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Social housing speed read – stock disposals

We look at how the government's plans to de-regulate the social housing sector could lead to more red tape on disposals of stock if you're also a registered charity.

Increased red tape for charities?

The Housing and Planning Bill, which had its second reading in the House of Lords on 26 January 2016, aims to de-regulate the social housing sector and in doing so the bill, as it currently stands, will remove the requirement for seeking HCA approval on disposals of stock.

HCA approval in itself has become less cumbersome over the years with the availability of The General Consent 2015.

However, if a registered provider is also a registered charity – and some 30% are according to the HCA – this move will actually bring about more red tape.

The Charities Act 2011 contains strict provisions surrounding the disposal of charity land, although the Act also provides exemption from these provisions where the disposal is regulated by another statutory scheme. So while disposals are regulated by the HCA, providers who are also registered charities do not have to additionally adhere to the provisions contained in the Charities Act. Once the HCA regulation is removed though, the Charities Act provisions will kick in.

What you will need to do

In most cases, you will be able to dispose of land without needing to obtain the specific consent of the Charity Commission. However, the legal measures that you must take to be able to do so are potentially onerous, and all must be taken prior to entering into any agreement to dispose of stock.

The measures involve obtaining a survey and valuation of the land, advertising the disposal and deciding you are satisfied the terms for the disposal are the best that can reasonably be achieved. If you cannot meet these requirements, or you do not comply with them before entering an agreement to dispose, you must apply to the Charity Commission for consent, which will lengthen the disposal timeframe.

There are also situations, such as a disposal to a connected person, which would always require Charity Commission consent.

What disposals will this affect?

This will affect all disposals where the provider retains no right to re-acquire the stock. It may be easy to think of disposals as stock transfers, but remember that an individual disposal will also be covered by the Charities Act provisions, and with the Housing and Planning Bill also bringing with it the right to buy for Housing Association tenants, this could have an increasing impact on providers.

For more information on the Charities Act provisions, please click here.

If you have any questions on the Housing and Planning Bill or the Charities Act 2011 and how it will affect social housing providers, or any other questions as a social housing provider, please do not hesitate to contact me or a member of our expert Social Housing Team.

Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.

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