« Previous | Contents | Next »
Listen
Housing(Scotland)Act 2001- Guidance on Tenant Participation
PART 6: TENANT MANAGEMENT AGREEMENTS
Background
80. Local authorities currently have power under section 22 of the Housing (Scotland) Act 1987 to enter into an agreement with a housing co-operative for the exercise by that co-operative of the landlord's housing management function. This provision is permissive, and relies on the willingness of a landlord to allow tenants to assume housing management functions. This power was strengthened by the introduction on 1 April 1994 of a new "right to manage" (section 22A of the 1987 Act, as inserted by section 152 of the Leasehold Reform, Household and Urban Development Act 1993) which is modelled on the section 22 provision in that it requires that housing co-operatives have the approval of Scottish Ministers and that all agreements must be approved by them. It also goes further by providing a mechanism to appeal to Scottish Ministers in the event that a landlord declines to voluntarily enter into a management agreement. Although any management agreement entered into with the authority does not continue after transfer, the transfer contract can include a contractual "right to manage".
81. Section 55 replaces the existing provisions of sections 22 and 22A of the 1987 Act and sets out arrangements for a tenant management co-operative to enter into an agreement with a landlord, a registered social landlord or a water or sewerage authority to manage the landlord's houses. Scottish Ministers must approve such management bodies and the terms of the agreement between the landlord and the co-operative. There is a right of appeal to Ministers in the case of an inability to agree terms or a refusal by the landlord to enter into an agreement.
82. Section 56 defines the range of functions which a landlord may make subject to a tenant management agreement. Subsections (4) and (5) make clear that a landlord's houses which are the subject of a tenant management agreement are still to be treated as the authority's houses for the purposes of the authority's Housing Revenue Account and related financial support from the Executive.
Establishment of a Tenant Management Co-operative (TMC)
83. The Executive considers that the right to manage afforded by section 55 of the 2001 Act will strengthen the rights of tenants. Under it, tenants will be able to take decisions about the management of their houses and this should lead to greater tenant satisfaction. At the same time, it must be recognised that formation of a TMC is not an easy option, and it will require a high level of commitment by those involved over an extended period of time.
84. While landlords may seek to encourage formation of TMCs, it is equally possible that tenants will take the initiative to seek to establish a TMC. This is most likely to happen in an area which has a tradition of tenant participation and involvement in housing issues. In such an area tenants will be aware of the satisfaction to be gained from being able to exercise real control over their living conditions, and of the benefits which can be obtained through bringing their personal initiative and interest into housing management. They will know that good housing management is crucial to tenants' enjoyment of a good quality of life. Consequently, they will be aware that taking over the housing management functions of a landlord is not a step to be entered into lightly, and that much time and effort will be required, both in the initial stages and subsequently, to gain the expertise and knowledge to successfully manage their homes. Experience elsewhere suggests that the time required between initial stages of identifying an interest among tenants and finally taking over functions from a landlord may be three years or more. Clearly this will require a long term commitment by tenants.
85. Where tenants are thinking of seeking to manage their homes, they must form themselves into an appropriately constituted organisation. A tenant management co-operative requires to have a constitution which clearly defines its functions and provides a framework within which its affairs are to be run. The constitution must reflect the aim of managing housing for the benefit of tenants, and secure the essential involvement of tenants in decision making. The constitution must cover basic issues including functions, membership, general meetings, management arrangements, election and powers of office bearers, disputes, record keeping, amendment of rules, and winding up.
86. Funding will be an important early consideration for a TMC. This might be obtained in a number of ways. So far as independent funding is concerned, a TMC might raise funds by subscription or by tenant levy. It may wish to pursue the possibility of obtaining financial support from its landlord. In addition. to direct financial assistance there are other ways by which support might be given by a landlord, for example, by providing meeting rooms and office space; access to, or provision of, photocopying and word processing facilities; secondment of staff; and provision of consultants to help a TMC draw up a feasibility study or development plan.
Scottish Ministers' Approval of a TMC as a Housing Co-operative
87. To become a TMC, tenants who have formed themselves into a society, company or body of trustees must obtain the approval of Scottish Ministers. Under section 55(2) of the Act, Scottish Ministers must approve such a society, company or body of trustees if they are satisfied that they are generally suitable to carry out such functions.
88. In deciding whether or not to give approval to a TMC, Scottish Ministers will have to satisfy themselves that it is properly constituted and that it is a "society, company or body of trustees" as specified in section 55. They will also wish to be assured that the TMC has the broad support of the residents of the houses for whom it proposes in due course to assume management responsibility. It will be crucial, therefore, to the TMC's request for the approval of Scottish Ministers that it is able to demonstrate such support. One means by which this could be shown would be by conducting an initial ballot or poll of tenants of the houses concerned.
89. Information at this stage about the TMC's abilities may not be extensive and, consequently, Scottish Ministers' approval to the body in terms of section 55(2) cannot imply any judgement as to the TMC's ability to carry out specific housing management functions it proposes to take over. If Scottish Ministers give their approval to the TMC, it simply becomes a "tenant management co-operative" for the purposes of the 2001 Act, and can then make application to the landlord under section 55(3). Scottish Ministers' consideration of an agreement entered into between the TMC and the landlord is dealt with below.
Application by TMC to Landlord
90. By the time it is ready to make application to a landlord to exercise all or part housing management functions, a TMC will have been in existence, at least in embryo form, for some time. It will have to confirm to the landlord that it has the approval of Scottish Ministers under section 55(2), and submit information about its constitution, the houses which are to be subject to any agreement, those housing management tasks it wishes to take over and those which are to remain with the landlord, allocations, finance and resources, safeguards for tenants and various other issues including the TMC's ability to undertake the tasks it proposes to assume. It will also require to show that the TMC has the broad support of the residents of the houses in respect of which it proposes to manage certain or all of the landlord's management functions. One means by which this could be shown would be by conducting an initial ballot or poll of tenants of the houses concerned.
91. The detailed aspects of the information to be provided by a TMC where it makes application to a local authority are discussed in Annex C.
Consideration of Application by Landlord
92. Under section 55(3) of the 2001 Act, the landlord must make an agreement with the TMC if it is satisfied that the TMC:
(a) has the approval of the Scottish Ministers;
(b) is able to perform the functions it proposes to take over competently and efficiently; and
(c) is representative of the tenants of the houses concerned.
93. Item (a) above will be a matter of fact. Either the TMC will have the approval of Scottish Ministers, or it will not.
94. As to the competence of the TMC to perform the functions it hopes to assume responsibility for, and its efficiency at performing those functions, the landlord will require much information. Many of these matters should be covered in the initial application submitted by the TMC to the landlord, as described in Annex C. The landlord will require to consider such information as is available to it, and should carry out a feasibility study into the TMC's proposals.
95. The TMC may also require assistance to obtain the necessary training to enable it in due course to satisfy the authority as to its competence. This will take some time, but it is important that this stage is not hurried. If it is, the risk is that a TMC could assume responsibility for housing management functions without having the capacity to cope with the complex managerial and technical issues involved, or having underestimated the task it proposes to assume. The landlord will want to be assured that the TMC has a management structure appropriate to the housing functions being assumed. It will also want to be assured that the TMC is able and willing to operate to current standards of good practice.
96. As to efficiency, there is a question about the size and viability of a TMC. TMCs have already been established in Scotland, covering from 60 houses up to 830 houses. The Executive see the right to manage as an important strengthening of the powers of tenant organisations in Scotland, and wish to encourage tenants to exercise their right to manage. It is recognised, however, that establishing a TMC is hard work which requires considerable time and effort on the part of both tenants and the landlord. It will be necessary therefore, to ensure that the energy is directed towards projects which have the prospect of viability.
97. There must be a question, for example, as to whether a TMC could reasonably be established for a single four in a block of flats. There must be a consideration as to whether it is reasonable to expect landlords to enter into agreements on such a small scale. We would suggest, therefore, that there should be a minimum limit of 100 on the number of properties involved, below which the right to management would not normally be exercised. Landlords may make a case for having a smaller number of houses where there are distinctive local characteristics which would merit this, for example in rural areas.
98. The final requirement on which the landlord has to be satisfied is whether the TMC is representative of the tenants of the houses concerned. This means that the TMC must be representative of the tenants of the houses which are to be the subject of any agreement with the landlord.
99. In almost all cases, many months will have elapsed since the TMC first initiated its proposals, and a new ballot or poll of tenants should be carried out. If, therefore, a landlord is satisfied that the TMC has the approval of the Scottish Ministers, and that it is able to perform the functions competently and efficiently, it is proposed that the landlord should:
(a) serve a notice on the tenant of each house identified in the proposal summarising the terms of the proposal, and containing an address within the locality at which a copy of the TMC's proposals may be inspected; and
(b) arrange for a ballot or poll of those tenants concerned, to establish their opinion about the proposal.
100. Facilities for the inspection of the proposals should be in line with equal opportunities requirements. For example, the location should be accessible to persons with a physical disability, and proposals should be available in appropriate formats and languages.
101. It is suggested that the support of tenants for a TMC would be demonstrated through a straight majority vote. On this basis, if the proposal failed to obtain a majority vote in favour, the landlord would be unable to make an agreement with the TMC, whose proposals would fall.
Scottish Ministers' Approval of Agreement Between a TMC and a Landlord
102. If the outcome of the ballot or poll is favourable and the authority is satisfied that the TMC meets the statutory requirements, a landlord may then enter into an agreement with the TMC. Scottish Ministers' approval under Subsection 55 (7) should then be sought. In considering a request for approval to an agreement, Scottish Ministers will wish to have before them information on the matters described at Annex C, together with a copy of any feasibility study or development programme. Scottish Ministers propose to ask that the information to be given to them by the landlord and TMC should include the following:
(i) information about how the ballot or poll has been conducted;
(ii) a copy of the information given to tenants; and
(iii) a note of the outcome of the ballot or poll.
103. At the point a TMC assumes responsibility for housing management functions, it will need resources to enable it to carry out the activity. The expectation is that a TMC will operate within a negotiated allowance or budget which the landlord will make available to it to carry out those housing management tasks which are specified in an agreement. The Executive expects, therefore, that an agreement between a TMC and a landlord would include provision to cover funding of the activities to be carried out under the agreement.
104. If a landlord was unwilling to include any provision about funding in an agreement, the likely consequence is that the TMC and the landlord would be unable to agree on terms. It would then be open to the TMC to appeal to Scottish Ministers (under Subsection (6) of section 55), who may determine the terms of the agreement. This could include ensuring that the agreement contains provision for the funding by the landlord of the activities of the TMC exercising the right to manage.
Appeal Against Refusal of Landlord to Enter into an Agreement
105. Where the landlord refuses to enter into an agreement with the TMC on the grounds that it does not satisfy the statutory requirements of paragraph (b) or (c) of Subsection 55(3), the TMC may appeal to Scottish Ministers under Subsection 55(4) who may confirm, or reverse, the decision of the landlord. As already indicated, Scottish Ministers would wish to have before them information on all the issues indicated in Annex C, together with any feasibility study or development programme prepared about the TMC's proposals. It may be necessary to seek further information from either the TMC or the landlord before Scottish Ministers are able to reach a decision. It might also be necessary for them to require that further work is done, including carrying out a feasibility study or development plan, on the competence and efficiency of the TMC and its proposals.
106. If Scottish Ministers confirm a decision of a landlord not to enter into an agreement with a TMC, the proposals fall. If, on the other hand, Scottish Ministers reverse a refusal decision of a landlord, the landlord and the TMC are required to come to an agreement. If it is not possible to reach agreement, the TMC may appeal to Scottish Ministers who have power to determine the terms of the agreement under section 55(6). Should a case every come to this stage, it is likely that Scottish Ministers will already have considerable information in their hands from the appeal which would already have been made to them under section 55(4). It may be necessary for them at this stage, however, to elicit further information from either or both of the parties as to the consequences of any conditions they may impose.
Review
107. A formal review process should be built into any agreement between the landlord and the TMC. Any such review should involve both the landlord and the TMC.
Termination of Agreements
108. There is no statutory limitation on the length of any agreement and it is envisaged that most agreements would be open-ended. Consequently, any agreement between a TMC and a landlord should make specific provision for termination of the agreement. This should cover both parties, since termination of an agreement could be instituted by either the TMC or the landlord. We anticipate two circumstances in which an agreement might be terminated:
(a) where a TMC is wound up or becomes insolvent; or
(b) where the landlord believes that the TMC is mismanaging its affairs or acting in a way which puts the good management of the houses concerned in jeopardy - this would cover the case where a TMC failed to deliver services in accordance with the agreement or was mismanaging is finances.
109. Termination of an agreement with a TMC would not prevent tenants from exercising their right to manage in the future, though a landlord could refuse to proceed to consider a further application if it had substantial grounds for believing that the circumstances which gave rise to the termination were still present.
110. Applications to Scottish Ministers for approval of a TMC or any appeal to Scottish Ministers should be addressed in the first instance to
Scottish Executive Development Department,
Housing 2-3,
1G Victoria Quay,
Edinburgh
EH6 6QQ
(Tel: 0131 244 2023).
« Previous | Contents | Next »