Affordable Housing Gateway: Revision of Deferred Payment Sales Process: Approval

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A decision made 17 June 2013:

Decision Reference: MD-H-2013-0043
Decision Summary Title :	DS – Revision of Deferred Payment Sales Process		Date of Decision Summary:	11th June 2013
Decision Summary Author:	Director of Strategy		Decision Summary: Public or Exempt? (State clauses from Code of Practice booklet)	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title :	Revision of Deferred Payment Process		Date of Written Report:	11th June 2013
Written Report Author:	Director of Strategy		Written Report : Public or Exempt? (State clauses from Code of Practice booklet)	Public
Subject: To approve changes to the process for the sale of properties where a deferred payment is provided to purchasers
Decision(s): The Minister agreed; that deferred payment sales should continue at an average rate of 15 sales per annum, as a means of providing continued funding for the refurbishment and new build programme and as a means of continuing to realign the stock. that homes may be sold to anyone (other than existing or previous home owners) registered with the Affordable Housing Gateway irrespective of whether or not they are an existing social housing tenant. that the existing maximum 25% deferred payment continues to be made available on a means tested basis according to the particular circumstances of the buyer(s). that all sales continue to be passed for approval to the Minister for Treasury & Resources in accordance with Standing Order 168. that all properties sold be retained within the Affordable Housing market by contractual provisions which restrict onward sales to Affordable Housing Gateway qualifiers or other such restriction introduced by the Minister through the auspices of the Strategic Housing Unit. that the income from all sales continues to be applied to the Housing Department’s rolling vote HYR000 for use in refurbishing the stock or in developing new homes. the contents of Policy HD20 and HD42. to seek the approval of the Minister for Treasury & Resources to the change in Policy
Reason(s) for Decision: To ensure that the homes for sale with a deferred payment are available to appropriate applicants who would not be able to purchase a home unassisted and that income arising from sales is reinvested in the social Housing stock.
Resource Implications: NIL
Action required: Finance Director to oversee seeking the approval of the Minister for Treasury & Resources
Signature:		Position: HOUSING MINISTER
Date Signed:		Date of Decision (If different from Date Signed):

Affordable Housing Gateway: Revision of Deferred Payment Sales Process: Approval

Date of Report:- 11th June 2013

REPORT FOR HOUSING MINISTER

REVISION OF DEFERRED PAYMENT SALES PROCESS

PURPOSE

To set out and seek approval for a revision to the procedures whereby States rental homes are offered for sale to qualifying purchasers.

BACKGROUND

To the date of this report some 120 States rental homes have been sold to existing social housing tenants, or to tenants of Housing Trusts who were originally nominated by the Housing Department under the agreements extant at that time. The majority of these tenants have benefited from assistance from an Affordable Housing Scheme which provides means tested assistance in the form of a deferred payment with a maximum value of 25% of the property value. The principles of this scheme were approved by the States on 17th July 2007.

The deferred payment is registered as a second charge against the property sold and is repaid when the property is next alienated.

Property sales have been restricted to existing social housing tenants to ensure that the benefit of the deferred payment was targeted and was not available to those who might be able to purchase a property without assistance.

The £42m sale income from sales to date has been used to develop new social housing and in the refurbishment of the stock to achieve Decent Homes Standards.

All sales are authorised in accordance with the provisions of States Standing Order 168.

Sales provide a useful means of continuing the realignment of the stock so that it meets the needs of the changing demographic make up of the population.

The Department’s forward business plan set out extensively in R.15/2013 which accompanied P.33/2013 ‘The Reform of Social Housing’ approved by the States on16th May 2013 requires that an average of 15 sales per annum are made if the development and refurbishment programme is to continue and funds advanced to the Department in lieu of sales are to be repaid to the Treasury. The business plan includes the supply of significant numbers of new homes and continued sales can therefore be carried out in a managed, sustainable way, without imposing unnecessary strains on the wider housing market, and related at all times to prevailing supply and demand for affordable housing. This approach is supported by the Treasury who expect previous funding advances for Le Squez Phase 2a & b and Pomme D’Or Farm, MD-H-2010-0044 and MD-H-2011-0066 refer respectively, to be repaid from future sales.

The introduction of the Affordable Housing Gateway now provides a means of identifying a wider pool of those in housing need and it is clear that there is a significant latent demand for the purchase of an affordable home. It is also clear that those registered within Band 5 (the Band reserved for those wishing to purchase with assistance) on the Gateway are not in a position to purchase an appropriate home on the open market without assistance.

Widening sales to this group has a number of advantages:-

It provides a realistic means of purchasing for many families who otherwise could not become home owners.

It is more equitable.

It promotes the use of the Gateway for affordable purchase schemes and may as a consequence encourage more applications giving a more accurate reflection of needs.

Until the Strategic Housing Unit has completed its Housing Strategy and introduced other affordable or intermediate housing products the existing deferred payment scheme offers a useful mechanism for a limited number of qualifying purchasers to buy.

The existing deferred payment scheme is well established and understood by local lenders and legal practices.

The approvals process as set out in States Standing Order 168 is well established.

Widening the pool of potential buyers makes achieving sales targets more realistic.

Reinvestment in the stock can continue which as a consequence helps to support the construction industry.

The strategic realignment of the stock can continue.

Applicants will continue to be means tested in line with Policy HD42 “Calculating deferred payment entitlement for affordable housing sales” attached hereto.

Allocations will continue to be prioritised within the spirit of existing policy HD20 “Allocation policy for the sales of affordable homes”.

SUPPORTING DOCUMENTS

Annex A Policy HD20 - Allocation policy for the sales of affordable homes

Annex B Policy HD42 - Calculating deferred payment entitlement for affordable housing sales

RECOMMENDATION

It is recommended that the Minister agree:-

that deferred payment sales should continue at an average rate of 15 sales per annum, as a means of providing continued funding for the refurbishment and new build programme and as a means of continuing to realign the stock.

that homes may be sold to anyone (other than existing or previous home owners) registered with the Affordable Housing Gateway irrespective of whether or not they are an existing social housing tenant.

that the existing maximum 25% deferred payment continues to be made available on a means tested basis according to the particular circumstances of the buyer(s).

that all sales continue to be passed for approval to the Minister for Treasury & Resources in accordance with Standing Order 168.

that all properties sold be retained within the Affordable Housing market by contractual provisions which restrict onward sales to Affordable Housing Gateway qualifiers or other such restriction introduced by the Minister through the auspices of the Strategic Housing Unit.

that the income from all sales continues to be applied to the Housing Department’s rolling vote HYR000 for use in refurbishing the stock or in developing new homes.

the contents of Policy HD20 and HD42.

to seek the approval of the Minister for Treasury & Resources to the change in Policy