that period.
The Act specifies the eligibility of applicants for all grants (s 104) and the conditions that must be satisfied in relation to the occupation of flats where the common parts grant is being sought (s 105).
A certificate as to future occupation is required to accompany an application for a renovation grant or a disabled facilities grant (s 106(1)). The applicant must provide one of four types of certificates specified:
- An owner-occupation certificate certifying ownership and an intention to reside in the dwelling as an only or main residence for a period of not less than 12 months;
- A tenant’s certificate where the applicant is a tenant entitled to apply for a grant (s 104(5)) and he or a member of his family intends to live in the dwelling;
- A certificate of intended letting where the applicant has acquired or proposes to acquire an owner’s interest and intends to let or has let a dwelling to someone other than a member of his family for a period of at least five years and, except where the application relates to a disabled facilities grant, on a tenancy which is not a long tenancy;
- A special certificate to be provided by an applicant of a class to be prescribed by an order.
This Part of the Act lays down a number of restrictions on grant aid. Section 107 specifies categories of houses that cannot normally be aided; ie, in certain circumstances, unfit houses. Section 109 provides for regulations that will tie the amount of the grant to the means of an applicant who is not a landlord. Further provisions apply to applications by certain types by landlords (s 110).
By section 113 local housing authorities are under a duty to approve grants in relation to works arising out of statutory notices, eg a repair notice under section 189 of the Housing Act 1985. Subject to these provisions, authorities have a discretion to approve grants for works that go beyond or are other than those which will cause a dwelling to be fit for human habitation provided that they are satisfied that the works are necessary for a number of specified purposes, eg to put a dwelling in reasonable repair; there is a more limited range of discretionary purposes in relation to common parts grants.
Conditions as to the completion of works are laid down in section 118 and as to availability for letting in section 119. There are obligations to repay grants in certain cases of disposal where a certificate of intended letting was given (see s 120-121).
Subject to regulations, section 131 provides for assistance for the provision of minor works. These works may include thermal insulation, repairs to a dwelling in a clearance area or adaptations for elderly persons. Assistance may be financial or the provision of material. At the present time the total value of the assistance is £1,000, or £3,000 in any period of three years.
Miscellaneous and general (Part IX)
This Part of the Act contains a wide range of important provisions relating to the community charge, the rating of non-domestic hereditaments and to the law of landlord and tenant. Only the provisions of particular interest to practitioners in the field of property are outlined in this article.
Non-domestic rating
Schedule 5 to the Act introduces a number of amendments and further provisions to the Local Government Finance Act 1988 in respect of non-domestic rating. References to sections and Schedules are to the 1988 Act, as now amended. Provision for the apportionment of the rateable value where a hereditament is partly unoccupied is made by section 44A. It is a matter for the charging authority to make a request in this regard.
Further provision is made for unoccupied hereditaments and new buildings by inserting section 46A and Schedule 4A into the 1988 Act (by paras 25 and 36 of Schedule 5 to the new Act). The new schedule has effect for the purposes of determining a day as the completion day in relation to new buildings and for the serving of completion notices.
A new Schedule 7A to the 1988 Act is introduced (by para 40 of Schedule 5) and this contains elaborate provisions for the transitional period 1990-95. During this period there will be a staged relief for a “defined hereditament”. In broad terms, transitional relief is available if the hereditament is on the valuation list on and after April 1 1990, the new rates bill exceeds that for the year ending March 31 1990 and or the succeeding four years and the occupier satisfies certain conditions as to occupation.
The drafting of Schedule 7A does not have as its objective the immediate comprehension of these simple ideas.
For transitional relief a hereditament must be a defined hereditament. For this it must:
(1) be shown for March 31 1990 in a valuation list maintained under the General Rate Act 1967; and
(2) be shown in the new non-domestic rating list with a rateable value for April 1 1990, the transitional day (if different from April 1 1990) and for each day (if any) falling after April 1 1990 and before the transitional day.
A transitional day is any day during the transitional period: see para 1 of the new Schedule 7A. A defined hereditament must, unless an advertising site, have a rateable value of £500 or more.
The transitional relief is applied daily. Certain terms need to be understood:
- The notional chargeable amount (“NCA”) for a defined hereditament is the rates due for that hereditament on a daily basis in any financial year during the transitional period (para 3 of Schedule 7A).
- The base liability (“BL”) for a hereditament is the rates that were payable daily on that hereditament for the year ending March 31 1990, and for succeeding years it is the rates payable for the previous year. If the new NCA exceeds the BL (eg for the financial year commencing April 1 1990, where the new rates bill exceeds that for the year ending March 31 1990), the hereditament is a defined hereditament subject to qualifications as to occupation (para 4).
The ratepayer is eligible for transitional relief if:
(1) he occupied all or part of the hereditament on March 31 1990, and he has been a qualifying person in relation to that hereditament as regards each day (if any) after March 31 1990; or
(2) he was the owner of the whole of the hereditament on March 31 1990, none of the hereditament was occupied on March 31 1990, but he occupied all or part of the hereditament on at least one day in the period beginning with April 1 1988 and ending with March 30 1990, and from this last or only day of occupation he was a qualifying person on each day before the transitional day.
In respect of each day, a person qualifies if he occupies all or part of a hereditament on any relevant day or, where none of it is occupied, he is the owner of the whole on that day.
Where the new rates bill in one of the years of transitional relief exceeds the rates bill for the preceding year, the transitional relief is found by applying the “appropriate fraction”: see para five. If the rateable value is £15,000 or more in Greater London, or is £10,000 or more elsewhere, the appropriate fraction is 120% of the proportionate increase in the retail prices index. In other cases it is 115% of the proportionate increase in the retail prices index. The proportionate increase in the retail prices index (“RPI”) is found by taking the RPI for the September in the year preceding the financial year and dividing it by the RPI for the September before that. The appropriate fraction is applied to the base liability for the first year, and then to each previous year’s rates to establish the transitional relief in each of the succeeding years of transitional relief.
The important thing about transitional relief is the fact that the ratepayer must satisfy the occupational or ownership conditions prior to April 1 1990 and in respect of each day thereafter for which relief is claimed during the transitional period. A change of occupation after March 31 1990 will result in the loss of transitional relief.
Power of local authorities to make charges
By section 150 of the 1989 Act, the Secretary of State is empowered to make regulations providing for the imposition of charges by local authorities for services, advice and documents. An obvious example is advice given by planning departments and the time spent by officers in planning consultations. The Secretary of State will not be able to make regulations requiring charges to be levied. A number of functions are excepted for these purposes: they include functions relating to education, library services, fire fighting, electoral registration, elections and the police.
Electronic transfer of documents
Section 9 of the Local Land Charges Act 1975 is amended to enable rules to be made for the electronic transfer of documents in connection with requisitions, official searches etc (s 158).
Unfit housing
Schedule 9 to the Act contains radical changes to the methods of dealing with unfit houses. Part VII of the Housing Act 1985, which relates to improvement notices, ceases to have effect.
Section 604 of the Housing Act 1985, as substituted by para 83 of Schedule 9, contains a new fitness standard. The provisions regarding repair notices are altered in a number of ways to deal with such problems as buildings containing flats and dwellings or flats in multiple occupation. Repair notices in respect of houses in disrepair but not unfit will no longer be served unless there is an occupying tenant or the building is within a renewal area. The power to purchase a house found on appeal to be unfit and beyond repair at reasonable expense ceases to exist.
After many years of bitterness and injustice to hundreds of claimants, the site value compensation provisions in sections 585 to 595 of the Housing Act 1985 now cease to have effect. Section 10 of, and Schedule 2 to, the Land Compensation Act 1961 are now repealed by the repeals Schedule to the new Act (Schedule 12).
Compensation provisions of the Landlord and Tenant Act 1954, Part II
These provisions were described by Tim Smithers — Disturbance Compensation — at (1990) 03 EG 26 to which article readers are referred.
Long leases
Schedule 10 to the Act has effect in relation to long leases at low rents within Part I of the Landlord and Tenant Act 1954.
Subject to a transitional period until 1999, a tenant under a long lease in future will continue after the expiration of such a lease under an assured periodic tenancy.
By section 186(2) of the Act, the provisions of Schedule 10, and not of section 1 of the 1954 Act, will apply to what is defined as a long tenancy at a low rent of a dwelling-house entered into after the appointed day. This means that any new long tenancies granted from now on will become assured periodic tenancies upon termination.
In the case of existing long tenancies within Part I of the 1954 Act, they remain until January 15 1999 subject to the security of tenure provisions of that Act upon termination. But if the tenancy is in existence on January 15 1999 and would have been a long tenancy at a low rent within the meaning of the 1954 Act, it will now become an assured periodic tenancy upon termination (s 186 (3)).
Schedule 10 contains provisions for assured periodic tenancies following a long tenancy, for the termination of such tenancies and for the basis of interim and market rents.
Local government organisation and finance
Local authority members, officers, staff and committees (Part I)
The Act implements the Government’s proposals in response to the report of the Widdicombe Committee on the conduct of local authority business.
The main effect is to give legal force to many of the conventions under which local authorities have done their business. Local authority staff in politically sensitive posts are required to abstain from political activity and they are required to be appointed on merit.
There are to be new rules on councillors’ remuneration and changes will be made to the audit rules so that no personal information about employees can be inspected by the public.
Local government administration (Part II)
Reports and recommendations of the Commission for Local Administration are not always heeded by some local authorities. The Act reforms the financial arrangements for the local ombudsmen. It will ensure proper publicity for cases where the local authority declines to implement a local ombudsman’s recommendation. It also gives statutory status to the National Code of Local Government Conduct.
Economic development and discretionary expenditure by local authorities (Part III)
A new power is introduced by the Act for local authorities to promote the economic development of their areas. It amends the general discretionary spending power in section 137 of the Local Government Act 1972 by adding further criteria of “direct benefit” and benefit “commensurate with the expenditure incurred”. The original powers relating to assistance to persons carrying on commercial or industrial undertakings shall cease to have effect.
Revenue accounts and capital finance of local authorities (Part IV)
This Part of the Act introduces a new capital finance system which replaces the present capital controls. The new system focuses control on the sources of finance for capital expenditure, the main sources being credit, capital receipts, government grants and revenue. Capital expenditure is defined and any other expenditure, such as on housing repairs, will be regarded as non-capital expenditure to come from revenue. There are new controls on borrowing.
Companies in which local authorities have interests (Part V)
Local authority interests in companies are regulated under a new framework. This defines what companies are to be regarded as part of the local authority sector and as being subject to control, or dominant influence, of local authorities, and provides for rules on their conduct. It also lays down rules for local authority minority interest in companies.
Housing finance (Part VI)
New arrangements for the management and organisation of housing revenue accounts are provided by Part VI. There will be restrictions on contributions to housing revenue accounts from other funds or from other funds to housing revenue accounts.
