Housing Act 1996

11 Covenant for repayment of discount on disposal

(1) Where on a disposal of a house by a registered social landlord, in accordance with a consent given by the Corporation under section 9, a discount has been given to the purchaser, and the consent does not provide otherwise, the conveyance, grant or assignment shall contain a covenant binding on the purchaser and his successors in title to the following effect.

(2) The covenant shall be to pay to the landlord on demand, if within a period of three years there is a relevant disposal which is not an exempted disposal (but if there is more than one such disposal then only on the first of them), an amount equal to the discount reduced by one-third for each complete year which has elapsed after the conveyance, grant or assignment and before the further disposal.

(3) The liability that may arise under the covenant is a charge on the house, taking effect as if it had been created by deed expressed to be by way of legal mortgage.

(4) A charge taking effect by virtue of this section is a land charge for the purposes of section 59 of the [1925 c. 21.] Land Registration Act 1925 notwithstanding subsection (5) of that section (exclusion of mortgages), and subsection (2) of that section applies accordingly with respect to its protection and realisation.

(5) Where there is a relevant disposal which is an exempted disposal by virtue of section 15(4)(d) or (e) (compulsory disposal or disposal of yard, garden, &c.)—

(a) the covenant required by this section is not binding on the person to whom the disposal is made or any successor in title of his, and

(b) the covenant and the charge taking effect by virtue of this section ceases to apply in relation to the property disposed of.