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HCA sets out Tenant Involvement Standard changes

9 February 2017 • Jo Loake

The HCA has set out the changes proposed to the Tenant Involvement and Empowerment Standard (TIE) in its consultation and also provided detailed information on the effect of the abolition of the consents regime, due to come into force on the 6th April 2017.

A letter has recently been sent to all CEOs of RPs, and detailed below are some of the key points to be aware of:

Consultation on the Tenant Involvement and Empowerment Standard

The HCA is consulting on changes to the TIE standard. These changes are being proposed in light of the deregulatory measures and aim to clarify and strengthen the requirements around consultation with tenants when RPs are proposing to change their landlord or a significant change in their management arrangements. The TIE consultation runs for a period of 6 weeks and will close on 22 March 2017.

The purpose of the consultation is to ensure that tenants have a degree of choice and protection and the opportunity to be involved in management of their properties and to be able to hold their landlords to account.

The proposals include:

  • When RPs are proposing to change a tenant’s landlord or a significant change in their management arrangements, that affected tenants be consulted in a timely, appropriate and effective manner. RPs would be expected to set out clear proposals including advantages and disadvantages. The outcome of any consultation must then be taken into account when reaching a decision and RPs will be expected to be able to demonstrate that they have done so. This is to ensure that the consultation is meaningful, however, clarification may be required from the HCA as to whether this would not prevent a decision to proceed against tenant’s wishes in the event that there were valid reasons to proceed.
  • The scale of the proposed change will not be relevant, consultation would be an expectation regardless. RPs will need to factor in the time, cost and administration of consultations.
  • Consultation would set out the costs and benefits of relevant options for the short, medium and long term.

The consents regime and other legislative changes

Non-profit registered providers will no longer need to seek the HCA’s consent before changing their objects, amending their governing document to make provision about the distribution of assets to members, becoming or ceasing to be a subsidiary or associate of another body, or restructuring (eg converting from a company to a registered society or vice versa; amalgamating; or transferring engagements). However, the requirement for a registered company to notify the HCA about changes of name or registered office will continue.

Registered providers will no longer need to seek the HCA’s consent to sell social housing or charge it for security. The legislation does introduce notification requirements.

The HPA 2016 introduces:

  • Requirements for all private registered providers to notify the HCA of disposals of social housing dwellings, and for some RPs to notify the HCA of disposals of other land. RPs will have to notify the HCA of any disposal of a social housing dwelling, even if it has ceased to be a dwelling and (for non-profit RPs) of any disposal of land which is not a dwelling;
  • Requirements for non-profit providers to notify the HCA about: changes to governing documents; company changes of name or registered addresses; certain restructures; dissolutions of registered societies; and company arrangements and reconstructions.
  • The requirement for a decision on the registration of a new body arising from certain restructures. In some circumstances, the HPA 2016 imposes on the HCA a specific statutory duty to make a registration decision about the body that results from a restructure.
  • Changes in requirements about the Disposal Proceeds Fund (DPF). After 6 April 2017 RPs will not have to pay new proceeds from relevant disposals into a DPF; but existing DPF funds must be managed and spent in accordance with current requirements for a further period.
  • Amendment of the power to appoint board members and managers. Where there has been a breach of any legal requirements, the HCA will have the power to make board member and manager appointments.
    A new statutory requirement on the HCA to re-designate a non-profit RP if it thinks it has become profit making.

Changes to the Regulatory Framework

The HCA is also making some changes to the regulatory framework as a result of these legislative changes.

Changes to the registration criteria

Following consultation, the HCA intends to implement changes to the registration criteria to coincide with the commencement of the de-regulatory measures on 6 April 2017. The decision statement includes the response to the consultation. It sets out:

  • the changes to the registration criteria for new entrants to the sector to take account of the removal of the consent regime
  • the registration criteria for post-restructure “new bodies” where the HPA 2016 imposes a statutory obligation on the regulator to make a registration decision

On-going obligations

Even after the deregulatory measures come into effect and the requirement to seek the HCA’s consent has been removed, RPs must continue to meet all remaining obligations, including:

  • The HCA’s standards: RPs must continue to meet all remaining obligations relevant to disposals, restructures and constitutional changes including adherence to the HCA’s standards and any current guidance.
  • Grant funding and lender requirements: Requirements must be met. A failure to do so may result in a breach of the HCA’s standards (in addition to any obligations to the grant funding body or lender).
  • Charitable status: Charity law rules and limitations must continue to be observed (whether the provider is a registered charity or an exempt charity). Registered charities should note that where they previously benefited from any exemption relating to disposals made under the Charities Act 2011, as a result of obtaining consent from the HCA, the exemption will no longer apply and RPs which are registered charities will need to make sure they understand the regime under charity law.
  • LSVT transfer agreements, nomination agreements, Section 106 and other planning agreements, transfers, leases and any other provisions which may be registered against an RPs titles to its assets (such as overage or clawback arrangements) may contain provisions restricting or preventing disposals.
  • RPs will need to consider any grant attached to an asset and any conditions which may be relevant in the event of a disposal.
  • RPs will still need to ensure that they comply with existing loan covenants.

This new regime potentially provides flexibility for RPs, however, it does reinforce the need for RPs to be certain that they take care in assessing risks when making decisions about their assets and their tenants. Audit trails in relation to decision making and good governance will be of paramount importance, not least in respect of in depth assessments.

If you would like to discuss any of these issues please contact our Head of Governance & Regulation, Jo Savage

Full details of the legislative changes and consultation documents can be found via the HCA website - click here

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