Explanatory note

Under Part XVI of the Housing Act 1985 an owner of a defective dwelling (one in a class designated by the Secretary of State because the buildings are defective by reason of their design or construction) can, if the appropriate conditions are fulfilled, require the local housing authority to give him a grant to reinstate the dwelling or, sometimes, require the authority to repurchase it from him at 95 per cent. of a “defect-free” price.

These regulations apply where an owner of such a dwelling has defaulted on a mortgage on it and the mortgagee is both entitled to sell the dwelling and is in possession of it. Regulations 3 to 18 give the mortgagee the right to require the local housing authority to repurchase the dwelling at 95 per cent. of the “defect-free” price (if the appropriate conditions are fulfilled) instead of the mortgagee having to sell it on the open market.

Where the mortgagee is a public sector authority, Part III of the regulations enables the defective dwelling to be vested in the mortgagee instead of being sold. By regulation 22 the owner is to be credited with 95 per cent. of the “defect-free” value both in this case and where a defective dwelling is vested under section 452 of the Act (vesting of house in authority entitled to exercise power of sale).

The Secretary of State is empowered by section 569 of the Act to provide exchequer assistance to authorities which incur expense in giving reinstatement grants or in repurchasing defective dwellings. In the case of repurchase, exchequer assistance is based on the difference between the amount paid (95 per cent. of the defect-free value) and the value of the dwelling in its defective state. Regulation 23 modifies section 569 to enable an equivalent exchequer contribution to be paid in the case of the vesting of a defective dwelling under Part III of the regulations or section 452 of the Act.