Consultation outcome

Draft guidance note 10: Sections 249, 250 and 250a – Management transfer (enforcement power )

Updated 29 February 2024

Applies to England

	Applicable
PRP (For profit)	yes
PRP (Not for profit)	yes
PRP (Registered charity)	yes
Local authority	yes

Type of power: enforcement power  

The power 

1 - This power enables the regulator to require a registered provider to transfer some, or all, of its management functions that relate to social housing to a specified person (transferee manager). 

When the regulator will use this power 

2 - Section 249(1) of the Act sets out the grounds under which the regulator can use this power. They are where, as a result of an inquiry under Section 206 of the Act or an extraordinary audit under section 210 of the Act, the regulator is satisfied: 

• the affairs of a registered provider have been mismanaged in relation to social housing ^{[footnote 1]} 

• a transfer of certain of a registered provider’s management functions would be likely to improve the management of some or all of its social housing; or 

• the registered provider has failed to meet a standard under section 193, 194 or 194C of the Act.

Process for using the power 

3 - If, after an inquiry or extraordinary audit has been carried out, the regulator is satisfied that the grounds under section 249(1) of the Act have been met, it will decide the scope of the management functions to be transferred including: 

• whether it will relate to all of the provider’s management functions in relation to social housing, or specific functions; and  

• whether it will relate to all of the registered provider’s social housing, or social housing located in a specific geographical or defined area.  

4 - Before requiring the management functions to be transferred, the regulator will give the provider a notice (‘warning notice’), as set out in section 250 of the Act, which will: 

• specify the grounds on which the regulator is proposing to take action 

• warn that the regulator may take action 

• set out the scope of the management functions which may be transferred  

• explain the effect of section 250 of the Act 

• explain that the registered provider may make representations to the regulator about the warning notice within the period of 28 days beginning with the day on which the provider receives the warning notice  

• indicate whether or to what extent the regulator would accept a voluntary undertaking instead of, or in mitigation of, requiring the provider to transfer its management functions  

5 - The regulator will also provide a copy of the warning notice to key stakeholders as set out in 250(4) of the Act. 

6 - The regulator will implement a process so as to ascertain the views of those set out in section 250(7) of the Act, which include relevant tenants. 

7 - The regulator will consider any representations, any voluntary undertakings offered and the views of stakeholders ahead of deciding to impose a requirement to transfer management functions.

8 - If the regulator decides to impose a requirement to transfer management functions, it will identify the transferee manager – this could be a person or organisation, including another registered provider and will consider a number of factors which may include, but is not limited to: 

• capability and capacity to deliver efficient and effective management  

• quality and management of the transferee manager’s service delivery in relation to the functions to be transferred 

• where the transferee manager proposed is a registered provider, its financial viability, governance; and management and financial capacity to deliver these functions

• determine the terms and conditions under which the management functions will be transferred including remuneration; and 

• seek consent from the Secretary of State in relation to the transfer and terms. 

9 - The regulator will provide the registered provider with notice of the requirement to transfer management functions (‘TMF notice’) setting out: 

• the matters as set out in section 249 (4)-(5) of the Act which are the scope of the management transfer, and terms and conditions 

• the transferee manager’s powers in accordance with section 249(6) of the Act 

• its proposals for subsequent liaison with the registered provider to ensure compliance with the requirement to transfer management functions. 

10 - The regulator must send a copy of the TMF notice to Homes England, the GLA (where the registered provider owns land in Greater London) and the Secretary of State (where the registered provider is a local authority).

Specific requirements relating to local authorities  

11 - The regulator may require a local authority to transfer its management functions even if the local authority already has a management agreement in place covering the same management functions which the regulator requires to be transferred.  

12 - Where the regulator requires a local authority to transfer management functions, the local authority may not implement any new or separate management agreement it has in place covering the same management functions which the regulator has required to be transferred.  

13 - Any duty the local authority may have to consult in relation to the exercise of its management functions does not apply where it is acting in accordance with a requirement imposed by the regulator. 

Appeal process 

14 - There is a statutory right of appeal to the High Court, which must be brought within the period of 28 days beginning with the day on which the regulator notifies the registered provider of the imposition of requirement under section 249(2).

1. Mismanagement has a specific meaning in the Act and is defined in s.275: Mismanagement in relation to the affairs of a registered provider means managed in breach of any legal requirements (imposed by or under an Act or otherwise). ↩