Commentary on Parts Part 7 – Repayment Charges
194.Under section 59(1) or (2) or paragraph 6(1) of schedule 5, a local authority is entitled to recover certain expenses and payments, including interest and administrative expenses. Section 172 gives a local authority in that position power to recover sums by registering a charge (called a repayment charge) in the property registers in respect of the relevant living accommodation or, in the case of a demolished house, of its site. The amount that can be recovered by a repayment charge (called the repayable amount) is the lowest of three sums: the amount that is recoverable under section 59(1) or (2) or paragraph 6(1) of schedule 5; or a lower amount set by the local authority; or any maximum amount that is prescribed by Ministers by order. The repayable amount is due to be paid in 30 equal annual instalments, but it may be redeemed at any time by a payment to the local authority of an agreed sum or, if agreement cannot be reached, a sum decided by Ministers. The local authority must register a repayment charge and its discharge (when the repayable amount is fully repaid or redeemed early) in the appropriate land register. A repayment charge may not be registered against living accommodation which is not a building or used to recover money due under section 59(2) from a landlord who does not own the relevant living accommodation.
195.Section 173 provides that a registered repayment charge is proof that a charge exists on the living accommodation to which it refers and a registered discharge is proof that the charge has been discharged. A registered repayment charge has priority over all future burdens and incumbrances on the living accommodation and all existing ones, with some specified exceptions relating to statutory provisions. The local authority can enforce a registered repayment charge against any owner of the living accommodation, except someone who acquires right to the property in good faith and for value before registration has taken place and anyone who derives title from such a person.
196.Section 174 gives Ministers power by order to specify the form of a repayment charge or discharge and to make further provision about the repayment or early redemption of amounts repayable under a repayment charge.