The Registered Social Landlords (Wales) Act 2018 which came into force last week was brought in to amend and remove powers which are deemed by the Office of National Statistics to demonstrate central and local government control over Registered Social Landlords. In enabling the sector to be reclassified, changes regarding the notification regime relating to certain disposals needed to be made. This new notification process is relevant to housing development, finance and governance officers. Our Property team are here to help you navigate sections 13 and 14 of the Act to ensure you understand what to do and when.
What is going?
Under the new Act the need for Welsh Ministers’ consent to certain disposals under s171D Housing Act 1985, Section 81 and s133 of the Housing Act 1985 and s9 of the Housing Act 1996 has been removed. The consent regime has been replaced with a new notifications procedure.
What is the new process?
The abolition of the consent from Welsh Ministers will not give Registered Social Landlords (RSLs) a free reign to do as they please with their land. RSLs need to ensure they are complying with the new regulatory regime.
Welsh Government Notifications
Disposals made by RSLs will no longer require Welsh Ministers’ consent. Notifications will need to be made to Welsh Ministers in relation to disposals of dwellings or disposals by way of leases if they fall within the definition of “Relevant Disposals”.
Notifications are not required:
- for non-residential property
- for land unless it is appurtenant to a dwelling
There are six categories of Relevant Disposals.
Where a disposal falls within more than one category only one notification will be required.
Category 1Out of Sector. Disposal of an occupied or unoccupied dwelling to someone who is not an RSL (other than a sale to the tenant)Category 2Within Sector.Occupied Dwellings to someone who is an RSL Category 3 Last Social Housing. Occupied or unoccupied where the disposal would result in the RSL no longer being eligible to be registered as a Social Landlord in Wales. Category 42% of Stock. Occupied or unoccupied where the disposal comprises 2% or more the RSL’s housing dwellings prior to the disposal.Category 5Finance.Where the disposal is connected to obtaining finance. It is worthwhile noting that the Welsh Government require notification of any non-standard finance before any proposal receives Board Approval.Category 6Guarantees and other obligations. A disposal which is to provide or support a guarantee except where this is to obtain finance (see 5 above).
If the RSL is disposing as a landlord and the result of this is that it will no longer be a landlord, notification will be required under categories 1-4.
What are the timescales?
Welsh Ministers only want to receive notifications quarterly unless the disposal is considered a Priority Notification. The notifications must be made within three weeks of the end of each quarter. The relevant quarters will be 1 April – 30 June, 1 July – 30 September, 1 October – 31 December and 1 January to 31 March. Therefore the last date to make a notification for each quarter will be 20 July, 20 October, 20 January and 20 April.
A Priority Notification must be made within 10 working days of the transaction. Where the disposal is a Priority Notification no further notification will be required.
Late submissions or notifications without relevant information will reflect badly on the RSL. The Welsh Ministers suggest that this will indicate a weak control environment and lack of compliance with performance standards within the RSL. It is important that the RSLs are aware of these requirements and comply in a timely manner.
Priority Notifications are currently:
- Category 1 disposal where the dwelling is occupied or where it is sold under market value
- Category 3 disposals
- Category 4 disposals
- Category 5 disposals
What information is needed for a notification?
Standard notification forms are available on the Welsh Government website.
Welsh Ministers have indicated that the following information will be needed:
- Address of the dwelling and relevant local authority
- Type and use of dwelling immediately prior to disposal
- Category of disposal
- Where the disposal is a Category 1 at undervalue the amount of the valuation
- Confirmation of whether the consideration is at market value
- Confirmation of the valuation and whether full consideration was received
- If the dwelling was grant funded confirmation that the local authority responsible for administering funding has been consulted
- Where the disposal is Category 4 – confirmation of the percentage of social housing disposed of as against that owned
- Identification of the person or category or person to whom the disposal was made
- Where there is a change of landlord or change in management arrangements to existing tenants you must provide details of the consultation conducted with those tenants. Also required is a copy of the consultation documents, details of the number of responses received compared to the number of tenants and details of any concerns received and the RSL response to those concerns
- Category 5 notifications must include details of the amount of properties charged, the type of disposal, the value of the finance obtained, details of the person/entity providing finance and information regarding the finance facility.
- Category 6 notifications must include details of the number of dwellings involved, type of disposal, value of guarantee or other obligation, details of the person to whom the guarantee or other obligation is provided and reasons for providing the guarantee.
Are there any disposals that do not need a notification?
Yes, these include:
- Disposals of vacant dwellings to another RSL unless the disposal is of over 2% of the total housing stock at the time of disposal
- Disposals of land which is not a dwelling (including land which used to contain dwellings but the dwellings have been demolished)
- Release of restrictive covenants over land or dwellings
- Disposals of social housing land which are not dwellings including parts of gardens, garages, rights of access, as long as they do not form part of a tenanted property
Land Registry Requirements
The consent of the Welsh Ministers will still be required on disposals which took place before 15 August 2018.
The Land Registry have suggested when submitting an application to it a note confirming that section 9 consent is not required because the disposal has taken place after 15 August is provided.
We have no doubt these regulatory changes will lead to further guidance and directions being issued. This will be an area which will evolve to ensure this becomes a smooth process.
We will be providing a training update on this topic with Community Housing Cymru. To register your interest please email [email protected]