Distributed to

All co-ownership societies and associations

Summary

Advises of amendments to Performance Standards and regulatory guidance subsequent upon the abolition of MIRAS

Legislation

Finance Act 1999

1 Introduction

1.1 This circular introduces an amendment to Performance Standard F1.5 relating to the safeguarding of MIRAS entitlement for co-ownership societies, and to the associated regulatory guidance.

2 Background

2.1 The Budget statement of 3 March 1999 announced the final abolition of mortgage interest relief at source (MIRAS) after 5 April 2000.

2.2 In the past co-ownership societies have been required to ensure that their members do not claim MIRAS on any other property, in order to safeguard societies' MIRAS entitlement. This requirement and associated regulatory guidance was promulgated under Standard F1.5 of Performance Standards, and previously in a letter from the Corporation in May 1997.

3 Changes to the Performance Standards

3.1 Accordingly, with effect from April 2000, Standard F1.5 of the Performance Standards for co-ownership RSLs, and the associated regulatory guidance, are amended to read:

'Co-ownership RSLs must have due regard to the safeguarding of public funds and the need to ensure as far as possible that lettings are to those whose housing needs are met by the provision of homes under the co-ownership principle. Co-ownership RSLs should require all prospective new members to sign a declaration to the effect that they intend to occupy the premises allocated to them as their only or main residence.

Interpretation

Co-ownership RSLs have a responsibility to safeguard the investment in their properties and to ensure that the dwellings are put to the use for which they are provided. Co-ownership RSLs must take steps to ensure as far as possible that lettings of their dwellings are to members who can demonstrate that their housing need is genuine, is best met by co-ownership housing, and who are in sympathy with the co-ownership principle. Co-ownership units should not be let to those who may use them as pieds-à-terre, or for any purpose other than that for which they are intended.'

3.2 Co-ownership societies are reminded that they have an ongoing responsibility to target new members appropriately. Co-ownership schemes were provided with public funds which must continue to be protected. The schemes are intended for members only, and should be restricted to those whose housing need is met by the provision of co-ownership housing and who are committeed to, and will comply with, the principles of co-ownership. Without this commitment co-ownership societies and associations cannot function successfully.

3.3 These amendments will be incorporated in future editions of the Performance Standards. An amendment slip is attached for duplication and insertion in the copies of the Performance Standards already circulated to societies.

4 Other publications

4.1 The withdrawal of MIRAS renders redundant question 27 in the booklets 'Co-ownership Housing - What is it?' and 'Co-ownership Equity Sharing Housing - What is it?'. This question, and the reference to MIRAS in question 1 of both these publications, should be struck out of existing booklets. Future editions of both publications will take account of these changes.

5 Unregistered societies

5.1 Although the Performance Standards apply only to registered co-ownership societies, those which are unregistered must observe the spirit of this circular in order to maintain their integrity as co-ownership entities. Unregistered societies are reminded that this requirement is enforceable through the powers contained in the Loan Agreement and Legal Charge between each of the societies and the Corporation.

6 Regulatory and Statistical Returns

6.1 An appropriate amendment reflecting these changes will be made to question 14 of Section 2 of the Regulatory and Statistical Return (Form RSR/CO) for the year ending 31 March 2001.

7 Enquiries

7.1 All enquiries relating to this circular should be referred to the Co-ownership Adviser, Regulation Division, at the Corporation's headquarters, telephone 020 7393 2054.

Amendment Slip to page 26 of 'Performance Standards for co-ownership registered social landlords'

F1.5 Co-ownership RSLs must have due regard to the safeguarding of public funds and need to ensure as far as possible that lettings are to those whose housing needs are met by the provision of homes under the co-ownership principle. Co-ownership RSLs should require all prospective new members to sign a declaration to the effect that they intend to occupy the premises allocated to them as their only or main residence

Interpretation

Co-ownership RSLs have a responsibility to safeguard the investment in their properties and to ensure that the dwellings are put to the use for which they are provided. Co-ownership RSLs must take steps to ensure as far as possible that lettings of their dwellings are to members who can demonstrate that their housing need is genuine, is best met by co-ownership housing and who are in sympathy with the co-ownership principle. Co-ownership units should not be let to those who may use them as pieds-à-terre, or for any purpose other than that for which they are intended.

Compliance test