Government to 'review' regulatory framework and role of commercial landlords

Published by 24publishing for 24dash.com in Housing and also in Communities, Local Government

The Government has announced it intends to review "certain aspects" of the new regulatory framework this year in a bid to clarify the expectations and approach to regulation of 'for-profit' landlords.

The move was announced in a consultation on Real Estate Investment Trusts (REITs) today, co-launched by housing minister Grant Shapps.

There are currently nine for-profit providers registered with the regulation committee within the Homes and Communities Agency (HCA) which took over regulation from the abolished Tenant Services Authority (TSA) this month.

The regulator has only just published the new regulatory framework - which also comes into effect this month - which places a greater emphasis on providers to prove value for money. The regulator has scaled back its role in consumer matters only intervening where "serious detriment" to tenants is caused.

Last week the regulator registered 'for-profit' subsidiaries of regeneration group Pinnacle, Orchard & Shipman - the largest private provider of temporary accommodation for homeless families - and house builder Shanly Partnership Homes Limited.

They join Chiswick-based Capital Housing Associates, Fern Gateways - which provides housing and support to people with dependency issues and other support needs; Hamelin Trust Services - an Essex-based charity for supporting people with learning disabilities and their families; Major Housing Association; Three Conditions Limited and Woodlands Housing Limited.

The aim of the review, says the Government, is to "gain deeper understanding, following consultation, of managing the risks and opportunities that for-profit providers generate, and may lead to the regulator proposing changes to the framework".

The consultation document says: "The regulator’s current expectation is that this consultation will take place in the summer, with the new regime in place by the end of 2012. This new framework would apply to any REIT wishing to register as a for- profit provider of social housing."

It adds that where relevant, for-profit providers will also need to abide by grant conditions applied by the Homes and Communities Agency (including the requirement to repay social housing grant in line with any contractual arrangements, or, by agreement, to recycle into the provision of new supply) should the regulator grant consent to the disposal of properties outside the regulated social housing sector.

The consultation on REITs explores the role they can play in supporting the social housing sector.

It's understood providers could put some or all of their portfolios into a REIT spin off – whose shares are publicly traded – allowing investors to invest in their portfolios. Alternatively, they could club together in a consortium to develop and manage a REIT.

However, one expert warned today that banks will be the main barrier alongside complications of grant-funded homes being placed into a REIT spin off.

He said: "Are banks going to be interested? And what are the Government going to do about grant. The vehicle needs to be made attractive to investors. They don't want it saddled with bank charges and grant."