Insolvency of registered providers of social housing

Insolvency of registered providers of social housing

The Housing and Planning Act 2016 introduces a range of housing and planning related reforms, including a special administration regime for registered providers of social housing at risk of insolvency proceedings, which places their affairs under the management of a housing administrator appointed by the court. Kate Cook, senior knowledge lawyer in the Housing Finance Team at Addleshaw Goddard LLP, discusses the key features and objectives of housing administration.

What are the key features of housing administration?

Housing administration was introduced by Part 4, Chapter 5 of Schedule 5 to the Housing and Planning Act 2016 (HPA 2016). It was the brainchild of the regulator of social housing (the regulator) which felt it needed wider reaching powers to deal with the insolvency of a large or complex private registered provider (RP) of social housing. This came about due to lessons learned from the near failure of Cosmopolitan Housing Group and RPs’ increased diversification, debt levels and exposure to the housing market.

The key features of housing administration are:

  • a housing administration order can only be made by a court in respect of an RP which is a company, registered society (including a community benefit society (CBS)) or charitable incorporated association (CIO)
  • only the Secretary of State or, with the consent of the Secretary of State, the regulator may make an application to court for a housing administration order
  • a housing administrator therefore cannot be appointed by creditors, whose enforcement powers remain broadly as under the existing Housing and Regeneration Act 2008 (HRA 2008) regime—but creditors cannot take enforcement action under HRA 2008 during a housing administration. It is likely that this will prevent a run on floating charges from creditors which was a concern of the sector when the original draft Housing and Planning Bill would have enabled creditors to appoint an administrator over an RP out of court, thereby creating parallel ordinary and special administration regimes for the sector
  • the housing administrator takes control of the whole of the business,

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About the author:

Anna joined the Restructuring and Insolvency team at Lexis®PSL in August 2013 from Berwin Leighton Paisner where she was a senior associate in the Restructuring Team.

Anna has worked on a number of large scale restructurings primarily in the UK market acting on behalf of lending institutions.

Recent transactions include the restructuring of a UK hotel chain and the administration sale of part of the Connaught group. Anna has also spent time on secondment at The Royal Bank of Scotland and trained at Clifford Chance qualifying in 2007.