What are Housing Associations and what role do they play in the modern law of public sector housing?
The Housing Act 1985 was a major attempt at the consolidation of the law affecting public sector (or quasi-public sector) housing in this country. The Landlord and Tenant Act 1985 and the Housing Associations Act 1985 form a major part of this consolidation, though it should not be forgotten that it is still necessary when dealing with some areas to refer to other legislation affecting public housing, such as the Housing and Building Control Act 1984. In this article, we are almost exclusively concerned with the provisions of the Housing Associations Act 1985 (the HAA 1985).
The HAA 1985 deals with two fundamental matters:
(1) the functions of the statutory body which supervises the operation of housing associations, namely the Housing Corporation; and
(2) the operation of a system of finance, including the statutory grant system, known as the “housing association grant”.
Part I of the Act makes provision for the regulation of housing associations, and for their structure and supervision by the Housing Corporation, and Part II makes provision for their finance. The intricacies of housing associations are not easy to grasp, and we are concerned here only with the nature of these bodies.
What is a housing association?
The statutory definition of a housing association is found in section 1 of the HAA 1985, which provides:
(1) In this Act “housing association” means a society, body of trustees or company —
(a) which is established for the purpose of, or amongst whose objects or powers are included those of, providing, constructing, improving or managing, or facilitating or encouraging the construction or improvement of, housing accommodation, and
(b) which does not trade for profit or whose constitution or rules prohibit the issue of capital with interest or dividend exceeding such rate as may be prescribed by the Treasury, whether with or without differentiation as between share and loan capital.
The important thing to notice is that the term “housing association” is a generic one embracing a number of different organisations, those organisations being defined by their functions. It is for this reason that the HAA 1985 defines a housing association as being a body “facilitating or encouraging the construction or improvement of housing accommodation”.
The definition is sufficiently wide to cover co-operative societies, which are those where the tenant has a share in the equity of the association’s property. The definition also covers co-operatives, which are organisations where the tenants have a share limited to par value, which has the effect of preventing the tenant benefiting from increases in value of those shares.
Management co-operatives would also come within the definition. These are bodies which are created by statute (ss 27, 30, Housing Act 1985) and on to which local authorities may pass certain of their housing responsibilities.
In sum, therefore, a housing association is defined by its functions and not by its strict legal structure. The other important part of the definition is found in section 1(1)(b), which provides that the association must not “trade for profit” or that it must be an association “whose constitution or rules prohibit the issue of capital . . .”.
What kind of body can be a housing association?
Three types of body can be a housing association: (1) a charity registered under the Charities Act 1960; (2) a society registered under the Industrial and Provident Societies Act 1965 (those societies not so registered cannot be registered as a housing association and therefore will not be eligible for public funding); and (3) a company. A company must be incorporated under the Companies Act 1985.
What is a “self-build society”?
A “self-build society” is defined by section 1(3) of the HAA 1985 as “a housing association whose object is to provide, for sale to, or occupation by, its members, dwellings built or improved principally with the use of its members’ own labour”.
Self-build societies are financed in a different way from other housing associations in that they receive loans from the Housing Corporation. Provision for this is made by section 79 of the HAA 1985, which specifies the lending powers of the Housing Corporation. As has been stated above, other housing associations receive assistance by way of the housing association grant.
Housing associations distinguished from housing trusts
A “housing trust” is defined by section 2 of the Housing Act 1985 as a body which “is required by the terms of its constituent instrument to use the whole of its funds, including any surplus which may arise from its operations, for the purpose of providing housing accommodation, or is required by the terms of its constituent instrument to devote the whole, or substantially the whole, of its funds to charitable purposes and in fact uses the whole, or substantially the whole, of its funds for the purpose of providing housing accommodation”.
It may be seen that this definition means that a “housing trust” falls also within the definition of a “housing association”. However, the activities carried out by the two bodies may be different; for example, housing trusts are given certain powers (in section 35) to transfer accommodation to local authorities (a power which has not been given to housing associations in the Act).
Registration of housing associations
The Housing Corporation (which is defined below) is required by the HAA 1985 to maintain a register of housing associations. Registration is necessary if the association is to receive central or local government funding under Part II of the Act. Those bodies which are eligible for registration are specified in section 4, namely charities or societies registered under the Industrial and Provident Societies Act 1965. Societies registered under the 1965 Act must satisfy, in addition, the conditions in sections 4(2) and 4(3) to the effect that they do not trade for profit, that they aim to “provide, construct, improve and manage (i) houses for letting, (ii) houses for occupation by members”, and that any of the requirements in section 4(3) are satisfied; for example, providing services for (and giving advice on) the running of registered housing associations.
What is the Housing Corporation?
The Housing Corporation is a central body created by statute to oversee the activities of housing associations and to assist in their finance. It consists of 15 people appointed by the Secretary of State. Section 75 outlines its functions, which may be summarised as the promotion, assistance and development of registered housing associations: s 75(1)(a).
What protection do tenants of housing associations have?
Tenants of housing associations are secure tenants under Parts IV and V of the Housing Act 1985 and receive virtually the same statutory protection as local authority tenants. The rents paid by tenants of associations are governed by Part VI of the Rent Act 1977, and the system of fair rent registration for regulated tenancies under Part IV of the 1977 Act is in operation for tenancies granted by housing associations. Repairing obligations are governed by the provisions of the Landlord and Tenant Act 1985.
Conclusion
It is now widely acknowledged that local authorities are inefficient providers of housing and so other bodies for the provision of housing are being encouraged (apart, that is, from the purely profit-making private landlord). Housing associations and housing trusts now form an important plank in the Government’s policy on housing. Recently, in their White Paper, the Government proposed a further expansion in the role of these bodies. Whether this expansion can be maintained without large increases in funding remains to be seen, but a basic knowledge of housing associations looks as if it will become more essential than ever for the surveyor.