The sample draft clauses and explanatory notes on the future of social housing regulation (the draft legislation) published on 29 March 2022 fulfil the Government’s promise to publish an update in March and provide the sector with long-awaited insight into the legislative changes proposed.
Whilst the draft legislation is not the full Social Housing (Regulation) Bill (nor is any timetable currently proposed for its introduction to the parliamentary process), its publication on a new gov.uk website page dedicated to social housing quality, alongside details of a new Social Housing Quality Resident Panel, proposals for Government powers to ‘name and shame’ failing landlords and a factsheet about the Housing Ombudsman and how it will work alongside the Regulator of Social Housing (RSH), does provide useful clarity to address criticisms linked to the lack of progress since the publication of The Charter for Social Housing Resident: Social Housing White Paper (the white paper).
The contents of the draft legislation are largely as anticipated in line with the white paper. However, this does not make them any less significant. We have considered key points from the draft legislation below.
- Consumer regulation
Regulation of the consumer standards will be placed on the same footing as that of the economic standards, with the scrapping of the ‘serious detriment’ test. Corresponding provisions within the Housing and Regeneration Act 2008 (the 2008 Act) which required the RSH to have regard to information received from various specified bodies when considering whether to exercise a monitoring or enforcement power following a breach of the consumer standards will also be removed. This permits the RSH to regulate the consumer standards proactively and intervene on grounds of a breach or potential breach of them, including where, if the RSH fails to take action, this could lead to a breach of a consumer standard.
The draft legislation includes amendments which will enable the RSH to issue codes of practice to accompany the consumer standards with the aim of providing clarity to tenants as well as registered providers of social housing (RPs) on what is expected in relation to demonstrating compliance with the consumer standards.
- Transparency and information
The RSH’s fundamental regulation objectives will be amended to include a requirement to ensure that RPs act in a transparent manner in relation to their social housing tenants and provide information in accordance with standards set by the RSH.
The draft legislation includes the power for the RSH to set standards relating to information and transparency, separate to the consumer and economic standards. This will include stronger requirements around self-reporting (which we anticipate will be particularly relevant for local authority RPs) and also, as trailed in the white paper, requirements to publish information about the remuneration of both executives and the board, as well as management costs and other expenses. The RSH will also be able to require RPs to provide specific information about their performance, as well as setting general standards.
Under the new powers contained within the draft legislation, the RSH will be able to set out the framework for the ‘access to information’ scheme which was proposed within the white paper, but as yet there is little detail available on this.
The requirement on the RSH contained within the 2008 Act to ‘minimise interference’ where possible will be retained, and the draft legislation notes that in setting standards relating to the provision of information and transparency, it must have regard to the desirability of RPs being free to choose services and how they conduct their business.
- Health and safety
The RSH’s fundamental objectives in relation to the consumer standards will include a specific requirement to ensure that it supports the provision of social housing that is safe.
RPs will be required to identify a ‘health and safety lead’ (H&S lead) responsible for ensuring compliance with their health and safety requirements and notifying the RP’s responsible body (the board or equivalent) of any material risks or failures to comply. Details of the H&S lead will need to be notified to the RSH and published.
The draft legislation confirms the duties owed by an RP in relation to the H&S lead (who will need to be an officer for RPs with fewer than fifteen employees): these include ensuring that the lead has ‘sufficient authority’, and is able to devote ‘sufficient time’, to perform the role effectively and discharge their functions. Failure to appoint an H&S lead, or for the H&S lead to discharge their functions, will be a ground for enforcement action by the RSH. Boards and councillors should begin considering who the most appropriate H&S lead would be, and it should be noted that the draft legislation confirms that appointment of an H&S lead does not absolve the board/councillors of potential liability in respect of health and safety failings.
The draft legislation also includes proposed amendments to the Housing and Planning Act 2016, which would allow regulations relating to electrical safety to be published requiring compliance from RPs (and not just private landlords). Moves to mandate electrical safety checks have been widely accepted by the sector, bringing electrical safety in line with existing obligations in respect of gas safety.
- Advisory Panel
As proposed in the white paper, the draft legislation provides for the establishment of an Advisory Panel (the panel), which will be made up of a range of voices from across the sector, including tenants, RPs and funders, to provide independent and unbiased advice to the RSH on discharging its functions. However, the remit of the panel appears to go beyond that outlined in the white paper, with it having the ability to proactively raise any issues with the RSH which could have a ‘significant impact’ on RPs or the provision of social housing. Further clarity will be needed on the panel’s remit and how it will carry out this role, particularly alongside the new ‘name and shame’ and direct intervention powers proposed for the Government where RPs are failing to meet regulatory standards.
- RSH’s remit and powers
Changes to the RSH’s powers outlined in the draft legislation seek to level the playing field between the regulation of different types of RP and give greater flexibilities to the RSH to allow it to regulate more effectively including:
- codifying the ‘look-through’ power promised in the white paper by widening the RSH’s powers to enable the RSH to follow information relating to funds or assets once they have left the regulated sector;
- removing some of the current legislative restrictions on the RSH’s powers to collect information directly from third parties (and introducing new offences in relation to the provision of false or misleading information);
- strengthening the RSH’s powers to carry out surveys if RPs are failing to maintain premises in accordance with the consumer standards;
- widening the RSH’s enforcement powers in respect of local authority and for-profit RPs and also registered charities which have not received public assistance; and
- removing the current cap on fines which can be imposed by the RSH (so that these will be unlimited) and making them applicable also to local authority RPs.
The draft legislation also brings in new enforcement powers for the RSH to require RPs to agree and comply with performance improvement plans. Interestingly, such plans go beyond the proposals contained in the white paper and will not just be limited to breaches of the consumer standards. It is proposed that such plans could be required even where there is a risk that if no action is taken by the RSH the RP would then fail to meet the standards, or if the interests of tenants of social housing require protection.
- Codification of the RSH’s relationship with the housing ombudsman
The existing Memorandum of Understanding in place between the two bodies will be codified and strengthened by the draft legislation stating that they must both “take such steps as it considers appropriate to co-operate in the exercise of their respective functions.” As mentioned above, a factsheet has also been issued which is designed to more clearly set out the two bodies’ respective roles and functions and how they work together. It is also encouraging to note that the draft legislation recognises the importance of communicating the respective roles of the RSH and housing ombudsman more widely by requiring the Memorandum to be “published in the way appearing to them to be best calculated to bring it to the attention of the public.”
The draft legislation provides useful clarity for RPs and confirms that serious practical and structural measures affecting all parts of the sector are coming. The proposed extension to the RSH’s enforcement powers will certainly assist in giving it additional ‘teeth’, but further detail will be needed on how it will be required to work with and alongside the advisory panel and also the proposed new powers for the Government in relation to RPs failing to meet required standards.
However, the new model of regulation will continue to be co-regulatory and assurance based – although it is proposed the RSH will have investigatory powers, the RSH has been keen to stress that this will not be a return to the days of the Audit Commission. Boards and councillors therefore need to be clear on how they are getting robust assurance on compliance with regulatory standards and health and safety requirements. Also, as evidenced from the Levelling Up White Paper earlier this year and statements made in connection with the release of the draft legislation, there will be a strong focus on quality of homes – RPs should ensure that have sufficient and accurate data on compliance with the requirements of the Decent Homes Standard.
The proposals in the draft legislation also need to be considered alongside the draft tenant satisfaction measures previously published by the RSH, and boards and councillors should be considering where there may be barriers in relation to identifying and tackling potential issues linked to tenant satisfaction.
Finally, there is still much detail to come about new information and transparency requirements, including the new ‘access to information’ scheme. Nonetheless, boards and councillors should be actively considering how open and transparent their organisations are, and particularly during these challenging times of balancing strategic priorities, how well information about decision-making and trade-offs are being communicated to tenants and other stakeholders.