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Many housing associations own large numbers of street properties which they acquired largely during the 1980’s and 1990’s, at a time when more than 80% of the Housing Corporation’s budget (now Homes England) was allocated to inner city housing and much of it to buying up and refurbishing Victorian terraced housing.

  • Some housing associations now see these properties as difficult to manage and expensive to maintain and are therefore quite keen to dispose of them as they become vacant, especially since they may provide a source of funding to re-invest in current housing
  • Housing Associations will consider a range of options when considering the disposal of stock. The worst case scenario is that they are simply sold to opportunist private landlords/absent investors wanting to maximize a return on their investment, something which can and often does destabilize the existing community
  • An alternative can be to sell or transfer the properties to a local CLH organisation that is committed to working in the area in question and can provide a locally-based, responsive housing management service

Sale of surplus properties at market value  

  • As a result of Registered Providers being reclassified as “non-public bodies” since April 2017, most housing associations no longer require Homes England approval before they sell existing vacant stock
  • However, they are still ordinarily required by Homes England to secure market value in relation to disposals. The gross sale receipt must not be below a valid valuation by an independent RICS qualified valuer (see Section 7- 3.4.4.2 of HCA Capital Funding Guide)
  • Funds generated from sales are placed into an association’s Recycled Capital Grant Fund and have to be utilised within three years of being generated. If possible, they should be re-invested by the association in the provision of replacement affordable homes in the area from which they were generated
  • While Homes England approval to dispose of property is not required, housing associations do have to complete an annual Recycled Capital Grant Fund (RCGF) return, that lists disposals by local authority area and captures the net capital receipt generated from sales once any outstanding loan debt has been taken in account

Sales of surplus properties at less than market value  

  • There may be circumstances where a community-led housing organisation is keen and well placed to take over surplus vacant properties. In recognition of the fact that they will only be let at an affordable or social rent and that work is likely to be required to bring them up to standard, a housing association may be willing to make the case to Homes England to sell them at a discount, on the basis that their existing use is probably fixed
  • They may need Home England’s approval for the transaction, if the sale price is not sufficient to realise the recoverable grant that would normally be paid into their recycled Capital Grant Fund. The Agency’s Capital Funding Guide, Chapter 7 - 3.4.4.5 states: “ If the net sales receipt is less than the attributed grant, then the Agency will, in exceptional circumstances, agree to the shortfall being written off by Registered Providers. The prior consent of the Agency is required.”  Questions about requesting permission to write off grant can be made to Homes England: Grant_Notifications@homesengland.gov.uk
  • In some limited circumstances a registered provider might also be a registered charity in its own right, as distinct from being merely an Exempt Charity ( as are many RPs) . Many almshouses for instance are also registered charities. In these circumstances registered charities are also subject to the Charity Commission’s explicit requirement that they secure “best price” for any assets they sell. However, this can be waived where a registered charity is selling an asset to another registered charity with compatible objectives, which is deemed to in effect be carrying out the work of the vendor charity. This could arise where the CLH organisation wanting to acquire property is itself a registered charity, with compatible objectives

Transfer to a community-led housing organisation that is also a registered provider

  • This is a relatively uncomplicated transaction since it’s possible to transfer properties between registered providers once a suitable valuation and deal has been agreed.  Any outstanding liabilities/historic debt are transferred along with the property to the receiving organisation and become a balance sheet item

 

Last updated in May 2018