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A B C D E F G H I J K L M N O P R S T V W Y

Housing & Regeneration

A quarterly newsletter keeping the social housing sector informed of the latest legal news and developments.

Latest Issue

In our latest issue of Housing and Regeneration News Alistair Fletcher looks ahead with his predictions for what 2017 has to offer, whilst we also look back at the success of the recent North West Housing Conference plus other news which we hope you will find of interest.

Season's Greetings: The Housing and Regeneration team would like to take this opportunity to extend our thanks to all our clients and contacts who have worked with us over the last year. We hope that we have helped to guide you through the issues that matter to you and that you will allow us to help you realise your ambitions in 2017 and beyond.

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Brexit: Considerations for housing associations

Friday 17th June 2016

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Housing and Regeneration News - June 2016

In April, the National Housing Federation released a briefing framing the debate and posing questions to enable housing associations to assess the significance of the EU referendum for their businesses. With debate over our participation in the EU continuing, we consider some of points raised in a referendum that will define the future of the UK.

Housing and Labour

An existing worry for the sector is housing supply and demand.  Currently housing associations in England aspire to increase their offering by delivering 120,000 new homes every year by 2033. However, a potential Brexit could impact upon this aspiration.

Currently, EU nationals have the right to live and work in the UK, which would be revoked upon the UK leaving the EU (which is anticipated to take up to two years to implement). EU workers provide a vital contribution to the delivery of new homes and this could mean a reduction in skilled labour, which causes concern given that it takes considerable time and resources to train skilled tradesmen. Although it is likely that the Government would suggest a new immigration system to ensure those with desirable skills can continue to work in the UK, less benefits coupled with a more rigorous process could make the prospect of working in the UK a less attractive one.

On the other hand, restriction of EU migration in the UK could reduce pressure on the housing market demand. However, it is possible that leaving the EU could mean UK nationals living in EU Member States being required to return. British consular authorities estimate that 2.2 million Britons live in the other EU countries. The effect on demand will be determined by the way the current tension is reconciled.

Borrowing

Housing associations need to secure the right investment. There are opposing views and much speculation about the short and long term effects that a Brexit will have on the financial sector, spelling uncertainty regarding the cost of borrowing for associations, investors and developers in the housing sector.

Official Journal of the European Union (OJEU) and State Aid

One consideration highlighted in the NHF briefing is that whilst social housing grants are currently protected under EU rules, the EU Commission can prohibit government grants and subsidies. A vote to leave the EU may open doors as the Government will have the freedom to provide whichever grant it chooses and there is a potential to benefit from new grant funding if the State aid rules are no longer binding. However, this is entirely dependent on the government making this funding available and whether any such grants and subsidies may be prohibited by new trade deals that will need to be negotiated.

Similarly, OJEU is an EU construct that may disappear and free up housing association’s ability to source supply. However, there are still the constraints of the need to seek best value and if we are to still trade with the EU we may be required to implement a similar arrangement to OJEU to appease our trading partners. Indeed the UK’s current arrangements go beyond EU requirements so it would be a change of approach to do away with it completely.

Conclusion

The outcome of the June 23 referendum is still very much uncertain. However, it would appear there are certainly more challenges ahead for the sector, the impact dependent on the differing business models of each housing association, the outcome of the referendum and the appropriate response to be considered by individual housing association boards.

Need advice or wish to talk to us?

If you would like to discuss any housing matters or concerns over the referendum please do not hesitate to contact us.


Alistair Fletcher

Head of Housing and Regeneration
Tel: 0151 600 3082
Email: alistair.fletcher@brabners.com

 

Paralegal, Housing & Regeneration
Tel: 0151 600 3052
 
 
 

Voluntary Right to Buy: A look at the latest developments

Friday 17th June 2016

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Housing & Regeneration June 2016

As D-Day for roll-out of the Voluntary Right to Buy (VRTB) grows ever closer, which is expected this autumn, what do we currently know about its implementation and what can housing associations do to prepare themselves?
 
1. What has the Housing and Planning Act told us about the VRTB? 

As expected, not very much! 
 
It does focus on what it refers to as the monitoring of ‘compliance with the home ownership criteria’. The ‘home ownership criteria’ is intended to be set by reference to the VRTB (at least, initially), and the Secretary of State can require the HCA to monitor associations’ compliance with the home ownership criteria. This would almost certainly be done by way of the regulatory framework, meaning that non-compliance could result in an association’s governance and viability rating being downgraded. 
 
2. VRTB Scheme Design

Given the lack of legislative design, it’s down to the Secretary of State to publish the VRTB guidance. Associations must then use this as a framework for their own VRTB policies. 
 
The process of creating this framework has been fairly transparent, with the NHF publishing blogs and briefings on the design process. There is a VRTB Sounding Board chaired by the NHF and made up of housing association representatives, DCLG and the HCA. The sounding board receive recommendations and learnings from the pilot scheme and proposals from various working groups (made up of housing association representatives) before considering these and, if they are endorsed, making recommendations to the secretary of state.  
 
A few key points arising:-
 
Eligibility
The government are responsible for deciding exactly which tenants will be eligible for the VRTB discount. We don’t know any further information at this point. Under the pilot scheme there is a 10 year residency requirement for tenant eligibility purposes, however this was always intended to be used as a tool to assist the government in deciding eligibility criteria for the full scheme and certainly can’t be relied upon as the eligibility criteria for the full roll-out. 
 
Portability 
Where associations exercise their discretion not to sell a property (for example, the property is subject to a restriction which renders it unsaleable under the VRTB), the association must offer the eligible tenant in an ‘ineligible’ property the option to use their discount to purchase another housing association property, be it from your own stock, or another association’s stock. It is anticipated that associations will need to publish individual policies which will set out how they intend to operate the portability scheme locally. 
 
3. When?

The framework is expected to be published this summer, with full roll-out of the scheme expected in the autumn.
 
4. What should Housing Associations be doing to prepare?
 
  • Start to think about what your VRTB policy will look like and how your applications process will work.
     
  • What will your portability policy look like – you want to avoid a high proportion of your stock being open to portability.
     
  • Ensure your asset and liability register is up to date, and start to determine which properties are eligible for the VRTB, and which will be subject to portability. You can then start to measure your potential exposure under the VRTB and start to recognise and deal with issues arising (for example, possible gearing issues in your loan documentation).
     
  • Further information is provided in the NHF guidance ‘What can you do to prepare now’.
    This is worth reading. 
5. What we still don’t know

There is still a lot that we don't know, including:
 
  • How one-for-one relacement will be achieved;
     
  • How quickly payment of the discount will be repaid to associations so as to not undermine development, achieving one-for-one replacement and protecting associations’ loan agreements (in particular loan to value ratios and the threat of a breach of loan covenants);
     
  • Application and sales process issues, including how fraud can be minimised;
     
  • The ultimate level of discretion afforded to associations in creating their VRTB policy;
     
  • How the scheme will work for smaller housing associations.
We believe many of these questions are currently being dealt with by the VRTB Sounding Board and associated working groups, with details to follow with the impending secretary of state guidance. 
Some of these issues are discussed in greater detail in our previous VRTB article (here), including funding issues and the viability of the one-for-one replacement (particularly in the North West).
 
Training on the Voluntary Right to Buy

We are currently offering training on the VRTB, its potential impact on the sector, and how associations can prepare themselves in readiness for its implementation. If you are interested to know about this and how we can help you, please contact Alistair Fletcher. 
 
If you wish to discuss any matters about the Voluntary Right to Buy please do not hesitate to contact either:
 
Head of Housing and Regeneration
Tel: 0151 600 3082
 
 
 
 
Solicitor, Housing & Regeneration
Tel: 0151 600 3042

Working in partnership to fight against drugs - enforcing tenancy conditions to combat anti-social behaviour

Friday 17th June 2016

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Housing and Regeneration News - June 2016

On 11 April 2016 we represented The Riverside Group Limited ('Riverside') in the County Court at Birkenhead and obtained an outright possession order against a tenant who had turned his home into a cannabis factory.

Sadly, this is not a rare occurrence and we work with many landlords in the fight against drugs in order to enforce tenancy conditions and combat anti-social behaviour.

This particular tenant was found guilty of allowing his premises to be used for producing a Class B drug, after cannabis plants with a street value of £12,950 - £25,900 were found at his home. He was sentenced to nine months in prison, suspended for 24 months, and was ordered to carry out 180 hours community service.

An enforcement officer on behalf of Riverside alerted Merseyside Police to the incident after smelling the cannabis and hearing a mechanical fan at the property. The Police subsequently forced entry after securing a warrant and uncovered what Riverside’s experienced enforcement officer described as one of the most professional and sophisticated set-up’s she had ever seen. She commented that the property looked more like a laboratory than a home.

The tenant said in his defence that he had not set up the factory himself but, rather, after falling into debt with drug dealers and unable to repay his debt and facing threats of violence, he allowed the drug dealers to use the property to grow cannabis.

The Court did not deem this a sufficient defence to defeat Riverside’s claim for possession and Deputy District Judge Ranson agreed it was an elaborate drugs factory and a large scale operation and said he had no hesitation in granting a forthwith possession order.

As is common in these types of cases, Riverside relied heavily on police evidence in order to establish the Grounds for possession and to satisfy the Court as to the reasonableness of making an outright possession order.

Despite some misconceptions as to what is required in a civil claim of this nature, a landlord ideally needs to produce to the Court the MG11 witness statements from the arresting police officers, police evidence as to the drug valuation, premises search log, photographs, interview record and a certificate of conviction. This is all in addition to a landlord’s own housing management evidence.

This was a good result and will send out a strong message to the community that drug use in this way will not be tolerated. 

Need advice or wish to talk to us?
 
If you would like more information about possession orders or how we can help you with your housing matters please contact:
 
Associate, Housing & Regeneration
Tel: 0151 600 3094

 


Severing the link between stock transfer housing associations and local authorities – the end of the 'golden share'?

Friday 17th June 2016

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Housing and Regeneration News - June 2016

In October 2015, £60 billion was added to the UK’s public debt after the Office for National Statistics (ONS) reclassified housing associations from private sector bodies to public sector, for public accounting purposes. 

Following the change, housing associations were concerned that their ability to borrow would be curtailed as the government would be reluctant to see the public debt increase. With housing associations building around 40% of new homes each year, a lack of access to private funding could seriously hamper the efforts to tackle the housing crisis. 

With the passing of the Housing and Planning Act 2016, the government has brought forward a host of deregulatory measures aimed at reversing the ONS’s reclassification. The removal of the HCA consent regime for disposal of housing association stock being the most publicised change.

A less publicised section of the Act has the potential to radically alter the constitutional composition of many housing associations, with the removal of 'golden share'. 

Many housing associations were formed, following large scale voluntary transfers of housing stock from local authorities. The term “golden share”, refers to provisions contained within a housing association’s constitution, which gives the local authority a power of veto over constitutional changes. In addition to golden share, local authorities often hold substantial voting rights at board level, as well as the ability to appoint and remove board members from the boards of housing associations.

In a further effort to distinguish housing associations as private sector organisations, Section 93 of the Act empowers the Secretary of State for Communities and Local Government to introduce regulations that would limit or remove the ability of local authorities to exert influence over housing associations. If implemented, local authorities would be prevented from blocking constitutional change, appointing officers or exercising voting rights on housing association boards. 

Whilst a relatively small number of local authorities retain the benefit from golden share arrangements, the new measures have received a mixed response. Whilst recognising the importance of working closely with local authorities, The National Housing Federation saw the measure as necessary in demonstrating to the ONS the independence of housing associations. By comparison, local authorities felt the changes would prevent them from holding housing associations to account and that consequently, future stock transfers may be less attractive to tenants. 

In light of the challenges presented by the social housing rent reductions, many housing associations are looking at mergers as a way of creating efficiencies. Section 93 of the Act has the potential to remove the obstacle of local authorities, who may otherwise object to mergers that diminish a housing association geographical identity. 

Need advice or wish to talk to us?
 
If you would like to discuss any matters about the issues raised here please do not hesitate to contact us.
 
Partner, Housing & Regeneration  
Tel: 0151 600 3317
 
 
 
Trainee Solicitor, Housing & Regeneration
Tel: 0151 600 3146

 


Court of Appeal ruling provides more options to owners of small development sites

Friday 17th June 2016

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Housing and Regeneration News - June 2016

On Wednesday 11 May 2016, the Court of Appeal upheld a Government recommendation to exempt smaller development sites from Affordable Housing Contributions.

The exemption applies to developments with 10 dwellings or fewer or those that are less than 1,000 square metres. For rural areas, including Areas of Outstanding Natural Beauty and National Parks, the threshold for the exemption is further reduced to 5 dwellings.

The ruling by the Court of Appeal will be beneficial for owners of small development sites as it will open up options for those sites which had not previously been available due to the need for payments of Affordable Housing Contributions.

A key Government objective is to open up housing land supply and this ruling will no doubt bring an increased number of planning applications for smaller housing sites as it will remove the need for payment of Affordable Housing Contributions. 

Also, as a result of the ruling by the Court of Appeal, a number of local authorities will need to re-visit their housing policies and update them accordingly. Furthermore, planning applications and planning appeals which are currently pending will also have to take this ruling into account.  Finally, there may also be an opportunity for developers to re-visit schemes with signed and completed S.106 Agreements.

It is open for local Councils to appeal the decision to the Supreme Court. Regardless of any future appeal, it would be prudent for all owners of small development sites to consider their options to maximise the relief provided by this ruling on Affordable Housing requirements.

Need advice or wish to talk to us?

Should you wish to discuss and planning matters for your housing arrangements or any other planning matter, please contact:


Kevin Halewood

Director of Planning
Tel: 0151 600 3365
Email: kevin.halewood@brabners.com


A tenant cannot rely on a human rights defence to possession proceedings brought by a private landlord

Wednesday 15th June 2016

Housing and Regeneration News - June 2016

Newsflash

On 15 June 2016 in the case of McDonald v McDonald, the Supreme Court held that a tenant cannot rely on a human rights defence to possession proceedings brought by a private landlord. 

This decision is significant not just for the private rented sector but also for social landlords who can argue that they are not “public bodies”, such as housing co-operatives and housing associations for the purposes of market rent schemes.
 
Need advice or wish to talk to us?
 
If you require any further information about this latest development please contact Ian Alderson.
 
Partner, Housing & Regeneration
Tel: 0151 600 3317

De-registration from the HCA - what are the key legal issues?

Tuesday 15th March 2016

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Housing and Regeneration News - March 2016

In these changing times we are only too aware that our registered provider clients are considering every possible alternative to establish whether that might be to their advantage. One of the matters under consideration is whether they should go as far as de-registering from the HCA (Homes and Communities Agency) which inevitably leads on to the question of whether that is legally possible to do so and, if so, what legal issues will need to be addressed. In this article we give an overview of some of those generic issues that are likely to arise in respect of every Registered Provider (RP) though you will appreciate that every RP’s individual circumstances will also need to be considered.

Does statute permit it?

Section 119 of the Housing and Regeneration Act 2008 allows a registered provider to submit an application for voluntary de-registration. The critical issue though is that the HCA 'may' comply with such a request and therefore the HCA has discretion in reaching its decision. There are some instances where de-registration is not permitted such as if the purpose of the de-registration is to distribute assets to members. However, if one of the following three criteria can be met then de-registration remains possible:

  1. The registered provider no longer is or intends to be a provider of social housing;
     
  2. The registered provider is subject to regulation by another authority (e.g. the Charity Commission) whose control is likely to be sufficient; or
     
  3. The registered provider meets any relevant criteria for de-registration set by the HCA.

There is debate about whether those three criteria need to be read separately or whether they should be interpreted together. The consequence of this is that if for example de-registration was being pursued on the basis that the RP would instead be subject to Charity Commission regulation the question is whether the HCA’s policies that it may have set under criteria number 3 should still apply. 

We anticipate that the answer to that is yes and therefore even if another regulator can be shown to be an appropriate replacement to the HCA, the HCA would still have discretion to refuse the de-registration.

What are the HCA’s de-registration criteria?

The HCA focuses on ensuring that satisfactory arrangements are in place to ensure the continued protection of tenants and to ensure that there is no misuse of public funds.

The HCA will also have regard to the size of the provider, the number of tenants affected and the nature of its operations when considering its application and therefore the bigger the provider the more intense the scrutiny the HCA will put the application under. In relation to the issue of public funds, any capital grants that have been made to the provider will need to be considered as they may prevent the de-registration. 

The HCA will also take soundings of appropriate stakeholders which we consider further below.

Which stakeholders are relevant?

  • The Local Authority or Council: They will be consulted and regard should also be had to the terms of any relevant stock transfer agreement and whether they address the issue of the de-registration.
     
  • Lenders: Whilst the HCA will inevitably consult with your lenders, your lenders’ loan documents will also need to be borne in mind as they will certainly require lenders’ consent to any de-registration.  We would anticipate that lenders are likely to strike a balance between the benefits to you and therefore them of de-registration against the removal of regulatory control.
      
  • Your Tenants: For any provider with more than 50 homes the HCA will expect evidence that a majority of the applicant’s tenants are content with the proposal to de-register. Whilst the HCA’s criteria makes no specific reference to a ballot, in reality we would anticipate that a ballot would be required to provide the necessary evidence. Thought needs to be given as to whether the potential increase in rents will encourage tenants to vote in favour.
Alternative regulator – frying pan and fire?  
 
Whilst RPs may wish to extract themselves from the HCA’s regulatory regime, whether another regulator (such as the Charity Commission) will indeed want to accept regulation is an issue to bear in mind. Even if they do accept regulation then serious consideration needs to be given as to whether that will actually improve the situation as whilst it may have some benefits, the Charity Commission’s likely increased focus on the application of charity law (which for exempt charities is often not considered to the degree that charity law might otherwise suggest) may have other consequences.


Conclusion

Whilst de-registration is possible at law, for large registered providers in particular we consider that the HCA is likely to be pretty resistant to any attempt to de-register and therefore potentially avoid the four year rent decrease due to the message that is likely to be sent to the rest of the sector (even if the other requirements can be achieved). We will consider this issue further in subsequent newsletters.

We would be happy to discuss any of these points in more detail with you. If you would like to do so then please contact either:


Alistair Fletcher

Head of Housing & Regeneration
Tel: 0151 600 3082
Email: alistair.fletcher@brabners.com

 


Rupert Gill
Partner, Corporate
Tel: 0151 600 3106
Email: rupert.gill@brabners.com


Proposed sector deregulation - an opportunity for diversity?

Tuesday 15th March 2016

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Housing and Regeneration News - March 2016

Before Christmas Brandon Lewis, the Minister of State for Housing and Planning, announced a package of deregulation measures for private Registered Providers (RPs). In his announcement he stated the measures had two aims:
 
  1. To enable the Office for National Statistics to return the sector entirely to a private one;
     
  2. To maintain a proportionate regulatory system. 
The key measures for RPs are:
 
  • Removal of the requirement for consents in respect of mergers, change of status, or restructuring;
     
  • Removal of certain consent requirements relating to winding up or dissolution;
     
  • Removal of the need for HCA consent to dispose of land, charge property, or change ownership;
     
  • Abolishment of the Disposals Proceeds Fund.
The Minister proposes to incorporate his proposals in the Housing and Planning Bill, aiming to give RPs more flexibility to manage their funds. 
 
If passed, the proposals provide opportunities for RPs and many could look to review their structures. Some may consider establishing unregistered entities to provide a mixture of social housing and private rents. These unregulated arms could complement and help fund the RPs traditional functions, partly negating the impact of the forthcoming cut to social rents. 
 
Additionally, the removal of the present HCA consent regime will make it easier to pass stock between a registered provider and an unregistered subsidiary, making an unregistered arm an attractive option. 
 
While the clear aim of the Bill is deregulation, the overall structure of regulation is retained. As such RPs should maintain key links and contact with the Regulator when exercising their new ‘freedoms’. It will remain important to emphasise that any decisions are financially viable and are of good governance. 
 
For RPs who are charities registered with the charity commission, it will be essential to comply with the obligations of the Charities Act 2011 in relation to the disposal of property. This effectively places more obligations upon the RP, and is in all likelihood an unforeseen consequence of Mr Lewis’ proposal. 
 
Mr Lewis also announced a special administration process for RPs, aiming to allow realistic options and timescales if an RP gets into financial difficulty, whilst preserving the rights of lenders. It is hoped this will protect the service to tenants and the government grant monies invested in the sector, as well as ensuring creditors can recover their security where required. 
 
The Bill is currently at the committee stage in the House of Lords, and is not therefore law. We will keep you updated as to its progress. 
 
If you like to discuss any issues regarding deregulation for for any other please contact either:
 
Solicitor, Housing & Regeneraion
Tel: 0151 600 3063
 
 
 
Trainee Solicitor
Tel: 0151 600 3144
 

Law Commission launches consultation on event fees in retirement housing leases

Tuesday 15th March 2016

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Housing and Regeneration News - March 2016

With an ageing population, increased house prices and a shortage of properties, retirement villages are becoming more popular as an investment to those people in their retirement years. They can release equity in their property, whilst moving in to a smaller, easily manageable property and receive extra care if required. However recently these developments have come in for some criticism.
 
In 2013, the Office of Fair Trading (OFT) published a report on its investigation into transfer or “event” fees. Leases in the retirement sector often include a transfer fee clause, which makes the tenant liable to pay a fee to the landlord when they assign their lease.
 
The report set out why such fees can be unreasonable, and lists the minimum standards with which the OFT expects landlords to comply when enforcing transfer fees.
 
In September 2014, and in response this report the government asked the Law Commission to look into “event fees” which subsequently launched a consultation paper. The punchy roll of your tongue easy to remember Residential Leases: Fees on Transfer of Title, Change of Occupancy and Other Events, asked respondents to comment on the transparency of event fees. It also seeks views on its proposals requiring estate agents and developers to comply with strengthened codes of practice on event charges. The closing date for the consultation was 29 January 2016.
 
Both reports are of interest to landlords, their conveyancers and for anyone advising on the purchase of a lease containing such a clause.
 
By way of background, many retirement developments sell properties on long leases which often contain clauses that require the leaseholder to pay a substantial fee when they resell their home; this is the most common trigger. 
 
This is different to sinking fund contributions that, in some schemes, are collected when the lease is assigned. Where this happens, the contribution is paid in to the sinking fund to cover future major capital expenditure (e.g. roof replacement) and it is held on trust for the benefit of current and future leaseholders, rather than being retained by the landlord. Under this model, sinking fund contributions are not collected through service charges, making retirement living affordable. This model is used in the standard HCA Protected Area House Lease. 
 
In retirement subsidised living can sounded very attractive and the Law Commission notes that “Experience in the USA, New Zealand and Australia suggests that deferred fees are integral to making specialist housing affordable, at least in the extra-care sector”. That is until you come to sell your home as the percentage can vary wildly from 1% to 30% and in some developments the money is retained by the freeholder as nothing more than an additional income stream.
 
The Law Commission paper concluded that event fees do play an important role in helping leaseholders to meet the costs of specialist retirement housing. However it also concluded that the law on event fees is complex and not sufficiently clear (see the recent case of Burrell and others v Helical (Bramshott Place) Ltd [2015] EWHC 3727 (Ch)). The market needs to be more transparent, with buyers being given enough information at an early stage to enable them to make an informed decision.
 
It recommends that developers, operators and managing agents should have to abide by strengthened codes of practice to ensure that the fees are brought to the early attention of prospective buyers. Non-compliance with the code would incur legal sanctions.
 
If the fees are not disclosed the Law Commission notes that it not only undermines buyer confidence with descriptions of the practice as “wrong” or “a rip-off” but also lender confidence which could have an adverse effect on the future investment in to such specialist developments.
 
The Commission hopes to make interim recommendations in summer 2016 with final recommendations in March 2017 so watch this space.
 
If you would like more information about these developments please do not hesitate to contact:
 
Paralegal, Housing & Regeneration
Tel: 0151 600 3128

Merseyside to be a key player in Right to Buy extension

Friday 18th December 2015

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Housing and Regeneration News - December 2015

The proposed extension of the Right to Buy to Housing Association tenants has produced more than its fair share of controversy over the previous 6 months or so. Most recently, the National Housing Federation negotiated a deal with the government to implement the extension by way of a voluntary extension with the support of housing associations.

There isn’t a corner of the sector that hasn’t had an opinion; every word of the National Housing Federation and the government on the extension has been scrutinised, and, still, it feels as though we are no closer to understanding the fundamentals of how the extension will operate in practice. 

Key questions still to be answered relate to how compensation will work, how strict the replacement home policy will be and which properties will be exempt under the scheme.

The latest key development is the announcement of the government pilot scheme. Albeit small (with a cap of just 600 sales), the pilot will offer the sector some much desired tangible evidence as to how the extension will operate in practice.

Spotlight on Merseyside

As of midnight on 25 November, certain tenants from five housing associations across England were able to begin the process of buying their housing association home by way of the Right to Buy extension giving them discounts of up to £77,900 (£103,900 in London) off the market value of their home.

Riverside’s Merseyside division is one of the five housing associations that has been chosen to partake in the pilot scheme with a quota of a quarter of the total sales within the pilot allocated to it. Merseyside will offer the pilot a unique perspective of demand and viability in a low value area of the country; with low value receipts placing financial strain on opportunity to build replacement homes - the average receipt of a home in Merseyside is well below the estimated cost of building a replacement home.

The pilot will operate as follows:-

  • Only those tenants of the five ‘pilot associations’ who have lived in social housing for 10 years or more are eligible to use the pilot scheme. This is more stringent that the current three year rule under the statutory scheme.

  • Although eligible tenants can begin the sales process now, they aren’t able to complete their sales until the Housing & Planning Bill has passed through parliament.

  • The pilot associations are free to decide which of their stock is eligible to be sold off under the extension. Homes built through Section 106 agreements (which contain affordable housing provisions) are exempt – and this is likely to be carried through to the full programme.

    Once the main scheme is in operation, associations will have to provide a ‘portable discount’ to those tenants who exercise the right but are in a home which is ineligible to be sold-off. This portable discount can then be used towards the cost of buying an eligible to be sold-off housing association property.

  • The pilot associations will be given full market value compensation from the Government for their lost stock. It remains to be seen whether this will be carried over to the full programme.

The Government will decide the final eligibility criteria based on what they learn from the pilot. If demand is low, and there are sufficient funds available, the Government are likely to allow more tenants to be eligible. The reverse is also true. Intelligence from the pilot will also enable the Government to decide how much autonomy to give associations in respect of properties that are exempt, as well as the rules surrounding replacement properties. 

The extension is expected to be fully rolled out in the new year albeit with a phased implementation due to Government funding constraints.

Further reading: You can read more about the Right to Buy extention in our previous article published in the last issue: The true price of the Right to Buy extension for the North West 

If you would like more information about the Right to Buy extension or to discuss any issues you may have please contact:


Bethan Williams

Solicitor
Tel: 0151 600 3402
Email: bethan.williams@brabners.com

 


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