Corporation to review its power to force RSLs to merge or transfer

The move is part of the fall-out from the ODPM’s end-to-end review of the regulator and comes a week after the Court of Appeal decided to allow a judicial review of the forced merger of Clays Lane Housing Co-operative and the Peabody Trust (HT 30 July, page 8).

Housing Corporation chief executive Jon Rouse said: “Following the end-to-end review, we’re having a full review of the powers available to us as regulator.

“This includes the powers we have to force associations to merge or transfer their assets.”

Rouse declined to comment on the specifics of the Clays Lane case and maintained there was no link between it and the corporation’s review of merger powers. “It’s not directly related to that – we’d be doing it anyway.”

The ODPM’s end-to-end review, published on 1 July, did not reach a conclusion on the corporation’s regulatory powers, despite specifically asking whether current powers were “appropriate and proportionate”.

The review’s action plan called on the corporation, the ODPM and the Treasury to “review statutory and non-statutory powers available to the corporation” by June 2005.

However, until this week, the corporation had been focusing on new powers for “light” intervention in associations, not on reassessment of its merger powers.

Forcing a registered social landlord to transfer assets to another, more successful association is a common corporation solution for failing RSLs, with Redland the latest example (HT 30 July, page 13).

Jim Coulter, chief executive of the National Housing Federation, said: “We are concerned that the corporation might use the opportunity of the review to take on broader-based powers to force change of assets at associations, and we would need to be consulted.”

Last Wednesday’s decision by Lord Justices Auld and Jacob to grant Clays Lane leave to pursue a judicial review means the corporation will be in court in December. The decision is the latest move in a lengthy saga, following a statutory inquiry into the association in 2000 that found serious mismanagement.

The corporation decided to force Clays Lane to transfer to the Peabody Trust in March 2002, against the wishes of the former.

Clays Lane, which maintains it has now recovered from its problems, wants instead to merge with Scottish co-op Tenants First.

The judicial review will be the first real test of the corporation’s powers to force mergers and will assess whether it acted properly.