The Local Authorities (Capital Finance) Regulations 1990

Capital receipts to be treated as reduced: disposal of certain dwellings

16.—(1) As respects local authorities in England, capital receipts of a description specified in paragraph (2) below shall be treated for the purposes only of section 59 as reduced by an amount determined in accordance with paragraphs (3) to (5) below.

(2) For the purposes of paragraph (1) above, capital receipts derived from a disposal of an interest in a dwelling are specified where the disposal is of–

(a) the freehold;

(b) a lease to which regulation 15(3) applies and which at the time of the disposal is for a term of which 125 years or more are unexpired;

(c) a shared ownership lease; or

(d) if at the time of the disposal the authority do not own the freehold of the dwelling or a lease of the dwelling for a term of which 125 years or more are unexpired, the authority’s interest in the dwelling;

provided that the authority have not at any time before the disposal granted a lease of the dwelling, other than a shared ownership lease, and that the dwelling has not been occupied under a secure tenancy.

(3) For the purposes of paragraph (1) above, the amount of the reduction is the aggregate of–

(a) where the dwelling was acquired by the authority, the cost of the acquisition of the interest or interests in the dwelling;

(b) where the dwelling was constructed by or for the authority,–

(i) the cost of its construction; and

(ii) if the land on which the dwelling was constructed was acquired by the authority on or after the relevant date, the cost of the acquisition of the land;

(c) where the dwelling was provided by the conversion by or for the authority of a building or part of a building,–

(i) the cost of the conversion; and

(ii) if the building or part of the building was acquired by the authority on or after the relevant date, the cost of the acquisition of the building or part of the building;

(d) the cost of any enhancement of the dwelling after its acquisition, construction or provision, as the case may be, by or for the authority; and

(e) the amount of any costs incurred by the authority in connection with the disposal.

(4) In paragraph (3) above, the cost of the acquisition, construction, conversion or enhancement, as the case may be, is the aggregate of–

(a) if the authority entered into a credit arrangement for the purposes only of the acquisition, construction, conversion or enhancement, as the case may be, the initial cost of the credit arrangement; and

(b) the amount of any consideration given or costs incurred by the authority in respect of the acquisition, construction, conversion or enhancement, as the case may be, other than any consideration taken into account by virtue of sub-paragraph (a) above.

(5) Paragraphs (5) and (6) of regulation 15 shall apply in relation to the amount of any reduction determined in accordance with this regulation as they apply in relation to the amount of any reduction determined in accordance with regulation 15.

(6) In this regulation,–

• “dwelling” and “shared ownership lease” have the meaning given by regulation 6(6);

• “relevant date” means the date three years before the date of the disposal or, if there is more than one disposal falling within paragraph (2) above relating to a dwelling, the first such disposal;

• “secure tenancy” has the same meaning as in Part IV of the Housing Act 1985.