As auctioneers, Allsop have been working with housing associations for over 30 years, helping them with hundreds of disposals and, during that time, we have noticed various changes within the sector.
The latest and most significant change to date is that, as part of the Housing and Planning Act 2016, from 6th April housing associations will no longer have to seek consent from the Homes and Communities Agency (HCA) for the disposal of stock, eliminating a major bug bear for the sector. This will be replaced by a notification requirement to be given to the HCA after completion has taken place.
Currently, the process of getting the HCA to grant consent can be potentially very long-winded, taking up to five weeks, or longer. In addition, the HCA’s requirement to undertake meaningful consultation with local authorities has also been an issue for many housing associations.
The freedom to dispose of stock without consent, under the new regulations, includes disposals on the open market. Under the old system, the HCA would only grant permission for the disposal on the open market under certain circumstances. Therefore, the introduction of the HCA’s new direction is a welcome move in the sector allowing for greater freedoms for housing associations to dispose of stock with less bureaucracy. It is worth noting that those housing associations registered with the Charity Commission will still need to comply with the Commission’s requirements on disposals.
As a result of the changes to the sector, we are expecting to see more housing association properties being disposed of through auction whereby, given these changes, sales at auction will become an ideal method of sale. In particular, the issue of conditional contracts will also no longer be a stumbling block. Previously, some bidders were put off by the uncertainty as to whether consent would be granted and the length of time it could take. Under the current regulatory regime, housing association properties are entered into an auction with a conditional contract, meaning that if the HCA does not approve the value achieved for the property, the sale could fall through or be severely delayed. In addition, where consents had been obtained in advance, there would be a requirement to apply for changes to the consent (e.g. the buyer’s details, the nature of transaction and the value), which would have previously added further delay to the transaction. This will no longer be the case, as the requirement to obtain consent will fall away as of the 6th April.
The removal of the consents regime should also have the added benefit of reducing the delay for housing associations putting properties on the market whilst awaiting consent and it will also reduce the length of time properties remain void between exchange and completion. Now, the housing association will be able to secure an exchange and have the sale proceeds in their account as early as 6 weeks from the point of instruction to sell.
I work with over 40 housing associations nationally, selling hundreds of their properties each year, with an average success rate of 95%. Given the relaxation of the HCA’s regulations, I am expecting to see a significant increase in the number of housing association properties coming to auction, which I see as a positive step for the sector.
