Tag Archives: housing transfer

Pouring money down the drain

Fans of the Right to Transfer may have wondered where I’ve been these last many months, well the truth is that there hasn’t been much I could say.  The Right to Transfer (RTT) process at Bushbury Hill EMB has been in a holding pattern, hopefully I’ll have some more interesting news in the near future.

In the meantime there has been one useful clarification over the Right to Transfer process which I can give an update on.  The Department for Communities and Local Government have made it clear that any RTT application must fully cover the cost of not only the HRA debt attributable to the stock to be transferred, but the cost of any redemption premia if that debt is repaid early.

Attributable debt

Under HRA self financing all stock owning authorities in England have HRA debt.  For a partial stock transfer such as an RTT proposal, the a portion of this debt is attributed to the homes being transferred – this should be a fair proportion based on the condition, type and rents of the stock.  The purchase price paid by the landlord buying the stock has to be enough to cover repayment of this attributable debt.

Debt Repayment Premia

However, if the local authority intends to use the transfer proceeds to pay off the attributable debt then it will incur debt repayment premia – they have to pay for the loss of interest that would have been due if the debt was not repaid early.  For a tenant group to have a business plan approved by the HCA it will have to demonstrate that the price paid to the local authority will be enough to cover the attributable debt plus any premia.  There is no Government funding available to assist with any shortfall.

Money down the drain – why pay interest twice on the same capital?

It is safe to say that stock owning councils have HRA business plans which involve borrowing money in order to invest in their homes or build new ones.  You may be wondering why any local authority would therefore want to send any capital receipt from transfer and send it to the Treasury instead of putting it to good use in their community. Doing this means that they end up paying two lots of interest on the same amount of capital – the debt repayment premia on the attributable debt and then interest on new borrowing for the same amount to support their HRA business plan.  It creates an unnecessary transfer of  money from the local authority to the Treasury . This money is no longer available to invest by the council, which is effectively pouring its tenants’ money down the drain.

Can’t you think of anything better to do with the money?

Small

The real reason for a local authority to say that it wants to repay the attributable debt is to drive up the cost of the transfer in an attempt to stop tenants exercising their statutory Right to Transfer.  However in light of the housing crisis, building some new homes would be a better use for the money.

Clarity is a good thing

It would be better if DCLG required local authorities seeking to repay attributable debt to demonstrate they had no borrowing in their HRA business plan and therefore no use for the capital receipt.  On the plus side, at least tenants now have a clear position form which to work, in order to make an RTT proposal fly they will have to ensure that they can come up with a business plan which will cover the attributable debt and debt repayment premia.  It is the fate of Bushbury Hill EMB as the pioneer of the Right to Transfer to iron out all the wrinkles in the process and hopefully make things clearer, if not easier, for other tenant groups in future.

 

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Bushbury Hill information house

Want to know what tenants want? Try talking to them

Bushbury Hill information house

Bushbury Hill information house

As part of our Right to Transfer process in Bushbury Hill we have recently opened what we call our Information house on the estate. Open five sessions a week, including evenings and Saturdays it offers every tenant a chance to come and chat to us about the transfer proposal. It also gives us the chance to find out from tenants which of our proposed improvements they would like to choose and if they will need the back garden fencing programme.

Tenant can choose a new fire suite

New fire suite

Don’t take offence

We know exactly what tenants want because we pounded the streets and asked them. Because our estate is nearly all houses with large gardens, three quarters of tenants need new fencing. It may seem a minor issue, but a decent fence means you can enjoy your garden in privacy and security. By and large tenants rub along just fine, but unwanted intrusions by next door’s dogs and or children can quickly grate. If you have a 100ft garden as many in Bushbury Hill do, the cost of fencing it yourself is many hundreds of pounds. Many of our tenants simply do not have this kind of money.

Ask and then listen…

It is this personal interaction with tenants that has given the board such a good understanding of the needs of our community and shape the transfer proposal accordingly. It may seem to be obvious, but if you want to know what your tenants want from the Right to Transfer (or anything else) then a conversation is the best way. This involves not just asking questions, but also listening to the answers and capturing them in a way that can be used. We have a very simple survey that we are using.

…Or not

Being led by the needs and wishes of our tenants is in our DNA as a tenant led organisation but it does beg the question, why would any landlord want to do otherwise? What I really cannot understand about the local authority’s opposition to transfer is that they have never taken the time to talk to the tenants in Bushbury Hill about the issues. How a local authority can possibly reach a meaningful conclusion about what is in the tenants best interests without engaging with the tenants is beyond me.

Right to transfer offers written by councils that oppose them? This is illogical.

The current statutory guidance on consulting tenants about a housing transfer was published in July 2009 and takes no account of tenant led schemes under the Right to Transfer (RTT) which had been enacted in 2008 but not implemented by regulation until December 2013. This means that the Offer Document to tenants is the responsibility of the very council that opposes the tenants’ wishes which is illogical.

The 2009 guidance states:

Tenants need to understand why the local authority is proposing to transfer their housing (Annex 1, Para.9)

However in RTT cases the council is not proposing the transfer, in fact they are opposed to it. This internal contradiction demonstrates why it makes no sense for the Offer to come from the council.

Just as the housing transfer manual has been re-written to acknowledge the tensions inherent in RTT and transfer some responsibilities from councils to the tenant group, the guidance on tenant consultation similarly needs to be updated.

RTT is a tenant led process, the proposal to transfer is that of the tenants, not the council and so the Offer should be produced by and from the tenant group. To get to offer stage the tenants have already complied with a regulatory framework and the RTT statutory guidance, they can just as well comply with the guidance at consultation stage.

The substance of 2009 guidance is still sound, I don’t think it would take much to update it to include tenant led transfers and make it clear that the offer belongs to and comes from the tenants with the accompanying duty to take proper account of the guidance.

Being a trailblazer means having to work with the existing structures, even if they are no longer quite fit for purpose. Whilst this is not always easy, it does flag up those issues that need to be addressed so that RTT can work properly. So let’s hope that future RTT have a new version of the guidance that empowers tenants.

Housing transfer manual 2015/16

100 million) for the next transfer programme and the publication of the stock transfer manual for 2015/16.  Their press release takes an interesting angle, promoting it as an opportunity for tenant empowerment through the Right to Transfer (RTT).  The first Para reads:

Council tenants wanting more influence and control over their homes will have access to a share of £100 million.

Council tenants wanting more influence and control over their homes will have access to a share of £100 million to do just that, Housing Minister Kris Hopkins announced today (14 July 2014).

Mr Hopkins said the fund will help unlock further investment in maintaining and building social homes across the country.

Since November 2013, tenants living in council housing have had a right to request that the management of their homes be transferred to a housing association – and that the council cooperate in that process.

From today, tenant groups wanting to exercise this Right to Transfer will be able to bid for a share of this £100 million fund to help that process, with the money becoming available from next year.

The £100 million fund is also available for councils wishing to transfer their stock, with proposals that provide good value for money and have the support of residents.

In my view it is a good thing that the RTT is being promoted in this way and crucially that the stock transfer programme remains open for business with funding available to support it.  I led a workshop on RTT at the recent National Federation of TMOs (NFTMO) and it was full, so there is definitely the appetite for RTT within the TMO world.

Whilst I welcome the push behind RTT there is no prospect of TMOs making much of a dent in £100 million, even if debt relief is needed.  So I can only assume that the Government also expects some local authorities to be making applications for this round.

Speaking of applications, the 2015/16 transfer manual now includes two versions of the application for transfer (Annex A) to be submitted to HCA as referred to in my previous post.  This recognises that it makes no sense for applications for tenant led transfers to come from the local authority.

Tenant led application to HCA

The newness of the Right to Transfer (RTT) means that all involved are feeling their way through to a certain extent.  This means that some of the well understood processes for large scale voluntary transfers are having to be rethought.  One example of this is the formal submission of a transfer proposal to the Homes and Communities Agency (HCA).

To date LSVTs have all (nominally) had the support of the local authority concerned.  It was therefore logical that the council make the application to the regulator.  With RTT the local authority is not in favour of the transfer and may be actively hostile.  It was therefore anomalous that the application pro forma in Annex A to the March 2015 Transfer Manual only allowed for applications with the support of the local authority.

Whilst councils involved in a RTT situation would be likely to comply with their statutory obligation to co-operate with the tenant group exercising the RTT, it was still odd that the elected members would have to pass a resolution giving support to a proposal that they did not believe in.  From the tenants point of view it was also a potential stumbling block which would allow their council to obfuscate or delay the process.

This situation has been resolved by a common sense approach from the HCA who have come up with a RTT version of the Annex A pro forma where the application comes from the tenant group.  This is eminently sensible and puts control where it should be – with the tenants.  The requirements and need to make a strong case for transfer are still there, but it is for the tenant group to make the case.  This is great news for Bushbury Hill EMB due to the tight timescale we’re working to, but will also make things clearer for other tenant groups in future.

When choosing a partner, choose a good ‘un

I reported earlier that the tenants in Bushbury Hill had chosen Wrekin Housing Trust as their proposed transfer partner.  Is it serendipity or good judgement that their choice has just won a best landlord award at the recent UK Housing Awards? They won in the Large social landlord of the year category. My boss doesn’t like this picture but as she didn’t blag me an invite…

Wrekin Housing Group at the UK Housing Awards

Wrekin Housing Group at the UK Housing Awards

I’m not suggesting that tenant groups looking for a transfer partner base their invitations on the shortlist of various awards, this certainly wasn’t a factor our Board were even aware of when selecting potential partners.  However performance, regulatory rating, financial stability and reputation are all relevant factors.  We asked Wrekin to take part in our selection process based on our good experience of working with them over a number of years.

The alternative to invitation is to have a completely open process and run it more like a tender, this has merits as you will reach a wider pool of potential partners and may unearth a hidden gem.  I know that LATMOS (in Lambeth, London) ran an open beauty contest and this generated considerable interest.  They chose to join WATMOS who are based in Walsall, so this shows that the best fit is not always on the doorstep.  The beauty contest has merits, but does require more time than Bushbury Hill had available.

However tenants make their choice my advice to groups using the Right to Transfer who want to transfer to a partner to be clear about their long term objectives and priorities and make this the basis on which they shortlist potential partners.  Tenants are not beholden to choose the highest bidder, finding the best fit for your group involves more than looking at the bottom line.