The Housing and Planning Act 2016 (Commencement No. 4 and Transitional Provisions) Regulations 2017

A number of other provisions in the Act will come into force with effect from tomorrow, including provisions relating to vesting declarations and compulsory purchase orders.

The Regulations also confirm that many of the deregulatory measures included within the Housing and Planning Act 2016, such as the removal of the need to obtain consent from the HCA to mergers, constitutional changes or disposals of assets, will come into force on 6 April. The Regulations provide clarity on the transitional measures that will apply in respect of funds held by housing associations in their Disposal Proceeds Fund as at 6 April. Current restrictions will apply to such monies until the earlier of such monies being utilised (in accordance with HCA requirements), such monies ceasing to be capable of being utilised in such a way or 6 April 2020.

Local authority influence

Section 93 of the Housing and Planning Act 2016, once enacted tomorrow, gives the Secretary of State power to make regulations to reduce the influence local authorities are able to exert over private registered providers (RPs) through the ability to appoint Board members and the use of voting rights. A DCLG source has stated that the “golden share” regulations will be issued in early April and are expected to come into force later that month.

It is not yet clear how far the “golden share” regulations will go. For example, will all shareholding/company membership by a local authority in an RP be prohibited, or will it just be restricted to a level which would prevent the local authority from being able to “block” special resolutions? Similarly, will local authorities be prevented from utilising any appointment rights to an RP’s Board, or will this be permitted up to a specified proportion of less than a third?

Change ahead

The changes are likely to be welcome for a number of RPs, particularly those whose transferor local authorities have blocked moves to consolidate group structures or merge with other organisations through the use of shareholding/company membership and Board rights.

If your association is likely to be affected by these changes, it is worth considering now how company membership/shareholding rights and Board membership could look once the changes come into force.

For example, if local authority rights at company membership/shareholding level are reduced to 10% maximum, how should the remaining 23% be distributed? Will this be between other members? Should it be weighted or will you move to a closed membership with all members/shareholders each having only one vote?

In relation to Board membership, how does this affect your succession strategy? Do you still want to maintain involvement from the local authority at Board level?

Another key question is whether this changes the relationship between your association and local authority and how this change can be managed effectively. This is particularly likely to be relevant for more recent LSVT associations, who may still be in the process of fulfilling Offer Document promises.

The devil will ultimately be in the detail - we will publish a further update on the key points of the regulations once they are issued.

For more information

For more details on the changes to golden share arrangements and deregulation please contact Gemma Bell.

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