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…
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.
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.
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.