2015 Following Brandon Lewis’ announcement of extensive deregulation measures for housing associations, Chris Wilson, head of social housing at KPMG, comments on a potential side effect, which could cause a substantial rise in values of social housing:
“With the Government publicly stating it will work to reverse the ONS classification of housing associations as public sector bodies, the extent of Mr Lewis’ deregulation measures was hardly a surprise. However, what so far doesn’t seem to have been fully explored is the effect one of the measures could have on the value of social housing properties.
“Currently, housing associations that choose to use a valuation for accounting use RICS EUV-SH (existing use value – social housing) methodology, which takes into account that social housing properties can’t be sold outside the sector, because of the restriction on consent for disposal from the HCA. Consequently, this depresses the value below a vacant possession open market value or ‘Market Value Subject to Tenancies’. Deregulation changes this by removing the consent regime, therefore meaning that the accounting value of social housing properties could be substantially higher.
“Such a change would be very beneficial for housing associations’ accounts and could help to negate the potential adverse impact of the 1% rent cuts policy on asset values. Of course, valuation is a matter for the surveyors, but if values do increase it would seem the Government has handed the sector a sizeable olive branch.”
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