Infrastructure and Capital Investment Committee

Meeting date: Wednesday, March 21, 2012

Official Report 495KB pdf

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Subordinate Legislation

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Scottish Secure Tenancies (Repossession Orders) (Maximum Period) Order 2012 [Draft]

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Scottish Secure Tenancies (Proceedings for Possession) (Pre-Action Requirements) Order 2012 [Draft]

Good morning. I welcome everyone to the seventh meeting of the Infrastructure and Capital Investment Committee in 2012. I remind everyone to turn off their mobile phones and BlackBerrys as they affect the broadcasting system. No apologies have been received today.

Item 1 is consideration of two instruments of subordinate legislation that are subject to affirmative procedure. I welcome Keith Brown, who is the Minister for Housing and Transport, and his supporting officials from the Scottish Government. They are: Pauline Brice, who is a housing policy manager; William Fleming, who is branch head in the social housing and strategy unit; and Gillian Turner, who is a principal legal officer.

The instruments are laid under affirmative procedure, which means that the Parliament must approve them before the provisions may come into force. Following evidence, the committee will be invited to consider a motion to approve the instruments under items 2 and 3.

Members will note from paper 1 that the Subordinate Legislation Committee has raised several issues in relation to the instruments. I invite the minister to make introductory remarks.

The Housing (Scotland) Act 2010 includes provisions to protect, through a series of order-making powers, social tenants who are in rent arrears. Today, we are considering two orders that are subject to affirmative procedure.

The orders are necessary because although the number of evictions for rent arrears in the sector has continued to reduce in recent years, there is still a lack of consistency in practice among social landlords. As a result, too many tenants are taken to court unnecessarily, which is a very expensive process. In 2010-11, social landlords took 14,600 eviction cases to court, but eviction took place in only 1,800—around 12 per cent. A huge amount of court action ultimately did not result in eviction, which was costly for landlords and the public purse and extremely stressful for tenants and their families.

The affirmative orders that are before the committee today, and two further orders that are subject to negative procedure and which we have laid in the past few days, will help to deal with that problem. In broad terms, they will do so by putting in place arrangements that are equivalent to those that the Home Owner and Debtor Protection (Scotland) Act 2010 established for owner-occupiers who are in arrears with their mortgage payments. The draft Scottish Secure Tenancies (Proceedings for Possession) (Pre-Action Requirements) Order 2012 will introduce a number of steps that landlords will have to follow in all rent-arrears cases, and the draft Scottish Secure Tenancies (Repossession Orders) (Maximum Period) Order 2012 will limit to a maximum of six months the period within which eviction decrees can have effect.

Under the pre-action requirements order, all social landlords will have to follow the same steps before taking a case to court. Those steps include trying to establish whether the tenant needs advice and assistance on housing benefit and making reasonable efforts to agree a plan for payment of arrears with the tenant. In effect, the order will ensure that social landlords are applying consistent good practice in key areas such as early intervention, in order to avoid unnecessary court action. That means that, in practice, all landlords will follow broadly the same approach that a number of the better landlords currently use to avoid cases going to court unnecessarily. For example, the Glasgow Housing Association reviewed its rent-arrears process to focus on an approach that is similar to the pre-action requirements. As a result, it reduced by more than 90 per cent the number of notices warning of possible eviction action that it issued to tenants, and it reduced current tenant arrears by more than £3.35 million between 2007 and 2009.

On the maximum period order, the sheriff must set the period during which it can be used when granting a decree for eviction. The order sets the maximum period as six months from the date that the order is “extracted” or, in plain English, the date that becomes available to the landlord. Usually, a decree is not extracted until after the tenant has had time to consider whether to appeal the decision. The purpose of that period is to provide time for landlords and tenants to try to resolve the outstanding arrears in order to avoid eviction, wherever possible. That period may be particularly useful for tenants who are, by virtue of their circumstances, unable to or unaware of the need to take legal advice at an earlier stage. The setting of a latest date by which an eviction decree must be implemented will also ensure that the decree cannot be held over a tenant’s head indefinitely.

The committee will be aware that the Subordinate Legislation Committee raised a number of points on the draft orders. Some of those relate to matters on which room for interpretation is needed. An example is the legal expenses that a tenant might incur. We have worked closely with practitioners through the evictions working group, the members of which include the Convention of Scottish Local Authorities, the Scottish Federation of Housing Associations and Shelter Scotland, to help us to draft the orders. We have refined the detail of the orders to reflect what the group told us, and we believe that we have reached consensus on the content of the orders. In the light of that, we believe that the group is satisfied in practical terms with what the orders will require. However, we continue to work with the group to develop statutory guidance, which we believe we should use to provide assistance with interpretation of how it is intended that the provisions will be used.

The Subordinate Legislation Committee had a concern about the maximum period order relating to whether a landlord could, by delaying extraction of a court order, extend the maximum period. However, the period of the court order will be set by the court, and the court, rather than the landlord, will control when the court order is to be extracted. If a court delays, or brings forward, the date on which an order is to be extracted, the maximum period will start from that date. The period for which the order can run is for the court to decide. We have reflected carefully on all the points that the Subordinate Legislation Committee raised and we are satisfied that the orders do not need to be further revised.

I apologise for describing the orders in detail; a longer opening statement was required because of the Subordinate Legislation Committee’s comments. However, the purpose of the orders is simple: they are to provide added protection for tenants to ensure that eviction for rent arrears is truly a last resort.

I am happy to answer questions. I hope that the committee will be pleased to recommend approval of the orders so that they can come into effect on 1 August 2012.

Thank you. I invite comments or questions from members.

I do not share most of the concerns of the Subordinate Legislation Committee, but I take its point about the meaning of the phrase

“an appropriate debt advice agency”.

I note that the Scottish Government says that it will clarify that point in guidance, which I hope will deal with the matter. However, my question is on a more general point. Will any of the Subordinate Legislation Committee’s other concerns be dealt with in guidance, or is that the only issue that requires attention?

Guidance is required only in so far as interpretation would make something clearer. My officials might want to comment, but that is the only issue that I am aware of.

The intention is to go back to the evictions working group to go through the statutory guidance. When we do that, we will pick up the points that the Subordinate Legislation Committee has raised. There are more concerns that need to be clarified, and we will certainly address them in the group.

The question relates to the point that an “advice agency” could be a citizens advice bureau, but could also be one of many other organisations: it simply would not work to try to name all of them in the legislation. We will give illustrations in the guidance.

As far as I know, that is the only concern that the Government has said it will address in guidance. It might give reassurance to those who are concerned if you were to indicate which other concerns will be addressed in guidance. Alternatively, do you feel that the other concerns are not substantive?

One of the Subordinate Legislation Committee’s other suggestions is that it might be a mistake for the officer who is dealing with the arrears to approach the people who deal with benefits in the council. However, that happens already. The guidance will say that that is a long-standing practice among the better landlords, which will reassure people who are concerned that they should not be doing that. The guidance can make the point that the GHA, and Stirling and Edinburgh housing associations already do that. There is established practice that we are encouraging others to follow.

We have heard about procedures that councils will have to follow to ensure standardisation so that each council does the same thing to address the problems. Will the Government be issuing a sort of standard procedure manual for the councils to follow to ensure that each council interprets things the same way and delivers the same interventions to tenants?

No. We will make the guidance a bit more detailed, but the various steps—finding out whether a person is properly accessing the housing benefit that is available to them and any further assistance that can be given—are fairly widely known by the exemplars that we have just now. Even if a council is not doing that just now, it will be aware of the practice of Edinburgh, Stirling and, in particular, the GHA. There will not be a step-by-step manual.

We have touched several times on standardisation of practice. There are a couple of points that argue in two opposite directions, and I would like to hear your thoughts on them. First, given that many of the pre-action requirements are already carried out by housing providers, how will the proposal significantly reduce evictions?

With regard to the various steps that are to be taken—and which are, as I said before, currently taken by a number of social landlords—if it is possible just now to seek eviction without checking whether the tenant in question is entitled to housing benefit or has even tried to find out whether they are, it is possible for it to happen without knowing whether the tenant has access to legal advice. Evictions will be reduced if we ensure that the tenant is aware of their opportunities in relation to housing benefit—especially now, with the changes that have been made—and if we ensure that reasonable steps have been taken to put in place a repayment plan and so on. As I said, there was a 90 per cent reduction in the number of evictions from the GHA’s properties at the same time as there was a substantial reduction in the level of arrears.

I will turn that around and ask you a question that might seem to go the other way entirely. Once the pre-action requirements are in legislation, will you see failure to carry them out to the letter as being an opportunity for a defence against legitimate eviction?

We are getting close to having to express a legal opinion. Maybe the lawyers—rather than I—should do that. What Alex Johnstone suggests is not my intention. The point of the legislation and the guidance is to ensure that pre-action requirements are fulfilled. Those who can be shown not to have followed them through will be leaving themselves vulnerable.

Perhaps a legal professional could give a better answer to the question.

The minister is correct. The landlord has to confirm to the court that it has complied with each of the steps, and the tenant will receive a notice setting out what the landlord says it has done to comply with the steps. If the tenant were to say that certain actions that were listed on that notice had not been taken, they could let their lawyer know about that, and the lawyer would be able in court to challenge the competence of the action because the pre-action requirements had not been complied with. It would then be for the court to take a view.

My final question is slightly different and concerns what you said earlier about placing a time limit on an order to evict, once one has been granted. We know that, at the moment, some landlords get an order to evict and use it to put pressure on a tenant to pay their rent. The order will put a limit on that of six months. Is there any danger that landlords who currently use those orders to encourage tenants to pay their rent might be more likely to serve the order and evict the tenant in the future?

Obviously, the intention of the pre-action requirements is to stop people getting to that stage. However, as Alex Johnstone points out, some will still get to that stage: the pressure that you describe still exists, although the eviction order will be time limited to six months. It seems, in the interests of justice, that a disposal of the court should not hang over someone’s head for a long time, with their not knowing when the hammer will fall.

As Alex Johnstone also mentioned, the threat of eviction might be used as a means to try to address an arrears problem. I imagine that that will still be the case, and all that will change is the time period that is allowed. We might find that, in some cases, the pressure will become more acute. At present, a tenant might think, “I’ll not bother paying these arrears. Nothing’s happened for a couple of months.” If they know that the six-month deadline is about to be reached, they will know that the landlord is likely to take action soon. There are different pressures at play, but the main thrust of what we are trying to do is to avoid getting to that situation in the first place.

10:15

At the margins, a bit of brinkmanship will still go on.

It could do, but we are trying as far as possible to ensure that it is at the margins.

The minister said that the Government has consulted the SFHA, Shelter and another body, and Mr Fleming mentioned debt advice agencies. Have you discussed the matter with the likes of Citizens Advice Scotland? Citizens advice bureaux tend to be the first port of call for people who are faced with court orders and possible eviction.

The other partner was COSLA. Shelter, the SFHA and COSLA have relationships with debt advice agencies, but I do not know whether my officials can confirm the involvement of debt advice organisations in the working group. The issue has certainly been taken into account; indeed, we could not have proceeded without taking it into account. Also, the pre-action requirements come from a body of experience that came particularly from citizens advice bureaux, which have been dealing for a long time with tenants who are in arrears. I ask William Fleming to say more about that.

The full list of members of the working group is the SFHA; COSLA, including the housing specialists within it; the Scottish Court Service; T C Young, which is a firm of solicitors; the Legal Services Agency, which provides a lot of advice to tenant groups as a tenant-focused legal services body; Shelter; the Scottish Housing Regulator; and two tenant representatives from tenant organisations. We have tried to capture, particularly through the advice of the Legal Services Agency, the practices that are involved in giving advice to tenants.

Within COSLA, the Association of Local Authority Chief Housing Officers is involved. It has a lot of expertise not just in provision but in debt management.

You mentioned that the number of court orders is huge compared with the number of evictions. Was the GHA’s 90 per cent reduction in the number of court orders or the number of evictions?

It was in the number of evictions.

It obviously uses good practice. Is that being shared with others?

The pre-action requirements are very much based on the work of the GHA; we pulled it out for that reason. One of the concerns is that, if we take the action that we propose and introduce the pre-action requirements, there might be sensitivity about the ability of landlords to ensure that arrears are addressed.

Just to clarify the figure that I gave in relation to evictions, eviction action was reduced by 90 per cent, with tenants’ arrears coming down, so that action—

Does “eviction action” mean court orders?

The number of notices warning of possible eviction that were issued to tenants reduced by 90 per cent.

One of the possible fears about pre-action requirements is that it will be harder to address arrears. I mentioned the GHA example because, in that case, there was at the same time a substantial reduction in arrears. More active management of people who are in arrears seems to produce dividends both for the tenants, in terms of far fewer costly eviction actions, and because it manages down arrears. That approach is also being taken in Edinburgh, Stirling and elsewhere, and it is enshrined in what we are trying to do with the orders.

When you say “eviction action”, do you mean court orders or what happens before that?

I refer to notices of possible eviction that are issued to tenants by landlords, not by a court.

As members have no further questions, we move on to agenda item 2. I invite the minister to move motion S4M-02390.

Motion moved,

That the Infrastructure and Capital Investment Committee recommends that the Scottish Secure Tenancies (Proceedings for Possession) (Pre-Action Requirements) Order 2012 [draft] be approved.—[Keith Brown.]

Motion agreed to.

We will move on to agenda item 3. I invite the minister to move motion S4M-02389.

Motion moved,

That the Infrastructure and Capital Investment Committee recommends that the Scottish Secure Tenancies (Repossession Orders) (Maximum Period) Order 2012 [draft] be approved.—[Keith Brown.]

Motion agreed to.

I thank the witnesses for their evidence. I briefly suspend the meeting to allow the witnesses to leave and the next set of witnesses to come to the table.

10:20 Meeting suspended.

10:22 On resuming—