Removing the straitjacket
Landlords must adopt new probity policies to adhere to TSA regulations, says Peter Hubbard
Following this month’s repeal of schedule 1 of the Housing Act 1996, all English registered providers must now devise and adopt their own ‘probity’ policies to comply with the Tenant Services Authority regulatory framework and maintain standards across the sector.
On 1 April this year, section 61 of the Housing and Regeneration Act 2008 came into force, removing the straitjacket of schedule 1 from all English registered providers. Welsh registered providers are still covered by schedule 1 which restricts them - as it previously did for English landlords - from making payments and giving gifts to current and former board members, employees and their relatives.
However, English registered providers are not completely free of legislative probity constraints because section 122 of the 2008 act continues to restrict the making of gifts or the payment of dividends or bonuses by non-profit registered providers to members, former members and other connected persons. There are some exemptions to these but the fundamental change that registered providers need to respond to is that there are no longer any provisions that deal with payments and benefits to employees or board members.
The TSA’s regulatory framework still expects registered providers to safeguard taxpayers’ interests and the reputation of the sector - and the recent National Housing Federation code, ‘Excellence in standards of conduct - code for members’, sets out the NHF’s expectations in relation to
non-contractual payments and benefits. The code recommends social landlords adopt transparent and appropriate policies to limit such payments, suggesting they should justify any deviation from the code in their annual accounts.
What does this mean for registered providers?
In short, all English registered providers must now adopt new, fully compliant, probity policies reflecting the withdrawal of both schedule 1 and good practice note 3: ‘Maintaining standards of probity’. Registered providers should self-monitor non-contractual payments and benefits to employees, board members and their close relatives and adopt mechanisms for their approval where appropriate.
Existing schedule 1 policies no longer offer adequate protection because they will, for example, not identify who can make the decisions that used to be left to the TSA. The new probity policies will also need to set the parameters by which, typically, either the chief executive or board of a registered provider will decide whether a payment or benefit is justified. The opportunities for registered providers are to adopt a much more flexible approach than schedule 1 ever offered - so long as there is still transparency in decision making.
As a starting point, registered providers would do well to adopt new probity policies simply to reflect the expectations of the NHF code and the old schedule 1 regime to allow themselves time to explore more fully the flexibilities in the future.
Peter Hubbard is a partner at Anthony Collins Solicitors
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