The Local Authorities (Capital Finance and Accounting) (England) Regulations 2003

Capital receipts reduced by costs of buying back dwellings in the preceding year

20.—(1) Subject to regulation 12(5), for the purposes of calculating the amount specified in regulation 12(4)(a), a capital receipt derived from a disposal by a local authority of an interest in a dwelling, which meets the conditions specified in paragraph (2), shall be treated as reduced by an amount determined in accordance with paragraph (3).

(2) For the purposes of paragraph (1), a disposal meets the conditions specified in this paragraph if—

(a) the authority makes the disposal by—

(i) conveying the freehold interest in the dwelling;

(ii) granting a lease of the dwelling for a term of not less than 125 years;

(iii) assigning its entire leasehold interest in the dwelling; or

(iv) granting a shared ownership lease; and

(b) where the interest disposed of is a lease other than a shared ownership lease, the authority estimates that not less than 90 per cent. of the capital value of the lease has been, or is to be, received by them within one year of the date of the disposal.

(3) The amount of the reduction for the purposes of paragraph (1) is—

A - B

where—

• A is 47 per cent. of the amount, if any, by which the total net expenditure exceeds the sum of £50,000; and

• B is the total amount, if any, by which capital receipts of the authority have already been reduced in the current year under this regulation.

(4) In this regulation—

“current year”, in relation to any capital receipts for a disposal, means—

(a)

in the case of notional capital receipts, the financial year in which the disposal is made; and

(b)

in any other case, the financial year in which the capital receipts are received;

“new town corporation”, “housing action trust” and “urban development corporation” have the same meaning as in section 4 of the Housing Act 1985 (other descriptions of authority)(1);

“preceding year”, in relation to any capital receipts, means the financial year immediately preceding the current year;

“shared ownership lease” has the same meaning as in regulation 19; and

“total net expenditure” is—

C - D

where—

(i)

C is the total amount of expenditure incurred by the local authority in the preceding year on acquiring relevant interests in land (including the administrative costs of and incidental to any such acquisitions); and

(ii)

D is the total amount of reductions made by the authority under regulation 19 in the preceding year by virtue of expenditure on repurchases incurred in that year and administrative costs of and incidental to repurchases incurred in that year.

(5) In this regulation, an interest in land is a relevant interest if—

(a) it is the freehold interest or a leasehold interest in a dwelling and is not acquired pursuant to a compulsory purchase order;

(b) the freehold interest or a leasehold interest in the dwelling has previously been disposed of by the authority, another local authority, a new town corporation, a housing action trust or an urban development corporation; and

(c) the person from whom it is acquired is not a body of persons corporate or unincorporate.

(1)

Section 4 was amended by section 62(7) of the Housing Act 1988 (c. 50). There are other amendments to section 4 that are not relevant to these Regulations.