Guidance

Glossary for Homes England cashflow

Published 9 May 2024

Applies to England

Glossary

Abnormal costs

Abnormal costs are additional or unusual costs that you might face when developing a site. Common examples of abnormal costs are ground remediation works, for instance removal of Japanese Knotweed or remediating underground mine-shafts; the use of specialist foundations, e.g. piling, as a result of ground conditions; retaining walls.

Affordable Homes Programme

The Affordable Homes Programme provides grant funding to support the capital costs of developing affordable housing for rent or sale.

Affordable homes

Homes sold to a Housing Association or similar, to then be sold to eligible homebuyers at a discount compared to market prices.

Affordable rent

Homes let at below market rent by a registered provider. The rent, including service charge, is set at up to 80% of the local market rent for an equivalent home.

Cashflow

You will need to provide a detailed cashflow. This will help us structure a deal and calculate how much loan we can offer you and how much money the project could receive each month.

While completing your cashflow, you will need to tell us about:

• the homes you are building
• the costs involved in building the homes
• any funding arrangements already in place, including the cash you have injected into the project.

CIL contributions/Community Infrastructure Levy contributions

s106/CIL contributions are an agreement with the Local Planning Authority. If an indexation has been applied, this means an increase in the financial contribution in line with inflation.

Completion

Practical completion is when the last dwelling has been handed over, with all homes approved as fit for occupation in accordance with the relevant certifications and requirements.

Construction costs

Construction is the cost of building the houses, or equivalent. This should also include refurbishment or renovation costs.

Contingency

This is the contingency budget that has been allocated to unforeseen cost increases. Homes England would ordinarily recommend a contingency of at least 10% of infrastructure, construction and abnormals.

Deferred payments

A deferred payment occurs where there is an agreement to delay or defer some or all of the land purchase cost. Deferred payments could be due on specific dates or when certain conditions are met.

Equity

Cash injected into the project by the developer to meet development costs.

Gross Development Value (GDV)

The total value of a property development project.

Incurred to date

The value of all costs incurred to date for each cost category. These are costs which have been spent on the project up to today.

Infrastructure costs

Infrastructure is anything associated with providing wider services to the development. For example, roads, footpaths, street lighting, utility services, public open spaces.

Intermediate rent

Homes sold to a Housing Association or similar, to then be let to eligible tenants at a discount compared to market prices.

Homes let at below market rent by a registered provider. The rent, including service charge, is set at up to 80% of the local market rent for an equivalent home.

Land acquisition cost

This could include costs such as Stamp Duty Land Tax (SDLT) and legal and professional fees associated to the purchase of the land. This does not include the cost of the land or any work done to date.

Marketing costs

Marketing is the cost related to the marketing of the development, specifically any marketing activity not already covered by agents’ sales fees.

Modern Methods of Construction (MMC)

Modern Methods of Construction (MMC) is a wide term, covering a range of offsite and onsite techniques. MMC provides alternatives to traditional methods and has the potential to deliver significant improvements in productivity, efficiency and quality for both the construction industry and public sector.

Open market housing

Homes sold or rented directly to homebuyers and renters on the open market.

Prelims/Preliminary costs

Prelims are the ongoing project-specific overhead costs associated with managing and maintaining the development. For example, welfare facilities or security.

Private rented sector

Classification of housing tenure covering property owned by a landlord and rented to a tenant.

Professional fees

These are the fees of the services provided in the development of the site, such as a quantity surveyor, architect or environmental reports. Do not include any fees that have already been included in the land acquisition costs.

S106/Section 106

Section 106 (s106) agreements are legally-binding agreements or planning obligations between the landowner and Local Planning Authority, usually agreed after the granting of planning permission.

S106/CIL contributions are an agreement with the Local Planning Authority. If an indexation has been applied, this means an increase in the financial contribution in line with inflation.

Sales costs

Sales costs are the costs attributable to the sale of each home.

Sales recycling

Revenue from the sale of homes that is not taken in repayment of the Homes England debt, but is instead released to meet ongoing development costs.

Site

A site is an area or piece of land on which the construction work is being carried out.

Social Rent

Low-cost rental social housing that is let at below market rent by a registered provider based on a formula set by the government.

Tenure

Tenure refers to the conditions around ownership or rental of the properties. For example, Shared Ownership or Social Rent. We provide more information on eligible tenure for affordable housing on our website.

Tenure detail

Tenure detail is a sub category of tenure and describes the type of tenure.