Local authority grants and loans for improvements and repairs

The current system for housing renewal assistance was introduced on 18 July 2002.[1] It replaced the old grants system with a broad general power to allow local authorities to give assistance for home repair, improvement and adaptation, subject only to limited constraints.

The order replaced Part 1 of the Housing Grants, Construction and Regeneration Act 1996, as a result of which, the detailed provisions relating to the following were repealed:

• discretionary Disabled Facilities Grants

• renovation grants

• houses in multiple occupation (HMO) grants

• common parts grants

• group repair assistance

• home repair assistance

It is still possible, however, for local authorities to provide assistance in the form of a grant, where it is considered that this is the most appropriate form of assistance for housing renewal.

Although the order makes minor amendments in relation to mandatory disabled facilities grants, these have not been abolished.

The current regulatory framework does not apply to applications for discretionary disabled facilities grants, renovation grants, home repair assistance grants, common parts grants or houses in multiple occupation grants that were approved before 18 July 2003. It is no longer possible to apply for these grants.

An applicant who successfully applied for one of these grants before 18 July 2003 will have their claim dealt with under the old grants regime, information on which can be obtained from the relevant local authority.

During the 12-month transitional period between July 2002 and July 2003, these grants existed alongside local authorities' powers to grant housing renewal assistance, in accordance with the current framework.

For the purpose of improving living conditions in its area, a local housing authority has powers to provide, directly or indirectly, assistance (usually in the form of a loan or a grant) to any person to enable them to:[2]

• acquire alternative living accommodation (whether within or outside the local authority area), provided that the local authority has decided to purchase (compulsorily or otherwise) their current accommodation, or has decided that acquiring new accommodation would provide the client with a similar benefit to adapting, improving or repairing their current accommodation

• adapt or improve living accommodation (whether by alteration, conversion, enlargement, or installation)

• repair living accommodation

• demolish accommodation, or a building in which accommodation is situated

• where a building comprising or including living accommodation has been demolished; construct a building that comprises or includes replacement living accommodation

Although a local housing authority has a wide discretion in the types of assistance it can offer and the conditions which a person must meet before they qualify for assistance, it cannot use its power in any particular case until it has published, and subsequently adopted, a strategy on how this power will be exercised.[3]

The local authority must also ensure that a copy of the full policy document is available for inspection free of charge at its principal office at all reasonable times, and that a copy of a summary of the policy is available by post, for which the authority may charge a reasonable amount.

The assistance that may be available is therefore dependent on a particular local authority's policy, and advisers must ensure that they have a copy of the policy for the relevant authority when explaining the options that are available to a client. Any assistance must be provided in accordance with the local authority's policy.

The policy should include time limits, with which the local authority must comply, for deciding applications. The local authority must consider applications on a case-by-case basis.

Before the local authority provides assistance to any person it must do all of the following:

• give the person a written statement confirming the terms and conditions (if any) under which it will provide them with assistance[4]

• satisfy itself that the person has had appropriate advice and information about any financial or other obligations that they will have to enter into, as a result of the provision of assistance by the local authority[5]

• consider whether the person will be able to repay or contribute towards any assistance before imposing any condition requiring them to do so,[6] for example where the financial circumstances of the person are such that they will not be able to repay a loan, the local authority must not offer them assistance in the form of a loan; it may instead consider offering them a means-tested grant, to which the person can contribute

• obtain the consent of the owner of the accommodation before carrying out any works on it[7]

• obtain the consent of everyone who is likely to be affected, if it decides to vary any works that it has already approved[8]

• obtain the consent of any person to whom assistance is being provided, before varying or revoking any condition attached to the assistance. A person can also apply to the local authority to ask it to vary or revoke a condition attached to the assistance[9]

Local authorities should state, within their housing renewal policies, what preliminary or ancillary fees and charges associated with the provision of assistance are payable as part of that assistance. It might include fees charged by in-house grant agency services, private architects and surveyors or home improvement agencies. It is for local authorities to determine this.[10]

The provisions of the order give local authorities a wide discretion as to the form of assistance that they can provide with housing renewal costs.[11]

This may be in the form of:

• grants

• loans

• assistance from home improvement agencies

• supporting purchase and relocation

• other forms of assistance

Local authority assistance may be subject to certain conditions,[12] for example, the requirement to repay a grant if the property is sold within five years. Before imposing any such condition or taking steps to enforce it, a local housing authority must consider the ability of the person concerned to make that repayment or contribution.[13]

An authority may decide to give assistance without attaching any conditions.

Although assistance is usually provided in the form of a loan, local authorities can make grants in certain circumstances where it is considered that they represent the most appropriate form of assistance. This is most likely to be the case for minor items of work, where the costs of arranging loan finance cannot be justified or in cases where the financial circumstances of the applicant are such that any other form of financial assistance would be inappropriate.

A local authority can make a grant for any of the purposes listed above. The local authority's policy should set out the criteria that a client must meet in order to qualify for a grant.

A local authority may carry out a means test of a person's financial resources in deciding if they qualify for a grant, and how much assistance they qualify for. Each local authority is entitled to decide the rules of the means test itself, but they must be set out in its policy.

Flood support grants

Home owners whose properties were damaged in part or in full by the floods of winter of 2013 to 2014 can apply to their local authority for a repair and renewal grant of up to £5,000 for the purpose of improving the future flood resilience of their property.

A local authority may consider offering financial assistance other than grants, in a form that may require the applicant to make some financial contribution or repayment. The loan can be for any of the purposes specified on the housing renewal assistance system page (in section on scope of housing renewal system). The local authority must set out, in its policy, the criteria that an applicant must meet in order to qualify for a loan.

Before making a loan, a local authority considers the applicant's ability to make a contribution or repayment. If they are not in such a position then the local authority would have to assist them by some other means, such as a grant. A local authority may take any form of security in respect of the loan.[14]

Where the local authority decides to take security on the loan, this could include putting a charge on the applicant's home. If they subsequently defaults on repayments, the local authority could take action for possession of the property. It is also possible for the local authority to reduce the scope of, or remove, the security over the property.[15]

The main types of loan that could be made available are as follows.

Interest-bearing repayment loans

The recipient would be required to repay this type of loan over a specified period of time, and the local authority applies an interest charge on the loan. It is up to the local authority to decide whether or not to take security for an interest-bearing loan.

Interest-only loans

For this type of loan, the local authority uses the recipient's house as security on the loan, and they would repay interest on the amount that they had borrowed. The recipient repays the capital when they sell the property on which the loan was secured.

Zero-interest or equity-release loans

The recipient would not be required to pay any interest on this type of loan, for which the local authority would use their house as security. The recipient would repay the loan when they sell the property.

It is also possible for the local authority and the recipient to agree that the authority would take a share in any increase in the value of the recipient's house, if this happens between the date on which the loan is made and the sale of the recipient's house.

Third-party loans

A local authority may work with third parties to provide a loan. It may provide assistance indirectly, for example by entering into an agreement with a third party for it to make the loan to the recipient.

Alternatively, the local authority may guarantee that a mortgage lender that is lending money to the recipient for purchasing, constructing or improving a home does not bear the cost if the recipient defaults on the loan.

A local authority may work with, or refer an applicant to, a home improvement agency to assist them with housing renewal assistance system issues. Home improvement agencies are non-profit making organisations run by local authorities, housing associations and charities.

Their objective is to assist people to live independently at home by, for example:

• arranging for repairs to be carried out

• assisting people in getting money for repairs

• running handyperson and energy efficiency schemes

Co-ordinating organisation Foundations can help with contacting a local home improvement agency.

A local authority may assist someone who wants to buy another more suitable property, either in the same or another area. The authority can offer different types of assistance, for example a loan or a grant, to enable the person to do this.

The local authority can only help a person to purchase another property if it is satisfied that buying the accommodation would give that person a similar benefit to carrying out work on their existing accommodation or the local authority has bought, or proposes to buy, their existing accommodation, whether by compulsory purchase or otherwise.[16]

There are other forms of assistance that a local authority may provide, in addition to loans and grants.

For example, the local authority may:

• offer cut-price materials for carrying out works

• supply manual labour for works to be carried out

• make it easier for the person to have access to a tool hire scheme

• provide a list of approved builders who will supervise or carry out the work

• offer to accommodate the person temporarily while the works are carried out, and this may include paying for the removal and/or storage of their possessions

Eligibility for housing renewal assistance depends on who can apply for assistance and the type of properties that qualify for assistance.

Who can apply for assistance

A local authority may provide assistance to any person for the purposes listed above. It is therefore possible for the authority to assist homeowners, tenants and/or landlords.

Housing renewal guidance[17] suggests that authorities should only provide assistance to local authority and housing association tenants in limited circumstances, although it does not specify who can apply or the circumstances under which they may do so.

Properties that qualify for assistance

A local authority can provide assistance to improve living accommodation, which is defined as a building, part of a building, a caravan, or a boat or similar structure.[18] Living accommodation also includes property with which the building, caravan, boat or similar structure is connected, such as a yard, or a garden.

For accommodation to be considered living accommodation, the applicant must occupy it for residential purposes, or it must be available for them to occupy for these purposes.

Each local authority has its own application process, as there is no standard application system. Advisers should check the relevant local authority's policy for information on how someone can apply for assistance.

In assessing if an applicant is eligible for assistance (or in some circumstances after it has agreed to provide financial assistance), a local authority may ask them to provide, within a specified period, reasonable information and evidence about their financial and other circumstances, which may be relevant to the application.[19] The authority can also use this information to decide whether or not to attach conditions to any assistance it may provide to the applicant.

When it approves an application for assistance, the local authority must inform the applicant if they are required to make a means-tested contribution if they receive assistance in the form of a grant. If the local authority approves an application for a loan, it must tell the applicant the amount of money they will receive and what the terms of repayment are.

The applicant must also be told if they will incur any other financial obligations as a result of any assistance they receive from the local authority.

The applicant may need to get planning permission or other authorisation before any work is carried out to the accommodation.

Each local authority must set out in its policy the conditions and procedures on how grant or loan payments are to be made. There is no requirement for payment to be made within any specified period of time.

If the applicant is not the freeholder of the property, a local authority must obtain the permission of the accommodation's owner before carrying out work on the property, if the work would involve:

• repairs to the accommodation

• adaptation or improvement of the accommodation

• demolition of the accommodation or a building in which the accommodation is situated[20]

An owner is the person who is entitled to receive rent for the accommodation concerned and is not themselves liable to pay rent for the accommodation to a superior landlord. In relation to moveable structures such as a caravan or a boat, the owner is the person who is entitled to dispose of it.[21]

Where someone applies for assistance, and the property is in disrepair, the local authority may decide that the property is not fit for people to live in.

Where there has been an application for a disabled facilities grant and the local authority decides, after inspection, that the property should not be used to house people, it must decide what to do about that property.

In these circumstances the local authority has the power to issue one of the following:

• a Repair Notice

• a Deferred Action Notice

• a Closing Order

• a Demolition Order

A potential applicant whose property is in a very poor state of repair should obtain specialist advice from a surveyor, for example, before they apply to the local authority for assistance for housing renewal, or for a disabled facilities grant.

Common problems could include:

• the local authority refused to issue an application form

• there was a delay in processing the application

• their resources were incorrectly assessed when their contribution to a means-tested grant was calculated

• the local authority refused to offer help

• the local authority delayed paying a loan or grant

• the local authority failed to adhere to its policy, for example where it does not meet a time limit for approving applications if it has set one out in its policy

• an authority fettering its discretion by, for instance, applying a blanket policy without regard to the personal circumstances of the applicant

A person experiencing problems in accessing help with home improvements can complain to the local authority, which should have a formal complaints procedure.

They can also object to an unlawful or unfair policy or decision on home improvements through the authority's monitoring officer. A monitoring officer, who is usually a senior local authority officer, has an obligation to report, to the local authority, a decision or proposal by the authority that is considered unlawful or unjust. The local authority then has 21 days within which to consider the report by the monitoring officer.

Complaints can also be made to the Local Government and Social Care Ombudsman (LGSCO). However, a complaint should be made through the local authority's complaints procedure first, before complaining to the Ombudsman.

In one case, the Ombudsman decided that in exercising discretion in relation to grant approval policies a local authority should consider the human rights of the applicant. A council should not automatically assume that its policy should be applied in all cases and should take into account the individual circumstances of the applicant(s).[22]

Where a local authority's decision on help with home improvements is made unlawfully, for instance if it has failed to comply with its legal requirements in reaching the decision, it may be possible to challenge this through judical review.