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Regulator was warned about ‘sham transactions’ in 2015
The Regulator of Social Housing was warned about a housing association accused of using “sham transactions” to violate agreements to provide affordable housing in 2015, Inside Housing can reveal.
London District Housing Association (LDHA) was accused by Southwark Council in two court cases of “conspiring” to sell homes meant to be used as Section 106 affordable housing on the open market.
The association signed Section 106 agreements agreeing to provide homes as shared ownership but then sold them as market sale while pretending they had been ‘staircased’ to 100% ownership on day one, the council alleged.
Southwark Council took LDHA and several other organisations to the High Court in 2015 and 2016.
Both cases reached confidential settlements, with the defendants denying all allegations and none of them conceding they were any part of any sham transaction or conspiracy. In July last year, a judge authorised the council to buy the homes back.
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Following an Inside Housing investigation, Hackney Council called for the regulator to reopen its investigation into LDHA. The regulator previously investigated the association between March and May 2017, but closed that inquiry without providing any details.
Inside Housing understands that a third London borough complained to the regulator that LDHA had breached Section 106 agreements three years ago but has received only generic holding responses since, despite regularly chasing up the issue.
Meanwhile, Hackney Council has received only an initial acknowledgement that the regulator received its complaint, sent more than three weeks ago.
A Hackney Council spokesperson said the regulator told them the information the council sent would be considered alongside the other information it has already received on LDHA.
The regulator, however, has so far declined to comment on further documents provided to it by Inside Housing.
These indicated that housing associations funded by companies accused of “conspiring” with LDHA to violate Section 106 agreements have bought homes formerly owned by LDHA in nine boroughs in the capital.
A spokesperson for the regulator told Inside Housing: “The regulator considers all referrals it receives. We don’t comment on investigations, but report regulatory concerns through regulatory judgements and notices.”
