Post Sales Procedures

5.1 General

5.1.1 RSLs must claim the discount amount from the Agency within 6 months of the date of sale.

5.1.2 Proceeds from sales must be retained by the RSL in a ring-fenced Disposal Proceeds Fund.  Proceeds can only be used for such purposes and in such way as the Agency may determine from time to time.  For details, refer to DPF chapter

5.2 Repayment of Discount

5.2.1 The discount provided for the purchase is subject to repayment in certain circumstances when the property is sold.

5.2.2  For RTA purchases prior to 18.1.2005 repayment is required within the first 3 years from the date of purchase. Discount repayment is on the following terms:

• sale within year 1 all of the discount is repaid;
• sale within year 2 two thirds (66%)of the discount is repaid
• sale within year 3 one third (33%) of the discount is repaid;
• no discount is repaid after year 3.

5.2.3 For RTA applications made on or after 18.1.2005 the discount is repayable if the property is sold within five years from the date of purchase, reducing for each of the years that pass before the property is sold. However, the discount is now treated as an equity investment – a share in the property. The repayment is based on  the percentage of the resale value that is the same as the percentage of the discount received by the tenant / purchaser when compared to the RTA purchase price as follows;

• sale with year 1, an amount equal to the % value as above
• sale within year 2, 80% of the amount calculated above
• sale within year 3, 60% of the amount calculated above
• sale within year 4, 40% of the amount calculated above
• sale within year 5, 20% of the amount calculated above
• no repayment is required after year 5. 

Click on the asterisk for a worked example.  

 

5.3 Waivers And Exemptions

5.3.1 RSLs have discretion to waive repayment of some or all of the discount. This discretion applies to all disposals which take place on or after 18th January 2005, regardless of when the property was bought.  See www.opsi.gov.uk.

5.3.2 Use of this discretion should be only in exceptional circumstances. It is for the RSL to decide whether the circumstances would justify the exercise of discretion.  RSLs will be expected to establish and maintain procedures for decisions, making the process open, fair and transparent, and bearing in mind the possibility of a judicial review or Independent Housing Ombudsman scrutiny. Follow asterisk for further details.  

 

5.3.3 Landlords should clear discount waiver decisions with their auditors, bearing in mind the net cost to the public purse. Follow asterisk for further details.  

 

5.3.4 Use of discretion is most likely to be justified in circumstances where demonstrable personal hardship would otherwise result. In each case it will normally be necessary to establish both the facts justifying a move, and that such a move could not take place unless part or all of the discount were to be waived. Follow asterisk for further details.  

 

5.4 Disregard of Improvements

5.4.1  Any increase in a property’s value attributable to improvements made by the owner after acquiring it, is to be disregarded if the property is sold within the five-year period. This allows the residents to obtain full value for the improvements to the property that they have made themselves. The RSL must brief their valuer accordingly when instructing them to undertake the valuation of the property being sold by the resident.

5.4.2  Where the value of any improvements is disputed, the RSL must refer the matter to a qualified Independent valuer to arbitrate- where is it reasonably practicable to do so. Any costs associated with reference to the Valuer are to be borne by the person disposing the property.  If the arbitrating Valuer does not make a determination no disregard for the value of improvements is allowed.

5.4.3 Exempted disposals are those disposals that do not trigger repayment of discount. Click on the asterisk for the list.