The Legal and Regulatory Landscape for Social Housing Investors

Procurement Act 2023: The Practical Impact for Social Housing

The Procurement Act 2023, which came into force on 24 February 2025, fundamentally reshaped social housing organisations' procurement demands. This legislation marked the most significant change to procurement laws in over 30 years and created a more transparent and flexible framework for public sector purchasing.

Key Benefits for Suppliers and Investors

The act introduces several transformative changes that benefit those operating in the social housing sector:

• Shift from Most Economically Advantageous Tender (MEAT) to Most Advantageous Tender (MAT), allowing contracts to be awarded based on non-financial criteria including quality, innovation and environmental impact

• Introduction of a new 'competitive flexible' procedure that simplifies bidding processes

• Better opportunities for SMEs through requirements to break large contracts into smaller lots

• Strengthened payment terms, with 30-day payment provisions now applying to a broader range of contracts

Digital Transformation Through Find a Tender

The Find a Tender service is key to the act's implementation, launched alongside the legislation as the central digital platform for public procurement. This free-to-use system offers:

For social housing providers, this digital transformation means greater accountability and transparency in how public money is spent, while creating more accessible pathways for diverse suppliers to engage with the sector.

Planning Reform Following the King's Speech 2024

The King's Speech delivered on 17 July 2024 established a bold vision for planning reform, positioning the planning system as an enabler rather than an obstacle to growth. The government's approach is clear: planning should facilitate democratic engagement with "how, not if" homes and infrastructure are built.

Planning and Infrastructure Bill

The Planning and Infrastructure Bill is the lynchpin of these reforms, introducing several key measures to accelerate development:

• Streamlining the delivery process for critical infrastructure, particularly to boost renewable energy and upgrade the national grid

• Reforming compulsory purchase compensation rules to ensure landowners receive fair but not excessive compensation

• Increasing local planning authorities' capacity to improve performance and decision-making

• Modernising planning committees to enhance local decision-making processes

Building Safety Act's "Golden Thread" Requirements

The Building Safety Act introduced the "golden thread" concept as a transformative approach to building safety management following Dame Judith Hackitt's landmark report. This digital record system has now become a legal requirement for all Higher-Risk Buildings (HRBs) in the UK.

Fundamental Concept and Purpose

The golden thread is a comprehensive digital record that acts as the "single source of truth" for building safety information. Its primary purpose is twofold:

This information must be:

• Kept in electronic format

• Accurate and up-to-date

• Intelligible to intended readers

• Secure from unauthorised access

• Only changed according to documented procedures

Implementation Timeline and Compliance

For social housing investors, implementation requirements vary based on building status:

• Existing HRBs: Information must be compiled from legacy records

• HRBs under construction before October 2023: A Golden thread should be created from existing information

• New HRBs from October 2023 onwards: Must have a golden thread in place before construction begins

The April 2024 implementation of the Higher-Risk Buildings Regulations has made these requirements fully operational, with Building Assessment Certificates now mandatory. For investors, this necessitates digital systems and clear responsibility allocation to maintain ongoing compliance.

Legal Structures for Social Housing Investment

UK Real Estate Investment Trusts (REITs) are attractive vehicles for social housing investment as they offer significant tax efficiencies whilst also meeting critical housing needs, such as:

• Complete exemption from the current 25% corporation tax on property rental income and qualifying capital gains

• Requirement to distribute at least 90% of property rental income as Property Income Distributions (PIDs)

• PIDs are subject to 20% withholding tax

Qualification Requirements

To qualify for REIT status, entities must satisfy specific conditions:

Recent Regulatory Relaxations

The government has implemented significant relaxations to REIT regulations since April 2022, including:

• Single property REITs now permitted for commercial properties valued at £20 million or more (effective July 2023)

• Unlisted REITs now allowed, subject to ownership conditions

• Simplified distribution rules for partnerships, removing the automatic 20% withholding tax requirement in certain cases

• Further relaxations in February 2024 making it easier to meet the £20 million value condition

These changes have attracted diverse investors, including pension funds, asset managers, and specialist social housing providers like Social Housing REIT, which focuses on supported housing for vulnerable adults.
Learnt more about different financing approaches to social housing investment, or talk to us about advice on financing your investment.

Recent Case Law Affecting Landlord-Tenant Relationships

Tenant satisfaction and safety are of paramount importance in social housing.

The Awaab Ishak Case

The tragic death of two-year-old Awaab Ishak in December 2020 from respiratory conditions caused by mould exposure has reshaped social housing regulation. Despite his family reporting mould issues multiple times, Rochdale Boroughwide Housing failed to take action, even after receiving a pre-action letter from solicitors and warnings from health visitors. This case revealed systemic failures in social housing management, including what the Housing Ombudsman found to be "dismissive and discriminatory" of asylum seekers and refugees.

The case directly led to Awaab's Law, incorporated into the Social Housing (Regulation) Act 2023, which mandates strict timelines for landlords to address damp and mould issues. Though originally scheduled for earlier implementation, the full enforcement of Awaab's Law has been delayed until 2027, causing significant concern among housing advocates.

Godagama & Edirisinghe v Hanson (2024)

Mr Hanson, a tenant living in an unlicensed, unsafe garden studio successfully argued it was unfit for habitation. The court agreed but rejected full rent refund claims, opting instead for partial damages based on impact. The case reinforces landlords’ duties and clarifies how courts assess compensation for unfit living conditions.

This landmark May 2024 Circuit Judge decision established critical precedent for unfitness claims:

The case rejected the "binary approach" to unfitness damages, establishing that compensation should be proportionate to the specific conditions, even when a property fails the fitness for human habitation test under Section 9A of the Landlord and Tenant Act 1985.

These cases demonstrate the courts' increasingly tenant-protective stance and the severe financial consequences for landlords who fail to maintain habitable properties.

Find out about mitigating the risks of social housing investment and compare social housing investment with other property investment models. Or take a look at our guide to social housing investment by investor type.