Clarion Housing Group Secures Dispensation for Energy Procurement

OUTCOME: Allowed

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : LON/00BE/LDC/2020/0067 HMCTS code

: P: PAPER REMOTE Property : Various properties in various locations owned and managed by [COMPANY] or [COMPANY] Applicants : [redacted] (2) [COMPANY] : [COUNSEL] Solicitors LLP Respondent : [redacted] Representative : N/A Type of [NAME] : For the determination of dispensation pursuant to [POSTCODE] of the Landlord and Tenant Act 1985. Tribunal members : Judge Tagliavini Venue : PAPER REMOTE Date of decision

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2 September 2020 DECISION

© CROWN COPYRIGHT

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Covid-19 pandemic: description of hearing This has been a remote determination on the papers which has not been objected to by the parties. The form of remote hearing was P:PAPERREMOTE, A face-to-face hearing was not held because it was not practicable and all issues could be determined on paper. The documents that the tribunal was referred to are in a bundle of 94 pages, the contents of which have been noted. The order made is described at the end of these reasons. Decisions of the tribunal (1) The tribunal grants the first and second applicants dispensation from the section 20 Landlord and Tenant Act 1985 Act consultation requirements with reference to the requirements of the Service Charges (Consultation) (England) Regulations 2003, for the purpose of entering into long-term qualifying agreements with energy suppliers as part of the Master Agreement dated 4 March 2020 made between [COMPANY] and [COMPANY] for the procurement of gas and electricity supplies during the period 1 April 2021 to 31 March 2024. _________________________________________________ The [NAME]

1. This is an [NAME] by the applicant landlords, via their parent company [COMPANY], seeking the tribunal’s grant of dispensation pursuant to section 20ZA of the Landlord and Tenant Act 1985 (“the 1985 Act”) for the purpose of entering into long-term qualifying agreements with energy supplier, following recommendation by its energy broker [COMPANY] (“[NAME]”) for the bulk purchase of gas and electricity during the period 1 April 2021 to 31 March 2024 as part of the Master Agreement dated 4 March 2020 made between [COMPANY] and [COMPANY].

The applicants’ case

2. In support of the [NAME] the tribunal was provided with witness statements dated 15 May 2020 and 28 July 2020 from Mr. [NAME] of Service Charges of [COMPANY] and Mr. [NAME] of Social Housing, MEI Chartered Energy Manager for [NAME] dated 11 August 2020. The tribunal were also provided with an electronic bundle of documents containing 54 pages.

3. It was said in the [NAME], that dispensation from the consultation requirements to enter into long-term qualifying agreements would enable the applicants to take advantage of more competitive energy

3 prices, which would not otherwise be available to them due to the volatile nature of energy procurement, if consultation with tenants was required. Therefore, the tenants would potentially lose the benefit of lower energy prices that would otherwise be available to housing associations, who are able to bulk buy as part of a ‘pot’ enabling them to get value for money for their tenants.

4. In addition, the applicants stated that were dispensation not granted, the applicants would be unable to provide estimated costs to tenants as required under the Service Charges (Consultation) (England) Regulations 2003, due to the energy having to be purchased as and when a competitive price was identified by the [NAME] on the wholesale energy market.

5. In a witness statement dated 28 July 2020, Mr. [NAME] responded to objections received from two tenants to the [NAME] for dispensation. Mr. [NAME] reiterated that the [NAME] dealt only with dispensation from the consultation requirements and did not affect the tenant’s rights to dispute the amount of any service charge (including energy costs) under the provisions of the 1985 Act.

6. Mr. [NAME] also stated that the applicants are committed to a sustainability strategy that covers the [COMPANY], although this needs to be balanced against its obligation to reduce costs. Mr. [NAME] stated that two of the key drivers for the energy procurement process that is to be followed by [NAME] are social value and sustainability. This is with the aim of tackling fuel poverty within the applicants’ [NAME] communities, through the adoption of a long term strategy to achieve a low and stable price of energy and balance against environmental sustainability.

7. In the witness statement of Mr. [NAME], the procurement process was explained in greater detail. Mr. [NAME] stated higher energy prices would be incurred were dispensation to enter into long-term qualifying agreements not granted, due to the enforced use of 12-month energy supply contracts that would be subject to the volatility of the markets.

The respondents’ case

8. The tribunal received objections from only two ([NAME]) tenants, Mr. [NAME] and Ms [NAME] by email dated 9 July 2020. Although, the applicants took it upon themselves to redact the names and addresses of these tenants, this measure was neither sought by the tenants themselves or granted by the tribunal. As these proceedings are effectively public hearings and the tribunal’s determinations a matter of public record, the tribunal determined that the usual transparency and openness of its decisions would be maintained.

9. Mr. [NAME] and Ms [NAME] objected to the [NAME] for dispensation due to the approach of the applicants being vague, lacking in

4 transparency and one that would remove tenants from the selection process while not aligning with the social purpose of [NAME]. It was also said the replacement of the democratic process simply to save time and potentially money is unacceptable, as [NAME] is a housing association and acts as a business with a social purpose. Further, due to the volatility of the energy market, there is a risk that the long term agreements may be more expensive for [NAME] than other options.

The tribunal’s decision and reasons

10. The tribunal finds that it is reasonable and appropriate to grant the dispensation sought by the applicants from the consultation requirements of section 20 of the Landlord and Tenant Act 1985 and by reference to the Service Charges (Consultation) (England) Regulations 2003.

11. The tribunal accepts that, entering into long-term qualifying agreements for the bulk purchase of energy provides financial benefits for tenants of social landlords and finds that this does not exclude environmental and sustainability concerns. The tribunal also takes into account that of the over 36,000 households identified by the applicants, only two have objected. Although the tribunal accepts that these tenants have raised valid concerns, it is nevertheless of the opinion that were dispensation not to be granted, it is likely that a significant detriment would be incurred by the respondent tenants as a result.

12. Therefore, the tribunal grants the first and second applicants dispensation from the section 20 of the 1985 Act consultation requirements with reference to the Service Charges (Consultation) (England) Regulations 2003, for the purpose of entering into long-term qualifying agreements with energy suppliers as part of the Master Agreement dated 4 March 2020 made between [COMPANY] and [COMPANY] for the procurement of gas and electricity supplies during the period 1 April 2021 to 31 March 2024.

Name: Judge Tagliavini Date: 2 September 2020

Rights of appeal By rule 36(2) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013, the tribunal is required to notify the parties about any right of appeal they may have.

5 If a party wishes to appeal this decision to the Upper Tribunal (Lands Chamber), then a written [NAME] for permission must be made to the First tier Tribunal at the regional office which has been dealing with the case. The [NAME] for permission to appeal must arrive at the regional office within 28 days after the tribunal sends written reasons for the decision to the [NAME]. If the [NAME] is not made within the 28-day time limit, such [NAME] must include a request for an extension of time and the reason for not complying with the 28-day time limit; the tribunal will then look at such reason(s) and decide whether to allow the [NAME] for permission to appeal to proceed, despite not being within the time limit. The [NAME] for permission to appeal must identify the decision of the tribunal to which it relates (i.e. give the date, the property and the case number), state the grounds of appeal and state the result the party [NAME] the [NAME] is seeking. If the tribunal refuses to grant permission to appeal, a further [NAME] for permission may be made to the Upper Tribunal (Lands Chamber).