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Changes to the Disposals Regime – a quick guide

Thu 06 Apr 2017

As part of a package of deregulatory measures, the Housing and Planning Act 2016 has now removed the previous requirement for Registered Providers to seek consent to dispose of social housing under the Housing and Regeneration Act 2008 (“HRA 2008”). With effect from today, this is replaced by a requirement to notify the Homes and Communities Agency (“HCA”) of a specific set of disposals.

Registered Providers should still be careful, however, as there may be other consents and requirements that they need to comply with. 

Find out more about the key changes to the disposals below:

Notification rather than Consent 

The HRA 2008 has been amended to require private Registered Providers to notify the HCA of any disposal of social housing dwellings. This has replaced the previous consents regime in Sections 172-175 of the HRA 2008. The HCA has stated that it does not need to know about any disposals of land (whether or not social housing dwellings previously stood on that land) or appurtenances (for example, gardens, garages and communal areas) to dwellings where such appurtenances are disposed separately to the dwelling. This is a relaxation of the previous consents regime.

Relevant Disposals 

The new requirement to notify the HCA only applies to the disposals set out in the HCA’s Direction entitled “notifications of a disposal of social housing dwellings and of land other than a dwelling 2017”.

The HCA has split these disposals into three categories known as “Landlord Disposals” (leases, freehold sales, disposals of the Registered Provider’s last social housing dwelling and (for providers with less than 1,000 social housing dwellings) disposals involving 5% or more of their stock), “Finance Disposals” (legal charges and other means of disposing of social housing dwellings to obtain finance) and “Guarantee Disposals” (any means of granting a security interest in a social housing dwelling to guarantee the performance of an associated company or guarantee an obligation or debt). Dependent upon whether the Registered Provider is a “small provider” (has less than 1,000 social housing dwellings) or not, different notification requirements apply.

Disposals not set out in the HCA’s Direction do not need to be notified. The HCA may also issue further directions that certain listed disposals no longer need to be notified.

Time Period for Notification 

The majority of disposals only need to be notified on a quarterly basis within three weeks of the end of each quarter. Some disposals, however, are treated as “Priority Notification” disposals and must be notified within three weeks of completion of the disposal. The categories of Priority Notification are set out in the HCA’s guidance available from its website.

Why These Changes? 

These changes are part of a package of measures to deregulate the activities of Registered Providers (with the aim of reversing the Office for National Statistics’ decision to reclassify Registered Providers as public sector for national accounts purposes) whilst still allowing the HCA to monitor the sector. The HCA is specifically interested in the impact of disposals on the Registered Provider’s financial position, the level (and loss) of social housing stock and circumstances where a resident’s landlord changes or where the Registered Provider is no longer the landlord of a social housing tenant.

The Carrot and the Stick

Although the HCA no longer has the power to void disposals, Registered Providers should still be wary. Failure to comply with the notification requirements may be reflected in the HCA’s judgement of a Registered Provider’s compliance with regulatory standards and could result in downgrading.

Other Consents and Requirements

Whilst Section 172 consent no longer applies, Registered Providers which are also registered charities will on the face of it now need to comply with the disposals regime in Part 7 of the Charities Act 2011. Registered Providers which are exempt charities (including all co-operative and community benefit societies) are unaffected. Previously, non exempt Registered Providers could circumvent this if they instead obtained Section 172 consent (the intention being to prevent double regulation). The HCA has made clear that it expects non exempt Registered Providers to now comply with the Charities Act 2011.

Registered Providers should also be aware that their own constitutions may have requirements in relation to disposals and that they will still need to take into account any section 106 obligations, any requirements relating to grant attaching to the relevant dwellings and any funder requirements when disposing of social housing.

Section 133 of the Housing Act 1988

From 6 April 2017, the requirement to obtain consent under Section 133 of the Housing Act 1988 no longer applies if the original stock transfer was made to a private registered provider of social housing. If any subsequent disposals require notification under the new regime, however, this will still need to be complied with.
 

Further information is also available on the Gov.uk website: How registered providers get statutory consent from the regulator.

We will be holding a seminar on Wednesday 17 May where the key changes and their implications will be discussed along with other deregulatory measures that have been implemented. Register your place by clicking here.

If you have any questions relating to these changes then please don't hesitate to contact one of our team whose details are on the right hand side of this page.

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