On 18 May 2020, the Ministry of Housing Communities and Local Government (MHCLG) wrote to all social housing residents in England (residents).
The deregulatory package, which we understand is designed to encourage the ONS to reverse its decision of September 2015 to classify housing associations as public bodies, includes:
- Removing the constitutional consents regime, so that consent from the Regulator will no longer be required for previously regulated changes to constitutions, such as changes to objects, nor to mergers and restructures;
- Removing the disposal consents regime, ending the requirement to obtain s172 or s133 consent to selling, leasing, charging for security and changes of ownership (although notification will be required);
- Abolishing the Disposal Proceeds Fund;
- Tightening the powers of the Regulator to appoint officers and managers of housing associations;
- Introducing a special administration regime for use in insolvency situations; and
- Including power for the Secretary of State to make regulations to limit or remove local authorities’ abilities to exert influence over housing associations i.e. to weaken or remove current “golden share” arrangements.
It is yet to be confirmed when such provisions will come into force (and when regulations setting out the detail of the proposals in relation to golden share arrangements will be published); however, we understand that the Regulator is currently reviewing the Regulatory Standards to ensure they will not conflict with these deregulatory measures.
Notification of these issues to the Regulator will still be required and the Regulator will continue to have powers of oversight, most notably through the use of in-depth assessments, which it has already indicated it will propose to carry out for most new structures where its consent would previously have been required.
Taking away the “safety net” of requiring consent from the Regulator, particularly in relation to decisions such as mergers and how the new asset freedoms can be used, will require, more than ever, a focus on good governance. Although there will still be restraints on how assets can be used, including, for example, Charities Act requirements for registered charities, funding constraints and restrictions under stock transfer agreements, Boards will no longer be able to rely on the Regulator to “check their homework”. More than ever, Boards will need to ensure that they are equipped to deal with challenging decisions, particularly in relation to how they can utilise asset freedoms to best serve their purposes.
For more information
please contact Gemma Bell
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