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Right to buy

Council delays purchase transaction

Sums to be credited to premium payable - housing benefit counts as rent

Hanoman v London Borough of Southwark
[2009] UKHL 29

Summary

Housing benefit amounted to payment by a tenant to the landlord for the purposes of s153A and B of the Housing Act 1985 and sums paid by way of housing benefit could therefore be deducted from the premium payable by a secure tenant exercising his right to buy.

The facts

T was a secure tenant of L and in receipt of housing benefit. T did not receive his housing benefit directly, given that the local authority was his landlord and was responsible for his housing benefit; his liability to pay rent was reduced according to his entitlement. He exercised his right to buy which met with considerable difficulties (including litigation) over the years. As a result of those difficulties, T served several notices of delay on L pursuant to s153A (5) of the 1985 Act; on the basis that L had not progressed the transaction within the required time. If effective, the notice of delay would mean that any rent payable by T from the service of the notice would be credited to the premium payable on his purchase of the property. In fact, T alleged that so much time had passed and so much rent paid, that the premium payable was nil. L maintained that whilst T was in receipt of housing benefit he did not get that credit. L argued that he did not pay the rent; the way housing benefit operated was to reduce his liability. Further, L argued that the purpose of the section was to ensure that a tenant was not prejudiced by paying unnecessary rent when the local authority delayed the purchase transaction. T decided to pay the sums claimed but reserved his right to litigate the point after he had completed the transaction.

The decision

Where a local authority had delayed in serving a counter notice to a tenant’s application for a right to buy, the tenant was entitled to set off against the purchase price the rent paid during the period caused by the delay, even though the tenant was in receipt of housing benefit for that time. For the purposes of section 153B of the Housing Act 1985, the crediting of housing benefit was considered payment of rent.


Delay in completion

Withdrawal - ‘relevant matters’

Ryan v Islington London Borough Council
[2009] EWCA Civ 578

The fact that there was subsidence at the property was not a ‘relevant matter’ for the purposes of s140(1) of the Housing Act 1985. Therefore the tenant’s application for a right to buy had been withdrawn when she failed to comply with a notice to complete. The fact that the local authority admitted disrepair and liability to remedy the subsidence did not prevent the notice to complete being effective.


Exception - homes for elderly

Challenging the exception

The Residential Property Tribunal (Right to Buy Determinations) Procedure (England) Regulations 2005 (SI 2005/1509)

Procedure to be followed in England for applications made to a residential property tribunal under the Housing Act 1985, Sch 5, para 11(4) - exception to a secure tenants right to buy under Part 5 of the Act ie where the property is said to be particularly suitable for occupation by elderly persons. An application under paragraph 11 is the means by which a secure tenant may question the landlord's decision that the exception in that paragraph applies to his claim to exercise the right to buy. Such applications were previously determined by the Secretary of State. Section 181 of the Housing Act 2004 amends Schedule 5 to confer the jurisdiction, in relation to England, on a residential property tribunal. In force: 4 July 2005.


Green belt

R (on the application of OByrne) v Secretary of State for the Environment, Transport and the Regions
[2002] UKHL 45

The House of Lords has held that a local authority cannot refuse to grant a lease of a dwelling house under the right to buy provisions (s118 of the Housing Act 1985) on the basis that the house is in a green belt area. The restriction in s5 of the Green Belt (London and Home Counties) Act 1938, which obliges the authority to obtain consent from the Secretary of State where green belt land is to be sold or exchanged or appropriated, does not apply to dispositions forced upon an authority by statute.


Notices

Information to secure tenants

Housing (Right to Buy) (Information to Secure Tenants)(England) Order 2005 (SI 1735)
The Housing (Right to Buy) (Information to Secure Tenants) (Wales) Order 2005. In force 28 September 2005.

New provisions relating to the information that needs to be given by certain landlords to secure tenants in relation to the right to buy, introduced as a consequence of the Housing Act 2004, which introduced new sections 121AA and 121B of the 1985 Act. Tenants must be sent the document as soon as practicable after it is first published, whenever it is revised, and in any case at least once in every 5 years. Each new tenant must be given a copy of the document at the time of signing the tenancy. England only. In force 26 July 2005.


New notice for tenants

The Housing (Right to Buy) (Prescribed Forms) (Amendment) (England) Regulations 2007 (SI No. 784) - New form (RTB 1) to be used when exercising the right to buy in England - in force 3 April 2007


New notice for landlords

Housing (Right to Buy) (Prescribed Forms) (Amendment) (England) Regulations 2005 (SI No. 410) - New notice to be used by a landlord in admitting or denying a tenant's claim under the Housing Act 1985 to buy the freehold or purchase a lease or leasehold interest of his or her property. In force 1 April 2005.

Housing (Right to Buy) (Prescribed Forms) (Amendment) (England) (No 2) Regulations 2005 (SI 1736) In force 4 July 2005 - New form of notice to be used by a landlord in admitting or denying a tenant's claim under section 124(1) of the Housing Act 1985 to buy the freehold or purchase a lease or leasehold interest of his or her property.


Withdrawal of notices

Martin v Medina Housing Association Ltd
[2006] EWCA Civ 367

A tenant who has served a notice claiming the right to buy a property may lose his right to buy by expressly abandoning it.

Facts:

In 1989 the claimant lived at the property with his mother, who was the tenant. In that year she served a notice under s122 Housing Act 1985 claiming to exercise the right to buy on her then landlord, the local authority. In that year the claimant also became a joint tenant of the property with his mother. The local authority admitted the claim to buy the property and stated that the appropriate price was £27,000. The claimant and his mother took no further steps. In 1990 the local authority sent an internal memo to the effect that the claimant and his mother had decided not to proceed with the purchase. In 2002 following the death of his mother the claimant sought to pursue the right to buy on the basis of the 1989 notice. The defendant housing association asserted that in 1990 either the claimant or his mother had orally informed the local authority that they did not intend to proceed - hence the memo. The claimant asserted that the Act did not allow for an oral withdrawal of the notice and that he and his mother had acquired an equitable interest in land which pursuant to s. 53 (1) (c) LPA 1925 could only be disposed of in writing. The judge refused the claim and the claimant appealed.

Held:

The Court of Appeal held that although the 1985 Act specifically allowed for a written withdrawal of notice it was not so comprehensive a code as to exclude common law and equitable principles relating to waiver, abandonment and estoppel. Lengthy inactivity coupled with the express assertion that the claim would not be pursued led to the conclusion that the claimants had abandoned the right to buy. There was no equitable interest in land because the requirement of s138 (1) that "all matters relating to the grant and to the amount to be left outstanding or advanced on the security of the dwelling-house have been agreed or determined" had not been fulfilled. The parties had never come to agreement in respect of the mortgage.


Relationship to possession claim

Basildon District Council v Wahlen
[2006] EWCA Civ 326.

Summary

Except in rare cases contemporaneous claims brought on the one hand by a council tenant to buy his council house under s118 Housing Act 1985 and on the other hand by the council for possession under s82 and Ground 16 of Schedule 2 of the Housing Act 1985 should be heard together and the court should carry out a balancing exercise by considering the overall merits of the parties positions.

This case

The tenant had, on the death of his mother, succeeded to her secure tenancy of a three bedroom house. The tenant was living alone in the property. On receiving notification from the tenant that he wished to exercise his right to buy the property the local authority offered him alternative accommodation. When the latter was rejected, the local authority, whilst admitting the tenant's right to buy, commenced possession proceedings on the basis that the house was bigger than his needs required.

At first instance the judge held that since all the requirements of s138 were met the local authority was under a duty to convey the freehold to the tenant and therefore granted an injunction compelling the council so to do.

The appeal

The Court of Appeal held that the judge should have treated the competing claims on an equal basis and if both were proved he should have carried out a balancing exercise between the two. The fact for instance that the house would be under-occupied if the tenant were to succeed would be relevant - but all relevant factors should be taken into account and no single fact would be likely to tip the balance. Since the judge had not carried out a balancing exercise and it was not possible to say that a decision in favour of the tenant was the only one that could be fairly reached on the facts of the case, the case was remitted to the county court for a retrial.

Manchester City Council v Benjamin
[2008] EWCA Civ 189

Summary

This case give guidance on weighing a possession claim against a claim under the right to buy provisions of Housing Act 1985 and whether a possession order removes a tenant's right to buy premises which are offered as alternative accommodation.

Facts

This was a case where the local authority brought possession proceedings against a tenant who had succeeded to the tenancy of a six bedroom house relying on (i) Ground 16 of Sch 2 HA 1985 (ie. the tenant has succeeded to premises which are bigger than needed) and (ii) the provision of suitable alternative accommodation. She lived at the premises with one child. T initiated the right to buy procedure. The local authority also offered suitable alternative accommodation.

At the trial of the matter the judge refused to order possession. He held that the alternative accommodation was unsuitable on the ground that the effect of the possession order would be to deprive B of her right to buy, and held that it was unreasonable to make an order for possession in those circumstances. He also held it against the local authority that, when possession was recovered the premises would be transferred to a registered social landlord.

The appeal

The Court of Appeal held that his reasoning on both grounds was defective. As a matter of law s121 which extinguishes a tenant's right to buy a property when a possession order is made would not apply in relation to premises which were offered as suitable alternative accommodation as opposed to the premises in relation to which possession was sought. The fact that the local authority wanted to recover a six-bedroom house to make better use of its housing stock was a relevant consideration. The fact that they proposed to transfer it to an RSL was not. It would still be available for social housing. The order was overturned and an order for possession substituted.


Restrictive covenants

The Housing (Right of First Refusal) (England) Regulations 2005 (SI No.1917). Explanatory memorandum. In force 10 August 2005.

Housing (Right of First Refusal)(Wales)Regulations 2005 (SI No. 2680 (W186). In force 28 September 2005.

The landlords of secure tenants buying their homes under the Right to Buy, Right to Acquire and Preserved Right to Buy and under schemes whereby properties sold voluntarily at a discount by local authorities, registered social landlords and housing action trusts are required to impose a covenant in conveyances and grants of leases to the effect that, for a period of ten years after the property is transferred to the tenant there must be no relevant disposal which is not an exempted disposal (as defined in the Act) unless a right of first refusal covenant" has been inserted. This statutory instrument sets out the terms of the covenant that must be included. The requirement to insert such a covenant was introduced by the Housing Act 2004.


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