Inside Housing – Commentary – Preparing for the end of a private finance initiative

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In addition to the list above, there will be different considerations depending on whether the housing PFI is a Housing Income Account (HRA), i.e. social housing, or a non-HRA contract.

Irrespective of the “type” of PFI, as noted above, surveying arrangements will require careful attention so that all steps are taken at the right time to understand the physical condition of the properties and that liabilities up to and after expiration are clearly identified. and put into action. Given the amount of individual surveys required, their logistical complexity is greater than that of single-asset PFI contracts (eg, building a hospital).

“Once you start reading the guidance, it becomes clear that there is still a lot of work to be done before a successful release can be achieved and the seven year figure offered by the API becomes a sensible starting point”

In addition, the treatment of residual land value requires careful analysis because deviations from standard drafting were often granted by the Secretary of State. This has the effect that the parties should not make assumptions based on the standard wording of the IFP, as it may have changed.

In a non-HRA PFI contract, if the public authority does not retain the assets after expiration, it would be wise to review the appointment agreement given that so many years have passed since it was originally negotiated. The appointment agreement gives the public authority the right to appoint the tenants of the PFI buildings. Account should be taken of the terms of consultation (statutory and informal) and notification of tenants and tenants, in particular in the event of a change in the management terms at the expiry of the housing PFI contract.

Once you start reading the advice, it becomes clear that there is still a lot of work to be done before a successful release can be achieved, and the seven-year figure offered by the API becomes a sensible starting point.

Early engagement, an understanding of what is really happening on the ground and a good understanding of the contract are paramount. While it is important for parties to determine their own contractual and commercial positions in order to be better protected, experience shows that early collaboration can reduce time and costs for all parties involved and reduce the likelihood of acrimonious relationships.

API recommends the creation of a working group to focus on managing the contract over the past seven years and ensuring that obligations are met, while another group focuses on exiting and another on continuity of service.

While plenty of guidance is now available for communities nearing the end of their housing PFIs, it should be kept in mind that each community will be subject to its own constraints and agendas – and that guidance is only the foundation for a successful exit. , the rest will be contextual to that authority.

Amardeep Gill and Lucy Doran, Partners, Trowers & Hamlins


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