3.—(1) A qualifying member who ceases to occupy a house or quarters with which he was provided free of rent becomes entitled to a replacement allowance.
(2) The replacement allowance is, subject to paragraph 8, an allowance at a rate equal to the total of—
(a)the rate at which housing allowance or, as the case may be, transitional rent allowance, was payable, or would have been payable if he had not been occupying the house or quarters, immediately before 1st September 1994, and
(b)the rate at which any allowance under regulation 35(6) or 36(3) was or would have been then payable.