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With the deadline for responses to consultation on the HCA’s proposed introduction of fees now passed the sector is waiting for further clarity on these new payments. Croftons’ Head of Governance, Jo Savage, recaps what we know so far, and poses some key questions the regulator needs to answer before the proposals are implemented.
The HCA proposed the introduction of fees to ensure that it has sufficient resources available to continue to be an effective regulator as the sector becomes more complex and diverse. It is proposed that the fees for RPs with less than 1000 units would be fixed at £300 per annum. RPs with over 1000 units would be charged a fee of £5 per social housing unit. It is further proposed that a fee of £2500 would be charged for new registrations.
RPs with under 1000 units would be charged £300 per annum. Concerns were raised in response to the initial discussion paper regarding possible exemptions for the smallest of providers, such as almshouses. However, it is proposed that providers are to pay the fee, regardless of size if they wish to receive the benefits of being part of the regulated sector. There will be no exemptions.
The fee is intended to reflect the costs of maintaining the register of RPs, the health checks that the HCA performs on financial statements and all other relevant costs and associated overheads.The fee level would be subject to periodic reviews and any material changes would be consulted upon.
A fee of £2500 is proposed and it would only be payable when an applicant has successfully completed the two stage process and is registered. This represents 25% of the average cost of registration to the HCA and it was felt that to charge a higher fee than that proposed would be a barrier to entry. The remaining £7500 cost to the HCA of registration will be met from the grant-in-aid that it receives from the government. This fee would not apply to registrations resulting from amalgamations or transfers of engagement which involve existing RPs.
The fee of £5 per social housing property is to be per property owned as at March 2016. It is intended that for the remainder of the spending review period until April 2020 the regulation budget would be reviewed annually to ensure it is kept in step with the costs of providing the service up to a maximum of 1% annual increases, from a base of £12.5 million in 2017/18.
The proposal is that ‘units’ are defined as social housing where the RP is the owner, as defined in the Housing and Regeneration Act 2008, section 77 and which includes low cost homeownership and affordable rent and other housing types. This follows the SDR definition which RPs should be familiar with.
The consultation states that relevant aspects of the definition, including ‘ownership’ are contained in the SDR guidance notes glossary and includes units which are owned by an RP but are managed by others. It also includes units which are vacant and both non-self-contained and self-contained units.
The annual fee in relation to groups will be set at group level, where the parent is registered. Where the parent is not registered the fee would be collected from each individual RP within the group.
The HCA recognises in the consultation that there may be variations in costs from year to year (it cites staff vacancies as an example) and in the event that excess charges are collected, these will be refunded.
It is intended that the HCA will publish an annual fee statement which will include an overview of its regulatory priorities, details of the regulatory budget (including a breakdown of budgeted costs and the amounts to be funded by grant-in-aid) and confirmation of the fee level for each RP.
The full cost of fee would be paid in the year in which an RP is registered, or de-registers. It is intended that an invoice for the annual fee will be sent to RPs in Spring 2017 and that the fee is paid in a single payment within 30 days of issue of an invoice. There may be some flexibility within the first year. For smaller providers, there is a proposal for an option to allow payments to be made quarterly. There will be consequences for non-payment, including a fine, enforcement notices, civil action for recovery and downgrades.
While seemingly fairly straightforward, the proposed introduction of fees does pose some significant questions that the regulator will need to provide clarity on to satisfy registered providers. For example…
If you have any questions or concerns about any aspect of governance and regulation please contact Jo Savage.
Croftons is the trading name of Croftons Solicitors LLP, a limited liability partnership registered in England and Wales with number OC343375. The term ‘partner’, if used, denotes a member of Croftons Solicitors LLP or a senior solicitor of Croftons Solicitors LLP with equivalent standing and qualifications. A full list of members is open to inspection at the office. Croftons is authorised and regulated by The Solicitors Regulation Authority (SRA) number 508041. Croftons has its principal place of business at The Lexicon, Mount Street, Manchester, M2 5FA.