Select Committee on Delegated Powers and Regulatory Reform Sixth Report


SIXTH REPORT


18 DECEMBER 2002

By the Select Committee appointed to report whether the provisions of any bill inappropriately delegate legislative power, or whether they subject the exercise of legislative power to an inappropriate degree of parliamentary scrutiny; to report on documents and draft orders laid before Parliament under the Regulatory Reform Act 2001; and to perform, in respect of such documents and orders and subordinate provisions orders laid under that Act, the functions performed in respect of other instruments by the Joint Committee on Statutory Instruments[1].

ORDERED TO REPORT

PROPOSAL FOR THE DRAFT REGULATORY REFORM (ASSURED PERIODIC TENANCIES) (RENT INCREASES) ORDER 2003

INTRODUCTION

1.  This is a "first stage" proposal laid before Parliament on 15 October 2002. It relates only to the timing of rent increases for certain types of assured periodic tenancy in England and Wales. An assured tenancy is a residential tenancy capable of benefiting from one or more of the security of tenure or rent protection provisions in the Housing Act 1988 ("the 1988 Act").

2.  Some assured tenancies are for a fixed term. This proposal does not concern those tenancies, except where the tenant stays on (after the end of the fixed term) paying weekly, monthly or other periodic rent. The proposal is only about periodic tenancies, by which is meant tenancies that run indefinitely from week to week, from month to month (or by reference to some other period) until one party seeks to end them. Furthermore, the proposal is only about those periodic assured tenancies whose period is less than one month. The most common category in this group is that of weekly tenancies (of which there are approximately 1.2 million). The landlord might either be a housing association or other registered social landlord (RSL) or a private sector landlord.

3.  The present position is explained at paragraphs 1.5 to 1.8 of the Statement provided by the Office of the Deputy Prime Minister ("the Statement"). Section 13 of the 1988 Act sets out the three ways in which a landlord can increase the rent. One of these is the notice procedure. Though section 13 allows a rent increase each year, it prevents landlords from increasing rents on the same day each year. By the same day is meant not the same date, but the same day of the week in the corresponding week of each year, e.g. "the first Monday in April". Paragraph (b) of section 13(2) prevents an increase taking effect before the start of a new period of the tenancy beginning no earlier than "the first anniversary of the date on which" the tenancy began or the rent was last increased. So, for a weekly tenancy beginning Monday 27th May 2002, the first rent increase could not take place before Monday 2nd June 2003 (which is the first Monday after Tuesday 27th May 2003). Similarly, the following year's increase could not be until Monday 7th June 2004 (which is the first Monday following 2nd June 2004), and so on. This problem of "forward drift" is explained more fully at paragraphs 2.1 to 2.7 of the Statement.

THE PROPOSAL

4.  The proposal is to amend section 13 to enable landlords, if they wish, to increase rents on the same day each year. The proposal has the potential to enable a slight "backward drift" of rent increases up to a maximum six days over a period of years (paragraphs 3.1 to 3.3 of the Statement).

5.  Chapter 2 of the Statement (paragraphs 2.1 to 2.5) sets out the nature of the burden on landlords. The Committee agrees that the proposal would remove or reduce this burden. To the extent that the present arrangements can be said to impose a burden on tenants in the carrying on of an activity (paragraphs 2.6 and 2.7 of the Statement), the proposal would remove it. However, it is not necessary for there to be a burden on both landlords and tenants for the Regulatory Reform Act 2001 to be engaged.

CONSULTATION

6.  The consultation is described in chapter 10 of the Statement.[2] A list of those who responded is at annex D to the Statement. The consultation paper was published on the department's website and all local authorities, all Registered Social Landlords in England and Wales (excluding fully mutual co-operatives and almshouse charities) and a large number of other organisations or persons were sent copies of the consultation paper. Amongst those consulted were 27 organisations which the Office of the Deputy Prime Minister identified as likely to represent the point of view of tenants in particular. Unfortunately, no responses were received from those representing tenants. The Office of the Deputy Prime Minister sought to rectify this by contacting, after the close of the consultation period, both the Association for Tenant Involvement and Control and the members of the Housing Corporation's Tenant Consumer Panel; they also contacted again some of the organisations that were sent the consultation paper initially. This elicited some response, but it must be said that the overall level of response from tenants' groups was low.

7.  Over 90% of those who responded were in favour of the proposal. There must be some doubt about the extent to which those representing tenants have addressed the question whether the benefits of the proposal (certainty and clarity) outweigh any potential financial disadvantage. But the relevant questions were addressed in the consultation paper and the Committee feels that the consultation was adequate.

NECESSARY PROTECTION

8.  This is addressed at chapter 7 of the Statement. The proposal reduces the level of protection afforded to tenants because it enables landlords to increase rents sooner each year than they are currently entitled to do. But the proposal is an adaptation, for a particular group of assured tenancies, of the "one year" protection set out in the 1988 Act. The Committee agrees that the intention of the 1988 Act was to protect tenants from more than one increase each year, and this position is broadly maintained. So we are satisfied that the order does not remove any necessary protection.

REASONABLE EXPECTATION TEST

9.   The proposal affects neither the amount of rent increases nor the tenant's opportunity to dispute the amount of an increase. The Committee does not consider that the proposal prevents landlords or tenants from exercising any right or freedom they might reasonably be expected to continue to exercise.

PROPORTIONALITY AND FAIR BALANCE

10.   The proposals may be considered to remove one burden and replace it with another (rather than merely reduce the existing burden). So the tests of proportionality and fair balance must be satisfied. There is little doubt that the proposals provide for greater certainty (for landlords and tenants alike). The Committee would have found it helpful to have had a greater response from tenants' groups to the consultation. But the Committee agrees in particular that the burden on tenants occasioned by landlords being able to increase rents each year slightly earlier than they otherwise could do is proportionate to the benefits to both landlords and tenants of greater certainty. The Committee considers also that the tests in section 3(2) of the 2001 Act (fair balance and desirability) are satisfied.

CONCLUSION

11.   The Committee concludes that the proposal is an appropriate use of the 2001 Act and meets its requirements.

DRAFT REGULATORY REFORM (SPECIAL OCCASIONS LICENSING) ORDER 2002

INTRODUCTION

12.  On 24 July 2002, the Government laid before Parliament a proposal for a draft Regulatory Reform (Special Occasions Licensing) Order 2002, together with a Statement by the Department for Culture, Media and Sport. We reported on the Government's proposals on 16 October 2002.[3]

13.  The purpose of the order is to relax licensing hours for all future New Year's Eves.

14.  In our earlier Report, we recommended no changes to the draft which we considered. The Regulatory Reform Committee in the House of Commons also reported favourably on the proposal (although expressed serious concern about the timing of the laying of the draft Order in Parliament).[4]

CONCLUSION

15.   In our first Report on this proposal, we concluded that it was appropriate to be made under the Regulatory Reform Act 2001. We remain of this view, and therefore recommend that the order, as it now stands, is in a form satisfactory to be submitted to the House for affirmative resolution.

DRAFT REGULATORY REFORM (CREDIT UNIONS) ORDER 2003

INTRODUCTION

16.  On 18 July 2002, the Government laid before Parliament a proposal for a draft Regulatory Reform (Credit Unions) Order 2003, together with a Statement by HM Treasury. We reported on the Government's proposals on 30 October 2002.[5]

17.  The order is part of a larger reform of the legislation relating to credit unions. The specific purpose of the order is to allow credit unions to charge fees for providing additional basic services; to make the "common bond" requirements (that is, the requirement for all members to have a specific qualification for membership) more flexible; and to establish appropriate regulation on the use of the name "credit union".

18.  In our earlier Report, we recommended no changes to the draft which we considered. The Regulatory Reform Committee in the House of Commons also reported favourably on the proposal save for a recommendation that a minor amendment should be made to new subsection 1(3B) of the Credit Unions Act 1979 to avoid an ambiguity in the drafting.[6] This and other minor, drafting amendments to the order have been made by the Government.

CONCLUSION

19.  In our first Report on this proposal, we concluded that it was appropriate to be made under the Regulatory Reform Act 2001. We remain of this view, and therefore recommend that the order, as it now stands, is in a form satisfactory to be submitted to the House for affirmative resolution.

REQUEST FOR EVIDENCE ON THE PROPOSAL FOR THE DRAFT REGULATORY REFORM (SCHEMES UNDER SECTION 129 OF THE HOUSING ACT 1988) (ENGLAND) ORDER 2003

20.  The Committee requests submissions in writing from any interested organisations or individuals no later than Monday 20 January 2003 on the proposals for the draft Regulatory Reform (Schemes under Section 129 of the Housing Act 1988) (England) Order 2003. Members of the public who have queries either about this regulatory reform proposal or the parliamentary regulatory reform procedure generally are invited to address them to the Committee's Clerk.[7] The text of the proposal and accompanying explanatory statement are available at the Cabinet Office website.[8] Copies are available to Peers from the Printed Paper Office.


1   This report is also published on the Internet at the House of Lords Select Committee Home Page (http://www.parliament.uk), where further information about the work of the Committee is also available. Back

2   Further information about the consultation is contained in the correspondence set out in the Annex to this Report. Back

3   27th Report, HL Paper 172, Session 2001-02. Back

4   1st Report, HC 1272, Session 2002-03. Back

5   27th Report, HL Paper 180, Session 2001-02. Back

6   1st Report, HC 1272, Session 2002-03. Back

7   Contact details are set out at the beginning of this Report. Back

8   http://www.cabinet-office.gov.uk/regulation/act/index.htm Back


 
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