Associations warned their status could be challenged in other areas
Ruling could land public with £53bn debt
Housing associations could see their £53.1 billion debt added to the public balance sheet, after the Supreme Court rejected an appeal against a ruling that the organisations are public bodies for some purposes.
The court last week refused an application for appeal from London & Quadrant against June’s Court of Appeal decision in the Weaver v L&Q case.
This was the housing association’s last chance to fight the ruling.
The Supreme Court held that L&Q acted as a public body when it served a notice seeking possession of its tenant Susan Weaver’s home.
The original Court of Appeal decision means housing associations are deemed to be public bodies and therefore subject to judicial review and the Human Rights Act in respect of functions relating to the management and allocation of their housing stock, including the termination of tenancies.
Lawyers are predicting a wave of applications for judicial review from tenants who might previously have used housing associations’ complaints procedures.
The court’s decision also opens the door for legal challenges on the removal of services such as resident wardens.
Although the Weaver ruling was related to human rights rather than registered social landlords’ overall status as public bodies, it has raised concerns that their status could be open to challenge in other areas.
Privately, some lawyers have raised concerns that associations’ £53.1 billion debt could ultimately be added to the public balance sheet.
Natalie Elphicke, partner at Stephenson Harwood, said the effect of the Weaver case on the public purse depended on how intrusive the Tenant Services Authority’s regulation of social landlords is.
‘It is to be hoped that the TSA [regulatory framework] brings a lighter touch to regulation, as an intrusive approach could mean housing association debt does become public,’ she said.
‘This case certainly adds weight to the concern that housing associations could also be public bodies in that respect.’
David Montague, chief executive of L&Q, said: ‘We are obviously disappointed with the decision. We believe the issue of whether housing associations are public bodies is one of considerable public importance and that the case deserved review by the Supreme Court particularly given that judgement was divided in the Court of Appeal.’
John Bryant, policy leader at the National Housing Federation, said it had ‘considerable concern’ about the impact of the decision ‘which we are surprised and disappointed by’.
He said that housing associations were likely to have to spend more time and money dealing with legal action from tenants as a result of the ruling.
In a statement L&Q said the court had refused permission to appeal stating that the ‘application for permission raised no arguable point of law of general public importance’.
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Readers' comments (20)
Sancho | 13/11/2009 4:29 pm
Ho Ho. Please let this be true....
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davidJ | 13/11/2009 4:55 pm
An additional £53.1bn of debt on the balance sheet - how ironic!!
Still, at least the Barristers got paid!!!!
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Joe Halewood | 14/11/2009 10:42 am
Ruling COULD land public with £53bn debt
Elvis COULD be alive and well on that double-decker bus on the Moon
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| 14/11/2009 8:02 pm
Excellent. The self professed myth that HA's are in some way "private" (despite being dependent on the State for their funding) has now been scotched. Can't see how anybody could be "surprised" by this ruling unless they were living under a rock.
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teddy mcnabb | 15/11/2009 4:14 pm
Happy days, there will be those shaking in their boots.
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Melvin Bone | 16/11/2009 9:38 am
Ooops, I hope the tenants are ready for the undoubted rise in 'service charges' to cover the cost of all the Barristers.
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Inquisitorial | 16/11/2009 10:09 am
With great power comes great responsibility. Is that public bodies because it suits the purpose or public bodies because it's what they are. You can't pick and choose, in which case subject to FOI, borrow from PWLB issue debt as a public body and be treated as a public body for VAT and taxation puposes. Great news for HA's, back to days of yore as Council then!!!
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stephen west | 16/11/2009 11:30 am
The Joseph Rowntree Foundation commissioned and published back in 2003 the first ever report in to the affects of Social Housing Stock Transfers from Local Authorities to RSL's / Housing Associations.
It stated that,
Large-scale ownership transfers are transforming social housing throughout Britain and, according to new research, have spawned more than 180 new housing associations since 1989. Whilst they are a diverse group, these agencies arguably represent a new class of social landlord. Whilst clearly distinct from local authorities, they tend to differ from traditional associations in terms of their stock profile and local focus, enduring close ties with founder local authorities, substantial tenant and (in England) councillor participation in governance and longer-term potential to generate substantial revenue surpluses. This study of pre-1999 transfers, by Hal Pawson and Cathie Fancy at Heriot-Watt University, finds that:
* The transfer process has tended to have a liberating effect on housing staff with the move to a more inclusive culture in which individual initiative is encouraged.
* Transfers have generally fostered staff ownership of corporate objectives to a degree far greater than in predecessor landlords.
Background
In the past 15 years, social housing in Britain has been substantially restructured through the transfer of former council stock into housing association ownership. Associations now manage over a third of all social sector dwellings - a threefold increase on the percentage in 1991.
Since the transfer process began in earnest in the late 1980s, more than 870,000 (tenanted) homes have been passed from state ownership (local authorities, new town development corporations or Scottish Homes) to housing associations (and, in a few cases, non-registered housing companies). By early 2003, 111 local authorities in England had transferred all their stock to housing associations. In addition, over forty authorities (twenty-three in England and nineteen in Scotland) have carried out 'partial stock transfers', where a council disposes of a package of tenanted housing whilst also retaining stock in its ownership.
A large majority of transferred stock has been taken into ownership by newly created associations, more than 180 in all. In most cases, these have been set up as free-standing bodies, though a few were established as subsidiaries of existing associations. Transfer associations are continuing to expand and now account for almost half of total association stock.
Readers might like to know that nearly all of these Stock Transfer Associations were able to buy up tens of thousands of former Local Authority Social Housing by means of very lucrative discounts on the valuations of the housing stock they were buying, which in affect is savings in market values achieved by public monies. Our landlord Orbit South was able to scoop up over 4000 former Bexley Council Social Sector home flats, houses, maisonettes sheltered housing schemes etc. and all for £34,000 000 less than £9k per dwelling together with local authority trained Housing Staff all of which was heavily subsidised by the UK tax Payer and local Authority Rate Payer These very same Stock Transfer Associations have continued to receive public finance towards, repairs and building new homes adding to their property portfolio in terms of value of these former Local Authority homes and by new build homes part funded by the former Housing Corporation. All are public subsidies. Lucrative tax avoidance coupled with Charitable status has increased the value of these Stock Transfer Association.
Eleven years on since our own Stock Transfer and Bexley Council still retains the right to allocate homeless persons to the two RSL's in the borough who snapped up between them over 9000 properties despite not owning a single social sector dwelling.
So I think it is a fair assumption to make by virtue of all the Tax and Local Authority Rate Payers monies shelled out to Stock Transfer Associations that they are as public as the NHS is.
Stephen West
Chairman OBHA Independent Leaseholders Group
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Joe Halewood | 16/11/2009 12:36 pm
While councils can transfer all their housing stock, they cannot legally transfer their legal housing law duties, such as homelessness.
So a council with no housing at all still retain the legal duties to deal with homelessness. They can transfer the operational administration and assessment for homeless cases but still they have to retain the legal duties that cant be transferred.
So Stephen Wests assumption conveniently ignores this legal fact and makes it invalid.
His highly selective reporting of the JRF report and the common situation on costs is that the receiving body, housing trust, ALMO et al, pay a cost that reflects the money needed to be put into these properties by wy of new bathrooms, kitchens, double glazing, central heating, etc., that the councils didnt have the money to fund. Oh and the very simple but obvious fact he ignores is that council tenants voted for all this.
In fact, transfer only happens because public bodies cant afford to put the money into their stock and are not allowed to borrow to fund it - that in a nutshell is why transfer happens. So it is preceicely because of the ABSENCE OF PUBLIC MONIES that stock transfer takes place and has taken place.
If councils had the ability to borrow to invest in stock there would have been no need whatsoever for transfer or indeed RTB - that public policy that sees councils sell off public assets to private individuals at a massive cost to the public purse - that creates duplicitous private power blocs such as leaseholder groups who bemoan their costs whilst sitting on valuable assets at the expense of the vulnerable.
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Stephen West | 16/11/2009 5:06 pm
What valuable assets are they Joe Halewood ?, you really need to live in the real world, do you suppose for one minute we would be living as Social Sector Leaseholders if we had the luxury of perhaps like you yourself of being able to live in nice leafy Suburbia and preached about the nastiness of Right To Buy Leaseholders by those even more fortunate than us to home our own homes.
I'm sure if Social Hosing was offered to its Tenants by Local Authorities for less than £9000 per dwelling, then there would be no need for Stock Transfer Associations who do get Government and Public subsidies to refurbish their properties and build new homes together with favourable tax breaks. Instead hundreds of thousands of tenants would have all been able to have a real stake in their homes instead of being sold out cheaply to RSL's and could have had management companies manage their private estates for them, and far more efficiently at a fraction of the cost and no cost to the public purse.
We still have sink estates only now instead of being owned by Local Authorities they are owned by profit making RSL's and Housing Associations with all the kick backs they can obtain from Government. I guess Joe Halewood you would hate the idea of mass home ownership of people taking a pride in their homes and estates instead of the current situation where many RSL's and Housing Association Tenants don't really think they are any better off than when their landlords were local authorities.
Stephen West
Chairman OBHA Independent Leaseholders Group
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