The determination by the Office for National Statistics (ONS), which is the body responsible for deciding on the classification of individual sectors in the economy, takes effect from 19 September 2018 and reverses its reclassification made in September 2016. The determination reflects a similar reversal in England and Wales.
The effect of the ONS' reclassification in September 2016 was to require the Scottish Government to add all new RSL indebtedness, including borrowings from private lenders, to the national accounts. There was concern that this may lead to public control of private borrowing by RSLs. The ONS' rationale was based on the extensive oversight powers of the Scottish Housing Regulator (the ''Regulator''), which under the ONS' criteria is regarded as a central government public body. The powers of the Regulator, include, amongst others, the ability to appoint, remove or suspend officers of a RSL, control the disposal of land and housing units (including consent to the grant of security interests), and control the restructuring of a RSL. Against this backdrop, the Act has been passed to limit the control of the Regulator and therefore limit deemed public sector control. The Act, amongst other things:
- narrows the circumstances in which a manager can be appointed by the Regulator to a RSL, and limits the duration of the appointment;
- in the context of disposals of land and housing units, largely alters the regulatory process from pre-disposal consent to post-disposal notification; and
- removes the need for Regulator consent to an amendment of a RSL's constitution and imposes only a notification requirement on a RSL.
The Act can be found here and a more detailed look at the Act in the context of social housing finance will follow in a separate post shortly.