Insolvency Act 1986 Part A1 Moratorium (Eligibility of Private Registered Providers) Regulations 2020

Baroness Falkner of Margravine Excerpts

Friday 24th July 2020 Lords Chamber

[Baroness Falkner of Margravine (Non-Afl) [V]]

My Lords, my interest in this statutory instrument is due to the fact that I served for nine years as a non-executive director of one of the largest housing associations in the UK. Naturally, therefore, the governance of registered providers of social housing—including routes to insolvency—was fairly uppermost in my mind, particularly as that period came before, through and after the financial crash.

When, after the financial crash, many housing associations diversified into different areas of business and took on considerably more debt to frame their portfolios—often with more risky undertakings as margins got tighter—we understood that the Housing and Planning Act allowed for the Secretary of State and the social housing regulator to apply for the new framework at the time, which was to apply for a housing administration order. Given that the HPA 2016 has reduced the amount of time that a moratorium will apply from the pre-existing regime of 28 working days to merely 28 days—I accept that the housing administration order can allow for much longer periods —it is not entirely clear to me whether that tightening of the timeframe has an impact on the viability of housing associations.

I wonder whether the Minister will be able to tell me how the social housing regulator will now assess the viability of housing associations caught in the current economic crisis, with several that are overextended and potentially may not survive. I know the department prefers consolidation, as with universities, to letting any housing association go under, as the Minister explained to us in his opening remarks.

However, there are a lot of housing associations that are now overexposed to student housing. We are aware of what is going to happen to universities in that regard with the tightening of the student housing market—I could say collapse, but I will not be that gloomy. There is another set of them which, in addition to overexposure to student housing, came into the private housing sector in quite significant numbers around 2010 to 2012 because it was seen as more lucrative at the time. What is the Minister’s department doing, in terms of working with the regulator, to have early warning systems to ensure that the financial health of these overexposed housing associations is monitored during this extreme time?

It is always a pleasure to follow both the noble Lord, Lord Wood, and the noble Baroness, Lady Kramer. I also wanted to press the Minister on how the two different regimes will operate. My own view is that housing associations will prefer to stick to the regime under the Housing and Planning Act 2016. For the avoidance of any doubt, I hope the Minister will be able to clear that up in his closing remarks.

Finally, I turn to an issue that the Minister might not be aware of but that came up in the Finance Bill on 17 July. This was an issue raised by several noble Lords—not least the noble Baroness, Lady Andrews—about what happens to rented tenants when the opportunities for landlords to use eviction orders are reinstated. There has been quite a lot about this in the media and we have seen that tenants in private rented accommodation are extremely insecure at the moment. They are in a situation where furlough is coming to an end, but they do not yet know whether they will be retained in employment, and currently landlords are moving quickly to serve eviction notices once the period of stay ends on 23 August. The noble Baroness, Lady Andrews, and a few other noble Lords drew attention to this in the Finance Bill. We did not get an adequate reply in the closure of that debate last Friday. I hope the Minister will be able to address that today.