Scottish Government

Introduction

1. This guidance is issued under Section 61C(4) of the Housing (Scotland) Act 1987 and provides local authorities with advice about making decisions on pressured areas designations following the changes made by the Housing (Scotland) Act 2010. The pressured area provisions in the 2010 Act commence on 30 June 2011.

2. Section 61C(4) of the Housing (Scotland) Act 1987 (as inserted by the 2010 Act) states that "A local authority proposing to make, amend, or revoke a designation under section 61B(1) must, before doing so, have regard to any guidance issued by Scottish Ministers about -

(a) how and when they should do so;

(b) the information which they should take into account before doing so, and

(c) the terms of such designations".

3. Section 142 of the 2010 Act makes significant amendments to section 61B of the 1987 Act as follows:

• Scottish Ministers' role in designating pressured areas has been removed and local authorities have been given the power to make, amend and revoke pressured area designations. The power may be exercised if the authority considers that each of two conditions is met. The first is that, in the relevant part of the authority's area, the need for housing provided by the authority or by Registered Social Landlords (RSLs) substantially exceeds (or is likely to exceed substantially) the amount of housing which is (or is likely to be) available. The second condition is that the exercise of the right to buy (RTB) by tenants in the area is likely to worsen the situation.
• New section 61B(1A) allows designations to be made generally in relation to all houses in the area, or in relation to particular house types only. So, any particular housing type may be designated as pressured if substantially more social rented housing of that type is (or is likely to be) needed than is available and if the RTB would worsen the situation. RTB would remain available for houses of any other type in that area. More information regarding house type is provided in paragraph 17.
• New section 61B(1C) increases the maximum period for which a pressured area can be designated from five years to ten years. This has the effect of suspending for a maximum period of ten years the modernised RTB entitlements of tenants who live in a designated area or in a particular type of house in that area. Those tenants with preserved RTB entitlements remain unaffected.

Transition and Renewals

4. Ministers will not be able to extend, amend or revoke existing Ministerial pressured area designations which have already been granted for periods of up to five years under the previous legislation. However, existing designations will continue for the applicable period, unless the local authority decides to amend or revoke them.

5. Local authorities can consider whether grounds exist for them to designate the same area as pressured for a new period of up to ten years, on the same or different terms. Section 61B(9) allows a further designation to be made where a designation is already in force, or has been in force. That would allow a new designation to be made prior to the expiry of a previous one. For example, where an existing pressured area designation was authorised by Scottish Ministers for a period of five years, the local authority may consider whether they want the designation to continue, in the same or different terms, for a period of up to ten years. This would in all cases involve a fresh examination of the supporting evidence, following the procedure set out in section 61C.

6. As currently, a designation has no effect in relation to any notice to purchase served prior to the designation taking effect.

Background

7. The Housing (Scotland) Act 1987 (as amended) sets out two criteria which must be met before local authorities can designate an area as pressured:

• The need for social housing (i.e. houses provided by the local authority or RSLs) in the area in question is, or is likely to be, substantially in excess of the social rented housing available; and
• The situation is likely to be exacerbated by tenants in the area exercising their RTB.

8. The shortfall referred to in the first of the two criteria may be a current shortfall or one that is expected to arise in the future.

9. It is necessary for both criteria to be met. Local authorities only have authority under the Act to designate areas where they are satisfied that these criteria apply. The 2010 Act made no changes to the level of evidence required to support a designation.

10. The effect of a pressured area designation is to suspend the RTB for the following tenants living in the area, or those living there in house types designated as pressured:

• those who took out a new tenancy in the area on or after the introduction of the Scottish secure tenancy (SST) (30 September 2002);
• those with tenancies created before the introduction of the SST who did not before that date have a RTB entitlement - these will be principally tenants of RSLs with assured tenancies (except for those with a preserved RTB);
• all those who have succeeded, on or after the introduction of the SST, to tenancies created before its introduction irrespective of the terms on which they would be able to exercise their RTB entitlement in the absence of the pressured area designation.

11. Generally, pressured area designations affect those tenants with a modernised RTB entitlement. New tenants after 1 March 2011 have no RTB and are therefore unaffected by pressured areas designations.

12. Tenants in tenancies created before the introduction of the SST and which were converted to SSTs will not be affected by a suspension provided that:

• before the introduction of the SST they had a RTB entitlement (whether or not this was with the same landlord, and ignoring the occupancy period required to exercise the right), as a result of having a secure tenancy or an assured tenancy with a preserved RTB;
• they have not succeeded to their tenancy on or after the introduction of the SST.

13. Tenants who have taken out a new tenancy in the area (and will, therefore, be covered by the designation) will include those who occupy their house as a result of an exchange with a tenant occupying a house owned by the same or another landlord, providing this exchange has taken place after the introduction of the SST.

14. The suspension will be for a period of up to ten years. Although ten years is the maximum period allowed for each designation, local authorities can make a further designation for the same part of their area. A fresh analysis of the evidence to support the proposed designation must be undertaken when the local authority is considering renewal of an existing pressured area designation. Local authorities can make multiple designations covering different parts of their area. This may or may not be limited to particular types of houses in those parts. For example, local authorities could make a designation for all properties within a particular area, as well as a designation for all four bedroom properties in another area.

15. It would be possible to designate an entire local authority area as pressured. However the local authority should be confident that there is enough evidence to justify the decision, particularly given the possibility of challenge from affected tenants or RSLs.

Local Housing Strategy

16. Local authorities should consider how any potential pressured area designation supports the local housing strategy. In particular, local authorities should consider what else is being done to address housing need in addition to consideration of pressured area designation. For example for property type, is there an issue regarding a shortage of appropriately sized properties, and therefore how else would the local authority propose to address this, as part of the local housing strategy.

House Type

17. As explained in paragraph 3, as a result of the 2010 Act, local authorities can now designate particular house types as pressured. "House type" is not defined in the 1987 Act, therefore, it could be defined in any way a local authority thinks justified. For example, by the number of bedrooms or whether the house is a flat, detached, semi-detached, or terraced. The definition of "house type" is most likely to relate to the construction or layout of the house, not its use by a particular type of person, such as persons of pensionable age or students, but it is for local authorities to consider what a pressured housing "type" is in the circumstances of their areas. Please note that Section 69 of the 1987 Act gives Scottish Ministers the power to authorise refusal to sell houses which have been designed or adapted for use by persons of pensionable age. The procedure in section 69 is unaltered by the 2010 Act, but if a property is within an area where a pressured area designation has removed the tenant's RTB, then no application to Ministers will arise (because section 69(2)(b) does not apply - the tenant does not have a right to purchase).

Advice and guidance

18. In February 2011, the Scottish Government published comprehensive guidance on the RTB application process (and other changes to the RTB provisions arising from the Housing (Scotland) Act 2010), in the new Right to Buy guidance circular - a guide for social landlords (HAR Circular 1/2011).

19. It is important that pressured area decisions are made on the basis of accurate and up-to-date data. Advice regarding the use of local administrative data, which local authorities may wish to consider, is available as part of the Housing Need and Demand Assessment guidance. In particular, page 15-17 (Use of different methods and data sources) and Annex B may be helpful.

20. The local Scottish Government offices (contact details provided below) are able to offer advice and support to local authorities when considering the evidence to support a pressured area designation. However, it is entirely for the local authority to be satisfied with the robustness of the data to support a designation. It would be for a local authority, not Ministers, to justify a decision in the event of any future challenge (for example, a Judicial Review could be sought to examine this evidence). Local authorities may find it helpful to contact the Scottish Government for advice at an early stage in considering a possible pressured area designation.

Informing the Scottish Government

21. It would be helpful if local authorities could inform the Scottish Government as soon as practicable of a decision to designate an area as pressured. The Scottish Government would find it helpful to know the following:

• Areas and/or house types to be designated as pressured;
• A summary of the reasons for the designation;
• Details of any adverse feedback during the consultation process.

Contact details

22. If you require further information regarding this guidance please get in touch with one of the contacts below.

Scottish Government local teams

rtb@scotland.gsi.gov.uk or 0141 305 4086

Making a Pressured Area Designation

23. Local authorities must be satisfied that their designations meet the two conditions set out in section 61B(1). However, the three subsections below may provide a useful framework for local authorities considering a pressured area designation, although other approaches are possible.

24. Section A identifies factual information and core evidence which we suggest should be of central importance in considering whether or not to make a pressured area designation.

25. Section B describes types of evidence which are more likely to be significant where the case for designation, as illustrated by the core evidence, does not appear clear cut. In those circumstances, local authorities will wish to devote more attention to evidence of this type in order to assist them in determining whether or not it is appropriate to designate an area.

26. Section C gives guidance on the type of evidence required to support the legislative requirement to undertake consultation and guidance on publicising the designation.

27. Please note, before asking RSLs to provide data to contribute information to support a designation, local authorities should make full use of all information already publicly available (e.g. from the Scottish Housing Regulator's data collection).

SECTION A - Key Facts and Core Evidence

28. As stated previously, the power to make, amend and revoke pressured area designations (section 61B(1)) may only be exercised if the local authority considers that each of two conditions is met. The first is that, in the relevant part of the authority's area, the need for housing provided by the authority or by RSLs substantially exceeds (or is likely to exceed substantially) the amount of housing which is (or is likely to be) available. The second condition is that the exercise of the RTB by tenants in the area is likely to worsen the situation.

29. Where a designation is being considered for a particular type of house, the assessment in section 61B(1) should consider the needs for housing accommodation of that type in the area, and whether they exceed substantially, or are likely to exceed substantially, supply of that type, and whether the exercise of the RTB would increase that excess.

Key Facts

30. The local authority should have clear information which allows it to establish:

• the boundaries of the pressured area;
• the houses affected by the pressured area;
• the period for which the pressured area has effect.

31. Local authorities may find it helpful to prepare a map or maps showing the boundary of any proposed pressured area, although this is not a legal requirement. Maps which are sufficiently detailed to distinguish clearly between those houses which are within and those which are outwith the proposed designated pressured area will be useful in some situations. Maps may be less useful when the proposal is to designate a large geographical area, or the whole local authority area, when the boundaries may be clear to those involved. If used, the form of map is for the local authority to decide.

32. There are also some key pieces of factual information which help build up a picture of the area being considered. For each area or, if appropriate, housing types within an area, being considered for designation, this information will include:

• the number of social rented units;
• the total number of tenancies that would be immediately affected, split into:

(a) local authority tenancies; and

(b) RSL tenancies.

• the estimated affordable housing (including low-cost home ownership as well as social housing) net need per annum, disaggregated at an appropriate sub-area level where possible, obtained from the most recent Housing Need and Demand Assessment;
• a statement of the overall expected number of new affordable units for social rent and/or low-cost home ownership in the area or of the type proposed for designation for at least the next three years. It may be helpful to consider both planned and confirmed new units;
• the number of RTB sales for each of the previous three years, working backwards from statistics in the latest quarter available. This should be available for the area or, if appropriate, the house type proposed for designation.

33. For any area or house type being considered for designation, it is also possible that data for a larger area might be relevant background (and that larger area might be the whole local authority area, or an administrative sub-area). For example, it would be for the local authority to consider whether in assessing a designation for Campbeltown it would be helpful to have regard to a wider area, such as the Kintyre peninsula or some other area, possibly as large as the whole council area.

Core Evidence

34. The ratio of the number of applicants on all relevant waiting lists to the number of lets (the waiting list-to-let ratio) is a fundamental consideration in the assessment of needs for housing accommodation and whether they exceed substantially (or are likely to exceed substantially) available social housing.

35. Local authorities should consider, wherever possible, the waiting list-to-let ratio for the area (or the specific house types within that area being considered) for at least the last three years. This could be for either calendar years or financial years.

36. There is no preferred geographical unit which should be used in determining ratios; while large areas may be appropriate in some circumstances, this may not always be the case. The geographical unit selected is a matter for local determination but we would suggest that it should be a recognisable locality or neighbourhood to tenants.

37. Where a local authority is considering designating a large area as pressured they should consider whether they have enough evidence to justify the designation in all settlement areas within it. For example, whilst the overall waiting list-to-let ratio for the larger area may show evidence of pressure, this may mask differences between smaller settlement areas. Local authorities should consider whether they can justify their decision in relation to all settlement areas, should it be challenged (for example by judicial review).

38. Local authorities should ensure that the waiting list information which they use to determine these ratios is as up to date and accurate as possible. This includes information from partner RSLs. There are a number of problems with housing registers when using them to understand preferences for locations within the authority. See page 83, paragraph 8 (Housing Registers) of the Housing Need and Demand Assessment guidance for further information. Also, with varying eligibility policies, re-housing priorities and actual chances of re-housing, there is likely to be great variation, across different local authority areas, in the propensity of households in need to actually register.

39. In particular, those transfer applicants and other applicants on the waiting list classed as not having a housing need, should be removed from the totals used to calculate ratios. The ratio should be calculated using the remaining applicants' first choices, where possible.

40. Where applicants make multiple choices, and those choices are not ranked in order of preference, an alternative approach will need to be considered. Local authorities should seek to demonstrate how areas proposed for designation are relatively more pressured than areas for which designation is not sought and in relation to the council area as a whole. In cases such as this other information from administrative systems such as turnover rates, letting times and time taken for re-housing, especially for those who are in priority need may help to inform the decision as to whether or not there are specific pressures on a particular area. In addition, qualitative information from local housing officers in relation to specific issues arising in particular areas might also be used to inform the process where the data is such that a simple pressure ratio based on an applicant's single choice cannot be derived.

41. Where the social housing application form does not provide the opportunity for an applicant to specify a preferred location, a local authority will need to be clear about what approach has been taken in order to demonstrate pressure for any specific area.

42. Local authorities may wish to be mindful of how the ratios in their proposed designation areas compare with the national average.

• Details of the national housing list and letting information.

43. From this information local authorities will be able to calculate a national waiting list-to-let ratio. This can be useful as it provides a broad benchmark against which pressure can be assessed. However, it should not be assumed that areas with ratios above the national average will necessarily be stronger candidates for designation, or that areas with lower ratios will be less likely to meet the criteria for designation. For example, it may be that even where ratios are higher than the national average there are other factors which suggest that pressured area designation may not be the appropriate response. This could be where there is a relatively high pressure ratio but where tenants very quickly move on.

44. Demonstrating pressure on a particular house type could be calculated in the same way as for overall pressure. That is, using the number of applicants on both the waiting and transfer lists (who are deemed to be in need) and the number of properties available supported by turnover rates and waiting times. The figures to be considered, rather than being about all households, would be about specific households in terms of type.

45. Local authorities may wish to compare the waiting list-to-let ratio for the house type proposed for designation in a particular area against the waiting list to let ratio for that house type across the whole local authority area. For example, if North Lanarkshire Council is seeking a designation for 3 bedroom houses in Plains it may wish to compare the waiting list-to-let ratio for 3 bedroom houses in Plains against the waiting list-to-let ratio for 3 bedroom houses across the whole local authority area.

SECTION B - Supporting Evidence

46. Local authorities may wish to consider supporting evidence where it is felt that this would assist in determining whether to make a pressured area designation.

47. Supporting evidence may also be useful in considering the case for pressured area designation of a rural area. The relative lack of social rented properties in rural areas (and in urban areas where there is a relative lack of stock) means that tenants that might be seeking social rented accommodation are disinclined to apply for housing in those areas as the chances of getting housed is very small. In these areas the case for pressured area status may have to depend more on the Housing Need and Demand Assessment and other housing management system data such as waiting times and turnover rates rather than focussing only on waiting list-to-let ratios. Other "softer" data may also be available via local surveys and various rural fora.

Estimated number of sales

48. It may be helpful, where possible, to consider the estimated number of sales which would be suspended, during the course of the designation period, by a pressured area designation. This will necessarily be an estimate because sales are subject to tenants' future intentions, as well as the economic climate, which can be difficult to predict.

Housing Need and Demand Assessment

49. As stated previously, information from Housing Need and Demand Assessments, which underpin local housing strategies, may be a useful source of evidence for demonstrating pressure in a particular area or for a house type within that area.

Homelessness Capacity Plan

50. Where Housing Need and Demand Assessments cannot be disaggregated to appropriate sub-area levels, alternative disaggregated data such as from Homelessness Capacity Plans (which some local authorities use to model the impact of the homelessness legislation) may be helpful in demonstrating evidence of supply and demand for social housing at community level.

Strategic Housing Investment Plan

51. Strategic Housing Investment Plans can also be a useful source of evidence as they can provide statements of a local authority's investment priorities in affordable housing development over an ensuing five year period.

Further Supporting Evidence

52. Consideration of the following may also be helpful:

• former RTB properties' re-sales data, although they can be resource intensive to provide;
• information on income data, to show whether waiting list applicants can sustain a mortgage of sufficient size to purchase a former council property;
• analysis of how the social rented stock has decreased historically, although this may be time consuming to provide;
• analysis of the impact on letting resulting from the 2012 homelessness target.
• information from administrative systems such as turnover rates, letting times and time taken for re-housing, especially for those who are in priority need.
• qualitative information from local housing officers on issues arising in particular areas where the data is such that a simple pressure ratio based on an applicant's single choice cannot be derived.

Section C - Consultation and Publicising a Decision

53. Consultation is a key element to the pressured area designation process and there is a statutory duty on local authorities, before designating an area, to consult with:

• Every RSL with houses in the area under consideration - (an RSL may also wish to suggest designation be considered in a particular area)
• Such bodies representing the interests of tenants and other residents in the area, and such other persons, as local authorities think fit.

54. Section 61C(3) of the 1987 Act requires that reasonable steps must be taken to publicise the proposal to make amend or revoke a designation and the reasons for so proposing. There is a requirement to consult every RSL holding houses in the area and to consult groups representing tenants and other residents.

55. It is expected that local authorities will undertake wide ranging local consultation with affected RSLs and tenant representative groups that clearly considers whether there is a need for designation, taking account of the detail of the areas and house types affected and the possible duration of any designation. This could take the form of letters to and meetings with those affected.

56. Local authorities will need to bear in mind that RSLs, in particular, may wish to suggest the designation of a particular area. It would, therefore, be helpful if local authorities were to determine their strategy for future pressured areas designations in consultation with all RSLs in their areas.

57. As well as consulting groups of tenants and residents, local authorities may wish to ensure that all individual tenants affected are informed of the proposal and its likely effect on them and given the opportunity to offer comment and seek further information. It is helpful if a partnership approach between the local authority and affected RSLs is used. For example, with each affected landlord informing their own tenants.

58. Local authorities may also wish to consider consulting with local property professionals, such as estate agents, who have an expert knowledge of the local housing market.

59. The legislation does not stipulate that consultation must be undertaken for a specific length of time. However, at least a three month consultation period is good practice, to give bodies consulted a time to form views and, where appropriate, seek input from those they represent and bodies they work with.

Publicising a designation

60. Once an area has been designated as pressured section 61B(6) of the 1987 Act makes clear that the local authority must take such further steps as are reasonable to publicise the decision and its effect. This goes beyond the terms of the designation itself and requires a description of what it does. If a pressured area designation is later amended or revoked the local authority must also publicise the decision and its effect. Issuing a new release would be a useful method of publicising a decision.

61. There is a statutory duty on landlords (both local authorities and RSLs) under section 23(5) of the Housing (Scotland) 2001 Act to notify the tenants directly affected that the designation has been made and the effects of the designation on their RTB. Landlords should to write to those tenants who are directly affected by the designation by letter to explain the designation and the impact on their RTB.

62. Once the designation has been made, both local authorities and RSLs, as landlords are also placed under a statutory duty under section 61B(7) of the 1987 Act to notify prospective tenants of houses in the area of the designation and its implications.

Housing Supply Division, 1 June 2011