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Housing and Regeneration Bill

moved Amendment No. 114CG: 114CG: Schedule 12, page 209, line 9, at end insert— ““(za) after ““final demolition notice””, where it first appears, insert ““(““the earlier notice””)””, (zb) after ““final demolition notice””, where it appears for a second time, insert ““(and no initial demolition notice)””,”” The noble Lord said: It will take me a little longer to move these amendments, but they are important because they build on a measure that was introduced by the Housing Act 2004 to tackle exploitation of the right-to-buy and compulsory purchase compensation rules by some tenants. They amend Schedule 12 to the Bill, which is given effect by Clause 304, in two different ways. The 2004 Act enabled landlords to end a tenant's right to buy a property that was scheduled for demolition—for example, under a regeneration scheme. It did so by adding properties that are to be demolished during the next two years to the exceptions that apply to the right to buy under Schedule 5 of the Housing Act 1985. That means in effect that the right to buy is no longer available on properties where the landlord has served a final demolition notice and followed the prescribed notification process. The 2004 Act also added Schedule 5A to the Housing Act 1985, giving landlords a power to serve an initial demolition notice suspending the right to buy for up to five years. Again, landlords who do so must follow a notification process. Notification of either initial or final demolition notices must set out the reasons and the intended date for demolition. Landlords must also publicise those provisions locally. The aim of allowing landlords to suspend or end the right to buy in such circumstances was to address a loophole in previous legislation. Prior to the 2004 Act, when a tenant knew that demolition was likely, he or she was able to buy their home under the right to buy at a discount, knowing that it would have to be repurchased using compulsory powers and that they would then be entitled to full market value plus home loss compensation. In other words, they could make a profit at the expense of taxpayers. In areas where the maximum £38,000 right to buy discount was available, a tenant could make a profit of up to £48,000. That affected the financial viability of regeneration schemes. Landlords had to find the money to buy these right-to-buy owners out. The demolition notice procedure means that landlords can prevent tenants from taking financial advantage of the length of time that it may take to plan and implement a large regeneration scheme. But, of course, there are safeguards for tenants. Landlords must notify them of when and why they intend to demolish. An initial demolition notice expires after five years, and another demolition notice, initial or final, cannot then be served in respect of the same property for a further five years unless the Secretary of State agrees. An initial notice can be extended, but again only with the agreement of the Secretary of State. Similarly, once a final demolition notice has expired, another final notice cannot be served in respect of the same property for five years unless the Secretary of State consents. If a tenant has incurred conveyancing costs prior to a demolition notice being served, he is entitled to compensation. A final demolition notice cannot be served unless arrangements are in place to acquire any neighbouring properties that might also need to be demolished. These provisions are also available if the landlord employs another body, for example an arm's-length management organisation, to manage the demolition scheme on his behalf while retaining ownership of the property, but they are not currently available if the landlord sells or transfers the property. Clause 304 and Schedule 12 to the Bill would enable initial or final demolition notices to remain in effect if the landlord sells or transfers the property to another landlord who intends to continue with the demolition plans. Of course, all the safeguards for tenants that I mentioned earlier will remain in place. This will work as follows. Unless the second landlord serves a continuation notice confirming that he intends to continue with the demolition plans, he will have to revoke any demolition notice served by the first landlord. The continuation notice must be justified on one of the same grounds as the original demolition notice, and it must be served and publicised in the same way. It may not vary the planned demolition date or the date on which the original notice will expire. The intention is to enable social landlords to manage demolition and regeneration schemes with flexibility. I turn now to the amendments. As I said, they are designed to do two things. The purpose of Amendments Nos. 114CG and 114CH is to add further provisions to Schedule 5 to the Housing Act 1985 in order to close a loophole which arises from the combined effect of provisions in Schedules 5 and 5A to that Act. The demolition notices scheme envisages that a landlord may serve an initial demolition notice valid for a maximum of five years, and that while the notice is still valid, it may be replaced by a final demolition notice valid for a maximum of two years, giving the landlord an accumulated maximum of seven years during which the right to buy is either suspended or terminated. As I mentioned earlier, once an initial demolition notice has ceased to be in force, there is a five-year ban on serving either a further initial notice or a final notice, unless of course with the consent of the Secretary of State. The ban is imposed by paragraphs 4(2) and (3) of Schedule 5A, while paragraph 15(8) of Schedule 5 provides that once a demolition notice has ceased to be in force for any reason, no further notice may be served within five years unless, again, with the consent of the Secretary of State. However, at present nothing in Schedule 5A prevents a landlord serving an initial demolition notice immediately after a final notice has ceased to be in force. This means that a landlord who wished to do so could in effect prevent or suspend the right to buy for nine years by serving a final demolition notice for the maximum of two years and then shortly afterwards serving an initial demolition notice lasting a further five years, and finally, just before that notice expires, serving another final demolition notice for two years. The effect of the first two amendments before us is to prevent a landlord doing exactly that. This was not the intention of the Government or of Parliament when it passed the 2004 Act, nor is it clear to tenants that this can be done. The aim of the amendments is to improve the transparency of the process. The third amendment picks up a suggestion made by London Councils, the representative body of London boroughs. It extends the maximum permitted lifetime to an initial demolition notice from the present five years to seven years. We agree with London Councils that the complexity of some regeneration schemes is such that it takes longer than five years to put them in place. However, we also wish to ensure that tenants are not deprived of the right to buy for longer than is necessary. To us, seven years seems reasonable. These amendments are designed to make existing provisions work more transparently and effectively to the benefit of tenants and landlords alike, and I hope that Members of the Committee will agree to them. I beg to move. On Question, amendment agreed to.