Thinking of slimming down?

Updated September 2010

If you’re a housing association considering a stock rationalisation programme - whether its part of a planned efficiency drive, you’re working with a local authority to support their regeneration agenda, or if your objective is simply to deliver a better service to your tenants - there are a number of legal issues you should always consider before embarking on such a project:

• Identify the appropriate form of stock rationalisation

Stock rationalisation comes in different shapes and sizes depending on what you’re trying to achieve. Models for stock rationalisation vary from a freehold transfer to a short term management arrangement and variations in between. Each approach has its advantages and disadvantages.

• Notify your bank

Check whether the properties in question are charged to the bank. If they are, in the case of a disposal, the association will need its bank to release the properties from the charge. Depending on the lender, they may require repayment of a proportion of the debt or less commonly, require substitute properties.

• Section 172 consent

Obtain Section 172 consent if you are disposing of tenanted housing stock and don’t forget to consult your tenants prior to making the application.

• EU procurement

The sale of property is not caught by EU procurement law, but a management agreement on a large scale might be, so always consider the impact of the EU procurement rules.

• TUPE

The Transfer of Undertakings Protection of Employment (TUPE) Regulations might apply, this is likely to be an issue where sheltered housing forms part of the portfolio.

• Supporting People grant

Communicate with the local authority to ensure they will assign any existing Supporting People contract to the recipient association. 

If you are considering a stock rationalisation programme or have any questions then please contact Kate Silverman on +44 (0)203 465 4167.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at September 2010. Specific advice should be sought for specific cases; we cannot be held responsible for any action (or decision not to take action) made in reliance upon the content of this publication.

TLT LLP is a limited liability partnership registered in England & Wales number OC 308658 whose registered office is at One Redcliff Street, Bristol BS1 6TP England. A list of members (all of whom are solicitors or lawyers) can be inspected by visiting the People section of this website. TLT LLP is authorised and regulated by the Solicitors Regulation Authority under number 406297.