Review of implementation of Section 157 of the Housing Act 1985 restriction

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Review of implementation of Section 157 of the Housing Act 1985 restriction.

1. Introduction.
1.1 Cotswold District Council is consulting on proposed changes to its policy criteria of the Area of Outstanding Natural Beauty (AONB) covenant which apply to former Council owned properties that were sold under the Right to Buy and which are subject to a restriction on sale under Section 157 of the Housing Act 1985 (“Section 157”).
1.2 The purpose of the proposed changes is to ensure all properties sold under the Right to Buy provisions remain affordable for purchase by local people and members of the armed forces and reserve forces. These changes will affect properties which are situated within the Cotswold Area of Outstanding Natural Beauty and which are subject to a section 157 restriction imposed when the property was sold by the Council.
2. Background
2.1 Section 157 of the Housing Act 1985 allows local authorities to impose a restriction on resale in a Right to Buy sale of a property in an Area of Outstanding Natural Beauty (AONB). This provides that the property cannot be sold without the Council’s consent and that consent cannot be withheld to prospective purchasers who have been resident or employed for the preceding three years either within the Cotswold AONB or the County of Gloucestershire. For persons purchasing who are not eligible under the restriction, the Council is required to grant a specific consent for that sale.
2.2 The purpose of the condition is to ensure that although the properties are owner occupied they remain available to persons local to the area (i.e. from the AONB or the County of Gloucestershire) so far as that is possible. It provides that consent cannot be withheld if the disposal is to a person who has, throughout the preceding three years:

(a) had a place of work in the designated region comprising the AONB or the County or

(b) had his/her only or principal home in such a region.

The three year period may be made up by part residence and part employment. The Council imposed Section 157 covenants in Right to Buy conveyances and applies residency and employment criteria. If the employment/residency requirements of Section 157 are met, the authority must give consent. Where the criteria are not met, the authority has discretionary powers to grant or refuse consent.

2.3 Under Section 157, the restriction on disposal also prevents disposal without the Council’s consent for the grant of a tenancy or licence, so that a purchaser cannot let the property or use it for holiday lettings unless he/she either lets it again to someone who fulfils the criteria or obtains the Council’s consent to the letting if the prospective tenant does not satisfy the relevant criteria.
3. Current concerns and proposed changes.
At the Cabinet meeting on 5th September 2013 it was decided to retain the policy relating to the Area of Outstanding Natural Beauty Covenant under Section 157 but a public consultation would be undertaken regarding proposed changes to the marketing period and the cases in which the Council’s consent to a sale will automatically be given to address current concerns. The following paragraphs 3.1 to 3.4.2 set out the concerns and the proposals to address them.

3.1 Marketing period.

3.1.1 Concerns have been raised by Members that the current policy does not allow for the condition to operate effectively. In particular, it is felt that the current 28 day marketing period for properties subject to Section 157 provisions is not adequate and should be extended, to give local people a reasonable chance to purchase them. Local people have intimated to Members that they do not have time to organise their finances during the 28 day period to enable them to make an offer. Extending the marketing period will address this issue.

3.1.2 To overcome this it is proposed that the marketing period is increased from 28 days to a maximum period of 12 months. Views are being sought on a range of options. See consultation question 1.

3.2 Mortgage availability.

3.2.1 Some owners of Section 157 properties have notified the Council that the covenant is causing problems when they try to sell their homes because buyers are unable to obtain mortgages or have to pay premium interest rates. Apparently lenders are concerned that if they have to re-possess the property, it will be difficult to sell. It would appear that this could be addressed by allowing lenders to sell the properties free of the restrictions, but the criteria would continue to apply to all subsequent sales.

3.2.2 To alleviate this problem it is proposed that automatic consent be given if a property is being sold by a mortgagee in possession. However, the restriction would be retained for subsequent sales. See consultation question 2.

3.3. Members of the armed forces and reserve forces.

3.3.1 In common with most authorities the housing register for affordable rented accommodation in the Cotswold district usually gives preference to households with a local connection to the district. In 2012 the Government issued guidance waiving the local connection requirement for the allocation of affordable housing accommodation for certain members of the armed forces and the reserve forces.
3.3.2 These provisions recognise the special position of members of the Armed Forces (and their families) whose employment requires them to be mobile and who are likely therefore to be particularly disadvantaged by local connection requirements, as well as those injured reservists who may need to move to another local authority district to access treatment, care or support. Waiving the employment and residency requirements for these groups would align the policies relating to access to housing for members of the armed forces and reserve forces. The residential and employment criteria would continue to apply to subsequent sales.
3.3.3 It is proposed that the residential and employment criteria will not apply to the sale of a S157 property if the purchaser belongs to one of the groups specified in the Allocation of Housing (Qualification Criteria for Armed Forces) (England) Regulations 2012 as follows:
(i) members of the Armed Forces and former Service personnel, where the application is made within five years of discharge;
(ii) bereaved spouses and civil partners of members of the Armed Forces leaving Services Family Accommodation following the death of their spouse or partner and their death was attributable (wholly or partly) to that service;
(iii) serving or former members of the Reserve Forces who are suffering because of a serious injury, medical condition or disability wholly or partially sustained as a result of their service.
See consultation question 3.
3.4 Applications for Consent Under the Mortgage Rescue Scheme
3.4.1 The Mortgage Rescue Scheme is a Government scheme which helps the most vulnerable homeowners facing repossession to remain in their homes. It was launched in January 2009 and targets those families with dependent children, the elderly and vulnerable groups at risk of repossession who can no longer afford their repayments and who would be entitled to homelessness assistance if their home is repossessed. Registered Providers do not meet the residency / employment criteria of the AONB Covenant under Section 157 of the Housing Act, consequently consent would automatically be refused.
3.4.2 It is proposed that an application by any Registered Provider to buy a property under the Mortgage Rescue Scheme should be delegated to the Head of Legal and Property Services, in consultation with the Cabinet Member for Planning and Housing, for determination. If a property is transferred under such a scheme, it would be on the condition that the Registered Providers enter into fresh Covenants with the Council to bind them and their successors in title to the terms of the AONB Covenant in the future. See consultation question 4.
4. Consultation
4.1 Before making a final decision, it was decided that a public consultation would be undertaken on all of the proposed policy modifications, to ensure that the likely consequences and impacts arising from the suggested changes have been properly considered.
4.2 The consultation will run for 12 weeks starting on Monday 14 October 2013 until 5.00 pm on Friday 3 January 2014.
4.3 The consultation shall be directed generally and specifically to include the following:-
(i) a public notice advertised in local newspapers;

(ii) local Estate Agents;

(iii) occupiers of properties subject to the condition;

(iv) Town and Parish Councils within the AONB;

(v) the Cotswolds Conservation Board;

(vi) mortgage lenders.

4.4 The results of the public consultation, and an amended policy, will be presented to the Cabinet in February 2014 for a decision.

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