The S133 issue

How to maximise Value and the S133 Issue
Carol Matthews
Partner, Wright Hassall
How to get maximum value from stock?
Need to elevate from an EUV valuation to MV-STT by:
• No affordable housing restrictions on title;
• No personal planning permissions;
• S106 Agreements with acceptable mortgagee exemption
provisions which are that affordable housing provisions
• Not bind a mortgagee, chargee or a receiver and their
• Any obligations to try to sell back to LAs or other RP must be
within a period of three months or less.
Get your ducks in a row
Work with the NHF which is pioneering new initiatives to streamline the
charging process;
Do a tidy of your rent roll – HCA out to consultation on “living wills” so you
have to do it;
Allow twice the time you think you need to sort your property lists for in
charging exercises – esp Bonds and PPs;
Vary your old S106 Agreements to elevate your valuation;
Work with the Valuers as a team so you all use the same list;
Support the initiative about the S133 restriction if you have LSVT stock!!
The current scenario – the S133 Issue
2 different categories of RPS
• Traditional RPs
BUT they do not have a ‘level playing field’ in asset valuation
Why is this?
All RPs have a restriction on disposal under s172 Housing
and Regeneration Act 2008
Consent to disposal needed from HCA
This falls away from title on disposal including sales by
mortgagees in possession
The S133 Restriction
Feature of the LSVT regime;
Local Authorities had certainty that stock would be
protected as affordable housing.
“ RESTRICTION: No disposition by the proprietor of the
registered estate or in exercise of the power of sale or
leasing in any registered charge (except an exempt
disposal as defined by section 81(8) of the Housing Act
1988) is to be registered without the consent of the
Secretary of State to that disposition under the
provisions of section 133 of that Act”
What is different about an LSVT RP?
All properties transferring by virtue of an LSVT have the
additional restriction on the title under s133 of the Housing
Act 1988
RPs need consent to disposal under this restriction from the
Secretary of State
BUT under s133(2) the restriction does not fall away on sale
by mortgagee in possession
What does this mean in valuation terms?
RP stock is valued under the RICS ‘red book’ as either:
Market value subject to tenancy
Existing use value (EUV)
stock valued subject to a tenancy
but not limited to social housing;
assumes properties will be re-let
as social housing
Valuers always value stock with an s133 restriction as EUV.
What can be done?
Move afoot to change the impact of s133(2) restriction
• Supported by NHF and CIH
• Treasury interested in proposal
• Consultation promises to tenants on LSVT will not be affected
Can be done by:
• Legislation
• General consent provisions
The on-going debate
May not elevate LSVT stock to MV-STT
• Loan agreements may prohibit this valuation
• Funders/valuers may take the view still EUV due to size and
density – could be EUV “basis 2” – 45% of MV
• Local authorities may object

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