Social Housing Development and the Procurement Act 2023 (PA23)

What package?

Where a developer offers to sell land, but only if it builds out social housing on that land, the developer is offering a ‘package deal’, i.e. usually a package of planning permission, design, works and land.

Do you have to procure package deals through competition?

When a social housing provider buys just land or land with completed new houses, it is exempt from PA23. If the developer only agrees to sell if it also carries out the works, this is a works contract, as the housing provider will usually include obligations to transfer the land and then carry out the works in the contract.

Housing providers usually argue that procurement law allows the works contract element of the package deals to be directly awarded without competition, because the housing provider has no other way of meeting its requirements for social housing in the locality of the development if:

1. the developer will not sell the land without carrying out the works, and 
2. the social housing provider has significant demand for social housing in that area, and
3. land supply is restricted to this opportunity, so this is the only way of meeting the demand. 

Most social housing providers used the negotiated procedure without publishing a contract notice to award package deals under PCR15. Social housing providers were supposed to publish a contract award notice once the package deal had been let, but most didn’t.

So what’s different under PA23?

In a word, transparency. The PCR15 required one notice, and no one remembered to publish it.  The PA23 requires many publications on the central digital platform, including:

1. A transparency notice – setting out exactly what the deal is, and why it can be awarded without competition;
2. A contract award notice – published before the contract is entered into; and
3. A contract details notice – setting out mostly the same information as the transparency notice; and
4. A copy of the contract. 

So this is quite a change. Whilst previously thought of as ‘low risk’ in terms of challenge, housing providers entering into package deals would now be well advised to consider the evidence that they are gathering before leaping into each deal.  

If there is no transparency (i.e. you forget all four publication requirements) in relation to the award of package deals, then the housing provider risks that transaction being set aside by the Court if challenged at any point up to six months after entering into the transaction.  

This would cause considerable difficulties, as at six months into most deals, the homes will have at least foundations by that stage and the land will have transferred. 

Whilst there is no chance that the sector will or should turn down all package deals because of PA23, entering into those deals with more thought as to the procurement position to justify the direct award is absolutely necessary.  

Please get in touch if you want to discuss.