Post Right to Buy Policy Policy Approach to Varying Or Releasing Restrictive Covenants Where Acceptable Plus Policy Approach to Unacceptable Breaches of Covenants
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Information Classification: PUBLIC Post Right to Buy Policy Policy Approach to Varying or Releasing Restrictive Covenants where Acceptable plus Policy Approach to Unacceptable Breaches of Covenants Date: April 2019 Housing Strategy & Partnerships Information Classification: PUBLIC Current Document Status Version Approving body Housing Partnership Board 0.5 Date of formal approval Date 30 August 2019 2018 (if applicable) Responsible Jon Lloyd-Owen Review date 2023 officer Location http://www.cornwall.gov.uk/housing/housing-strategy/ Version History Date Version Author/Editor Comments First working draft for internal March 2018 0.1 Draft. Sarah Thorneycroft consideration First working draft for internal April 2018 0.2 Draft Sarah Thorneycroft consideration and at Housing Partnership Board First working draft with comments from Legal and Fraud incorporated and May 2018 0.3 Draft Sarah Thorneycroft from Housing Partnership Board of 11/05/18 First working draft incorporating comments from key internal July 2018 0.4 Draft Sarah Thorneycroft stakeholders – version signed off by MB and JLO Working draft incorporating minor August 2018 0.5 Draft Sarah Thorneycroft amendments. April 2019 1.0 Final Julia Lansdowne Updated Appendix 2 Comprehensive Impact Assessment Record Date Type of Stage/level Summary of Completed Impact assessment completed actions by Assessment conducted (where taken review date applicable) decisions made Pre DEAG Some changes Sarah May 2018 Full version requested Thorneycroft 2023 Post DEAG Sarah July 2018 Full NFA 2023 version Thorneycroft Document retention Document retention period 5 years in electronic version Post Right to Buy Policy 2 V1.0 Final Information Classification: PUBLIC 1. Summary 1. The ‘Right to Buy’ (RTB) scheme was introduced by the 1980 Housing Act. Qualifying tenants may purchase the home they rent from their social landlord at a discount. There are varying covenants in place on RTB properties. 2. Suspected breaches of covenants continue to be reported to the Council on an ad hoc basis. 3. This Policy will be used to identify: The process current owners will need to follow to vary or release part of a restrictive covenant on their former RTB property; and The specific circumstances under which a breach of covenant is likely to result in enforcement action being taken. 4. The Policy will include detail on: Buy back of former Council owned homes; Alteration or extension to a former RTB property; Building within the grounds of a former RTB property or selling off a part of the grounds for development; Unacceptable breaches of covenant; Administrative, legal and other fees that will be considered for the variation or release of part of a covenant; and Requests to purchase the freehold of a leasehold property. 5. Owners must seek approval from the Council if they want to do anything to the property which would otherwise breach a covenant specified within the RTB conveyance. If a covenant attached to a former RTB property is breached the Council can take action to make sure the owner complies with the restrictions within the covenant. 6. It may be possible to negotiate the release or variation of a restrictive covenant by deed. This option will only be effective in a limited number of circumstances and should only be attempted where there is clear justification for pursuing such a request Post Right to Buy Policy 3 V1.0 Final Information Classification: PUBLIC 2. Context 7. The ‘Right to Buy’ (RTB) scheme was introduced by the 1980 Housing Acti with effect from October 1980. RTB is available to secure tenants of local authorities and registered providers; and registered providers assured tenants who have been transferred with their homes as part of a stock transfer from a local authority to a registered provider - these tenants have a Preserved Right to Buy. Qualifying tenants may purchase the home they rent from their social landlord at a discount. 8. There are varying covenants in place on Right to Buy (RTB) properties. Restrictive covenants are contractual obligations that prohibit certain specific conduct and are binding on successors in title as well as the original purchaser. 9. Covenants can include restricting the use of the property to that of a residential property and permission being required for the alteration, extension and further development on land of these properties. The aim of these covenants is to protect and sustain the housing supply for residential purposes, good estate management practice and in promoting the wider duties of the local housing authority as a land owner meeting local housing needs. 10. Since 1980 council houses sold under the RTB scheme in designated rural areas have had restrictions imposed on them. These restrictions mean former RTB properties can only be sold to a person who has lived and/or worked in Cornwall for three years immediately preceding the purchase of the property. This is to ensure that the limited social housing stock in these areas is maintained to meet the needs of local people. 11. In April 2012 major changes were made to the Government’s RTB scheme which included a significant increase in the maximum discountii a tenant could receive. These changes have resulted in an increase in the sales of Council homes in Cornwall and it is expected that Council owned homes will continue to be lost through RTB given the attractiveness of the area. 12. The Council has been informed over the years of certain former RTB properties being advertised and let as holiday accommodation or long term lets. However, since the creation of the Cornwall Council Unitary authority in 2009 there have been no formal investigations or enforcement action taken against reported incidences as there has been no RTB Policy in place. Informal investigations have been undertaken and a number of properties have been provisionally identified as potentially being in breach of their covenants. 13. Suspected breaches of covenants continue to be reported to the Council on an ad hoc basis. Many of these relate to the letting of such Post Right to Buy Policy 4 V1.0 Final Information Classification: PUBLIC properties as holiday accommodation although there have also been reports of lettings as student accommodation. 14. There are a number of former RTB properties in Cornwall that are either listed as second homes or appear to be long term lettings according to Council Tax data. A small single point in time survey was undertaken in 2017 in the Padstow area and it was found that it could be proven that there were a number of former RTB properties being let as short term holiday accommodation which is in breach of the covenant on these properties. 15. As there seems little or no point in having restrictions and covenants in place if they are not to be enforced, a report was taken to the Council’s Housing Partnership Board with a number of options for discussion and determination. The Board confirmed that a post RTB policy was required to clearly set out the circumstances against which the Council will take enforcement action against breaches of RTB covenants. The rationale for this decision was: The Council has a responsibility in ensuring its landlord functions continue to be fulfilled by protecting the rights of current tenants and the neighbourhood they live in. Former Council owned homes sold through RTB and then subsequently let as holiday accommodation or student lets can impact significantly on neighbouring residents and the local community. Council homes are built with public money for the public good and it is inappropriate for them to be converted into profit making enterprises – particularly as the discount given to the RTB purchaser would not have recouped enough capital for the Council to build a replacement home. In addition, a key priority for the Council is to provide homes that are affordable to local people – losing a number of such homes to holiday accommodation reduces the opportunity for local people to access low cost housing, i.e. they are removed from residential stock. Post Right to Buy Policy 5 V1.0 Final Information Classification: PUBLIC 3. Objective of the Policy 16. The Council operates the Right to Buy (RTB) scheme for its tenants in line with the regulations set out in legislation. The processing of applications and management of the RTB scheme is carried out by Cornwall Housing Ltd (CHL – the Council’s Arms’ Length Management Organisation) with the Council’s Estates and Legal Services Teams. 17. The aim of this particular Policy is to clearly set out the policy and processes that will apply to all situations that might arise in terms of covenants on former Council owned homes that have been purchased through Right to Buy – referred to as former RTB properties for the purposes of this document. The aim of the policy is to set out the Council’s approach to the discretionary areas that are not governed by legislation relating to the Right to Buy. 18. In the majority of cases, this Policy will aid those owners of former RTB properties who have breached an element of their covenant in that it sets out the approach to be followed, where it is appropriate, to regularise a breach through a retrospective variation or release. Breaches of covenant can cause issues when an owner plans to sell their former RTB property and it is in the interest of the owner to regularise a breach when they can. 19. This Policy will be used to identify: The process current owners will need to follow to vary or release part of a restrictive covenant on their former RTB property; and The specific circumstances under which a breach of covenant is likely to result in enforcement action being taken. Post Right to Buy Policy 6 V1.0 Final Information Classification: PUBLIC 4.