APPENDIX 1
Gloucester City Council Acquisition (Housing) Guidance Document
Overarching Aim and Decision Making Framework
Overarching Aim
“The City Council may acquire or buy-back residential property in order to deliver its Housing Strategy, and to ensure sustainable and cohesive communities. Acquisition of property will be considered on a case by case basis based on the criteria set out within the following framework and subject to budget”
Background
The Council is offered properties for repurchase under the Housing (Right of First Refusal) (England) Regulations 2005 (See Appendix 1). Owner Occupiers and Shared Owners also contact the Council and request either total or part purchase of their property for a number of reasons.
There is no duty or obligation upon the Council to buy back any property or to purchase property offered to it. It is purely discretionary and subject to budget. It will consider purchasing property where this will help the Council meets the objectives as laid out and using the framework set out below.
The Council has limited resources and as such acquisition or buy back is likely to be the exception rather than the rule unless resources change. Therefore the Council will continue through its Housing Service to seek to help people meet their housing need and through its enabling role work with its partners to achieve the desired outcomes.
Objectives Through acquisition of owner occupied or shared ownership residential housing stock the Council will seek to:
Promote best use of the City’s housing stock Maintain sustainable communities Objective cont…
Support regeneration, community cohesion and other related strategies and policies Assist in meeting the housing need of Gloucester Prevent unintentional homelessness and financial hardship where all other alternatives have been exhausted, Provide a clear and equitable framework to consider requests for the Council to repurchase any residential property regardless of tenure.
The council wishes to ensure through this aim that its limited resources are used to best effect and that applicants receive a fair and equitable service.
A number of those with shared ownership leases and those who have bought under the right to buy have an obligation to offer the Council Right of First Refusal on their property; the Council will make decision on such offers through this framework.
The Decision Making Framework
When will the Council consider buying back properties or acquiring new residential property?
This document sets out the Council’s overriding objectives in relation to acquiring or buying back property. When making a decision on buying a property the Council and or its agents will consider the following factors: Whether purchase will assist the Council in meeting its broader strategic objectives Whether there is enough money within budget to allow purchase or whether the purchase could be cost neutral within the financial year The property’s standard of repair and compliance with current building standards The impact upon the local community Whether the property can be effectively managed 2 Whether purchasing the property would enable the Council to meet housing need in the City or a particular/special need. Whether the council already has a financial interest in the property, for example owning part of the equity on a shared ownership property. The circumstance of the homeowner
Circumstances of the homeowner.
The council will consider use of acquisition in cases that would prevent non- intentional homelessness or that would alleviate hardship of homeowners forced to sell due to financial difficulty not of their own making, where all other options to prevent homelessness have been exhausted.
The Housing Services team will assess applicants in line with their existing policy and practice and will liaise with the Strategy and Enabling team to ensure the acquisition of property is carried out appropriately.
If it is identified that the property is of strategic importance to the City Council and that acquisition or buy back by the Council is the preferred option this will circumvent housing options, homelessness and homeless prevention processes. In all other case these processes will be followed and acquisition and buy back will only be considered where no other option is available. Even when this is the case other factors may mean that the acquisition or buy back will not be agreed.
Homeowners must provide the Council will all relevant information so that the Council can assess their application. The person offering the property back to the Council must be legally entitled to sell the property.
The council will take into consideration its existing allocation policy when deciding whether the occupiers should continue to live at the property being bought or whether suitable alternative accommodation should be provided, for example if a family house is repurchased which is under occupied or a medically adapted property has been purchased and no-one resident in the property requires the adaptations. The Council will be clear to the vendor as 3 early as possible on the Councils decision on whether they should be rehoused into suitable alternative accommodation and their reason for this decision. However all vendors, who wish to become Council or Housing Association Tenants, should be eligible in accordance with the existing allocations policy and a judgement will be made as to whether the property is suitable for them.
Standard of Repairs and compliance with current building standards.
The council and/or its agents will consider whether the property meets or can meet current standards such as the Decent Homes Standard (the target is that all properties to be compliant within the Social Housing Sector by 2010).
Where a property cannot meet the Decent Homes Standard careful consideration will be given as to the reasons for this, as, only in exceptional cases would the Council buy a property back where this standard could not be met.
Favourable consideration may also be given to properties that meet or are close to meeting other standards such as the Design and Quality Standards and Lifetime Homes Standards where the property was not originally designed to be social housing.
Impact on the Local Community (Regeneration)
Consideration will be given to whether the purchase of the property will assist in a specific redevelopment, the regeneration or sustainability of the local neighbourhood. For example if an anti-social behaviour hotspot exists in an area this may influence the decision to purchase so that effective local management assists area regeneration. Consideration will be given to acquisition where a particular property is having a disproportionate impact on the local community for example its state of disrepair.
In regeneration areas acquisition will be preferred to Compulsory purchase orders to achieve the required landownership to allow regeneration to 4 continue. If properties in an area are due for refurbishment and owners cannot afford to contribute to their proportion of the costs then the council will consider buying back to ensure all homes are renovated to the same standard. Other elements that council will consider when acquiring property would be the tenure mix and property types that exist in the locality.
Whether the property can be effectively managed Consideration will be given to whether the property can be effectively managed if acquired, issues that would be considered would include its location, the tenure and use of surrounding properties.
Meeting Housing Need
The acquisition of any property is likely to assist the council meet local housing need. However given limited resources the Council will consider the supply and demand in relation to the type of property when making a decision. Favourable consideration will be given to purchase, if the property is of a type in high demand and/or there is limited supply; for example large family accommodation or property that is adapted to meet a particular special need. In the alternative if the Council has an over supply of a particular type of property this might lead to a decision not to buy back or acquire the dwelling.
Ensuring the best use is made of adapted or special needs housing
Acquisition would be considered favourably if it means that a home that has been specially adapted will lead to assisting a person on the Housing Register with relevant needs. If the council has funded these improvements via Disabled Facilities Grant or other monies then consideration will be given to getting best value out of this investment by ensuring the property is used by a person requiring the adaptations. Properties may need to be inspected by a relevant professional to ensure that the adaptations meet current requirements.
5 If homes in an area or block have been designed for particular special needs groups they may be bought back to ensure the original purpose of the housing is maintained
Financial Considerations
If the council already has a financial interest in the property, for example on a shared ownership or shared equity basis, the council will take into account how any decision to acquire the property would affect its financial interest in the property.
Whether there are sufficient funds available to allow purchase.
A key element is whether the Council has enough money available to make the purchase. Where City Council budget will not allow for repurchase but repurchase of the property would alleviate hardship and or assist local regeneration in the short term the City Council will seek to find funding through other partners such as registered providers.
Where the decision would be cost neutral.
The council may consider repurchase of property where this would alleviate hardship, assist local regeneration in the short term and where vacant possession of the property would allow for resale either immediately or within the financial year, the costs of the transaction being covered by discounting the price paid to the initial seller.
Where the long term Costs are outweighed by benefits.
The cost or maintenance should to be set against the long-term rental stream and consideration should be given to whether the property will be a long term asset as opposed a liability. For example immediate works may be required on a property but these and other maintenance liabilities may be off set by the future income stream over the lifetime of the property.
6 Appendix 1
Legislative background
Relevant Legislation
• Housing Act 1985
• Landlord and Tenant Acts 1985 and 1987
• Housing and Planning Act 1986
• Leasehold Reform, Housing and Urban Development Act 1993
• Commonhold and Leasehold Reform Act 2002.
Housing (Right of First Refusal) (England) Regulations 2005
Right to Buy The Housing Act 1980 gave tenants the right to buy their property at a discount dependent upon the length of residence.
Right of First Refusal
The Housing Act 2004 amended the Housing Act 1985 (c. 68) and set out the right to of the landlord to be offered first refusal (Section 156A).The landlord has eight weeks form initial offer to respond.
Offering the Right of First Refusal
Under the 2005 Regulations above, the Owner’s offer must: 1. Be in writing 2. State that the owner wishes to dispose of the property, giving its’ full postal address 3. State that there is a covenant requiring him to first offer the property to the Council 4. In relation to the property to which the notice relates:
(i) specify whether the property is a house, a flat or maisonette;
7 (ii) specify the number of bedrooms; (iii) give details of the heating system (iv) specify any improvements or structural changes which have been made since the purchase and (v) state the address at which the recipient can serve notices upon the owner.
Who is entitled to make the offer? This is defined under the Regulations as “the person who is the freehold or leasehold owner of a property and who is bound by a right of first refusal covenant imposed under S156A of the 1985 Act”.
If an Owner has died, then it will be for his Executors or Personal Representatives to make such an offer (suitable evidence of their capacity in this respect to be supplied e.g. Grant of Probate, Letters of Administration). We cannot proceed with contract or completion if these individuals do not have that authority.
Anyone who received an offer notice under the Right to Buy legislation since the 18th of January 2005 and wants to sell their property within the first 10 years MUST give the first right of refusal to their former landlord
There are exemptions to the right of first refusal. These are set out in Section 160 of the 1985 Housing Act. They include: If you were a joint owner of a property and you pass sole responsibility to the other person If you pass your property to your spouse or former spouse If you pass you property to a family member. The family member must have lived with them for twelve months before passing the property to them If you leave your property to someone as a part of a will or it is subject to intestacy. Intestacy is when you do not make a will If the property is subject to the Matrimonial Causes Act 1973 and subsequently the Family Act 2003. If the property is subject to a compulsory purchase order
8 If a person is not bound by the right of first refusal rules then they may sell the property on the open market but are also able to offer the property to the Council.
The value of the property is governed by Section 158 of the Housing Act 1985 as amended. It is stated to be such amount as may be agreed between the parties or determined by the district valuer as being the amount which is to be taken as the value of the dwelling-house at the time the offer is made. The value shall be taken to be the price which, at that time, the interest to be reconveyed, surrendered or assigned would realise if sold on the open market by a willing vendor on the assumption that any liability in respect of repayment of discount, would be discharged by the vendor on completion. Tenant’s improvements are not to be disregarded from the valuation. Any repayment of discount is to be deducted from the purchase price.
Repayment of Discounts
Section 155A of the Housing Act 1985 sets out the law in relation to the repayment discounts
“The maximum amount which may be demanded by the landlord is a percentage of the price or premium paid for the first relevant disposal which is equal to the discount to which the secure tenant was entitled, where the discount is expressed as a percentage of the value which under section 127 was taken as the value of the dwelling-house at the relevant time. (3) But for each complete year which has elapsed after the conveyance or grant and before the disposal the maximum amount which may be demanded by the landlord is reduced by one-fifth.” This is subject to section 155C of the act which ensures that the valuation discounts any value added by the tenant by way of improvements after the RTB disposal.
In relation to buy backs this means a discount is reapplied to the valuation given if the buy back is occurring within 5 years of the right to buy.
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