When it comes to local authority development a very early consideration will be deciding on who will own the resulting homes. This can become a complex jigsaw of entities depending on a number of factors including, the viability of the scheme, planning requirements, local housing need and many more. Here we set out a quick summary of the options councils have at their disposal.
Council housing / in-house delivery
The resulting homes can be owned by the council and operated as council housing or otherwise as permitted under the Rent Standard.
- Affordable housing held under Part II Housing Act 1985
- Stock owning local authorities are by default a Registered Provider of Social Housing (regulated by the Regulator of Social Housing (RSH)
- Subject to Rent Standard (subject to limited exceptions)
- Subject to Right to Buy
- Can be eligible for grant funding – in London enhanced grant rates under Building Council Homes for Londoners
Registered Provider (RP)
The homes can be transferred to an RP, either for profit or not-for-profit. This is often required under a section 106 Agreement – the council is an RP by default but some opt not to own the homes themselves.
- Regulated by RSH
- Subject to Rent Standard (subject to limited exceptions)
- Most common entity is Community Benefit Society (exempt charity) but also could be charitable company limited by guarantee or charitable incorporated organisation or a different "for profit" type of entity
- Can receive grant from Homes England and the Greater London Authority (GLA) under affordable homes programmes
- If an exempt charity or registered charity will likely obtain tax advantages (e.g. no SDLT or corporation tax)
- Council may incorporate an RP, however subject to deregulation controls which requires independence
Unregistered housing company
The homes can be transferred to an unregistered entity which could be owned and controlled by the council.
- Could be wholly owned or joint venture
- Could be: (i) company limited by shares or (ii) limited by guarantee or (iii) limited liability partnership
- Not subject to the Rent Standard or regulated by RSH – greatest tenure flexibility
- Not eligible for affordable housing grant under Homes England or GLA general programmes
These models are tried and tested. There are many different permutations of each – which might require flexibility to accommodate collaboration with a joint venture partner or funder or to enable security taken over assets. This poster is intended to be an aide memoire, however specific legal advice should be taken when considering structuring for development. If you need assistance in appraising these options, please get in touch.
