Explanatory note

These Regulations amend the Housing (Service Charge Loans) Regulations 1992 (the 1992 Regulations), where the housing authority (as defined in section 450A and 450B of the Housing Act 1985 (the Act)) is a local authority.

Section 450A of the Act and regulation 2 of the 1992 Regulations give tenants a right to a loan (a mandatory loan) in respect of service charges for repairs where the lease was granted under Part V of the Act (the right to buy) and the landlord is a housing authority.

Section 450B of the 1985 Act and regulation 5 of the 1992 Regulations empowers housing authorities to make a loan (a discretionary loan) in respect of service charges for repairs.

Regulations 6 and Schedule 2 to the 1992 Regulations provide for the rates of interest which are to be payable on such loans and, in particular, apply the provisions of Schedule 16 to the Act where a local authority is the lender.

These Regulations disapply Schedule 16 to the Act as regards the rate of interest for discretionary loans and, as a consequence, the rate of interest payable on such loans shall be such a reasonable rate as may be determined by the local authority making the loan. Local authorities are thus put in the same position as other lenders under the 1992 Regulations.

The position in relation to mandatory loans remains unchanged.