Social Housing Speed Read – deregulation

How is regulation of the social housing sector changing?

The Housing and Planning Act 2016 changed the regulatory role of the Homes and Communities Agency, by introducing a range of new measures.

In 2015, the Office for National Statistics reclassified housing associations as being in the public sector – a determination was based on the HCA’s many regulatory powers over associations. Going forward, housing associations will:

• No longer need to seek the regulator’s consent for mergers, restructures and other internal changes;
• No longer need the regulator’s approval, when selling housing stock;
• Need to inform the regulator of any disposals and restructures;
• No longer have to pay into a disposals proceed fund when they sell property which was funded by grants;
• Be subject to an amendment to the regulator’s power to appoint board members and managers, as this will only be in the regulator’s ability where an association is “in breach of legal requirements”, rather than being mismanaged.

One of the likely overall effects of deregulation is that housing associations will move back into the private sector, which the ONS will assess (once a date for review has been fixed).

The practical changes will, of course include associations’ ability to sell property, and merge without requiring the regulator’s consent, reducing delays and administrative burden.

Associations won’t be completely autonomous however, as the key requirement to keep the regulator informed of stock movement and structural changes is in place.

Our Speed Read series on the Housing White Paper, earlier this year showed the Government’s keenness to place associations at the forefront of boosting the housing supply.

The White Paper also recognised that associations needed more flexibility to do this – reducing the regulatory hurdles ought to help this.

What are the opportunities in deregulation?

Fiona MacGregor, director of regulation at the HCA, has described the focus of the deregulation debate as being “increased freedoms and increased responsibilities for providers”.

Deregulation will, Fiona says, create “interesting opportunities for providers and can assist them achieve their “fundamental objectives”.

Her advice to associations’ boards is to remain mindful of their various roles and responsibilities (as charities and community institutions) when making decisions on housing stock and structuring, and to also be wary of new financing options from lenders.

James Tickell, Consultant of Campbell Tickell housing consultancy, advises that the impact of deregulation has perhaps been “overstated”, as whilst there are “new freedoms” to transfer stock and merge more easily and quickly, much of the key regulation (such as charities, landlord and tenant and health and safety legislation) remains in place.

James describes deregulation as one factor in a sector which is undergoing major changes – as associations continue to diversify, the importance of “good governance” at board level will be essential to ensure that opportunities are seized, and risks are managed in this new landscape.

If you have any questions on the above and how it will affect social housing providers, or any other questions as a social housing provider, please do not hesitate to contact John Murray or a member of our expert Social Housing Team.