4  INTERMEDIATE RENTS

1 INTRODUCTION

1.1 The Intermediate Rent scheme is designed to assist in the recruitment and the retention of frontline key workers by making homes available for rent. This is particularly relevant for staff in the health, education and community safety sectors, whose services are essential to local communities but who are unable or do not wish to purchase a home. The intention is to target key workers who cannot afford market rents in areas within a reasonable travelling to work distance of their workplace.

1.2  Annex B contains details of the specific eligibility and needs criteria for each key worker sector. KWL operates in London, the South East or East. In addition to the sector eligibility rules outlined, there are further variations for intermediate rent schemes only as follows:

• There must be at least 6 months remaining on the key worker’s work permit at the commencement of the tenancy;
• Key workers who have temporary contracts with at least 6 months remaining at the commencement of the tenancy are eligible and do not need to meet the further requirements in Annex B in relation to the terms of their temporary contract.  Those on permanent contracts are also eligible for the intermediate rent scheme;  
• Trainee key workers with an employment contract are eligible for the intermediate rent, where they are undertaking ‘on the job’ training rather than training for a qualification that would enable them to become a key worker.

1.3 The information in this section should be read in conjunction with  KWL-1. 

2  RENTS

2.1 In common with key worker schemes at below market rents provided under the Challenge Fund the rent re-structuring framework applicable to mainstream social rented housing does not apply to KWL Intermediate Rent. The rent of homes available for KWL Intermediate Rent must not exceed 80% of the current local market rent. Wherever possible a figure significantly lower than this but higher than social rents should be anticipated.  Annual rent increases should be limited to RPI plus 0.5%. 

2.2 Landlords can request the first month’s rent in advance when the tenancy agreement is signed and can also request up to the equivalent of a further month’s rent at that time as a returnable deposit against breakages/damage. 

2.3 Either fixed or variable service charges can be used and, where payable, should be reasonable.  RSLs should look to adopt the principles of the Tenant’s Charter and comply with the Regulatory Code where possible, in respect of the management of Intermediate Rented properties.

 
3 TENANCY AGREEMENT

3.1 Applicants for Intermediate Rented homes must be granted Assured Shorthold Tenancies (AST).  Contractual periodic tenancies should be granted in all cases.  In no circumstances should ‘permanent’ Assured Tenancies be granted.

3.2 Single/ Joint Tenancy

Where the property is let to joint tenants the Assured Shorthold tenancy will be granted to both parties who both need to be fully aware of the terms.  It should be made clear in the conditions attached to any joint tenancy that at least one party must remain in eligible key worker employment.  Both the key-worker tenant and the non-key-worker tenant are placed under an obligation to inform the landlord RSL in the event that the key worker tenant ceases to be a key worker.

3.3 Below are examples of the clauses in relation to:

• Key Worker (mandatory);
• Change of Employment notification and
• Rent

that we would expect to see included in the Assured Shorthold Tenancy. They are for illustrative purposes only and we do not accept any liability for any errors with the examples. We strongly advise landlords to obtain independent legal advice on the appropriate drafting for their Assured Shorthold tenancy agreements.

Key Worker

3.4 Where a Key Worker is considering a change in their employment they should check with their landlord that the proposed post will be a qualifying post for the purposes of the KWL scheme. The tenant should provide the landlord with full written details of the new job prior to taking it up. The landlord will confirm in writing to the tenant whether or not they will continue to qualify as a Key Worker whilst employed in the new job. This will be determined by the Key Worker eligibility criteria listed in Annex B that the Corporation may amend from time to time in conjunction with the DCLG. The tenant has six months in which to commence employment in that job from the date of the landlord’s confirmation that it is a qualifying post.  Should the qualifying categories of employment have changed during these 6 months, the tenant is still eligible / a qualifying Key worker.

Draft Clause “For the purposes of this agreement a “Key Worker” means an individual employed in one of the categories of employment from time to time specified by the Landlord. A current list of the qualifying posts/ criteria will be available from the landlord on request.

If a tenant changes their job during the tenancy he/she will cease to be a “Key Worker” unless:-

(i) He/she provides the Landlord with full written details of the new job he/she intends to take up; and

(ii) The Landlord confirms in writing that he is content that the tenant will continue to qualify as a Key Worker whilst employed in that new job; and
(iii) The tenant commences employment in that new job within six (6) months of the date of the Landlord’s confirmation under sub-paragraph (ii).

For the avoidance of doubt, if the Landlord is satisfied that the job that the tenant is proposing to take up is one that falls within one of the categories of employment that they have for the time being specified as a "Key Worker" occupation the Landlord may not withhold their consent to the tenant remaining a Key Worker for the purposes of this agreement."
 
3.5 Change of Employment notification

Under the terms of the tenancy agreement the Key worker is required to notify the landlord within seven days of leaving their current qualifying employment 
The landlord will need to decide which of the following draft clauses they wish to use in their tenancy agreements:

• Option A “  to notify the Landlord  within 7 days of the tenant  leaving his or her current employment (whether or not such change would lead to the tenant ceasing to qualify as a Key Worker)
   or
• Option B “  to notify the Landlord  within 7 days of any one of the tenants  leaving his or her current employment (whether or not such change would lead to the tenant ceasing to qualify as a Key Worker)

Rent

3.6 Within the tenancy agreement the rent payable should be expressed as the market rent that is discounted whilst the tenant remains a qualifying key worker.  Once the tenant is no longer a qualifying Key worker the market rent is payable from the next rental payment period i.e. the next month, and recoverable at that level until the property is vacated. The landlord will need to decide which of the following draft clauses they wish to use in their tenancy agreements:

“The monthly rent for the premises at the date of this agreement is £...."

"The payment of monthly rent is due in advance on the ... day of each month."

Option A “If, on the date that rent is due the tenant is employed as a key worker, the rent to be paid shall be reduced by …..x…..percent "
or
Option B “If, on the date that rent is due one of the tenants under this agreement is employed as a key worker, the rent to be paid shall be reduced by …..x…..percent "

4  CESSATION AS QUALIFYING KEYWORKER

4.1 It must be a condition of the Assured Shorthold tenancy agreement that when a key worker leaves a qualifying form of employment the tenancy must be terminated and the property surrendered. In addition the market rent will be charged from the next rental payment period until such time as the property is vacated.  Changes in the sector specific eligibility criteria will not, on their own, trigger a requirement to surrender the property. A beneficiary’s eligibility status will be judged against the criteria prevailing at the time they were granted assistance under the scheme .unless they change employment or wish to transfer to another property or participate in one of the other KWL options, in which case, their eligibility will be re-assessed against the current version of the sector specific eligibility criteria.   

Exclusions

4.2 A key worker would not have to surrender their tenancy but the market rent would be payable from the next rental payment period if they left their employment because:

(i)  They retired, provided that a minimum of five [5] years continuous service has been undertaken since the qualifying key worker was granted assistance under the scheme
(ii)  They were made redundant
(iii) They left with the employer's permission, for health reasons validated by a health professional (i.e. early retirement on health grounds, dismissal on health grounds)

4.3 There may be other special circumstances where it would be appropriate for the landlord to delay or defer seeking possession of the property.  Exceptional cases should be referred to the Housing Corporation who will decide whether the proposed approach is merited. Repossession action would not be required if the key worker took a career break of up to 12 months with their employer's permission. This period could be extended to a maximum of three years, at the employer's discretion in exceptional circumstances, with an assumption that this would be for family reasons.

Change of employment 

4.4 If the key worker changes employment, surrender of the tenancy will not be required as long as the new post qualifies as eligible employment under the scheme and this is confirmed in line with 3.4 above.  The only exceptions to this rule are:

• If eligible police force employees (including British Transport Police and the Civil Nuclear Constabulary) wish to make a permanent transfer to another participating police force, or any other eligible employment, it will be up to the exporting police force to decide whether to revoke or allow the key worker to retain the tenancy.
• If eligible fire and rescue service employees wish to make a permanent transfer to another fire and rescue service, or any other eligible employment, it will be up to the exporting service to decide whether to revoke or allow the key worker to retain the tenancy.

Recovering the Property

4.5 The provisions take effect from the date that the tenant leaves eligible employment.  Thus, the landlord will be expected to take action to recover the property at the earliest opportunity. In addition, the market rent is payable from the next payment period until such time as the property is vacated. If the tenant returns to eligible employment before the possession order comes into force the property recovery provisions no longer apply. 

4.6 RSLs should make contact with the tenant and set out the next steps as soon as they become aware that the tenant is no longer a qualifying key worker.  RSLs will be expected to use all reasonable endeavours to recover debts.  As landlord RSLs will initiate legal action to recover possession of the property, but the tenant needs to be informed of the landlord’s intention to recover the cost of any legal action from them.

4.7 RSLs are expected to manage cases resulting from the loss of the qualifying form of employment and consequent breach of tenancy, providing advice and referring them to appropriate agencies such as the Local Authority.  RSLs need to be mindful about the status of those who are on work permits, as the rules may prevent them from having recourse to public funds via access to public sector housing.

4.8 Where a Key worker dies in service, RSLs will be expected to manage such cases so as to avoid unnecessary hardship for any household members remaining in the property. 

    
5 GRANT RECOVERY

5.1 In circumstances where units are transferred or disposed of, e.g. as a result of stock rationalisation, (or in other circumstances where the grant is no longer being used for Intermediate Rents properties), grant must be repaid to the Corporation.