Stock Transfer - frequently asked questions

What is stock transfer?

Stock transfer is where a council transfers the ownership and management of its homes (rented and leasehold) to a not for profit Registered Provider, or housing association.

Stock transfer has benefited over 1 million households and resulted in investment of £15bn in improvements to neighbourhoods and new housing since 1988. This investment would not have been possible if the council had kept hold of the housing.

In addition to improvements to homes, housing associations do a lot of excellent work tackling anti-social behaviour, appointing neighbourhood wardens and organising activities for young people. The Government’s Respect agenda puts housing associations at the heart of tackling anti-social behaviour.

The Survey of English Housing 2006/7 found that 51% of tenants who had transferred from a council to a housing association said that the service provided by the housing association was about the same in comparison. 33% thought it was better.

Stock transfer can only happen if tenants vote for it in an independent ballot.

Stock transfers nationally

Nationally tenants have voted ‘yes’ to transfer in 80% of ballots

No housing association has ever broken rent commitments made to tenants at the time of transfer

82% of tenants who transferred to a housing association were satisfied with their landlord – 13% higher than those still in council homes

What are the benefits of stock transfer?

The advantages of transferring to a respected and established housing association such as Circle are numerous.

Stock transfer was established in order to increase investment in social housing. The Government has stated that all social homes must meet its ‘Decent Homes Standard’ by 2010. In order to reach the standard, investment and improvements are required to homes, which many councils’ can’t afford. Housing associations don’t pay money back to the government to fund social housing nationally and are also able to borrow money. They therefore have more money to spend on housing, community improvements and services.

Most transfer housing associations go above and beyond the basic Decent Homes Standard when carrying out improvement work and also provide greater choice to tenants in regards to the type of fittings and finishes they would like.

Some councils have been directly funded to meet the Decent Homes Standard, should tenants just hope that their council can do the same?

The government does occasionally allow councils to borrow money but is rare as these borrowings show up on the public sector balance sheet.

The Decent Homes Standard is a recommendation and not a legal obligation. When tenants are asked to vote in a transfer ballot they can either vote for stock transfer and get their homes improved, or vote against, and hope their council will get some money from the government.

What security is there for tenants if they transfer?

Tenants’ key rights and entitlements are protected when transferring form council to a housing association. These rights are set out in law, in tenancy agreements, in the transfer organisation’s policies agreed with the council as part of the transfer, and in a ‘Tenants’ Charter’ set out by the Government body that regulates associations.

All tenants get a written offer of what may change before they vote. This sets out to answer all questions about the transfer, setting out the benefits and any changes so that residents can vote in an informed way.

What happens to rents after transfer?

The Government has regulations in place concerning rents charged by councils and housing associations. These regulations set maximum rents and outline a process to ensure that housing association and council rents charge broadly the same amounts by 2012.

Rent for housing associations and councils has been calculated in the same way since April 2006. Transfers are bound by these rules so rents cannot be increased by more than the government allows. In addition, some housing associations give rent guarantees to new tenants which have to be kept.

Are housing associations accountable to tenants?

Tenants have a direct say in the management of the association via tenant members of the board. The boards of housing associations are made up of tenants, council nominations and members of the public. The board oversees the running of the association and are involved in key decisions to do with the organisation.

Housing associations go to great lengths to make sure that tenants are involved in how they run their organisation, through their board and via resident consultation.

Circle has an enviable record on successful stock transfers

Circle has attained a yes vote across twelve separate ballots

Six of the seven partner RPs that form Circle were established via stock transfer

Stock transfers in Fenland, Mole Valley, Tower Hamlets and Mardyke have added nearly 11,000 homes to the Circle Group

Circle’s expertise in regeneration ensures that complex, long term schemes are viable

Over 320 staff have transferred to the Circle Group from local authorities

Aren’t housing associations private companies?

Housing associations are not private companies. They are not-for-profit organisations that are prohibited by the law and their own rules from making a profit.

Any surplus made is ploughed back into additional and improved services, neighbourhood and community initiatives and investment in better homes and new homes.

Do housing associations have shareholders?

Some housing associations do have shareholders but this isn’t the same as holding shares in a private company. These shares aren’t actually worth anything and can’t be sold. The shares allow people to be involved in the running of the organisation and respond to the needs of residents and other stakeholders.

How many stock transfer ballots have tenants voted against?

The number of positive ballots far out numbers the number of negative ballots. Almost 80% of tenant ballots have returned ‘yes’ results.

What about leaseholders?

Leaseholders are not invited to vote in stock transfers because they do not pay rent (except for a national ground rent). Leaseholders are consulted on improvements the housing association wishes to make and will have to cover costs involved with these improvements. This is not a new system, all leaseholders know that they have to cover this cost and benefit from an increase the value of the property.

Can tenants return to the council if they are unhappy with the housing association?

Once stock has transferred, it can’t go back to the council. The housing association will have secured funding to buy and improve the homes which neither local nor central government would be able to buy back.

There has never been a campaign to transfer back from housing association to council in the past twenty years.

What other options are available to the council?

Some councils have brought their homes up to the Decent Homes Standard using their existing resources. For those who could not afford this and did not want to go down the stock transfer route, two other choices were introduced.

Arms Length Management Organisations (ALMO)

These are separate companies set up to manage the stock and if perform well have access to borrowing but still limited by the Government and only aimed at reaching the minimum Standard, little being allowed for neighbourhoods. This option is only open to authorities whose performance has been assessed by the Housing Inspectorate as ‘good’ (two stars) or ‘excellent’ (three stars).

There is no statutory requirement for a ballot of tenants when an authority intends to establish an ALMO but tenant consultation is viewed as central to the process. Beyond the requirements set out above, local authorities have a great deal of discretion over how they devise their ALMO arrangements. ALMOs are usually companies that are 100% in the control of local authorities and are usually constituted as companies limited by guarantee.

Private Finance Initiative (PFI)

PFI also involves retention of the authority’s stock but are generally not viewed as an option that can deliver the Decent Homes standard to all of an authority’s stock; it is viewed more as a partial stock solution.

Of the eight PFI Pathfinder schemes set up in 1999 only two have so far entered into PFI contracts. The Government is increasingly favouring a ‘mix and match’ approach to achieving the decent homes target which could involve authorities using two or more of the options available across the range of their stock.

Further information

• For more information about stock transfer, visit the National Housing Federation website.
• For case studies on successful stock transfer see our stock transfer case studies

28/05/09 19:11