Changes to Chapter 7 of the Capital Funding Guide mean prior consent from Homes England (HE) is now required for the transfer of grant between Registered Providers (RPs).

In other words, if you are transferring properties that include grant to another RP you will need HE’s prior consent. If that consent is not obtained, there is a risk that the grant repayment liability will remain with you following the completion of the property transfer.

In this insight we summarise the changes and outline the new process.

What are the changes?

Following HE’s updates to the Capital Funding Guide on 30 June 2023, all RPs wishing to dispose of property that has been grant funded must obtain Homes England’s prior approval.

Previously, where grant liability was being transferred (as part of a property transfer between RPs), no consent was needed and RPs were simply required to notify HE following the transfer.

Why has the process changed?

The changes by HE are a direct response to the trend towards the transfer of grant-funded properties to “for profit” RPs. The new process enables HE to alter the grant conditions that bind “for profit” RPs once they have acquired such properties (as outlined below).

What is the new process?

The Capital Funding Guide sets out the process to be followed to obtain HE’s prior consent.

A ‘Registered Provider Transfer Form’ (available here) should be completed and sent to HE, at least 14 days prior to the proposed transfer taking place.

The form of notification and approval process means that the disposing and receiving RPs must agree the amount of grant liability being transferred, and the receiving RP must accept the grant funding conditions. For receiving for-profit RPs, HE will also confirm the rebasing of uplift to the open market value at the point of transfer.

Where HE provides its consent, the property disposal does not trigger an obligation to repay/recycle the grant monies (event 7(o) of the Recover of Capital Grants from Registered Providers General Determination 2017). Instead, the grant will become recoverable from the receiving RP following any future relevant event. As mentioned above, however, if consent is not obtained and/or supplied, the property disposal will likely automatically trigger an obligation on the disposing RP to repay/recycle the grant monies.

HE requires RPs to keep adequate records of grant transferred to and from other RPs in respect of transfers of grant-funded assets, including the amount and conditions of grant given and how it has been apportioned across schemes. Apportionment of grant can only be amended with HE’s agreement.

Has the Greater London Authority (GLA) changed its guidance?

The GLA’s affordable housing capital funding guide was last updated in March 2023, and they are not currently requiring RPs to obtain their prior consent for the transfer of grant monies that would otherwise be recoverable by them. This may change in future.

Capsticks’ view

We recommend early discussions with HE if you are considering disposal to another RP.

RPs should also consider the timescales for notification, detailed above, when building their project timescales. We do not anticipate this additional requirement will cause delays, provided notification is made within sufficient time.

How Capsticks can help

Our Housing & Regeneration team, one of the largest in the country, advises on all types of disposals by Registered Providers, including stock transfers, swaps and disposals to other RPs. We also offer regulatory and governance advice, please get in touch if you need any support or further guidance on the updated process required by HE.

If you have any queries around what's discussed in this article, and the impact on registered providers, please speak to Susie Rogers or Kayleigh Bradford to find out more about how Capsticks can help.