Assistance with home repairs/improvements

BRIEFING PAPER Number 1617, 9 June 2017 Assistance with home repairs/improvements By Wendy Wilson Contents: 1. Background 2. The Regulatory Reform Order 2002 3. Funding private sector renewal work 4. Assistance in Wales, Scotland and Northern Ireland 5. Guidance and evaluation www.parliament.uk/commons-library intranet.parliament.uk/commons-library papers@parliament.uk @commonslibrary

2 Assistance with home repairs/improvements Contents Summary 3 1. Background 4 1.1 Private sector renewal the case for reform 2001 4 1.2 A new approach to private sector renewal 6 2. The Regulatory Reform Order 2002 7 2.1 Grants and loans 7 2.2 Purchasing an alternative property 7 2.3 Disabled facilities grants (DFGs) 8 2.4 Renewal areas 8 3. Funding private sector renewal work 9 4. Assistance in Wales, Scotland and Northern Ireland 10 4.1 Wales 10 4.2 Northern Ireland 10 4.3 Scotland 11 5. Guidance and evaluation 13 Contributing Authors: Alexander Bellis Cover page image copyright Wendy Wilson

3 Commons Library Briefing, 9 June 2017 Summary Local authorities in England and Wales have broad discretion to offer assistance to private owners with housing repair/improvement work. The English Housing Survey 2015-16 found that 18% of owner occupied homes in England failed to meet the decent home standard. There is no additional Government funded assistance with home repairs in England although the Welsh Government has made 10 million available for a 15 year home improvement loan scheme. This briefing paper explains the powers authorities in England and Wales have to offer assistance under The Regulatory Reform (Housing Assistance)(England and Wales) Order 2002. Constituents seeking assistance with home repairs are best advised to check the relevant local authority s website information is usually listed under the heading of private sector renewal. Scottish local authorities may also offer help under a Scheme of Assistance most of the assistance available is discretionary and can involve non-financial assistance. In Northern Ireland grant and other assistance is administered by the Northern Ireland Housing Executive rather than local authorities.

4 Assistance with home repairs/improvements 1. Background It has long been accepted that poor quality housing has an impact on the health of occupants and on the quality of life in the area. Responsibility for maintaining privately owned homes rests first and foremost with their owners, but some targeted assistance may be available from local authorities and agencies, such as home improvement agencies, for the elderly and less well off, to pay or contribute to carrying out essential maintenance/improvement work. Up until July 2003, local authorities had a range of powers at their disposal to give grants or loans, or provide labour and materials to help homeowners, private sector landlords and tenants to repair or renovate their homes. The main grant giving powers for home improvement were contained in the Housing Grants, Construction and Regeneration Act 1996. This Act still governs authorities duties to issue mandatory Disabled Facilities Grants in England and Wales. Part I of the 1996 Act provided for authorities to issue grants (subject to a test of resources) for specific purposes. Renovation grants were designed to help homeowners and tenants to make their homes fit for habitation, 1 put them in reasonable repair, or carry out other specific improvements. Common parts grants and Houses in Multiple Occupation (HMO) grants served a similar purpose but were targeted on the shared parts of buildings and on HMOs. Authorities powers to provide renovation grants and home repair assistance under the 1996 Act were revoked 12 months after The Regulatory Reform (Housing Assistance)(England and Wales) Order 2002 came into force, i.e. on 18 July 2003. 1.1 Private sector renewal the case for reform 2001 In March 2001 the Department of Environment, Transport and the Regions (DETR) 2 published a consultation paper, Private sector housing renewal: reform of the Housing Construction and Regeneration Act 1996, Local Government and Housing Act 1989 and Housing Act 1985, chapter 5 of which set out perceived problems with the private sector renewal system. Grants The very detailed controls that governed local authorities' powers to give grants under the 1996 Act were viewed as inconsistent with the discretionary regime and the legislation governing loans, which contained far fewer restrictions. The controls, the aim of which was to ensure the effective targeting of public resources, 1 The housing fitness standard contained in section 604 of the Housing Act 1985 has been replaced with the Housing, Health and Safety Rating system. This is not a pass or fail test. 2 Housing matters are now the responsibility of the Department of Communities and Local Government (DCLG).

5 Commons Library Briefing, 9 June 2017 were identified as a factor that actually inhibited authorities' ability to address local needs. The paper also suggested that the widespread use of grants as part of area based renewal work might actually discourage homeowners with resources from carrying out the work themselves. Loans The restrictions on the use of home improvement loans were far fewer, but nonetheless, it was thought that they prevented authorities from being able to use them effectively. As the rate and terms of interest under which loans were given were linked to those for commercial loans, authorities could not offer preferential loans for home repair, except in very limited circumstances. The regime had prevented authorities from helping to develop equity release schemes, in which capital in the home, rather than income, is used to repay a loan. Equity release loans avoid the need for the borrower to make repayments from income and can provide access to capital without reducing people s living standards. Purchasing an alternative property Under the legislation local authorities had few opportunities to give financial help with the purchase of another property where this was a better option than improving or adapting someone s existing home. Although authorities were able to give loans for house purchase, they were tied, as with home improvement loans, to charging commercial rates of interest. Authorities could give relocation grants to help people whose homes were subject to a compulsory purchase order to move out of slum clearance areas; however, they were unable to help homeowners whose homes were purchased outside slum clearance areas, or to offer disabled people help with buying another property where their existing home could not be adapted. Where they gave relocation grants, they had no discretion over how much grant to give. This was identified as a problem in some cases, for example where there was negative equity in the property. Partly as a result of these constraints, and partly because of the high cost of the grants, authorities had made only limited use of their powers to give relocation grants. They were often forced down the route of investing repeatedly in the repair of obsolete or unwanted housing where a selected clearance strategy, involving a mixture of voluntary and compulsory purchase, would have made more sense in the longer term. Renewal areas It was felt that certain rules, such as the criteria for declaring a renewal area, ensured that authorities targeted their powers to deal with renewal areas on the most deprived areas and on those large enough to benefit from an area-based approach. The Government believed that the criteria, which prevented authorities from using their own judgement to decide what a deprived community is, could often be counter-productive. In particular it was thought that they could prevent authorities from tackling equally pressing problems in smaller communities, such as former mining villages, and from taking early action to prevent an area showing early symptoms of decline from deteriorating rapidly.

6 Assistance with home repairs/improvements 1.2 A new approach to private sector renewal In April 2000 the Labour Government published Quality and Choice: a decent home for all in which it proposed a new approach to private sector renewal. In place of detailed regulation the then Government set out proposals to use a combination of guidance, local public service agreements and Best Value to set key principles and targets, monitor activity and reward good performance. On 13 December 2001 the Government laid before Parliament a proposal for a draft Regulatory Reform Order under the Regulatory Reform Act 2001. This Order proposed a number of changes to the detailed provisions that prescribed how authorities could offer assistance to home-owners and others for the renovation of their properties (see below). The Order was subject to detailed simultaneous scrutiny by the Deregulation and Regulatory Reform Committee in the Commons and the Delegated Powers and Regulatory Reform Committee in the Lords.

7 Commons Library Briefing, 9 June 2017 2. The Regulatory Reform Order 2002 The Regulatory Reform (Housing Assistance)(England and Wales) Order 2002, which was made under the Regulatory Reform Act 2001, came into force on 18 July 2002. Authorities powers to provide renovation grants and home repair assistance were revoked on 18 July 2003 and replaced with a system under which authorities are enabled to provide a wide variety of assistance to home owners. Assistance provided under the RRO is discretionary. 2.1 Grants and loans Authorities have a general power to give financial assistance for home repair, improvement and adaptation. This power is not restricted, aside from the fact that authorities must have regard to guidance which sets out overarching principles, such as the need to be fair and to: give priority to the most vulnerable households; ensure that applicants for loans are properly advised; and take realistic account of people s ability to contribute, including to equity release loans. Authorities are required to give assistance under these powers in accordance with a published policy (on which they are expected to consult service users). Assistance can take the form of grants, loans, loan guarantees or indemnities, provision of materials or labour, or by incurring expenditure in other ways, e.g. by paying the contractor to carry out the work. It could be provided directly by an authority or through another agency. To ensure that the assistance given is targeted effectively, authorities have the power to carry out means testing and to charge for any labour or materials they provide, should they wish to do so. They have the power to set the conditions under which any financial assistance should be repaid and the period over which those conditions should apply. Where they choose to give a loan, or to attach conditions to a grant or loan, authorities have the power to waive any requirement to repay it or to reduce the amount they require to be repaid. 2.2 Purchasing an alternative property In place of limited powers authorities had to issue relocation grants, authorities now have a power to help people to buy another property in two broadly defined sets of circumstances. The first is in cases where the authority and owner agree that moving house makes more sense than improving or adapting their existing home, or where they wish to offer the applicant a choice. The second is where they make a compulsory or voluntary purchase of someone s home, for example as part of a renewal or clearance strategy. In the latter case, assistance given under the proposed power would be on top of any other

8 Assistance with home repairs/improvements compensation they are required to pay. The power does not affect any existing entitlement, for example to a Disabled Facilities Grant or to compensation available under the compulsory purchase rules. 2.3 Disabled facilities grants (DFGs) Mandatory DFGs remain unaffected but authorities now have a power to offer alternatives to disabled people, such as a loan that does not involve a means test, or help towards buying a more suitable property. They can offer a loan to top up a mandatory grant; this can help applicants who face difficulty in meeting the cost of their contribution. The power to issue discretionary DFGs has been revoked. More information about DFGs can be found in Library briefing paper 3011: Disabled facilities grants for home adaptations. 2.4 Renewal areas The statutory criteria laid down in relation to the declaration of a renewal area and the number of unfit dwellings which it should contain was abolished. Changes to the renewal area provisions came into force on 18 July 2002, except for the special grant making powers specific to renewal areas which remained in force for a further 12 months.

9 Commons Library Briefing, 9 June 2017 3. Funding private sector renewal work Central Government funding for private sector renewal work in England was ended with effect from March 2011: Andrew Stunell: The Government have made clear that our most urgent priority is to tackle the UK's record deficit in order to restore confidence in our economy and support the recovery. In order to tackle the budget deficit all Government Departments have been required to work within a very tight fiscal settlement. Failure to tackle the deficit would have pushed up mortgage rates and made housing less affordable. The decision to discontinue funding the Private Sector Renewal programme, which received funding of 308 million in 2010-11, reduced by the previous administration from 376 million, is a direct result of these constraints. Where Private Sector Renewal activities are a local priority, local authorities may choose to direct other funding to provide support packages for vulnerable private sector households. Neither Bolton at Home nor other ALMO would have been direct beneficiaries of funding from this programme. DCLG has undertaken an equality impact assessment into the end of funding for the Private Sector Renewal programme, in line with our equalities duties, and will be publishing the assessment shortly. In the spending review we announced almost 4.5 billion investment in new affordable housing to deliver up to 150,000 affordable homes and a further 2 billion investment in Decent Homes. We are also giving housing associations much more flexibility on rents and use of assets. Our aspiration is to deliver even more homes through our investment and reforms. We will publish details of how these proposals will work shortly. 3 The Equality Impact Assessment referred to in this Parliamentary Answer was published in December 2010. This assessment noted that the funding for private sector renewal was not ring-fenced and had, in practice, been used for a very wide range of purposes. The paper stated that owner occupiers are primarily responsible for the upkeep of their own properties but went on to say:...the increased freedoms and flexibilities being given to local authorities as part of the Spending Review mean that discontinuing this funding stream will not necessarily result in less money being spent on repairs to the private sector. Local authorities will have greater freedom to prioritise and allocate budgets to support public services in ways which meet the needs of local people and communities. Some areas may decide to provide assistance to vulnerable private sector households, while others may prioritise other activity. 4 3 HC Deb 17 November 2010 c804w 4 DCLG, Equality Impact Assessment on funding for private sector renewal, December 2010

10 Assistance with home repairs/improvements 4. Assistance in Wales, Scotland and Northern Ireland The Regulatory Reform (Housing Assistance)(England and Wales) Order 2002 applies only in England and Wales. Although the Welsh Government assumed responsibility for housing policy after 5 May 2011, the Regulatory Reform (Housing Assistance)(England and Wales) Order 2002 remains in force there. In England, Wales and Scotland, it is local authorities that define eligibility for home improvement assistance. In Northern Ireland, responsibility rests with the government and the assistance provided is limited to grants. 4.1 Wales In addition to powers under the 2002 RRO, in 2015, the Welsh Government announced 10 million in funding for a 15 year home improvement loan scheme. Administered by local authorities, these short to medium term loans of between 1,000 and 25,000 can be taken out by owners of substandard properties. Criteria for applications apply. Further details can be found on Welsh local authority websites 4.2 Northern Ireland Support for home improvements is not available from local authorities in Northern Ireland. Instead, the Northern Ireland Housing Executive administers grant assistance. Grants have been part of the Housing Executive s duties since 1976. 5 Part III of the Housing (Northern Ireland) Order 2003 is the most recent legislation underpinning the grants system. Article 35 outlines that the Government may provide grants for: the improvement or repair of dwellings, houses in multiple occupation or the common parts of buildings containing one or more flats; the provision of dwellings or houses in multiple occupation by the conversion of a house or other building; and the provision of facilities for disabled persons in dwellings and in the common parts of buildings containing one or more flats. Most of these grants are discretionary and eligibility is defined by the Department. Currently, these discretionary grants include: Renovation Grant. This grant is only considered for properties that pose an imminent safety risk to the occupier(s) but can be improved via renovation. 5 For further information about the history of the Housing Executive, see their publication More than bricks: 40 Years of the Housing Executive (Housing Executive, 2011).

11 Commons Library Briefing, 9 June 2017 Repair Grant. If a local council has served a Statutory Notice on the owner or occupier of a private rented property, they may apply for a Repair Grant. As outlined in Part III, articles 18-19 of the Private Tenancies (Northern Ireland) Order 2006, Statutory Notices include a Notice of Unfitness (where a property is deemed unfit for human habitation) or a Note of Disrepair (where the council believes that the property does not meet a basic standard). Replacement Grant. This grant is only considered for properties that pose an imminent safety risk to the occupier(s). This is aimed at properties where renovation is not feasible and instead a replacement property is required. Home Repair Assistance Grant. This grant is only considered for properties that pose an imminent safety risk to the occupier(s), but where the necessary improvements are less significant. It is aimed at those in receipt of certain benefits and people over 60 years of age. Houses in Multiple Occupation (HMO) Grant. This grant aims to improve the living conditions in HMO properties given the number of tenants. It is only available in certain regeneration areas. Living Over The Shop (LOTS) Grant. Available to those living above shops in regeneration areas of town centres, this grant is for properties that pose an imminent safety risk to the occupier(s). Group Repair Scheme. This grant is available for occupiers of terraced properties where improvements would benefit from an area based approach. Restrictions to funding can lead to the temporary closure of these grants. The NI House Executive website provides more information about each grant and whether or not they are currently available. As in England and Wales, the only grant which the NI Housing Executive is obliged to provide in certain circumstances is the Disabled Facilities Grant for home adaptations. All the grants available are means tested. More information can be found via the Citizen s Advice Bureau (Northern Ireland). In Northern Ireland a house in multiple occupation is a property rented out by at least 3 (unrelated) people who share the bathroom or toilet and kitchen. It can also be known as a house share. 4.3 Scotland As in England and Wales, assistance for home improvements is a local authority matter in Scotland where the regime is known as a Scheme of Assistance. Under articles 71 and 72 of the Housing (Scotland) Act 2006, each local authority must outline their Scheme of Assistance for home improvements. They can provide assistance for, inter alia, the: improvement, repair or maintenance of a house bringing any house into, or keeping any house in, a reasonable state of repair;

12 Assistance with home repairs/improvements adaptation of a house for a disabled person to make it suitable for the accommodation, welfare or employment of that person; reinstatement (rebuilding) of any house adapted for a disabled occupant; and provision of means of escape from fire and other fire precautions. Authorities can provide assistance in a variety of formats such as providing advice or information; allowing local authority staff to help; acting as a guarantor for loans; acquiring and managing land; and providing grants and loans, with any terms and conditions that the council deems fit, including interest-free loans. These powers are broad but the scope of assistance available and how it is means-tested is at the authority s discretion. There are only two circumstances in which a Scottish local authority must provide assistance according to article 73 of the 2006 Act: When an owner of a house has been served a Work Notice under the terms of Section 30 of the Act. Work Notices are administered by local authorities and demand certain repairs to bring a property up to standard. Assistance in this respect might not be financial. When home improvement or rebuilding of a house is necessary to improve the accommodation, welfare or employment of a disabled person. Article 73(2) stipulates that if the amenity required is essential to the needs of the disabled person, this assistance must take the form of a grant. Citizen s Advice Scotland has more information about Schemes of Assistance.

13 Commons Library Briefing, 9 June 2017 5. Guidance and evaluation Guidance on housing renewal under the system introduced in 2002 was published in the form of a Departmental Circular, Housing Renewal, on 17 June 2003 (Circular 05/2003). This Circular is now stored on the National Archives website. Mortgage Sales Guidance was issued in November 2005 to set out procedures that both Registered Social Landlords (housing associations) and local authorities must follow when providing mortgage finance under their Regulatory Reform Order powers. This guidance has also been archived. In December 2005 the Joseph Rowntree Foundation published research into the impact of the new private sector housing renewal regime: Implementing new powers for private sector housing renewal. The key findings from this research were: The initial response of local housing authorities to the RRO was generally favourable. However, there is currently a major contrast between the expectations of the policy reforms of central government and the capacity of local authorities to deliver these programmes. In England, 80 per cent of the housing stock is in private ownership yet over half (54 per cent) of all local housing authorities employed fewer than five full-time members of staff on private sector housing renewal activity and 26 per cent of authorities had less than three people undertaking such work. The initial policy changes made by local housing authorities were characterised by the introduction of a variety of new types of grant aid which more effectively address local housing problems. Engaging with private lenders to attract private finance and develop a portfolio of affordable loan products has been extremely difficult to achieve. Unless private finance can be more effectively levered in to private sector renewal programmes it is difficult to see how local housing authorities can meet their obligations under the RRO and the Housing Act 2004. As a result of the focus of Government attention on vulnerable households living in non decent homes, area-based activity appears to be giving way to client-orientated programmes based on the needs of household types, except perhaps in the Market Renewal Pathfinder (HMRA) programme. The major thrust in private sector housing renewal has been in the area of energy-efficiency, which is supported by a grant regime available from Defra. In terms of implications for future policy development, the researchers suggested: A firmer commitment from central Government to private sector housing renewal in order to meet its commitments under Public Service Agreement (PSA) 7 to improve the housing conditions of vulnerable households in non-decent homes in the private sector

14 Assistance with home repairs/improvements and to prevent the further deterioration of the older private sector housing stock more generally, A need to mobilise private finance and ensure the availability of a range of low-cost loan products underpinned by grant-aid in the neediest circumstances. More encouragement and assistance to support the development of not for profit intermediary lending agencies and extend coverage across England and Wales. A need to explore ways of delivering more effective private sector home improvement programmes. Larger local authorities and the Housing Market Renewal Pathfinders need to take a lead in this process. Existing options could be more effectively evaluated and lessons disseminated. A need to recognise the potential strategic significance of a programme of preventive care for the older housing stock in those authorities without major remedial problems. More effective engagement between the private rented sector and both local and central government and a concerted effort to improve the quality of management practice and the maintenance and repair of the private rented stock. There are demonstrable advantages arising from efforts to achieve greater co-ordination between energy-efficiency/fuel poverty programmes and housing renewal programmes. Energy-efficiency and fuel poverty programmes also need to be more effectively targeted on vulnerable households than they have in the past. In April 2007 the Department for Communities and Local Government (DCLG) published research into the suitability and potential take-up of loan and equity release packages developed by local authorities to support vulnerable private sector households maintain and improve their homes. The full report, Loan Finance to Improve housing conditions for vulnerable owner occupiers, can be accessed on the National Archives website.

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