Greenwoods Warns Registered Social Landlords On Transfers To Subsidiaries » Housing » 24dash.com

Peterborough-based Greenwoods Solicitors LLP (www.greenwoods.co.uk) has issued a warning to registered social landlords (RSLs) considering transferring land and property to subsidiaries about the compliance issues involved.

Sealed consent of the Housing Corporation to the sale of a property by an RSL to a subsidiary is required under Section 9 of the Housing Act 1996. In addition, RSLs which are charities must also be aware of their responsibilities under the Charities Act.

Stephen Illingworth, chairman and head of property at Greenwoods, said: "The reason RSLs are required to seek consent is to ensure that there is no improper use of the property and to protect public funds. The application for consent may also alert the Housing Corporation to regulatory problems.

"The Corporation will normally give consent, but care should be taken to ensure that the disposal is not less than the market value or contrary to the RSL's objects and/or permissible purposes.

Many RSLs are charities and are subject to regulation by the Charity Commission. However, some RSLs are also industrial and provident societies and these are incorporated bodies registered under the Financial Services Authority under the Industrial and Provident Societies Act 1965. Such RSLs are not subject to Charity Commission control and, currently (until the Charities Act is in full force), need not worry about this issue

Stephen Illingworth added: "Under Section 36 of the Charities Act 1993, sub-section 9 allows a disposal of land for which general or special authority is expressly given in an act of parliament. Therefore, on the face of it, consent under Section 9 of the Housing Act 1996 will allow the charity to proceed to dispose of the land to a connected party without formal Charity Commission consent.

However, the charity still needs to take account of the rule against self dealing which, in spite of the apparently clear words of Section 36, still requires a charity to obtain consent from the Charity Commission.

"Charities thinking of disposing to a subsidiary should be aware of this point since Section 36 would, on the face of it, allow the matter to proceed with only consent from the Housing Corporation. In fact consent will probably be required from the Charity Commission as well.

This should not be too problematic since it is possible to obtain an application form from the Charity Commission website. Although there is extra work involved, if this application is completed at the same time as the application to the Housing Corporation, then that would be an efficient use of time, so as to achieve compliance."

Further guidance on these issues can be found in the Housing Corporation guide Disposing of land (Section 9 of the Housing Act 1996) and in the Housing Corporation circular The General Consent (February 2008). Further information is also available in Operational Guidance 54 B2 on the Charities Commission website (www.charity-commission.gov.uk).

Notes to editors

1. Greenwoods Solicitors is based in Peterborough, 45 minutes from central London. It advises a blue chip client base drawn from local, national and international markets and comprising numerous household names and FTSE 250 firms as well as local authorities and housing associations.
2. Greenwoods has over 50 lawyers based in specialist, client focused teams and has developed a track record in attracting and retaining high calibre lawyers from leading London and regional firms.
3. In addition to its housing law team Greenwoods has teams specialising in corporate, commercial, dispute management, property, human resources and personal legal services.