RIGHT TO ACQUIRE PROCEDURES

Transcription

1 RIGHT TO ACQUIRE PROCEDURES The Right to Acquire was introduced by the 1996 Housing Act and is effectively the right to buy as a condition of Social Housing Grant funding. The Right to Buy rules apply to Right to Acquire but there are some key differences:- Tenant eligibility the same as for RTB but must be secure or assured tenant. Does not apply to assured shortholds or licensees Applies to properties funded by SHG via HCA or LA from 01/04/97 Or from Disposal Proceeds Fund Or transferred from LA or similar after 01/04/97 Freehold owned by RSL or other public sector body Exclusion of property eligibility as for RTB but also where the attributable net debt is equal to or greater than its current market value Discounts less than for RTB but Housing Association can reclaim as grant from HCA after sale completion. Discounts range from 9,000-16,000 but are limited to 50% of valuation The HCA must make a grant to the landlord RSL if a tenant is entitled to acquire his or her home, but with the landlords agreement has chosen to purchase another property in the ownership of the landlord. Where this applies, the discount must not exceed the amount that the tenant would have been entitled to had he or she purchased the home in which they live With effect from 26 July 2005, Statutory Instrument 1735 requires landlords to publish and provide to tenants, certain information relating to RTA/RTB. It will not be sufficient for landlords to meet this obligation by issuing the Corporation s information booklet. Landlords should make arrangements to ensure that the requirements of SI 1735 are met. The matters about which information should be given to tenants covered in the SI include: An outline of RTA/RTB; That initial costs are likely to be incurred upon exercising the RTA/RTB; The likely regular payments to be incurred by a homeowner; The risk of repossession; The requirement for and likely expenditure in relation to good repair and maintenance of a property, which may include the payment of a service charge. 1.1 Initial Enquiry When the initial enquiry is made, check the tenant s tenancy, if the tenant is secure they may be eligible for the right to buy. If they have an assured tenancy, check to see if they qualify and also if their property qualifies (see below.) If they do qualify send out an RTA1 form, along with the Housing Corporation s explanatory booklet supplied by the. [Please note - I know the auditors will pick this up at some point and recommend that this

2 is changed to the HCA - the Housing Corporation is still referred to on the HCA website in this context] Make sure you include a note in the covering letter saying that if they want to share the right to acquire with a family member who is not a tenant they must provide proof of residence. 1.2 Sharing the Right to Acquire A tenant may share the right to acquire with up to 3 members of the family. A tenant s wife or husband may share the right to acquire if the property is their only or principal home. Other members of the family can share the right to acquire if the property is their only or principal home and they have lived there throughout the last 12 months. A person living with the tenant as the husband or wife but not actually married is regarded as a member of the family. 1.3 Proof of Residency We need to see two of the following items to determine proof of residence, please note we only accept original copies (which we would return.) The documentation must include the address on it. Your Council Tax Bill. Utility bill from BT/Electricity/ Gas/Water, showing 12 months occupancy, giving the person s name and address. Bank statements for the last 12 months in the applicant s name at the stated address. Credit Card statements for the last 12 months in the applicants name at the stated address. Motor insurance renewal notice and certificate of insurance for the vehicle in the name of the applicant at that address Wage slip UK residence permit P45 Bank or building society statement P60 Recent household bills in your name Benefit award letter Certificate of employment in HM forces Occupational pension slip Police registration document Driving license 2.1 When we receive RTA1 form Please note we have 4 weeks from the day we receive the RTA1 form to send the tenants an RTA2 form, this confirms or denies the tenants right to acquire.

3 When we receive the form send an acknowledgment letter to the tenant confirming the date we received the form (proforma 2a.) Send a memo to the relevant housing officer asking for information on the type of tenancy, the date the tenancy started and if there are any court orders outstanding. An is to be sent to Maintenance asking for information on what we have spent on the property in the last 10 years. When the results come back complete and send form RTA2 (proforma 5a.) If the tenant has asked to share the right to acquire with others (see above) check the evidence they have sent and if applicable name them on form RTA2. If we have not received the evidence, send a reminder. 2.2 A tenant is eligible for a right to acquire if: If they have been a public sector tenant before 18 th January 2005, the tenant must have spent a total of two years as a tenant If they have been a public sector tenant after 18 th January 2005, the tenant must have spent a total of five years as a tenant. Live in a house or flat which is the main home. If they are not subject to a possession order. In the case of right to acquire applications the property must also be eligible: 2.3 A property is eligible if: The property has been built, transferred or purchased by an RSL funded by a Housing grant on or after 1 st April If the tenant is not eligible we must provide them with a reason on the RTA2 form. If Pierhead does not own the Freehold If the freehold of the property is owned by the Liverpool City Council it is they who need to process the right to acquire. Send a letter to the tenant informing them of this (proforma 4a) and send the details (proforma 3a) to the following address: Liverpool City Council Home Ownership Unit Room 232 Municipal Buildings Dale Street L2 2DH Telephone number: RTA 3 Form

4 Once we have acknowledged the tenants right to acquire we have 8 weeks to send out form RTA3. This applies if the home is a freehold house. If the property is leasehold, a flat or maisonette 12 weeks applies. Send an to Peter Kenny asking him to carry out a valuation of the property. A contact number for the tenant should be included on this form to allow the district value to contact the tenant and arrange a viewing. Discount Once the valuation has come back, calculate the discount the tenant will receive. Unlike right to buy, the amount of discount does not depend upon the number of years the applicant has been a tenant. It is a set amount depending upon the area the applicant is living. In our case it is 9,000. When completing the form RTA3, you have to include any details of service charges which may be applicable, ask for this information from the housing management administrator. Make sure that this information also includes the likely replacement of equipment or changes in the service charge over the next five years e.g. Is a new lift to be installed or a new TV aerial system. If so we need to give an estimate of what this will cost. Send the completed form RTA3 to the tenant with a cover letter (proforma 8a.) Once RTA3 form is sent to the tenant, they have 12 weeks to inform us whether they wish to proceed. A further reminder is sent to them giving them an extra 28 days (proforma 9a.) If no response is received then it can be presumed that the tenant does not wish to continue. The tenant can reapply but any application will be treated as new. If the tenant chooses to proceed. If the tenant decides to proceed with the offer, we forward the details of their solicitor to Brabners and ask them to deal with the conveyancing (proforma 10a.) Consent of Borrowing above Property Value/ Re-mortgaging If the tenant wishes to borrow an amount of money above the cost of the property, or wishes to re-mortgage the property once they have bought it, they must get the consent from the Association to waive the charge (i.e. if the property is to be sold or re-possessed repayment of the existing and new loan would take priority over the repayment of our discount (please see below.)) Under guidelines the Association is obliged to give consent if the borrowing is to fund improvements to the property. This must be proved by the tenant showing us copies of estimates. (For example please see the case of 7 Glover Place)

5 It is custom and practice to ask the tenant to cover the cost of our solicitors for providing consent. Point of Sale When the Solicitors informs us they are ready to complete, they will normally provide us with a date which the tenant has asked to complete on. At this point we need to check with the relevant Housing Officer, the head of Housing Management and the Head of Technical Services to check this date is ok. If so, we inform our solicitor that the date is ok. The solicitor will normally ask for the rent balance at that point. All arrears must be cleared before the sale can go through. It is customary for sales to take place on a Monday as the rent is paid up to this day. If the sale goes through on any other day, the tenant must pay the rent up to the end of the week. Prior to completion, the solicitor will send over a duplicate copy of the Land Registry deeds. They both must have the Association seal placed on it and be signed by a Committee member and the Company Secretary (currently the Chief Executive.) Once they are signed and sealed they should be returned to our solicitors. Completion Our solicitors will inform us when the sale is complete. A cheque will be sent to the Association which should be passed to the Finance department for them to calculate if any RCGF needs to be repaid. An should be sent to the relevant Housing Officer, the head of Housing Management and the Head of Technical Services informing them of the sale. A record must be made for CORE. Send the tenant a letter asking if they would still like to be involved in consultation (proforma 11a,) if they respond in the positive pass their details to the tenant participation officer. Along with letter a satisfaction questionnaire should be sent. Repayment of Discount If the owner sells the property in a given time period after it is purchased under the right to acquire scheme they are obliged to repay some of the discount. There are two different rules, which determine how much discount is repaid, which rule applies depends upon when the tenant originally applied for the right to acquire. If the tenant applied for the right to buy before 18 January 2005

6 The tenant is liable to repay a part of his discount if they re-sell the property within 3 years from the point of sale. If the property is sold within the first year, the entire discount has to be repaid. After 1 year, 2/3 rd of the discount must be repaid. After 2 years, 1/3 rd of the discount must be repaid. If the tenant applied for the right to buy on or after 18 January 2005 The tenant is liable to repay an amount up to 5 years from the point of sale. The amount the tenant is liable to repay is a part of the resale price determined by the percentage of the price, which the discount was when the Association sold the property. If the property is sold within the first year, the full discount % of the resale value must be repaid. After 1 year, 4/5 th of the discount % of the resale value must be repaid. After 2 years, 3/5 th of the discount % of the resale value must be repaid. After 3 years, 2/5 th of the discount % of the resale value must be repaid. After 4 years, 1/5 th of the discount % of the resale value must be repaid. E.g. the property was sold by the Association for 100,000. The tenant received a 9,000 discount. I.e. 9% The owner then sells the property over 2 years after they originally bought it. The sale price is 150,000. The Association is entitled to a repayment of 9% x 150,000 x 3/5 th = 8,100 The percentage the discount makes of the original sale price is normally provided to us by the solicitors at the point of sale. Copies of all proformas can be found in S/_Shared/Right to Buy and Acquire proformas