Accounting Direction 2022
The English Regulator of Social Housing (RSH), has consulted on and updated the 2019 version of “The Accounting Direction for private registered providers of social housing”, and has published the 2022 version. The date for implementation is for periods commencing on or after 1 January 2022, although earlier adoption is encouraged.
The changes from the previous version are not significant and consist of:
- Disclosure of Disposal Proceeds Fund no longer being required as it ceased to exist in April 2020.
- Clarification as to the distinction between “Social Housing lettings” and “Other social housing activities” as disclosed in notes A and B.
- Clarification that the Value for Money reporting requirements set out in the Value for Money (VFM) Standard and amplified in the VFM Code of Practice, are to be reported at a group level.
The RSH believes that the changes are minor in nature, with no additional disclosure requirements, and therefore is encouraging RPs to adopt early.
New Shared Ownership Model
The English Government introduced a new model for shared ownership from 1 April 2021. There were four principal changes to the model:
- The lowest initial share is reduced from 25% to 10%.
- There is a new gradual staircasing offer, which permits purchases of additional shares of 1%.
- A period of 10 years in which the shared owner will receive support from the landlord for essential major repairs and internal repairs.
- The shareholders are given more control when they come to sell their property.
There are possible accounting implications as a result of the changes to the model;
- The responsibility for the landlord to pay for major repairs and internal repairs for 10 years;
- The right to shared ownership gives social housing tenants the right to buy extra shares in their existing homes, thereby providing access to the new shared ownership model.
The new repair free period means that during the first 10 years from the date of the lease the landlord will be responsible for repairs to the external fabric of the building and structure. Repairs in relation to these expenses will not be passed onto the leaseholder.
Leaseholders will be able to ask for a contribution towards up to £500 per year of certain repairs and maintenance.
At present the SORP Working Party have not issued any guidance as to how to deal with the accounting implications of the new model. We however recommend a discussion between your current auditors and advisers to consider the possible implications.