F1-20/97 Right to Acquire

Distributed to
All registered social landlords, (excluding co- ownership societies, fully mutual co- operatives, almshouse charities and Abbeyfield Societies) and local authorities.

Summary
This circular announces the introduction of the Right to Acquire provisions of the Housing Act 1996.

1 Legislative References

1.1 This circular announces the introduction of the Right to Acquire (RTA) provisions of the Housing Act 1996 ('The Act') and outlines which properties/tenants may be eligible. The Act states that Part V of the Housing Act 1985 (The Right to Buy) shall apply to the RTA, subject to any amendments specified in regulations made by the Secretary of State. These amendments are set out in the Housing (Right to Acquire) Regulations S.I. 1997 No. 619. This circular provides an outline of the key features of the scheme and must be read in conjunction with the statutory provisions, together with any guidance published by the Corporation. Registered social landlords (RSLs) are advised to take their own legal advice as the contents of this circular are not an authoritative interpretation of the legislation. The relevant legislation is listed below:

Primary Legislation

The Housing Act 1985 and
The Housing Act 1996

Regulations

The Housing (Right to Acquire) Regulations S.I. 1997 No. 619

and

The Housing (Right to Acquire or Enfranchise) (Designated Rural Areas in the West Midlands) Order 1997 SI 1997 No. 620

The Housing (Right to Acquire or Enfranchise) (Designated Rural Areas in the South West) Order 1997 SI 1997 No. 621

The Housing (Right to Acquire or Enfranchise) (Designated Rural Areas in the North West and Merseyside) Order 1997 SI 1997 No. 622

The Housing (Right to Acquire or Enfranchise) (Designated Rural Areas in the East) Order 1997 SI 1997 No. 623

The Housing (Right to Acquire or Enfranchise) (Designated Rural Areas in the North East) Order 1997 SI 1997 No. 624

The Housing (Right to Acquire or Enfranchise) (Designated Rural Areas in the South East) Order 1997 SI 1997 No. 625

and

The Housing (Right to Acquire) (Discount) Order 1997 SI 1997 No. 626

The above are published by The Stationery Office Limited and are available from:
The Stationery Office Bookshop
and
The Publications Centre, (Mail, telephone and fax orders only), PO Box 276 London SW8 5D I, General Enquiries: 0171 873 0011, Telephone Orders: 0 171 873 9090, Fax orders: 0171 873 8200

2 Introduction

2.1 Part 1 of The Housing Act 1996 introduced the RTA. The intention of the scheme is to enable certain tenants of RSLs to purchase their homes at a discount whilst ensuring that replacement properties are provided.

2.2 The Act introduces the RTA for tenants of RSLs whose properties have been acquired built or improved with the benefit of Social Housing Grant (SHG) or whose properties have been transferred from the ownership of a public sector landlord e.g. a local authority on or after 1 April 1997, S. 16 (2)

2.3 The definition of payment of Social Housing Grant includes the payment of Local Authority Social Housing Grant (LASHG) but excludes other public subsidy. However, where SHG is used in partnership with other funding, the resulting dwellings will be subject to the RTA provisions. S.16 (2)(a) 2.4 Properties acquired or developed with monies from the Disposal Proceeds Fund (see para 7 below) will also be subject to the RTA. S16 (2)(b)

2.5 The Corporation is required to make a grant payment to RSLs equivalent to the full amount of discount to which tenants exercising the RTA under Section 16 are entitled. Therefore, these funds are not subject to the Corporation's bids and allocations process. The rates of discount are set out in the Housing (Right to Acquire) (Discount) Order 1997. S17 (1)(a)

2.6 Although the new RTA for tenants shares some of the features of the existing 'Right to Buy' (RTB) under Part V of the 1985 Housing Act, there are a number of important differences and the RTA should be regarded as distinct from the RTB.

3 Eligible Properties

3.1 The RTA only applies to self contained rented accommodation provided by RSLs. The new right does not change any existing rights of tenants who may have the Right to Buy under Part V of the Housing Act 1985.

3.2 The RTA provisions apply to:

i. properties funded with the benefit of Social Housing Grant through either the Housing Corporation or a local authority on freehold land or on leasehold land, where the freehold is owned by an RSL or a public sector body. S16(3) For the purposes of RTA, it is only newbuild and rehabilitation for rent schemes including re-improvement schemes that receive Grant Confirmation on or after 1 April 1997 that will be affected. Major Repairs Schemes and schemes approved before April 1997 will not be subject to the RTA provisions.

and

ii. properties provided or acquired using money from the 'Disposal Proceeds Fund' (see para 8). S16 (2)(b)

iii. properties transferred (after 1 April 1997) from a public sector landlord e.g. a local authority which are capable of being let as a separate dwelling.

4 Eligible Tenants

4.1 Only secure or assured tenants will be eligible; tenancies let on assured shorthold basis or a long tenancy are excluded. S 16 (1) (a)

4.2 Qualifying tenants (assured or secure) must have rented from a public sector landlord or RSI, for a minimum period of 2 complete years. The two year period is taken as an aggregate and need not be continuous.

4.3 Where a tenancy is a joint tenancy not all the tenants need to exercise their RTA. In such circumstances the written agreement of any joint tenants not wishing to exercise the right to acquire will be requested at the time notice is served on the landlord. Failure to seek the agreement of other joint tenants in exercising the RTA will mean the purchase cannot proceed.

4.4 A qualifying tenant may join with up to three members of his/her family in the purchase provided the family members have occupied the property as their principal home and with the exception of the spouse, have been in residence for at least 12 months prior to the tenant giving notice to the landlord. A RSI, has discretion to waive the residence condition of other family members.

5 Exclusions from the Right to Acquire

5.1 All dwellings provided with the benefit of SHG, from the Disposals Proceeds Fund or transferred from a public sector landlord are subject to the RTA provisions unless exempted by Part V of the Housing Act 1985 as amended by The Housing (Right to Acquire) Regulations 1997, or under one of the Housing (Right to Acquire or Enfranchise) (Designated Rural Areas) Orders 1997.

5.2 RSLs should refer to the Regulations detailed in paragraph 1 above for the comprehensive list and clarification of exclusions. However, properties excluded from the RTA include the following:-

i properties where the landlord has insufficient legal interest i.e. where the property is a house, a lease with a term less than 21 years and for a flat, a lease less than 50 years;

ii. properties where the freeholder is not a RSI, or a public sector landlord;

iii properties situated in a rural area designated by order of the Secretary of State under Section 17(1)(b) (Right to Acquire: Supplementary Provisions) of the Housing Act 1996;

iv. properties let in connection with employment;

v. properties designed with special features for letting to people with physical disabilities. To gain exemption the property should be one of a group of properties normally let to people with physical disabilities and a social service or special facility is provided close by wholly or partly to assist the tenants"

vi. properties let to tenants who are suffering or have suffered from a mental disorder. As in (v) above, the property must be one of a group of properties and a social service or special facility must be provided close by wholly or partly to assist the tenants;

vii. properties which are one of a group of properties which it is the practice of the landlord to let for occupation by persons who have special needs and require intensive housing assistance and such intensive housing assistance is provided either directly or indirectly by the landlord;

viii. properties let to elderly persons. Such properties must be one of a group of properties let to the elderly and have special facilities such as a warden or calling facility;

ix. properties held on Crown tenancies.,

x properties where the attributable net debt is equal to or greater than its current market value;

xi. properties provided wholly through private funds (except public sector transfers).

RSLs are advised to take their own legal advice in determining whether a property is excluded from the provisions of the RTA,

The right to acquire cannot he exercised if the tenant is:

i. obliged to give up possession of the property in pursuance of an order of the Court, or will be obliged to at a date specified in such an order;

ii. subject to a bankruptcy petition which is pending or a receiving order is in force against the tenant, or he/she is an undischarged bankrupt.

6 Discounts

6.1 Discounts are funded by Grant paid to the RSL by the Corporation after the sale is completed.,

6.2 Levels of discounts are fixed amounts set by the Secretary of State. The Housing (Right to Acquire) (Discount) Order 1997 SI 1997 No. 626

6.3 Discounts are repayable to the registered social landlord where properties are disposed of within 3 years.

7 Disposal Proceeds Fund

7.1 Receipts from RTA sales and repaid discounts are required to be retained by RSLs in a ring fenced fund and can only be used for providing replacement rented housing. Disposal Proceeds Fund General Determination 1997.

7.2 This fund is called the Disposal Proceeds Fund, After deducting eligible expenses, the landlord RSL will credit the net sales receipt to the fund.

7.3 The use of monies from the Disposal Proceeds Fund will be restricted to the provision of replacement property/ies in consultation with the relevant local authority.

7.4 The Housing Corporation will monitor the fund and has the power to recover amounts from the fund if the RSL fails to replace the property/ies disposed of under the provisions of the RTA legislation. S24 and S25

8 Payment of Grant in respect of other disposals

8.1 The Corporation must make a grant to the landlord RSL if a tenant is entitled to acquire his or her home, but with the landlords agreement has chosen to purchase another property in the ownership of the landlord. Where this applies, the discount must not exceed the amount that the tenant would have been entitled to had he or she purchased the home in which they live. S21 (2)

9 Procedures and Forms

9.1 The procedures and forms to enable RTA claims to be processed will be published shortly and will form part of the Capital Funding Procedure Guide.

9.2 Tenants information booklets on the RTA will be available from June 1997.

10 Enquiries

10.1 Enquiries on this circular should be directed to the Regional Office of the Corporation

F1-20/97 Right to Acquire

Search