Disposal of Housing Association Property

Section 7 of the Housing (Amendment) Act (NI) 2020 provides for the abolition of the right to buy scheme for Registered Housing Associations. This is subject to a transitional period of 2 years from 28 August 2020 which allows time for eligible tenants to be aware of the closure and exercise their right within that timeframe.

• Ending of house sales scheme for tenants of registered housing associations

From 28 August 2020, Registered Housing Associations are no longer required to request consent from the Department for disposals of land or dwellings, however Associations are required to notify the Department within 28 days of a disposal. Please take action per Appendix B of the Housing Regulation Advice Note – Notifiable Events

• Housing Regulation advice notes

Sales to Tenants (including Equity Sharing)

The Department have the power to draw up a House Sales Sheme for housing associations to offer for sale or lease to their secure tenants the dwelling houses occupied by those tenants

Introduction

The Housing (Northern Ireland) Order 2003 includes provisions which give the Department the power to draw up a House Sales Sheme for housing associations to offer for sale (including equity sharing) or lease to their secure tenants the dwelling houses occupied by those tenants. It also places a statutory obligation on housing associations to operate the sales scheme.

The statutory House Sales Scheme (‘Scheme for the Sale of Dwelling-Houses by Registered Housing Associations’) came into effect on 11 October 2004. The Scheme sets out clearly the provisions which apply and this guidance is intended to supplement the scheme by providing some additional clarification on issues where there may be scope for ambiguity.

An extension to the House Sales Scheme to include equity sharing was introduced in January 2009 for those tenants who wish to buy their homes but are unable to afford the full cost. The extension allows tenants to buy part of their home in conjunction with their landlord. For the part of the dwelling that is still retained by the landlord a rent will be payable.

General

Eligibility to purchase

The Scheme sets out the category of tenants who are permitted to purchase and the type of dwellings which are eligible to be purchased. Tenants wishing to purchase must have a minimum of 5 years as a secure tenant. For the purposes of the Scheme, time spent as an introductory tenant will be taken into account. Squatters and those under investigation as regards anti-social behaviour are exempted. Tenants who are in rent arrears will not be excluded on these grounds but their application will be allowed to proceed to completion stage. However no sale will be completed until all arrears, whether rent or any other payment due from them as a secure tenant, have been paid. For the purposes of the Scheme rent arrears are defined as two weeks or more for non-payment of rent or rates, heating charge (if any) or any other rent account debit.

Exemptions

In recognition of the fact that housing associations have a wide variety of sheltered accommodation properties the House Sales Scheme includes a more general exemption for group housing schemes for persons with special needs, than that contained in the NIHE scheme. To qualify for this exemption, any individual house must be part of a group of houses which have been designed for persons with special needs where either:

• the houses are provided with, or situated near, special facilities for use by their tenants; and/or
• the tenants of the houses are provided with housing support services, that is services which provide support, assistance, advice or counselling to an individual with particular needs which are necessary for them to live independently in their house.

The practical effect of this is to exempt all group housing schemes for persons with particular needs including, but going beyond simply sheltered housing. The Department considers that houses in group housing schemes do not necessarily need to be physically contiguous providing the other tests are met. However, the houses in question would need to have facilities and services which go beyond the inclusion of a simple call system to qualify for the exemption.

All bungalows with 2 bedrooms or less are exempted from the House Sales Scheme.

Applications to purchase

Those wishing to purchase their homes should apply in writing to the Association. The Association, in considering the application, will make the necessary checks to ensure that the tenant is eligible to purchase. The tenant will be notified of the purchase price within 12 weeks of making the application.

For more information see Calculation of Discount below.

Purchase price

The Scheme states that the purchase price shall be the market value less any available discount (see also final paragraph in this section). Market value must be assessed by a suitably qualified professional valuer as at the date of the application to purchase. The valuation will take into account, and make appropriate deductions for, any improvements carried out by the tenant.

Tenants applying to purchase their homes are responsible for the payment of the valuation fee and, if applicable, the reassessment fee. On completion of the sale of the property, the association will reimburse to the tenant the fee for the valuation and, if applicable, the fee for the reassessment. Associations can reclaim, as an Allowable Cost, the fee for the valuation and any reassessment associated with the completed (see section on Allowable Costs below).

The applicant should be given 6 weeks to confirm that they wish to purchase the property. If they are not satisfied with the valuation they can request a reassessment by the District Valuer. Any request for a reassessment should be made within 4 weeks of an offer being made. The District Valuer’s re-determination is binding on both parties.

Market Valuation for all valued properties is only valid for six months after the date of the letter which has been issued by the valuing agent. If the sale has not been progressed within this time period then a new valuation will be required, with all calculations being based on the new valuation. Where there is a new valuation Associations should seek new consent in principle.

Calculation of discount

The Scheme sets out the methodology for calculating discount. Initial discount is 20% of the market value and this increases by 2% for each additional completed year of tenancy to a maximum of 60% or £24,000 whichever is lower. The discount should not, however, reduce the price below the historic cost. Historic cost is the amount of money spent by the Association in providing, improving or acquiring the dwelling in the year the tenant applied to buy as well as in the previous 10 financial years. If the market value price before discount is below the historic cost figure there shall be no discount and the purchase price shall be the market value price. For details as to how to calculate historic cost see Departmental Procedures below.

Associations should not assume that tenancies with a registered housing association in England, Scotland or Wales can be included for discount purposes. Account must be taken of the important distinction between registered housing associations in Great Britain which have charitable status and those which have non-charitable status. The tenant will be required to provide sufficient proof of having lived at a particular property, for example, old rent books, phone, electricity or gas bills which bear the name and address of the applicant.

Conditions on resale

The Scheme sets out the arrangements for repayment of discount in the event of a resale and the buy-back option for housing associations. Tenants must pay back the entire discount should they sell within 5 years of purchase and associations shall place any discount received in the Disposals Proceeds Fund. Should a tenant decide to sell within 10 years then the property must be offered to the original landlord. Associations must ensure that leases and other relevant documents allow for these conditions of purchase. Where an association does not wish to repurchase a property, but there is an acknowledged housing need, that association should engage with other housing associations to determine whether they may wish to purchase the property. This exercise should be completed expeditiously in order to ensure that the process does not unduly delay the sale of the property.

Objective Timescales for House Sales Process

The Department expects housing associations to process all applications to purchase within a reasonable timeframe. The following timetable is indicative of what is required:

• Application to offer
  12 weeks
• Tenant acceptance period
  4 weeks / 1 month to reply
  (1 month to request re-determination of market value if disputed)
• Acceptance of offer to issue of contract
  8 weeks
• Tenant acceptance of contract
  8 weeks to return

Departmental Procedures

Calculation of historic cost

Historic Cost is calculated by totalling all the costs that have been expended on the property which is being applied for under the House Sales Scheme. In determining the historic cost, account must be made of the provision and acquisition costs associated with the property i.e. the total costs incurred to build the particular property, or alternatively, the total costs incurred to purchase and make the property habitable for tenants. These should be calculated as one joint figure. Total costs are based on the Total Qualifying Costs and Non Qualifying Costs of the Scheme as a whole. These amounts should be based on the initial scheme application forms detailing Qualifying Costs.

Costs pertaining to the provision of a property are only relevant if the property was built or purchased and made habitable, or substantially improved with the practical completion date being within the past 10 years. These overall scheme costs should be apportioned based on the Initial NAV of the individual property as a percentage of the Total Initial NAV of the scheme or, for schemes completed after 1 April 2007, the Capital Valuation of the property as a percentage of the Total Capital Valuation of the scheme. NAV/Capital values should be based on the Initial NAV/Capital Valuation of the property and scheme respectively when it was built or purchased. This is to ensure an accurate percentage can always be recorded against each scheme and will save time in compiling the current overall scheme costs.

Examples

Net Annual Valuation (properties completed on or before 31 March 2007)
Initial NAV of Property - £80
Initial NAV of Scheme - £2500
Total Cost of Scheme - £1,200,000
(Qualifying and Non Qualifying costs)

80/2500 x 1,200,000 = £38,400 Provision and Acquisition Historic Cost

Capital Valuation (properties completed on or after 1 April 2007)
Initial CapValuation of property - £110,000
Initial Cap Valuation of scheme - £3,437,500
Total Cost of Scheme - £4,200,000
(Qualifying and Non Qualifying Costs)

110,000/3,437,500 x 4,200,000 = £134,400 Provision and Acquisition Historic Cost

Improvements and adaptations

As the term suggests, only development and enhancements to any properties should be considered when calculating historic cost. A list of improvements, which is not exhaustive, that might be considered include:

• adaptations
• installation of heating systems
• upgrading of windows to double glazing

Only improvements which have been made to the property during the previous 10 years should be considered as a cost eg. Small Adaptation Grants payments (excluding all On-Costs) and improvements made at the private expense of the association. All such costs should be totalled to give an overall subtotal for Historical Improvement Costs.

Figures relating to maintenance costs should not be included within this figure as maintenance refers to the upkeep of the property and is not, therefore, an improvement.

Costs associated with improvements made to a number of properties at the one time can be averaged to calculate an estimated cost for the property being purchased.

Example:

A contractor is installing Double Glazing within 20 houses and has charged a total of £108,000. An average costing for the property in question should be calculated by simply dividing the total by the number of units being modified i.e. £108,000/20 = £5400

Verifiable calculations

Once figures have been calculated for both areas of Historic Cost – Provision/Acquisition and Improvements they should be totalled to give a final Historic Cost figure.

The House Sales Scheme makes it clear that all calculations must be completed in a manner which is verifiable. The methodology and calculations will be subject to scrutiny by Housing Division’s Governance and Inspection Unit at a future date to ensure compliance with the above guidelines. Any unsupported figures may result in further audit work being carried out to ensure suitable evidence is maintained.

See Historic Cost Calculation Worked Examples for more information.

Allowable Costs

Associations can claim allowable costs which are deducted from the overall VPG figure to create a net surplus. The expenses which constitute Allowable Costs are as follows:

• valuation fees
• legal fees
• survey fees (sale of flats only)
• VPG administrative allowance

Valuation Fees, Legal Fees and Survey Fees must be accompanied by an invoice. Fees which are listed as allowable expenses and which are not accompanied by an invoice will not be considered as an allowable cost.

Disposals Proceeds Fund

Associations must transfer the net surplus on sales together with the VPG received to a "ring fenced" account (Disposals Proceeds Fund).
For further information:

Finance Guide - Disposals Proceeds Fund
Scheme Approval Guide - Foreword

Sales to Tenants - Equity Sharing Guidance

Tenants of social housing may choose to buy part of the dwelling if the cost of buying the dwelling in full is not financially feasible.

Introduction

Within the House Sales Schemes for tenants of social housing an equity sharing option has been introduced from 31 January 2009. This means that for all new applications and those not approved at that time a tenant may choose to buy part of the dwelling if the cost of buying the dwelling in full is not financially feasible.

The tenant, in exercising the option to buy and more particularly the equity sharing element, should take into account the need for additional expenditure recurring as a homeowner such as household insurance, service charges if applicable, rates, any water charges and possibly for repairs and maintenance as well as the costs associated with purchasing the dwelling and subsequent staircasing. These are discussed in more detail in paragraph seven below. For equity sharing there will be an ongoing rental payment as well as the mortgage repayments to be budgeted for and, when buying further equity, valuation and legal fees will recur.

The equity sharing option is not a separate scheme but is an integral part of the House Sales process. Consequently all applications to purchase dwellings including exercising the option to buy part of the house for the first time are subject to the same rules regarding the sale of a dwelling under the terms of the respective House Sales Scheme applicable to Housing Executive and Housing Association tenants.

The purpose of this guidance is therefore to set out the process for using equity sharing and explain any consequential differences in the appropriate sections of the main policy. The guidance is intended for landlords and tenants and should be put on the landlord’s website. Landlords may wish to develop further specific guidance for their own staff. A copy of this guidance will be placed on the Department’s website. Any tenants who do not have access to Internet facilities should be given a paper copy particularly when they first enquire about using the equity sharing option.

For clarity it should be noted that the current rules particularly those relating to eligibility, restriction on sale of property types, historic cost, disposal, repayment of discount and offering back the house to the landlord continue to apply including time scales.

In this guidance the following definitions are used:

• owners(s) are those who buy their dwellings outright
• leaseholder(s) are those who have purchased equity in the dwelling
• tenant(s) are those who have not finalised purchasing the initial application to buy their dwelling
• landlord(s) are either the Housing Executive or a Registered Housing Association

Initial Equity Purchase

Where a tenant makes an application to buy the working assumption will be that it is to buy the full equity. The equity sharing amendment is not intended to allow tenants to buy houses more cheaply than they can reasonably afford. It is intended to allow the tenant to buy as much of the dwelling that they can reasonably afford. However where the tenant wants to buy part of the dwelling independent financial advice should be provided to show that buying the full equity is not financially possible at this time and showing the maximum equity that the tenant could afford.

The minimum amount of equity that can be purchased is 25%. Unless there are exceptional circumstances to do so the next higher share should be in steps of five percent. For example where a tenant can only raise enough money to buy at 27% then this should be allowed. For additional purchases the five percent steps would apply with the final purchase making up the outstanding difference. This option should be used sparingly. The independent financial advice can be a copy of the details on which the tenant’s mortgage application has been approved or it may a formal statement from an accredited financial advisor – this may require payment of a fee if provided instead on the mortgage approval. Both should be supported by the approval letter from the lender setting out the terms of the mortgage.

In the case of joint purchasers, where one or more family members join with the tenant in purchasing the dwelling, the joint finances will need to be taken into account in determining the level of equity that can be afforded.

If the tenant cannot produce such evidence the application should not proceed. The relevant schemes set out the circumstances in which an application to buy can be refused. Failure to provide the evidence requested will simply stop the process until such evidence is produced.

The landlord is neither able to provide financial advice or recommend a particular accredited financial advisor. It is the tenant’s responsibility to ensure that independent financial advice is obtained as equity sharing and in particular the minimum levels may not be the most appropriate nor cost effective method for them to use.

The use of the 25% level may help a tenant who needs to buy now at the reduced level but who has firm prospects to be able to buy a larger equity within a reasonable time. To help in the decision making process it may be useful if the tenant could provide a projection of income and staircasing timeline with percentages included as part of the application process. The lack of such a forecast will not be barrier to accepting or approving an application to buy on a shared equity basis.

While landlords cannot give financial advice several examples with appropriate costs should be set out showing in general terms the likely costs for different levels of equity and staircasing. It should be made clear that these are for illustrative purposes only. This could include an indication of associated issues that would attract fees and show current fees as a potential indicator of the additional costs that need to be factored into the tenant’s decision to proceed with the equity sharing option.

Discount

Award

Discount will be based upon the proportion of equity initially bought and will be subject to the maximum discount available to the tenant or the scheme maximum whichever is the lesser. The discount and will be payable as follows:
- Under House Sales and Equity Sharing the scheme maximum discount a tenant can receive is £24,000.
- Discount will be payable each time equity is purchased.

In order to encourage people on to the home ownership ladder, a more generous discount rate will apply to the first 50% of the property purchased. On the purchase of between one quarter and one half of the home, a person will be entitled to between 35% and 70% of the maximum available discount. On the purchase of more than half of the home, the remaining discount (totalling 30% of the original total) will be made available. An example is set out below. Details of the maximum available discount are:

- Example: A person who is entitled to the scheme maximum discount (£24,000) purchases 25% of their home will be allowed 35% of the total discount, which will total £8,400 or a lesser amount if the tenant has not reached the scheme maximum. They subsequently decide to increase their total share to 55%. They will therefore be entitled to receive 73% of the total discount (£17,520). However, as they have already received 35%, they will receive the remaining 38% discount (73% -35%) which will amount to £9,120 ( £17,520 [73%] - £8,400 [35%] ).
- Where equity is not bought in multiples of five, discount should be applied on the basis of the nearest amount of equity that is a multiple of five. For example if 31% of equity is bought discount will be 42% of the amount applicable to 30% equity. Similarly if 34% of equity is bought discount will be 49% of the amount applicable to 35% equity.
- There may be some cases where the full value of the dwelling is low and together with the full scheme discount it may be more cost effective for the tenant to buy the full equity. In such cases the tenant should be encouraged to buy the full equity. Where the tenant continues to opt for equity sharing it is essential that the assessment of the tenant’s finances is extremely robust to ensure that (a) the tenant can only afford the percentage sought and (b) that there are no negative implications for continued ability to make payments and buy further equity.

Repayment

The existing rules on repayment apply although the date from which the five year period for repayment will start from the date the each portion of discount is paid. For example the initial equity purchased is 50% and the initial discount of £12,000 is paid. After three years an extra 50% equity is purchased and a further discount of £12,000 is paid. After a further three years the leaseholder sells all the equity. The second discount of £12,000 would have to be repaid as it falls within the five year period from the date the second portion of discount is paid.

Additional Discount

Discount is accrued as a tenant and not as leaseholder. A tenant who purchases with the scheme maximum discount entitlement of £24,000 cannot accrue additional discount entitlement after purchasing the initial equity. Similarly if the tenant purchases the dwelling at the maximum level that they have earned which is less than the scheme maximum further discount cannot be accrued to increase the discount to level to the maximum discount of the scheme.

Discount on low cost dwellings

Discount will apply to such dwellings in the normal way. However given the low value of such dwellings there are implications for equity sharing as described at the end of Award paragraph above.

Rent, Rates and Service Charges

Rent

The rent payable by the leaseholder will be reduced by an amount for maintenance and will be calculated on the basis of the level of equity retained by the landlord. For example the initial equity purchased is 25%, the equity rent will be based upon the 75% equity retained by the landlord. Depending on the leaseholder’s circumstances, Housing Benefit may be available for the equity sharing rent. The Housing Executive will continue to responsible for assessing entitlement on this rental element. As the leaseholder is now the owner of the property the Housing Benefit calculation will only apply to the rental element. Housing Benefit for the rate element is described in Rates paragraph below.

The amount awarded for maintenance to be deducted from the rent will be set at the initial equity purchase stage and will remain the same throughout the period that the leaseholder is liable for rent.

The leaseholder’s rent will increase annually in accordance with the landlord’s Rent Scheme.

Rates

The leaseholder will be responsible for the full rates as assessed annually by the Rate Collection Agency and will pay their rates separately to that Agency as the landlord will not be collecting and paying rates on their behalf. Sharing responsibility for rates will not be feasible as the purchase of the dwelling in whole or in part takes it out of the social housing category. This follows the procedure for dwellings bought under the Co-ownership Scheme. Depending on the leaseholder’s circumstances Housing Benefit may be available for the rates element. Advice on entitlement can be obtained from the Rate Collection Agency.

Service charges

In the case of the sale / lease of flats / maisonettes, the purchaser / leaseholder, in addition to the purchase price, will be required to pay an annual service charge. The service charge will be reassessed each year and together with the amount of the charge, the landlord will provide details of any works proposed to be carried out in a rolling five year period following each re-assessment and the estimated costs.

In the purchase of flats or other dwellings, the leaseholder will pay the full service charge.

Staircasing

The minimum amount of additional equity that can be purchased at any one time is five percent. The final purchase of equity may be less than a multiple of five percent where the landlord has allowed in exceptional circumstances as described in paragraph 2.1 the purchase of equity at a level that is not a multiple of five.

While arrears will not be a barrier to the purchase of additional equity the purchasing process will not be finalised until the arrears are paid. Continual arrears will have implications for affordability which may result in the forfeiture of the lease.

In the purchase of additional equity the cost of valuations and re determinations will be paid by the leaseholder who should be advised that prolonged staircasing up in steps of five percent may not be the most cost effective method of staircasing. It is envisaged that the use of the five percent level of staircasing will therefore only be considered in a small number of cases and will not be the norm for staircasing. Fees will be payable as explained below for each purchase of equity thus making prolonged use of the five percent level potentially economically unattractive.

Dwelling improvements including structural defects remedied by leaseholders will be discounted by valuers in assessing market value for future purchase of equity shares.

Maintenance and Repairs

Maintenance and repairs are the responsibility of the leaseholder irrespective of the level of equity purchased. The sharing of responsibility for this according to the levels of equity owned by the leaseholder and the landlord would be contrary to the concept of the House Sales Scheme which allows people who wish to become home owners.

As part of the lease the landlord will continue to include a clause requiring the leaseholder to maintain the property in a reasonable state until such time as the full equity is bought. Failure to comply with the terms of the lease may result in forfeiture of the lease. A reasonable state will be one that does not materially affect the market value of the dwelling. The landlord may also wish to specify in the application form that failure to maintain the dwelling or comply with other aspect of the lease will require the leaseholder to compensate the landlord for the short fall and that recovery action may be taken through the Courts as well as incurring forfeiture of the lease.

The leaseholder is strongly advised to take out appropriate house insurance.

The landlord will continue to be responsible for common areas which may result in charges being applied as described above under service charges.

Fees

A range of fees will have to be paid whether the dwelling is bought in full or in part. It should be noted that when buying part of the dwelling the same range of fees will recur for each purchase of additional equity.

The landlord will pay the initial valuation in determining the market value of the dwelling. However the tenant may chose to obtain a valuation from a suitably qualified Valuer at the tenant’s own expense.

Where the landlord considers the application to be speculative the landlord may seek to recover from the tenant or leaseholder the valuation fee paid in respect of that application. In addition the landlord may also recover from the leaseholder fees paid in respect of issues related to the enhancement of the leaseholder.

The leaseholder will pay all additional fees including those for further equity purchases. It will be a matter for the leaseholder to determine the most appropriate method to pay for fees particularly large fees such as the building society and purchaser legal fess for the initial equity purchases as well as the legal and building society valuation fees in the purchase of further equity. The range of fees may include:

• Building Society and Purchaser legal fees in the purchase of the initial and further equity
• rates
• service charges where appropriate
• household insurance
• legal and building society valuation fees in the purchase of further equity
• the payment of the Valuer at a rate set by the Landlord in the purchase of second and subsequent equity buy out; and
• the payment of Land and Property Services Agency fees for re determinations of valuations in the purchase of second and subsequent equity.

Arrears

Where a leaseholder gets into arrears with the rent payable to the landlord the purchase of additional equity cannot be finalised until the arrears are paid.

Under Equity Sharing the landlord should seek a copy of the full Valuation Report. This is required as it highlights any structural defects and tenant/leaseholder improvements and is useful in advising Valuers if additional equity is to be purchased.

Stairlift / Vertical Lifts

The following paragraphs are included for clarity and will apply to sales under the equity sharing option on the same basis that they apply in full purchase cases.

Where the landlord sells/leases a dwelling equipped with a stairlift/vertical lift, ownership of the lift transfers to the appropriate Health and Social Services Trust on completion of the sale/lease of the property.

Thereafter, the Trust has full responsibility for the maintenance of the stairlift/vertical lift in accordance with the terms of an agreement entered into between the Trust and the purchaser.

Tenants of dwellings with such adaptations must be advised at Offer stage of the arrangement which will apply in respect of the stairlift/vertical lift.

The Health Board should be informed of the impending sale at Contract stage and again when the sale is completed.

Postponement of Charges

The purchase of additional equity may give rise to the need for charges to be prioritised. It will be the responsibility of the landlord to determine the most appropriate course of action in each case. This may occur where further equity is bought through a different lender. The landlord should work with the lender to ensure that the interest of all parties are respected and taken into account as far as possible.

Any refusal by the landlord to postpone his charge will have to be fully justified and should not be used as a method of preventing sale.

Other Disposals (including Disposal of Land)

The Department's consent is not required for such disposals.

Unless a disposal is a necessary sale of vacant property to meet a charge on an association’s assets, the Department will require the Housing Association Grant to be repaid in full to the Housing Executive following a sale. In the former case, the grant to be recovered may be abated to the extent necessary for the Association to pay the debt secured by the charge. For any further advice on the repayment of Housing Association Grant please contact the Development Programme Group in the Housing Executive.

Scheme for the Sale of Dwelling-Houses by Registered Housing Associations

This section outlines the procedures for associations who wish to sell their dwellings to secure tenants and succeeds the Voluntary Sales Schemes.

Introduction

This is the Scheme for the sale of dwelling houses (“dwellings”) by Registered Housing Associations (“ Housing Associations”) prepared under the provisions of Article 3 of the Housing (NI) Order1983 as inserted by Article 96 of the Housing (NI) Order 1992, and amended by Article 131 of the Housing (Northern Ireland) Order 2003. The object of the Scheme is to place a statutory responsibility on Housing Associations to sell their dwellings to secure tenants and succeeds the Voluntary Sales Schemes.

Entitlement to Buy

The right to buy only arises after the tenant has been a secure tenant (of the Housing Executive, a Registered Housing Association or of one of the bodies mentioned in the attached Appendix) for a period of not less than five years or for periods amounting together to not less than five years, but neither the dwelling nor the landlord need have been the same during the whole of that period. For the purposes of the scheme time spent as an introductory tenant will be taken into account. If the secure tenancy is a joint tenancy, the timequalification condition only has to be satisfied with respect to one of the joint tenants.

The following shall be treated as included in the dwelling:

• any land used for the purposes of the dwelling which the Housing Association and secure tenant agree to include
• any land let with the dwelling other than land to which both of the following two conditions apply:
  - the land is additional to the minimum amount of land which, in the Housing Association’s reasonable opinion, is necessary for the purpose of the reasonable enjoyment of the dwelling as a residence and
  - the excess land has, in the reasonable opinion of the Housing Association, significant development potential

(whether immediately or potentially).

A secure tenant may purchase jointly with up to three other persons. Each of the other persons must satisfy one or both of the following conditions:

• he/she is the spouse of the secure tenant
• he/she is occupying the dwelling as his/her only or principal home and has been residing with the secure tenant throughout the period of twelve months ending with the date of application to purchase

A secure tenant may only acquire a dwelling as a "tenant in common" where his/her interest or share in the dwelling upon completion is at least 25%.

Exceptions to Entitlement to Buy

Under the Scheme, any dwelling may be sold with the exception of.

• sheltered dwelling units
• dwellings which are part of a group housing scheme and
• any single storey or ground floor dwelling (other than a flat) with no more than two bedrooms

In the present context the term ‘group housing’ refers to any individual house which is part of a group of houses which have been designed for persons with special needs where either:

• the houses are provided with, or situated near, special facilities for use by their tenants and/or
• the tenants of the houses are provided with housing support services, that is services which provide support, assistance, advice or counselling to an individual with particular needs which are necessary for them to live independently in their house.

A secure tenant cannot exercise the right to buy at any time when any of the following circumstances apply to him:

• the Housing Association has served a relevant statutory notice seeking possession at any time within the previous three months.
• proceedings for possession of the dwelling pursuant to a relevant statutory notice are pending.
• the tenant is obliged to give up possession of the dwelling in pursuance of an Order of the Court which has been granted pursuant to a relevant statutory notice or will be so obliged at a date specified in the Order.
• the Housing Association is actively considering whether it would be appropriate to serve – at some time within the next three months – a relevant statutory notice seeking possession.

A "relevant statutory notice" means a Notice Seeking Possession on one or both of the following grounds:

• ground 2 of Part I of Schedule 3 to the Housing (Northern Ireland Order 1983
• the allegation that the secure tenant has been guilty of “nuisance to neighbours” within the meaning of the Housing Association’s standard Tenancy Agreement.

Applications to purchase made by secure tenants who are in rent arrears shall not be rejected on those grounds but shall be allowed to proceed to completion stage. However, no sale shall be completed until all arrears whether for rent or any other payment due from them as a secure tenant have been paid.

Purchase Price

Subject to the provisions of Section 5.0 below, the purchase price shall be the market value less any available discount.

The market value shall be that assessed by a suitably qualified professional valuer as at the date of the completed application to purchase (that is date of receipt of all required information). The valuation will be adjusted to take account of any improvements which were carried out to the property by the tenant.

The secure tenant shall be notified of the purchase price within 12 weeks of making the application to purchase.

The secure tenant shall be advised of any structural defects known to the Housing Association which affect the dwelling or the building in which it is situated.

The purchaser, if not satisfied with the assessment of market value, shall be entitled to request a re-determination of the purchase price. Such re-determination shall be carried out by the District Valuer of the Valuation and and Lands Agency or by some other official of the VLA nominated by him/her. Any request for a re-determination must be made in writing within one month of the offer being made.

In the case of the sale of flats/maisonettes the purchaser shall be required to pay an annual rent of £10 and an annual service charge. (The annual service charge shall include the relevant proportion of the estimated cost of repairs, maintenance and improvements programmed to be carried out in that year to the block in which the flat is located). The Housing Association shall, when making a formal offer to the secure tenant of a flat, give details of any works proposed to be carried out in the next 5 years together with estimated costs and service charges for those years.

Tenants applying to purchase their homes are responsible for the payment of the valuation fee and, if applicable, the reassessment fee. On completion of the sale of the property, the association will reimburse to the tenant the fee for the valuation and, if applicable, the fee for the reassessment. Associations can reclaim, as an Allowable Cost, the fee for the valuation and any reassessment associated with the completed, see the Disposals Proceeds Fund - Finance Guide.

Discount

Discount shall be offered to secure tenants in relation to the total number of years which they have spent as secure tenants of relevant accommodation (hat is, of the authorities or bodies listed in Appendix 1).

The discount shall not reduce the price below the Historic Cost. The Historic Cost is the amount, which is to be taken as representing so much of the costs incurred in the provision, improvement or acquisition of the dwelling as is to be treated as incurred in the relevant period (the financial year in which the application to purchase is made and in the 10 previous financial years). Housing Associations must be able to demonstrate, in such a way as is verifiable, the method used to calculate the historic cost. If the price before discount is below the historic cost amount there shall be no discount and the purchase price shall be the market value price. Where the aggregate of the costs incurred in respect of improvement works is less than £5,000 throughout the relevant period, those costs can be disregarded. For the purposes of this paragraph, the Housing Association can estimate the costs incurred, however, any such estimate must be a reasonable and verifiable estimate.

Tenancy periods with former Public Sector bodies which have now been privatised shall be eligible for discount only in respect of the period up to the date of privatisation.

Time spent in any accommodation provided for Regular Armed Forces of the Crown shall also count for discount.

Subject to the following paragraph, secure tenants of a dwelling (house, flat or maisonette) with 5 years completed tenancy shall be allowed discount of 20% with an increase of 2% for each additional completed years tenancy up to an overall maximum of 60% subject to the Historic Cost proviso contained above.

The discount shall not in any event reduce the price of the dwelling by more than £24,000.

Where a spouse succeeds to the tenancy on the death of his/her spouse he or she may take the benefit of the discount rights of the deceased spouse provided that both were occupying the dwelling as their principal home at the time of the death of the deceased spouse.

In cases of joint purchase (that is, a purchase by a secure tenant along with an eligible co-purchaser) it is only the periods spent by the secure tenant in relevant accommodation that will count in the calculation of discount. Where joint tenants purchase a dwelling jointly discount shall be based on the tenancy period(s) of the secure tenant who has spent the longer period as a secure tenant of relevant accommodation.

Periods during which the secure tenant's spouse was a secure tenant or was previously the spouse of another secure tenant shall be taken into account provided both the secure tenant applying to purchase and his spouse occupied the dwelling as their only or principal home at the time of the completed application to purchase.

A spouse of a secure tenant who is separated or divorced may take the benefit of the tenancy periods of the former spouse in the original dwelling when purchasing the dwelling he/she now occupies provided that during those periods they were occupying the original dwelling as their only or principal home.

Discounts will be calculated as at the date of a completed application to purchase.

Where a secure tenant of a dwelling dies or otherwise ceases to be a secure Tenant (“the former tenant”), and subsequently, a child of the former tenant who occupies the dwelling as his/her only or principal home succeeds to the tenancy of the dwelling ("the new tenant"), and the new tenant applies to purchase, discount shall be granted to the new tenant based on the number of years during which the new tenant resided in the dwelling after his/her 16th birthday (whether under the same tenancy or under another secure tenancy). A break in that residence qualification is permitted where that break has been for two years or less, and in such cases full discount rights back to the 16th birthday shall be allowed. If the break is for more than two years, discount rights shall only be allowed from the date of the new tenant's return to the dwelling after the break.

Where an application to purchase has been lodged by a secure tenant and where a child of that secure tenant succeeds to the tenancy of the dwelling before the completion of the purchase by the secure tenant, the child shall be entitled to receive the full discount rights of the parent if that child wishes to continue with the purchase of the dwelling.

A soninlaw or daughterinlaw who occupies the dwelling and succeeds to the tenancy shall be treated as a 'natural' son or daughter.

A child will not be treated as a successor for discount purposes unless one of the following sets of circumstances apply to him/her:

• the child is the immediate successor of one or both of his/her parents or
• the child is not the immediate successor of one or both of his/her parents, but a brother/sister of the child is the only intermediate successor.

Where a person, or one of the persons, applying to purchase a dwelling was a previous purchaser, all previous tenancy periods shall be taken into account in assessing discount allowable. However, the discount entitlement on a second or subsequent purchase shall be reduced by the cash value of any discount allowed previously less the amount repaid to the Housing Association on previous disposals (if any). Where a previous discount was given to two or more persons jointly, this paragraph has effect as if each of them had been given an equal proportion of the discount.

Circumstances In Which Discounts are Repayable

The legal documentation shall contain a covenant binding on the secure tenant and his/her successors in title to repay to the Housing Association the full discount received if within a period of 5 years there is a disposal falling within paragraph 6.2, but if there is more than one such disposal, then only on the first of them.

A disposal is:

• a further conveyance of the fee simple or an assignment of the lease or
• the grant of a lease or sublease for a term of more than 21 years otherwise than at rack rent, whether the disposal is of the whole or part of the dwelling;

but the following categories of disposal do not attract repayment of discount:

• disposal between joint purchasers or spouses;
• disposals between members of the same family who have lived together throughout the six month period ending with the disposal;
• disposals where the dwelling has been compulsory purchased or where compulsory powers would have been used if the dwelling had not been acquired voluntarily
• disposals not involving the residential part of a dwelling
• disposals in pursuance of an order under Article 26 of the Matrimonial Causes (Northern Ireland) Order 1978
• disposals under Article 4 of the Inheritance (Provision for Family and Dependents) (Northern Ireland) Order 1979
• disposals vesting in a person taking under a will or an intestacy

Conveyance of Fee Simple and Grant of Lease

The Housing Association may include in a conveyance or lease such conditions as the Department may approve.

The Housing Association shall include in a conveyance or lease any conditions or covenants which the Department may specify.

The Housing Association shall include in a contract and in a conveyance or lease a clause whereby the purchaser must agree that if he/she wishes to dispose of the dwelling within 10 years from the date of purchase the Housing Association or any other registered housing association will be given the option to re-purchase.

Without prejudice to the generality in this section the conditions and covenants

• shall have the effect of ensuring that the tenant has as full enjoyment
• and use of the dwelling as owner as he/she has had as tenant
• shall secure to the tenant such additional rights as are necessary for his/her reasonable enjoyment and use of the dwelling as owner (including, without prejudice to the foregoing generality, common rights in any part of the building of which the dwelling forms part) and shall impose on the tenant any necessary duties relative to rights so secured
• shall include such terms as are necessary to entitle the tenant to receive a good and marketable title to the dwelling
• shall, where a new charge for the provision of a service in relation to the dwelling is imposed or where an existing charge for such provision is increased, provide for the charge to be in reasonable proportion to the cost to the Housing Association of providing the service

For more information:

• Appendix 1 - Tenancies to be recognised for Qualification and Discount Purposes