For-profit firm told its original application was unacceptable by regulator
Assettrust told to alter registration bid by HCA
The social housing regulator has refused to allow a property investment company’s initial bid to register a subsidiary as a not-for-profit social housing provider.
In the first known example of the new regulator rejecting a for-profit company attempting to register non-profit entities, the Homes and Communities Agency’s regulatory committee has refused to approve an application from Assettrust Housing.
Minutes published last week reveal that in August, the HCA opposed an attempt by the for-profit company, which has a turnover of £18.4 million, to register existing subsidiary Assettrust Housing Number Two.
Assettrust, which specialises in privately financed shared ownership properties, last year announced plans to buy 40,000 social rented homes and convert them into shared ownership.
The HCA committee minutes from 29 August said: ‘Having considered [the registration], [the] committee was not satisfied that AHN2 should be registered as a non-profit provider.’
Assettrust was ‘invited’ by the committee to make changes to its proposal, and the matter was delegated to committee chair Julian Ashby and committee member Jim Coulter, who will make the final decision on whether to give the move the green light once the company has made changes.
A spokesperson for the HCA said it will be approved if Assettrust provides assurances, but would not reveal further details. The regulator is understood to have been concerned about directors sitting on the boards of both the for-profit and proposed non-profit parts of the business.
It feared the non-profit registered company, which would manage properties, would merely be used to boost the profits of the rest of the business, rather than to meet a social purpose.
Graeme Moran, managing director of Assettrust Housing, said he expected to conclude negotiations with the HCA in ‘the coming days’. He added it would ‘be the first time that the HCA will have awarded “not-for-profit” registration status to a completely new entrant organisation from the private sector’.
The move reflects the challenge the new regulator faces in grappling with how it regulates providers with parent companies that are for-profit or unregistered.
Mr Ashby warned last month that unregistered parent companies could potentially ‘undermine or threaten the viability’ of housing associations, because the money generated from social assets could leak out to the riskier private sector.
The regulator will publish guidance later this year or in early 2013 aimed at ring-fencing the value of social housing assets.
In numbers: Assettrust Housing
Assettrust’s last annual turnover
capital a year Assetttust hopes to unlock
the number of social rent properties to which Assettrust wants to offer its shared ownership product
8 per cent
expected take-up rate of Assettrust’s shared ownership product from the 500,000 offers
the number of social rented homes Assettrust plans to buy to convert into shared ownership properties