VATGPB8315 - Other local authority activities: housing and community projects: background to housing stock transfers

It is Government policy to require local authorities to look at a range of investment options to bring their housing stock to the Government’s ‘decent homes standard’. One of these options is for stock to be transferred to registered social landlords (RSLs) subject to residents being balloted and agreeing to the proposal.

The transfer of housing stock is a non-business activity by the selling local authority. However, this does not apply to commercial properties, shops, garages for non-residents and residential or other properties bought for investment purposes, to which the normal rules apply.

Housing stock transfers can take one of two forms. The RSL either:

• purchases the housing stock in its existing condition at a price that reflects the condition, with any refurbishment funded by the RSL, or
• it agrees to purchase the housing stock on condition that the local authority undertakes outstanding routine maintenance and ‘catch-up’ works, with the price paid reflecting the work that the local authority is bound to undertake.

The two arrangements lead to very different VAT consequences (see VATGPB8320 and VATGPB8325).