Consultation outcome

Draft guidance note 13: Sections 253-254 – Transfer of land (enforcement power)

Updated 29 February 2024

Applies to England

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Applicable
PRP (For profit) yes
PRP (Not for profit) yes
PRP (Registered charity) no
Local authority no

Type of Power: enforcement power 

Scope 

1 - This power enables the regulator to require a private registered provider (‘PRP’) to transfer land either to the regulator or another PRP where an inquiry under section 206 or extraordinary audit under section 210 has been carried out.  

2 - This power cannot be used in relation to registered charities. However, it can be used in relation to charities which are not registered, provided such transfers of land are to another charity whose objects the regulator thinks are similar (section 253(6)-(7)) of the Act.  

3 - The regulator cannot require a not for profit PRP to transfer land to a for profit PRP under section 253(5) of the Act.  

4 - Under section 253(3)-(4) of the Act, the power can be applied to a for profit PRP only in relation to its social housing and associated land. Land is associated with social housing if the regulator thinks that it is used in connection with the social housing [footnote 1] or its management. 

How will the regulator use this power 

5 - Section 253(1) of the Act provides that this power may be used where the regulator is satisfied that:  

  • the affairs of a PRP have been mismanaged in relation to social housing [footnote 2]  

  • a transfer of land by a PRP would be likely to improve the management of the land; or  

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

Process for using the power 

6 - If the regulator is satisfied that the grounds as set out at section 253(1) of the Act have been met, it will decide the identity of the transferee. 

Where land is to be transferred to the regulator, this will be a temporary measure pending onward transfer to another PRP.

7 - Where land is to be transferred to another PRP in assessing their suitability, the regulator will consider all relevant factors including but not limited to: 

  • the requirements under section 253(5)-(7) of the Act regarding the identity of the transferee are met (as set out under the heading ‘scope’ above) 
  • the quality and management of their services to residents 
  • the quality of their governance systems  
  • their financial viability  
  • their general regulatory compliance; and 
  • their management and financial capacity.

8 - The regulator will decide the terms of the transfer including: 

  • the land to be transferred including whether it will be all the PRP’s land, or part of it - if the former, the terms of the transfer will make provision for all assets and liabilities of the provider to be passed to the recipient PRP. 
  • the price of the transfer – the regulator will commission and pay for valuations and will ensure that the price at which the transfer takes place is not less than the amount the property would fetch if sold by a willing seller to another PRP (section 254(2) of the Act).  
  • provision as to the payment of any debts or liabilities in respect of the land, whether or not secured (section 254(3) of the Act). This will be relevant where only part of the PRP’s land is to be transferred. The regulator will seek to: 
  • reach a fair solution in terms of apportionment of any assets and liabilities; and avoid giving preferential treatment to a creditor who is not lawfully entitled to such treatment. 

9 - The regulator will consider if there are any relevant stakeholders and consult with them as necessary. 

10 - The regulator will obtain the consent of the Secretary of State to: 

  • the transfer of land; and 

  • the terms under which that transfer of land will take place.  

Appeal process 

11 - There is no statutory right of appeal or appeals’ process in accordance with the Regulator’s Appeals Scheme.

  1. As defined in section 68 of the Act. ↩

  2. 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). ↩

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