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Capital Funding Guide

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Homes and Communities Agency
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10. Social Rent

This chapter sets out the procedures which must be followed and the conditions under which providers must progress social rent schemes; and the basis upon which the Agency will assess applications for grant.

1. Overview

1.1 Purpose

1.1.1 This chapter sets out the procedures which must be followed and the conditions under which providers must progress Social Rent schemes; and the basis upon which the Agency will assess applications for grant.

1.2 Context

1.2.1 The principal low cost rental accommodation delivered under the 2015 to 18 Affordable Homes Programme (AHP) is Affordable Rent. However, there is limited provision for Social Rent, in exceptional circumstances.

1.2.2 As required in the 2015 to 18 AHP grant agreement it will be for providers to demonstrate through evidence that there are exceptional reasons why Social Rent provision should be allowed, in preference to Affordable Rent.

1.2.3 Social Rent is low cost rental accommodation that is made available at rent levels that are set in accordance with the regulator’s Rent Standard (including Rent Standard Guidance). For further information regarding Social Rents please refer to the Rent Standard (including Rent Standard Guidance).

1.2.4 The following scheme types are included under the Rent heading:

  • New Build including Acquisition & Works, Off the Shelf and Works Only schemes Rehabilitation including Acquisition & Works, Existing Satisfactory, Purchase and Repair and Works Only schemes
  • Re-improvement of Registered Provider owned stock but not major repairs. For information on major repairs please see the Repair chapter

Further information on the above scheme types can be found in section 3 of the Procurement and Scheme Issues chapter.

1.3 Scheme Administration

1.3.1 Programme Management 15 to 18 Affordable Homes Programme Section 3 sets out the Scheme Administration requirements which will also apply to Social Rent.

1.3.2 Programme Management 15 to 18 Affordable Homes Programme Section 5 covers Programme Change Notices which will also apply to Social Rent.

1.4 Right to Acquire

1.4.1 The Right to Acquire provisions of the Housing and Regeneration Act 2008 (section 180 etc.), apply to all dwellings built or acquired for the social rented sector (including Affordable Rent) with public funding since 1 April 1997, unless exempted. It is a condition of grant funding that Registered Providers comply with this legislation. Please refer to the Right to Acquire chapter for more information.

1.4.2 The Right to Acquire provisions in the Housing and Regeneration Act 2008 require the Agency to notify grant recipients before giving grant that schemes will be regarded as publicly funded for Right to Acquire purposes.

1.4.3 For schemes developed under the 2011 to 15 and the 2015 to 18 Affordable Homes Programmes, the Agency will meet this obligation by means of an Investment Management System notification confirming to providers of Social Rent that schemes are treated as publicly funded for the purposes of the Right to Acquire. This notification will be available for providers to print each time a scheme is approved on Investment Management System.

1.4.4. For schemes developed under the 2008 to 11 National Affordable Housing Programme, the Agency will meet this obligation by confirming that schemes developed for Social Rent will be subject to the Right to Acquire in the Conditions of Grant section of its Approval Notification. Registered Providers will have 14 days in which to accept this condition or to withdraw their application for grant. Making an application for grant funding will imply acceptance that the Right to Acquire is attached to properties included in the scheme.

2. Rents

2.1 General

2.1.1 This section describes the requirements in relation to rents to be charged on grant-funded Social Rent schemes.

2.2 Requirements

2.2.1 Rent policy is subject to the Regulator’s Rent and Tenancy standards and, social rent levels should be calculated according to a formula based on relative property values and relative local earnings.

Social rents are calculated using the formula and data set out in the Department for Communities and Local Government’s Guidance on Rent for Social Housing (for local authorities), and in The Regulatory Framework for Social Housing in England from 1 April 2015 and the Rent Standard (including the Rent Standard Guidance) in The Regulatory Framework for Social Housing in England from 1 April 2015 (for private registered providers).

For details on the calculation of the weekly rent providers should refer to these documents as appropriate.

For further information on rent setting, rent caps and guideline limits please refer to the Agency’s website.

2.2.2 Where there are to be changes to the rents forecast in the original offer the provider must notify the Agency. The Agency may require a revised offer submission for the scheme as the revised rent may affect the amount of grant payable on a scheme.

2.2.3 Providers that wish to participate in the High Income Social Tenants scheme should refer to the Recovery book section 3.4.1.9 for further details.

2.2.4. The Agency expects that the proposed rental income will have been considered together with the long-term operational costs, including that the repayment of loan principal and interest can be met. Any initial revenue deficits should be within the financial and cash-flow capacity of the provider. The Regulator will monitor the effect of development and the general financial status of the Registered Provider.

3. Reporting and Audit Requirements

3.1 General

3.1.1 The reporting and audit requirements for Social Rent are the same as those for Affordable Rent – please see Affordable Rent section 4 for details.