The Housing (Preservation of Right to Buy) Regulations 1993

Provisions affecting future disposals

Repayment of discount on early disposal

155.—(1) A conveyance of the freehold or grant of a lease in pursuance of this Part may, at the discretion of the landlord, contain (unless there is no discount) a covenant binding on the qualifying person and his successors in title to the following effect, but not one the effect of which would be more onerous.

(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), the discount to which the qualifying person was entitled, reduced by one third for each complete year which has elapsed after the conveyance or grant and before the disposal.

(3A) Where a qualifying person has served on his landlord an operative notice of delay, as defined in section 153A—

(a) the three years referred to in subsection (2) shall begin from a date which precedes the date of the conveyance of the freehold or grant of the lease by a period equal to the time (or, if there is more than one such notice, the aggregate of the times) during which, by virtue of section 153B, any payment of rent falls to be taken into account in accordance with subsection (3) of that section.

Liability to repay is a charge on the premises

156.—(1) The liability that may arise under the covenant imposed by virtue of section 155 is a charge on the qualifying dwelling-house, taking effect as if it had been created by deed expressed to be by way of legal mortgage.

(2) Subject to subsections (2A) and (2B), the charge has priority immediately after any legal charge securing an amount advanced to the qualifying person by an approved lending institution for the purpose of enabling him to exercise the right to buy.

(2A) The following, namely—

(a) any advance which is made otherwise than for the purpose mentioned in subsection (2) and is secured by a legal charge having priority to the charge taking effect by virtue of this section, and

(b) any further advance which is so secured,

shall rank in priority to that charge if, and only if, the landlord by written notice served on the institution concerned gives its consent; and the landlord shall so give its consent if the purpose of the advance or further advance is an approved purpose.

(2B) The landlord may at any time by written notice served on an approved lending institution postpone the charge taking effect by virtue of this section to any advance or further advance which—

(a) is made to the qualifying person by that institution, and

(b) is secured by a legal charge not having priority to that charge;

and the landlord shall serve such a notice if the purpose of the advance or further advance is an approved purpose.

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

(3A) The covenant imposed by virtue of section 155 (covenant for repayment of discount) does not, by virtue of its binding successors in title of the qualifying person, bind a person exercising rights under a charge having priority over the charge taking effect by virtue of this section, or a person deriving title under him; and a provision of the conveyance or grant, or of a collateral agreement, is void in so far as it purports to authorise a forfeiture, or to impose a penalty or disability, in the event of any such person failing to comply with that covenant.

(4) The approved lending institutions for the purposes of this section are—

• the Corporation,

• a building society,

• a bank,

• a trustee savings bank,

• an insurance company,

• a friendly society,

and any body specified, or of a class or description specified, in an order made by the Secretary of State with the consent of the Treasury.

(4A) The approved purposes for the purpose of this section are—

(b) to enable the qualifying person to defray, or to defray on his behalf, any of the following—

(i) the cost of any works to the qualifying dwelling-house,

(ii) any service charges payable in respect of the qualifying dwelling-house for works, whether or not to the qualifying dwelling-house, or

(iii) any service charge or other amount payable in respect of the qualifying dwelling-house for insurance, whether or not to the qualifying dwelling-house, and

(c) to enable the qualifying person to discharge, or to discharge on his behalf, any of the following—

(i) so much as is still outstanding of any advance or further advance which ranks in priority to the charge taking effect by virtue of this section,

(ii) any arrears of interest on such an advance or further advance, and

(iii) any costs and expenses incurred in enforcing payment of any such interest, or repayment (in whole or in part) of any such advance or further advance.

(4B) Where different parts of an advance or further advance are made for different purposes, each of those parts shall be regarded as a separate advance or further advance for the purposes of this section.

(5) An order under subsection (4)—

(a) shall be made by statutory instrument, and

(b) may make different provision with respect to different cases or descriptions of case, including different provision for different areas.

(6) Before making an order varying or revoking a previous order, the Secretary of State shall give an opportunity for representations to be made on behalf of any body which, if the order were made, would cease to be an approved lending institution for the purposes of this section.

Restriction on disposal of qualifying dwelling-houses in National Parks, etc.

157.—(1) Where in pursuance of this Part a conveyance or grant is executed by a housing association (“the landlord”) of a qualifying dwelling-house situated in—

(a) a National Park,

(b) an area designated under section 87 of the National Parks and Access to the Countryside Act 1949[1949 c. 97.] as an area of outstanding natural beauty, or

(c) an area designated by order of the Secretary of State as a rural area,

the conveyance or grant may contain a covenant limiting the freedom of the qualifying person (including any successor in title of his and any person deriving title under him or such a successor) to dispose of the qualifying dwelling-house in the manner specified below.

(2) The limitation is, subject to subsection (4), that until such time (if any) as may be notified in writing by the landlord to the qualifying person or a successor in title of his,

(a) there will be no relevant disposal which is not an exempted disposal without the written consent of the landlord; but that consent shall not be withheld if the disposal is to a person satisfying the condition stated in subsection (3), and—

(b) there will be no disposal by way of tenancy or licence without the written consent of the landlord unless the disposal is to a person satisfying that condition or by a person whose only or principal home is and, throughout the duration of the tenancy or licence, remains the qualifying dwelling-house.

(3) The condition is that the person to whom the disposal is made (or, if it is made to more than one person, at least one of them) has, throughout the period of three years immediately preceding the application for consent or, in the case of a disposal by way of tenancy or licence, preceding the disposal—

(a) had his place of work in a region designated by order of the Secretary of State which, or part of which, is comprised in the National Park or area, or

(b) had his only or principal home in such a region;

or has had the one in part or parts of that period and the other in the remainder; but the region need not have been the same throughout the period.

(4) If the Corporation consents, the limitation specified in subsection (2) may be replaced by the following limitation, that is to say, that until the end of the period of ten years beginning with the conveyance or grant there will be no relevant disposal which is not an exempted disposal, unless in relation to that or a previous such disposal—

(a) the qualifying person (or his successor in title or the person deriving title under him or his successor) has offered to reconvey the qualifying dwelling-house, or as the case may be surrender the lease, to the landlord for such consideration as is mentioned in section 158, and

(b) the landlord has refused the offer or has failed to accept it within one month after it was made.

(5) The consent of the Corporation under subsection (4) may be given subject to such conditions as the Corporation thinks fit.

(6) A disposal in breach of such a covenant as is mentioned in subsection (1) is void and, so far as it relates to disposals by way of tenancy or licence, such a covenant may be enforced by the landlord as if—

(a) the landlord were possessed of land adjacent to the house concerned; and

(b) the covenant were expressed to be made for the benefit of such adjacent land.

(6A) Any reference in the preceding provisions of this section to a disposal by way of tenancy or licence does not include a reference to a relevant disposal or an exempted disposal.

(7) Where such a covenant imposes the limitation specified in subsection (2), the limitation is a local land charge and the Chief Land Registrar shall enter the appropriate restriction on the register of title as if application thereof had been made under section 58 of the Land Registration Act 1925.[1925 c. 21.]

(8) An order under this section—

(a) may make different provision with respect to different cases or descriptions of case, including different provision for different areas, and

(b) shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

Consideration for reconveyance or surrender under s. 157.

158.—(1) The consideration for the offer by a qualifying person (or his successor in title or a person deriving title under him or his successor) referred to in section 157(4)(a), to reconvey or surrender his interest to the landlord shall be such amount as may be agreed between the parties or determined by the district valuer as being the amount which is to be taken as the value of the qualifying dwelling-house at the time the offer is made.

(2) That value shall be taken to be the price which, at that time, the interest to be reconveyed or surrendered would realise if sold on the open market by a willing vendor, on the assumption that any liability under—

(a) a covenant imposed by virtue of section 155 (repayment of discount on early disposal),

would be discharged by the vendor.

(3) If the landlord accepts the offer, no payment shall be required in pursuance of any such covenant as is mentioned in subsection (2), but the consideration shall be reduced, subject to subsection (4), by such amount (if any) as, on a disposal made at the time the offer was made, being a relevant disposal which is not an exempted disposal, would fall to be paid under that covenant.

(4) Where there is a charge on the qualifying dwelling-house having priority over the charge to secure payment of the sum due under the covenant mentioned in subsection (2), the consideration shall not be reduced under subsection (3) below the amount necessary to discharge the outstanding sum secured by the first-mentioned charge at the date of the offer to reconvey or surrender.

Relevant disposals

159.—(1) A disposal, whether of the whole or part of the qualifying dwelling-house, is a relevant disposal for the purposes of this Part if it is—

(a) a further conveyance of the freehold or an assignment of the lease, or

(b) the grant of a lease (other than a mortgage term) for a term of more than 21 years otherwise than at a rack rent.

(2) For the purposes of subsection (1)(b) it shall be assumed—

(a) that any option to renew or extend a lease or sub-lease, whether or not forming part of a series of options, is exercised, and

(b) that any option to terminate a lease or sub-lease is not exercised.

Exempted disposals

160.—(1) A disposal is an exempted disposal for the purposes of this Part if—

(a) it is a disposal of the whole of the qualifying dwelling-house and a further conveyance of the freehold or an assignment of the lease and the person or each of the persons to whom it is made is a qualifying person (as defined in subsection (2));

(b) it is a vesting of the whole of the qualifying dwelling-house in a person taking under a will or on an intestacy;

(c) it is a disposal of the whole of the qualifying dwelling-house in pursuance of an order made under section 24 of the Matrimonial Causes Act 1973[1973 c. 18.] (property adjustment orders in connection with matrimonial proceedings) or section 2 of the Inheritance (Provision for Family and Dependents) Act 1975 [1975 c. 63.] (orders as to financial provision to be made from estate);

(d) it is a compulsory disposal (as defined in section 161); or

(e) it is a disposal of property consisting of land included in the qualifying dwelling-house by virtue of section 184 (land let with or used for the purposes of the qualifying dwelling-house).

(2) For the purposes of subsection (1)(a), a person is a qualifying person in relation to a disposal if—

(a) he is the person, or one of the persons, by whom the disposal is made,

(b) he is the spouse or a former spouse of that person, or one of those persons, or

(c) he is a member of the family of that person, or one of those persons, and has resided with him throughout the period of twelve months ending with the disposal.

Meaning of “compulsory disposal”

161.  In this Part a “compulsory disposal” means a disposal of property which is acquired compulsorily, or is acquired by a person who has made or would have made, or for whom another person has made or would have made, a compulsory purchase order authorising its compulsory purchase for the purposes for which it is acquired.

Exempted disposals which end liability under covenants

162.  Where there is a relevant disposal which is an exempted disposal by virtue of section 160(1)(d) or (e) (compulsory disposals or disposals of land let with or used for purposes of qualifying dwelling-house)—

(a) a covenant imposed by virtue of section 155 (repayment of discount on early disposal) is not binding on the person to whom the disposal is made or any successor in title of his, and that covenant and the charge taking effect by virtue of section 156 cease to apply in relation to the property disposed of, and

(b) any such covenant as is mentioned in section 157 (restriction on disposal of qualifying dwelling-houses in National Parks, etc.) ceases to apply in relation to the property disposed of.

Treatment of options

163.—(1) For the purposes of this Part the grant of an option enabling a person to call for a relevant disposal which is not an exempted disposal shall be treated as such a disposal made to him.

(2) For the purposes of section 157(2) (requirement of consent to disposal of qualifying dwelling-house in National Park, etc.) a consent to such a grant shall be treated as a consent to a disposal in pursuance of the option.