Consultation outcome

Draft guidance note 9: Sections 247, 248 and 250a – Management tender (enforcement power)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) yes
Local authority yes

Type of power: enforcement power  

The power 

1 - This power enables the regulator to require a registered provider to tender some, or all, of its management functions that relate to social housing.  

When the regulator will use this power 

2 - Section 247(1) of the Act sets out the grounds under which the regulator can use this power which are: 

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

  • where a registered provider: 
    i) does not have a health and safety lead designated under section 126A of the Act, or 
    ii) has failed to meet a requirement under section 126C(1) of the Act 

  • where the functions of the health and safety lead are not being carried out 

  • where the affairs of a registered provider have been mismanaged in relation to social housing [footnote 1]; or  

  • where a registered provider has failed to comply with a performance improvement plan notice.

Process for using the power

3 - If the regulator is satisfied that one or more the grounds set out in section 247(1) of the Act has been met, before imposing the requirement to tender management functions, the regulator will give notice to the registered provider, as set out in section 248 of the Act (‘warning notice’), which will: 

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

  • warn that the regulator is proposing to take action 

  • set out the scope of the management functions which the regulator is proposing should be tendered (i.e. whether it is the entirety of the registered provider’s social housing affairs or specific aspects of them) 

  • explain the effect of section 248 of the Act 

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

  • indicate whether or to what extent the regulator would accept a voluntary undertaking instead of, or in mitigation of, the registered provider being required to tender its management functions  

  • explain that the registered provider has a statutory right of appeal in accordance with section 248(10) if the regulator requires it to tender management functions. 

4 - The regulator will also provide a copy of this warning notice to key stakeholders as set out in 248(4) of the Act. 

5 - The regulator will implement a process so as to ascertain the views of those set out in section 248(7) of the Act, which include relevant tenants.  

6 - The regulator will consider any representations and/or voluntary undertakings offered and the views of stakeholders ahead of deciding to impose a requirement to tender its management functions.

7 - Where the regulator decides to proceed with imposing the requirement to tender management functions, it will serve a notice on the registered provider covering the areas as set out in section 247(2)-(4) of the Act (‘tender notice’). The tender notice will set out: 

  • the process to be used in relation to: 
    i) inviting persons to apply to undertake management functions
     ii) selecting from those applications; and  
    iii) making the appointment 

  • the scope of the management functions which must be tendered

  • requirements as to the constitution of the selection panel which must include provision for ensuring representation of tenants’ interests 

  • provision for ensuring that the procurement process follows best practice and is consistent with any applicable procurement law; and  

  • the terms and conditions under which the appointment should be made, including provision about setting, monitoring and enforcing performance standards and resources.  

8 - The regulator will notify the following bodies by sending them a copy of the tender notice imposing the requirement: 

  • Homes England 

  • 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  

9 - The regulator may exercise this power even if the local authority already has a management agreement in place covering the same functions which the regulator requires to be tendered. In such circumstances, the local authority may not implement any new or separate management agreement it has in place.  

10 - Any duty the local authority may have to consult in relation to its management functions does not apply where it is acting in accordance with a requirement imposed on it under section 247 of the Act.  

Appeal process 

11 - 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 247(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). ↩

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