Housing Bill

House of Commons

Session 2003 - 04
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Housing Bill

Housing Bill
Part 6 — Other provisions about housing
Chapter 2 — Disposals attracting discounts other than under right to buy
121

subsection (2), the consideration shall not be reduced under subsection
(3) below the amount necessary to discharge the outstanding sum
secured by the first-mentioned charge at the date of the offer (as
determined in accordance with regulations under section 36A).”
(2)
In section 33(2) of the Housing Act 1985 (c. 68) (covenants and conditions
5
which may be imposed), after “But” insert “, subject to sections 36A and 37,”.
(3)
In section 37(1) of that Act (restriction on disposal of dwelling-houses in
National Parks etc.), after “restriction on assignment)” insert “or a covenant as
mentioned in section 36A(3) (right of first refusal for local authority)”.
(4)
In section 41 of that Act (exempted disposals which end liability under
10
covenants), after paragraph (a) insert—
“(aa)
the covenant required by section 36A (right of first refusal for
local authority) is not binding on the person to whom the
disposal is made or any successor in title of his, and that
covenant ceases to apply in relation to the property disposed of,
15
and”.
(5)
The amendments made by this section do not apply in relation to a disposal
under section 32 of that Act if—
(a)
the purchaser has accepted an offer for the disposal of the house from
the authority, or
20
(b)
the authority has accepted an offer for the disposal of the house from
the purchaser,

before the day on which this section comes into force.
171
Deferred resale agreements
(1)
After section 39 of the Housing Act 1985 (c. 68) insert—
25
“39A Treatment of deferred resale agreements for purposes of section 35
(1)
If a purchaser or his successor in title enters into an agreement within
subsection (3), any liability arising under the covenant required by
section 35 shall be determined as if a relevant disposal which is not an
exempted disposal had occurred at the appropriate time.
30
(2)
In subsection (1) “the appropriate time” means—
(a)
the time when the agreement is entered into, or
(b)
if it was made before the beginning of the discount repayment
period, immediately after the beginning of that period.
(3)
An agreement is within this subsection if it is an agreement between the
35
purchaser or his successor in title and any other person—
(a)
which is made (expressly or impliedly) in contemplation of, or
in connection with, a disposal to be made, or made, under
section 32,
(b)
which is made before the end of the discount repayment period,
40
and
(c)
under which a relevant disposal (other than an exempted
disposal) is or may be required to be made to any person after
the end of that period.
(4)
Such an agreement is within subsection (3)—
45

Housing Bill
Part 6 — Other provisions about housing
Chapter 2 — Disposals attracting discounts other than under right to buy
122

(a)
whether or not the date on which the relevant disposal is to take
place is specified in the agreement, and
(b)
whether or not any requirement to make that disposal is or may
be made subject to the fulfilment of any condition.
(5)
The Secretary of State may by order provide—
5
(a)
for subsection (1) to apply to agreements of any description
specified in the order in addition to those within subsection (3);
(b)
for subsection (1) not to apply to agreements of any description
so specified to which it would otherwise apply.
(6)
An order under subsection (5)—
10
(a)
may make different provision with respect to different cases or
descriptions of case; and
(b)
shall be made by statutory instrument which shall be subject to
annulment in pursuance of a resolution of either House of
Parliament.
15
(7)
In this section—

“agreement” includes arrangement;

“the discount repayment period” means the period of 3 years that
applies for the purposes of section 35(2) or the period of five
years that applies for the purposes of section 35(3) (depending
20
on whether an offer such as is mentioned in section 168(4) of the
Housing Act 2004 was made before or on or after the coming
into force of that section).”
(2)
The amendment made by this section does not apply in relation to any
agreement or arrangement made before the the day on which this section
25
comes into force.
Disposals by registered social landlords
172
Repayment of discount: periods and amounts payable
(1)
For section 11 of the Housing Act 1996 (c. 52) substitute—
“11
Covenant for repayment of discount on disposal
30
(1)
Where on a disposal of a house by a registered social landlord, in
accordance with a consent given by the Relevant Authority under
section 9, a discount has been given to the purchaser, and the consent
does not provide otherwise, the conveyance, grant or assignment shall
contain a covenant binding on the purchaser and his successors in title
35
to the following effect.
(2)
The covenant shall be to pay to the landlord such sum (if any) as the
landlord may demand in accordance with subsection (3) on the
occasion of the first relevant disposal which is not an exempted
disposal and which takes place within the period of five years
40
beginning with the conveyance, grant or assignment.
(3)
The landlord may demand such sum as he considers appropriate, up to
and including the maximum amount specified in this section.

Housing Bill
Part 6 — Other provisions about housing
Chapter 2 — Disposals attracting discounts other than under right to buy
123

(4)
The maximum amount which may be demanded by the landlord is a
percentage of the price or premium paid for the first relevant disposal
which is equal to the percentage discount given to the purchaser in
respect of the disposal of the house by the landlord.
(5)
But for each complete year which has elapsed after the conveyance,
5
grant or assignment and before the first relevant disposal the maximum
amount which may be demanded by the landlord is reduced by one-
fifth.
(6)
Subsections (3) to (5) are subject to section 11A.
11A Increase in value of house attributable to home improvements to be
10
disregarded
(1)
In calculating the maximum amount which may be demanded by the
landlord under section 11, such amount (if any) of the price or premium
paid for the first relevant disposal which is attributable to
improvements made to the house—
15
(a)
by the person by whom the disposal is, or is to be, made, and
(b)
after the conveyance, grant or assignment and before the
disposal,

shall be disregarded.
(2)
The amount to be disregarded under this section shall be such amount
20
as may be agreed between the parties or determined by the district
valuer.
(3)
The district valuer shall not be required by virtue of this section to make
a determination for the purposes of this section unless—
(a)
it is reasonably practicable for him to do so; and
25
(b)
his reasonable costs in making the determination are paid by
the person by whom the disposal is, or is to be, made.
(4)
If the district valuer does not make a determination for the purposes of
this section (and in default of an agreement), no amount is required to
be disregarded under this section.
30
11B Liability to repay is a charge on the house
(1)
The liability that may arise under the covenant required by section 11
is a charge on the house, taking effect as if it had been created by deed
expressed to be by way of legal mortgage.
(2)
Where there is a relevant disposal which is an exempted disposal by
35
virtue of section 15(4)(d) or (e) (compulsory disposal or disposal of
yard, garden, etc.)—
(a)
the covenant required by section 11 is not binding on the person
to whom the disposal is made or any successor in title of his,
and
40
(b)
the covenant and the charge taking effect by virtue of this
section cease to apply in relation to the property disposed of.”
(2)
In section 12, for “section 11” in each place where it occurs substitute “section
11B”.
(3)
The amendments made by this section do not apply in any case where—
45

Housing Bill
Part 6 — Other provisions about housing
Chapter 2 — Disposals attracting discounts other than under right to buy
124

(a)
the purchaser has accepted an offer for the disposal of the house from
the landlord, or
(b)
the landlord has accepted an offer for the disposal of the house from the
purchaser,

before the day on which this section comes into force.
5
(4)
Subsection (5), however, applies in any such case if the first relevant disposal
by the purchaser to which the covenant for repayment of discount applies
takes place on or after the day on which this section comes into force.
(5)
In the following provisions—
(a)
section 11(2) of the Housing Act 1996 (c. 52) (as it has effect without the
10
amendments made by this section), and
(b)
any covenant for repayment of discount,

any reference (however expressed) to a person being liable to pay an amount
to the landlord on demand is to be read as a reference to his being liable to pay
to the landlord so much of that amount (if any) as the landlord may demand.
15
(6)
In subsections (4) and (5) “covenant for repayment of discount” means the
covenant contained in a conveyance, grant or assignment in accordance with
section 11 of that Act.
173
Registered social landlord’s right of first refusal
(1)
After section 12 of the Housing Act 1996 insert—
20
“12A  Right of first refusal for registered social landlord
(1)
Where on a disposal of a house by a registered social landlord, in
accordance with a consent given by the Relevant Authority under
section 9, a discount has been given to the purchaser, and the consent
does not provide otherwise, the conveyance, grant or assignment shall
25
contain the following covenant, which shall be binding on the
purchaser and his successors in title.
(2)
The covenant shall be to the effect that, until the end of the period of ten
years beginning with the conveyance, grant or assignment, there will
be no relevant disposal which is not an exempted disposal, unless the
30
prescribed conditions have been satisfied in relation to that or a
previous such disposal.
(3)
In subsection (2) “the prescribed conditions” means such conditions as
are prescribed by regulations under this section at the time when the
conveyance, grant or assignment is made.
35
(4)
The Secretary of State may by regulations prescribe such conditions as
he considers appropriate for and in connection with conferring on—
(a)
a registered social landlord which has made a disposal as
mentioned in subsection (1), or
(b)
such other person as is determined in accordance with the
40
regulations,

a right of first refusal to have a disposal within subsection (5) made to
him for such consideration as is mentioned in section 12B.
(5)
The disposals within this subsection are—
(a)
a reconveyance or conveyance of the house; and
45

Housing Bill
Part 6 — Other provisions about housing
Chapter 2 — Disposals attracting discounts other than under right to buy
125

(b)
a surrender or assignment of the lease.
(6)
Regulations under this section may, in particular, make provision—
(a)
for the purchaser to offer to make such a disposal to such person
or persons as may be prescribed;
(b)
for a prescribed recipient of such an offer to be able either to
5
accept the offer or to nominate some other person as the person
by whom the offer may be accepted;
(c)
for the person who may be so nominated to be either a person
of a prescribed description or a person whom the prescribed
recipient considers, having regard to any prescribed matters, to
10
be a more appropriate person to accept the offer;
(d)
for a prescribed recipient making such a nomination to give a
notification of the nomination to the person nominated, the
purchaser and any other prescribed person;
(e)
for authorising a nominated person to accept the offer and for
15
determining which acceptance is to be effective where the offer
is accepted by more than one person;
(f)
for the period within which the offer may be accepted or within
which any other prescribed step is to be, or may be, taken;
(g)
for the circumstances in which the right of first refusal lapses
20
(whether following the service of a notice to complete or
otherwise) with the result that the purchaser is able to make a
disposal on the open market;
(h)
for the manner in which any offer, acceptance or notification is
to be communicated.
25
(7)
In subsection (6) any reference to the purchaser is a reference to the
purchaser or his successor in title.

Nothing in that subsection affects the generality of subsection (4).
(8)
Regulations under this section—
(a)
may make different provision with respect to different cases or
30
descriptions of case; and
(b)
shall be made by statutory instrument which shall be subject to
annulment in pursuance of a resolution of either House of
Parliament.
(9)
A disposal in breach of the covenant mentioned in subsection (2) shall
35
be void.
(10)
Where there is a relevant disposal which is an exempted disposal by
virtue of section 15(4)(d) or (e) (compulsory disposal or disposal of
yard, garden, &c)—
(a)
the covenant required by this section is not binding on the
40
person to whom the disposal is made or any successor in title of
his, and
(b)
the covenant ceases to apply in relation to the property
disposed of.
12B
Consideration payable for disposal under section 12A
45
(1)
The consideration for a disposal made in respect of a right of first
refusal as mentioned in section 12A(4) shall be such amount as may be
agreed between the parties, or determined by the district valuer, as

Housing Bill
Part 6 — Other provisions about housing
Chapter 2 — Disposals attracting discounts other than under right to buy
126

being the amount which is to be taken to be the value of the house at the
time when the offer is made (as determined in accordance with
regulations under that section).
(2)
That value shall be taken to be the price which, at that time, the interest
to be reconveyed, conveyed, surrendered or assigned would realise if
5
sold on the open market by a willing vendor, on the assumption that
any liability under the covenant required by section 11 (repayment of
discount on early disposal) would be discharged by the vendor.
(3)
If the offer is accepted in accordance with regulations under section
12A, no payment shall be required in pursuance of any such covenant
10
as is mentioned in subsection (2), but the consideration shall be
reduced, subject to subsection (4), by such amount (if any) as, on a
disposal made at the time the offer was made, being a relevant disposal
which is not an exempted disposal, would fall to be paid under that
covenant.
15
(4)
Where there is a charge on the house having priority over the charge to
secure payment of the sum due under the covenant mentioned in
subsection (2), the consideration shall not be reduced under subsection
(3) below the amount necessary to discharge the outstanding sum
secured by the first-mentioned charge at the date of the offer (as
20
determined in accordance with regulations under section 12A).”
(2)
In section 13(1) of the Housing Act 1996 (c. 52) (restriction on disposal of
houses in National Parks, &c), after “restriction on assignment)” insert “or a
covenant as mentioned in section 12A(2) of this Act (right of first refusal for
registered social landlord)”.
25
(3)
The amendments made by this section do not apply in relation to a disposal
under section 8 of that Act if—
(a)
the purchaser has accepted an offer for the disposal of the house from
the landlord, or
(b)
the landlord has accepted an offer for the disposal of the house from the
30
purchaser,

before the day on which this section comes into force.
174
Deferred resale agreements
(1)
After section 15 of the Housing Act 1996 insert—
“15A Treatment of deferred resale agreements for purposes of section 11
35
(1)
If a purchaser or his successor in title enters into an agreement within
subsection (3), any liability arising under the covenant required by
section 11 shall be determined as if a relevant disposal which is not an
exempted disposal had occurred at the appropriate time.
(2)
In subsection (1) “the appropriate time” means—
40
(a)
the time when the agreement is entered into, or
(b)
if it was made before the beginning of the discount repayment
period, immediately after the beginning of that period.
(3)
An agreement is within this subsection if it is an agreement between the
purchaser or his successor in title and any other person—
45

Housing Bill
Part 6 — Other provisions about housing
Chapter 2 — Disposals attracting discounts other than under right to buy
127

(a)
which is made (expressly or impliedly) in contemplation of, or
in connection with, a disposal to be made, or made, by virtue of
section 8,
(b)
which is made before the end of the discount repayment period,
and
5
(c)
under which a relevant disposal which is not an exempted
disposal is or may be required to be made to any person after
the end of that period.
(4)
Such an agreement is within subsection (3)—
(a)
whether or not the date on which the relevant disposal is to take
10
place is specified in the agreement, and
(b)
whether or not any requirement to make that disposal is or may
be made subject to the fulfilment of any condition.
(5)
The Secretary of State may by order provide—
(a)
for subsection (1) to apply to agreements of any description
15
specified in the order in addition to those within subsection (3);
(b)
for subsection (1) not to apply to agreements of any description
so specified to which it would otherwise apply.
(6)
An order under subsection (5)—
(a)
may make different provision with respect to different cases or
20
descriptions of case; and
(b)
shall be made by statutory instrument which shall be subject to
annulment in pursuance of a resolution of either House of
Parliament.
(7)
In this section—
25

“agreement” includes arrangement;

“the discount repayment period” means the period of three or five
years that applies for the purposes of section 11(2) (depending
on whether an offer such as is mentioned in section 172(3) of the
Housing Act 2004 was made before or on or after the coming
30
into force of that section).”
(2)
The amendment made by this section does not apply in relation to any
agreement or arrangement made before the day on which this section comes
into force.
Disposals by housing action trusts
35
175
Repayment of discount: periods and amounts payable
(1)
Schedule 11 to the Housing Act 1988 (c. 50) (provisions applicable to certain
disposals of houses) is amended as follows.
(2)
In paragraph 1(2) for the words from “to pay to the housing action trust” to the
end of the sub-paragraph substitute “to the following effect.”
40
(3)
After paragraph 1(2) insert—
     “(3)
The covenant shall be to pay to the housing action trust such sum (if
any) as the trust may demand in accordance with sub-paragraph (4)
on the occasion of the first relevant disposal (other than an exempted