Housing stock transfer – Do I need consent?
The answer to the question posed in the title
is, generally, “yes”. Only, this would not be much of an
article if the answer were as simple as that in all cases. In
particular, I want to look at stock transfers by certain types of
public authority, as well as touching on transfers and disposals by
registered social landlords. I also want to examine the
application of the General Consent 2003 issued by the then Housing
Corporation and the General Housing Consents 2005 issued by the
then Office of the Deputy Prime Minister.
The statutory regime
The first statutory provisions to consider are
Sections 32 and 43 of the Housing Act 1985. Section 32
provides, in essence, that a Local Authority cannot dispose of land
held for housing purposes without obtaining the consent of the
Secretary of State. Section 43 provides that a Local
Authority cannot dispose of a house which is let on a secure
tenancy, or of which a Lease has been granted pursuant to the
exercise of the Right to Buy, without consent. Of
course, the grant of a secure tenancy itself or a sale to a tenant
effected pursuant to the statutory Right to Buy are exceptions to
these general rules.
Similar provisions apply to Housing Action
Trusts (are there any left?) by virtue of Section 79 of the Housing
Act 1988. A further exception to the need to obtain
consent, in this case, is a disposal by a HAT of a house let on a
secure tenancy to a registered social landlord or to a local
housing authority.
Similar provisions apply to registered social
landlords by virtue of Section 9 of the Housing Act 1996, with
similar exceptions under Section 10 of that Act, for instance,
sales pursuant to the statutory Right to Buy or pursuant to the
right to acquire conferred by Section 16 of the Housing Act
1996.
In all cases, it should be noted that
“disposal” includes an agreement to sell and, even, the granting of
an option. In all cases, a disposal without the requisite consent
is void.
Subsequent disposals
It would be dangerous to assume that one consent
issued by the Secretary of State is necessarily
sufficient. Consents may be issued with further strings
attached, one of which may be that no further disposals of the same
house shall take place without obtaining a further consent.
Consider the provisions of Section 133 of the Housing Act
1988. This provides that where consent is required for a
disposal by virtue of Section 32 or Section 43 of the Housing Act
1985 “and that consent does not provide otherwise, the person who
acquires the land or house on the disposal shall not dispose of it,
except with the consent of the Secretary of State”. So
suppose a Developer acquires, say, a block of flats from a Local
Authority, with the express purpose of renovating and selling the
refurbished flats within the block. A consent would be
required under Section 32. Assuming that consent is obtained,
it may be necessary for the Developer to obtain a further consent
on each subsequent disposal.
When is a Public Authority not a
Public Authority?
It might sound like a daft question but local
authorities are, somewhat bizarrely, included in the statutory
regime for some purposes and excluded for others.
The definition of a local authority is
contained in Section 4 of the Housing Act 1985, which has undergone
a number of amendments. Sub-paragraph (e) of that Section
defines local authorities. However, local authorities thereby
defined are, in some cases, only local authorities for certain
purposes. For instance, the Broads Authority appears to be a
local authority for the purposes of Section 43 of the 1985 Act, but
not Section 32. Somewhat bizarrely, therefore, it would
appear that it can sell land held by it for housing purposes
without Secretary of State’s consent, but can’t sell a house that
is let on a secure tenancy without the Secretary of State’s
consent.
Paragraph (e) of Section 4 is difficult to
follow. I was recently involved in a case for a Police
Authority and acted for that Police Authority in connection with
the proposed sale of its tenanted housing stock to a registered
social landlord. Sub-section (e) refers to “a Police
Authority established under Section 3 of the Police Act
1996”. The relevant Secretary of State is now the Secretary
of State for Communities and Local Government. An enquiry was
raised with DCLG (by the way, they are very helpful) as to whether
a consent for the proposed disposal by the Police Authority was
required under Section 32 and/or Section 43 of the Housing Act
1985. At first, the view taken was that the transfer
constituted a small scale voluntary transfer and that the regime
for such would have to be followed, eg, consultations with tenants
and their representatives, etc. However, the view ultimately
taken was that a Police Authority is not a local authority for the
purposes of Section 32 of Section 43 of the Act, whereas it appears
to be a local authority for the purposes of, for instance, Section
50 (2) of the Act, meaning it will be exempt from the sanctions
imposed by the preceding sub-section if, for instance, it fails to
provide information as to service charges.
It was certainly an arguable proposition that
paragraph (e) of Section 4 of the 1985 Act meant that a Police
Authority is a local authority for the purpose of Section 43, so
that it couldn’t dispose of houses let on secure tenancies without
consent, but the view of DCLG, ultimately, was that Section 43 did
not apply to the Police Authority in this case. By the way,
the question would then have arisen as to whether tenants of the
Police Authority are Secure Tenants, which of itself is not a
simple question to answer but to explore that question is probably
deserving of an article in itself – only readers might not stay
awake long enough to read it all.
Another issue that did arise was the question
of whether a consent was given when the housing stock in question
was originally transferred from the County Council to the Police
Authority. If so, a further consent under Section 133
of the 1988 Act might be necessary. As it turned out, no
specific consent was sought or obtained by the County Council in
question at the time of disposal to the Police Authority (which
took place, in this case, in 1995) be cause transfers were effected
pursuant to provisions of the Police & Magistrates Court Act
1994 (Commencement number 5 and Transitional Provisions) Order 1994
– a riveting read if you ever find the time. The view taken,
in any event, was that because the transfer took place pursuant to
statutory provision, a specific consent was not needed at the time
and hence no further consent was needed under Section 133 for the
further disposal of the stock by the Police Authority to the
Housing Association.
Registered social landlords
I don’t propose to go into much detail here.
It is safe to say that registered social landlords will require the
consent of the Homes & Communities Agency (which from December
2008 was formed out of the amalgamation of the Housing Corporation
with other bodies). One thing to watch out for with
housing associations is, to check whether they are also registered
charities. If so, Charity Commissioner’s consent is probably
also required to the disposal of any housing stock held by that
housing association.
The general consents
The first of these to consider is the General
Consent 2003, being Circular Number 03/03 issued by the Housing
Corporation. This refers to housing associations, which
is used as a generic term for registered social
landlords. I don’t propose to repeat the
provisions of this consent in detail but, taking a broad brush
approach, this general consent authorises the granting of shared
ownership leases; granting of charges or mortgages in favour of
local or public authorities; grants or disposals of land to
statutory authorities, eg, a sub-station lease; and empty
properties having a value of £50,000 or less (£100,000 in
London).
The General Housing Consents 2005 apply to
disposals by local authorities and other public bodies and relate
to Sections 32, 33 and 34 of the Housing Act 1985 and Section 133
of the Housing Act 1988. It is dangerous to generalise
and each transaction must be looked at on its own merits.
However, again taking a broad brush approach so as not simply to
repeat the Ministerial Circular, the general consents
authorise:
- The disposal of vacant dwelling houses for
owner occupation;
- The disposal of occupied dwelling houses to
the occupiers;
- Sales pursuant to the Right to Buy;
- Disposals by way of Shared Ownership Lease;
and
- Disposal of reversionary interests in houses
and flats where, for instance, those houses and flats are
occupied under leases granted pursuant to the Right to Buy.
The general principle that emerges is that
local authorities cannot dispose of tenanted property without
obtaining a specific consent.
There are also general consents relating to
transfers of land by local authorities to registered social
landlords, issued pursuant to Section 25 of the Local Government
Act 1988, where the general thrust is that consent is available
where it is anticipated that the RSL is going to improve the loss
of those housed on that land in a way that the local authority
cannot. These consents tend to re-enforce the perception that
the Government’s opinion is that RSL’s are better at providing
housing accommodation that local authorities.
Conclusion
If you are a local authority, housing association or
developer, don’t agree to buy or sell land unless you are sure that
the relevant statutory consents are in place.
David Percival, Partner
david.percival@weightmans.com