Voluntary Right to Buy (Midlands Pilot) Policy 1. Policy Statement Clarion Housing Group Ltd (Clarion Housing) has joined over 50 other housing associations to work in partnership with the Ministry for Housing, Communities and Local Government (MHCLG) and the National Housing Federation (NHF) to take part in the Midlands Voluntary Right to Buy (VRtB) pilot. The Voluntary Right to Buy pilot extends the opportunity to buy with Right to Buy discounts to eligible housing association tenants. The pilot does not match the existing Right to Buy arrangements exactly. Individual housing association policies will detail their offers reflecting the local policy arrangements for excluded properties and the options for porting discount to an alternative property. 2. Scope 2.1. This policy applies to tenants living in the Midlands local authority areas that are eligible to apply to buy their home under the terms of the VRtB pilot; see Appendix 1. 2.2. Tenants with a statutory Preserved Right to Buy (PRtB) will not be eligible to apply to buy their home under the terms of this VRtB pilot. However, eligible tenants with a Right to Acquire may choose to make an application under the VRtB pilot as the VRtB currently offers a greater discount. 3. Policy Aims and Objectives 3.1. This policy sets out Clarion Housing s VRtB Midlands pilot offer, ensuring compliance with the guidance issued by MHCLG, NHF and the Regulator of Social Housing ( the Regulator ) and, Homes England. 3.2. This policy provides tenants with information to understand if they are eligible to apply to buy their home under the VRtB, the purchase process, timescales, the level of discounts available and what will happen if their home is exempt from the pilot or excluded under Clarion Housing s local policy. 4. Roles and Responsibilities 4.1. The Right to Buy Team will be responsible for processing applications in line with this policy and for reviewing the policy to address legislative, regulatory, best practice or operational issues. They will be assisted by other specialist Clarion Housing teams as required. August 2018 Page 1 of 9
5. Clarion Housing s Voluntary Right to Buy Pilot Offer 5.1. Applications 5.1.1. Before applying to Clarion Housing, tenants must register through the Government s digital gateway and receive their Unique Reference Number (URN).The pilot will run with a set level of funding for each of the two years. When the available funding has been allocated for that year, the gateway will close and tenants will need to wait till it reopens to apply for their URN. 5.1.2. Applications to Clarion Housing will only be accepted when made using the Clarion Housing application form and where the tenant has received and included their URN. On receiving an application, Clarion Housing will assess eligibility and check the property against the local policy exclusions. 5.2. Eligibility 5.2.1. To be eligible to apply to buy under the VRtB pilot scheme, tenants must meet all the criteria set out in the MHCLG guidance, which is included in Appendix 1. This includes a requirement for tenants to have a clear rent account, hold an eligible tenancy and provide evidence to support the following: They have been a tenant of social or affordable housing for at least 3 years (this does not have to be with the same landlord or continuous) Currently hold a un-demoted secure tenancy, assured tenancy or Localism Act fixed term tenancy Can demonstrate the property is their main home and they have resided in it for at least the last 12 months Where applying jointly with up to 3 family members, all applicants must demonstrate this is their main home and has been for at least the last 12 months. No applicant can be added to or removed from the application during the process without voiding the application All applicants must have the right to reside in the UK and can demonstrate they meet the immigration status checks 5.2.2. If evidence is not provided to satisfy all the criteria in the MHCLG guidance, the application will be rejected and tenants will be informed in writing. Tenants wishing to make a further application will need to obtain a new URN from MHCLG. 5.2.3. Joint applications where any applicant is ineligible will be rejected. 5.3. Properties not included in the pilot and local exclusions 5.3.1. There are some types of properties not included in the VRtB pilot, these include: Sheltered Homes properties for older people, usually over the age of 55 years and / or people with a disability Supported or Specialist Homes properties which offer support or facilities to meet a particular need 5.3.2. Where an application is received from tenants living in a property not part of the VRtB pilot as defined by MHCLG, the application will be rejected and the reason will be confirmed in writing. 5.3.3. In addition, Clarion Housing has excluded the following properties from the pilot as part of its local policy and as agreed by the Clarion Housing Group Board: Properties provided through charitable or public-benefit resources or bequeathed for charitable or public-benefit purposes, and in the possession of the housing association before it became registered under the Housing Act 1974 (or later equivalent legislation) August 2018 Page 2 of 9
Properties where Clarion Housing does not have sufficient legal interest to be able to grant a lease exceeding 50 years for a flat Houses where Clarion Housing does not have sufficient interest to sell as freehold Properties occupied in connection with tenants employment Properties where Clarion Housing is not able to sell due to planning restrictions (for example Section 106 agreements), restrictive covenants, nominations agreements or for any other legal or regulatory reason Properties that Clarion Housing has plans to demolish or redevelop including properties pending appraisal, properties of unusual construction and / or impaired ground conditions, or near to such properties and would affect Clarion Housing s ability to redevelop or access the estate Properties with a high debt burden, where the value of the property is lower than the combined cost of Clarion Housing buying, repairing or improving it Properties which Clarion Housing is in discussion with another registered provider for a potential stock transfer 5.3.4. This is not an exhaustive list. In exceptional circumstances Clarion Housing may use their discretion to approve or refuse exclusions. 5.3.5. Where Clarion Housing has excluded a property under its local policy, the reason will be confirmed in writing and the tenant will be given the opportunity to purchase an alternative property, see section 5.9 Buying an Alternative Property (Portability). 5.4. Timescales 5.4.1. Applications will only be accepted where submitted on Clarion Housing s application form and include the VRtB pilot Unique Reference Number (URN) provided by MHCLG. Applicants can download the form from Clarion Housing s website and have four weeks to complete and submit. Clarion Housing aims to process accepted applications as follows: Carry out eligibility and property checks within 8 weeks Request administration fee at conclusion of eligibility and property checks, payable within 4 weeks of request Allow tenants up to 12 weeks to identify a suitable alternative property where they are not able to buy their current home Commission valuation of the property and issue a formal offer including discount within 12 weeks of the valuation, subject to receiving permission to proceed from Homes England Allow tenants 4 weeks to accept formal offer 5.4.2. The pilot expects that from acceptance of offer, the sale will complete within 12 weeks. 5.4.3. These timescales are for guidance; where Clarion Housing is unable to meet the timescales above the tenant will be advised and provided with anticipated revised timescales. 5.5. Application Fee 5.5.1. An application fee of 250 is payable by the tenant(s) within four weeks of request once preliminary eligibility and property checks have been carried out. If the fee is not received when requested, the application will be cancelled. The fee is refundable under the following circumstances: The application does not proceed because the tenant is not eligible The application does not proceed because the property is exempt and the tenant does not wish to buy an alternative At the completion of the purchase 5.5.2. The fee will not be refundable if the tenant is found to be ineligible due to false August 2018 Page 3 of 9
information or fraud; or if the tenant decides not to proceed. 5.6. Repairs and Maintenance 5.6.1. On receipt of an application, no further repairs or maintenance will be carried out to the property other than emergency, urgent works or safety compliance checks such as gas or electrical certificates. 5.6.2. Where a tenant cannot buy their current home but is going to port their discount to an alternative property, this restriction will be removed. 5.7. Discount 5.7.1. The VRtB provides eligible tenants with a discount off the open market value of their property. The amount of discount is dependent on the length of time spent as a qualifying public sector tenant. 5.7.2. For each complete year of confirmed qualifying tenancy, the tenant is entitled to receive a discount based on a percentage of the open market value of the property. The total periods of qualifying tenancy are added together and the discount is calculated on the total years, up to a maximum of 70% or 80,900 (or as amended by MHCLG). The monetary value of this percentage is deducted from the market value of the property. Property type Discount for Discount for each Maximum discount first 5 years additional year Freehold 35% 1% Whichever is lower: 70% or 80,900 Leasehold 50% 2% Whichever is lower: 70% or 80,900 5.7.3. If a tenant has previously received funding under the Right to Buy, Preserved Right to Buy or Right to Acquire, the discount will be reduced by that amount previously received. 5.8. Valuation 5.8.1. The open market valuation of the property will be provided by a Royal Institute of Chartered Surveyors (RICS) certified surveyor. 5.8.2. A list of RICS certified surveyors will be provided for the tenant to select from; Clarion Housing will instruct the surveyor to undertake the valuation, meeting the cost of this first valuation. 5.8.3. If the tenant disputes the valuation, they can pick a second surveyor from the list but will have to meet all costs of the second valuation. The result of a second valuation will be binding on both parties and there will be no recourse to the District Valuer or any other valuations. 5.9. Buying an Alternative Property (Portability) 5.9.1. One of the principles being tested during this Voluntary Right to Buy pilot is the ability for tenants to move, or port, their discount to another property when their current home is not available to purchase. 5.9.2. Housing associations are testing different options. Clarion Housing is testing the offer to port the discount to a property in its private sale pipeline. See Portability Policy for full details. 5.9.3. The opportunity to port the discount does not apply where a property is not part of the pilot as defined by MHCLG. August 2018 Page 4 of 9
5.10. Prevention of Fraud 5.10.1. Clarion Housing is required to ensure that only eligible tenants are able to use the VRtB pilot scheme. Clarion Housing is also committed to preventing fraud. Clarion Housing will therefore take all reasonable steps to check the validity of applications. This will include: Seeking proof of identity to confirm the applicant is the legal tenant and checking residency at the tenancy address Checking that the money to purchase the property is the tenants own, or from an approved source Investigating additional addresses linked to applications Checking that the applicant/s are residing in the property as their only / principal home and that the property is not sublet 5.10.2. An application may be suspended where fraud or a breach of regulations such as Money Laundering or Facilitation of Tax Evasion Offences (Guidance about Prevention) is suspected. Clarion Housing reserves the right to refuse a VRtB sale if any checks are not satisfactorily passed. 5.11. Home Ownership Information 5.11.1. Clarion Housing will provide general purchasing information to applicants relating to the costs of purchasing a property, including fees for mortgage arrangement, valuation, legal / conveyance services, building survey, searches, land registration and any applicable Stamp Duty Land Tax. 5.11.2. Applicants will be encouraged to seek independent legal and financial advice to understand mortgage options and the legal process of buying. 5.11.3. Owning a home comes with responsibilities such as arranging and paying for repairs. Tenants may also be required to pay a service charge. Tenants will be encouraged to use the Government s Right to Buy Agent Service to discuss the additional responsibilities they take on when purchasing their home. 5.11.4. As part of the sales process Clarion Housing will provide tenants with information relating to any payable service charge and ground rent. 5.11.5. Clarion Housing will also outline costs that may be incurred in the first year in relation to planned or major works which the tenant will be liable to pay for; this usually only applies to leasehold properties. 5.12. Post Sale Conditions 5.12.1. If the tenant decides to sell their property within the first ten years after purchase they must offer it to Clarion Housing first before advertising on the open market. 5.12.2. If the tenant sublets or sells the property within the first five years after purchase, they will have to repay all or some of the discount. In the first year the entire discount is repayable, the amount decreases from year two to five. The discount is calculated as a percentage of the resale value. 5.12.3. The tenant will also be required to repay the discount if they breach any of the terms or sale, or if they are found to have made a fraudulent application or committed fraud. 5.13. Complaints 5.13.1. Any complaints will be managed through Clarion Housing s Complaints Policy. 5.14. Early Termination of Pilot 5.14.1. Should the government remove funding or close the pilot early, Clarion Housing reserves the right to cancel any applications where exchange of contracts has not taken place. August 2018 Page 5 of 9
6. Compliance 6.1. Clarion Housing will comply with the requirements set out in: MHCLG s Guidance document: Voluntary Right to Buy Midlands Pilot Homes England Capital Funding Guide Any relevant Clarion Housing policies such as the Data Protection Policy 6.2. This policy may be amended at any time in response to a change required by MHCLG, The Regulator of Social Housing, Homes England or Clarion Housing s Group Board. August 2018 Page 6 of 9
Appendix 1 Local Authority Areas included in the Midlands (East & West) Voluntary Right to Buy Pilot East Midlands Amber Valley Ashfield Bassetlaw Blaby Bolsover Boston Broxtowe Charnwood Chesterfield Corby Daventry Derbyshire Dales East Lindsey East Northamptonshire Erewash Gedling Harborough High Peak Hinckley and Bosworth Kettering Lincoln Mansfield Melton Newark and Sherwood North East Derbyshire North Kesteven North West Leicestershire Northampton Oadby and Wigston Rushcliffe South Derbyshire South Holland South Kesteven South Northamptonshire Wellingborough West Lindsey Derby UA Leicester UA Nottingham UA West Midlands Birmingham Bromsgrove Cannock Chase Coventry Dudley East Staffordshire Lichfield Malvern Hills Newcastle-under-Lyme North Warwickshire Nuneaton and Bedworth Redditch Rugby Sandwell Solihull South Staffordshire Stafford Staffordshire Moorlands Stratford-on-Avon Tamworth Walsall Warwick Wolverhampton Worcester Wychavon Wyre Forest Herefordshire, County of UA Shropshire UA Stoke-on-Trent UA Telford and Wrekin UA August 2018 Page 7 of 9
Appendix 2 Eligibility Criteria as set out in the Ministry of Housing, Communities and Local Government Guidance Tenants are eligible if: they can prove they have been a tenant of social or affordable housing for at least 3 years (this need not have been with the same landlord, or continuous); and they currently hold an un-demoted secure tenancy, an assured tenancy 1, or a Localism Act fixed term tenancy 2 ; and they can demonstrate that the property is their main home and they have resided in it for at least the last 12 months; and if they are applying jointly with up to 3 family members, these applicants can also demonstrate that it is their main home and it has been their residence for at least the last 12 months. No joint applicant 3 can be added to or removed from the application during the process without voiding the application, requiring a reapplication by the tenant(s). Joint applications where any applicant is ineligible will be voided; and they, and any joint applicants, have the right to reside in the UK, and can demonstrate that they meet the immigration status checks. Qualifying period The qualifying period, and the period on which the discount is calculated, can include: o non-consecutive periods as public sector tenants; o all undemoted secure or assured tenancies; o fixed term assured short hold tenancies as long as they don t apply to the property being purchased; o any probationary periods as long as they have been completed or do not apply to the property being purchased; o any period spent as a public sector licensee (e.g. alms house; MOD tenant) even though they cannot buy such properties under the scheme. The qualifying period, and the period on which the discount is calculated, cannot include time spent as a non-tenant adult in a parental home. The onus is on the applicant to demonstrate that they qualify for the whole eligibility period being claimed. In exceptional circumstances, tenants can make a statutory declaration, but this would need to be supported by some indirect evidence (e.g. that the public sector landlord owned the relevant property for the period in question). 1 The following categories of assured tenants are not eligible: Assured shorthold periodic tenants (although time spent holding such a tenancy may count towards the 3-year qualifying period); Assured shorthold fixed-term tenants where the original term is less than two years (although time spent holding such a tenancy may count towards the 3 year qualifying period); Assured fixed-term tenants where the original term is 21 years or more; Assured tenants in shared housing. 2 A Localism Act fixed term tenancy is a fixed term assured shorthold tenancy granted by a housing association, in line with Part 7 Localism Act 2011 and the Regulator of Social Housing s Tenancy Standard, for a fixed term of at least 2 years (and usually 5 years) 3 Joint tenants can apply. This text applies to joint applicants. August 2018 Page 8 of 9
Tenants are not eligible if: they have Preserved Right to Buy or statutory Right to Buy; at the time of application, they hold an assured short hold tenancy (other than a Localism Act fixed term tenancy), a contractual (non-assured, non-secure) tenancy or are a licensee; they have a fixed term tenancy of less than 2 years, or if they have a periodic assured shorthold tenancy (including a starter tenancy which has not converted); they do not have the right to reside in the UK, and cannot demonstrate that they meet the immigration status checks they are currently subject to the mortgage rescue scheme. They will become eligible if they move to a new property or are granted a new tenancy; they are residents of almshouses or co-operative housing associations; they have any rent arrears; they or any joint applicants are subject to bankruptcy proceedings or unfulfilled credit arrangements; they have committed anti-social behaviour as defined in the Paragraph 11 of Schedule 11 to the Anti-Social Behaviour, Crime and Policing Act 2014 and the housing association has initiated legal proceedings as a result of this. Tenants would become eligible if such legal proceedings were withdrawn or discontinued; they are currently subject to legal proceedings, e.g. injunction proceedings have been issued or a notice of seeking possession (NOSP) has been served. Tenants would become eligible if such legal proceedings were withdrawn or discontinued, or if the landlord failed to send papers to the court for issue within 6 months of expiry of the NOSP, or the landlord loses the case in court (including following any appeal); they are subject to legal proceedings at any point between application and completion. Tenants would become eligible if such legal proceedings were withdrawn or discontinued; they already own a property at the point of application; and will not end their ownership on or before the completion of the Voluntary Right to Buy; they hold an assured fixed term tenancy where the original term was 21 years or more (i.e. a long term tenancy); they occupy only a room, or rooms, in a shared house or flat, even if the terms of the occupancy amount to an assured tenancy; they are a shared ownership tenant. August 2018 Page 9 of 9