4. Programme Management National Affordable Housing Programme
This chapter sets out the Agency’s requirements in relation to management of Registered Provider development programmes funded through the former 2008 to 2011 National Affordable Housing Programme.
1.1.1 This chapter sets out the Agency’s requirements in relation to management of Registered Provider development programmes funded through the former National Affordable Homes Programme (NAHP) 2008 to 2011.
1.1.2 Please note that the NAHP is closed to new applications and this chapter applies only to Registered Providers who are continuing to develop schemes that were allocated funding on or before 31 March 2011.
1.1.3 There were two routes for bidding for funding under the NAHP:
- Programme Partnering Agreement; and
- Non-Programme Partnering Agreement.
1.1.4 The requirements for schemes bid for under these routes are set out in section 2 and section 3 of the chapter respectively.
1.2 Investment Management System
1.2.1 Registered Providers that received allocations for funding under the NAHP must manage their schemes through the Investment Management System (IMS).
1.2.2 For details on how to access and use IMS please refer to the IMS page on the Agency’s website or contact the helpdesk on 01908 353 604.
2. Programme partnering agreement
2.1.1 This section sets out the process that Registered Providers must follow when developing schemes under the Programme Partnering Agreement.
2.2.1 Following the approval of funding under this route, Registered Providers signed a legally binding contract, referred to as the Programme Partnering Agreement.
2.2.2 The Programme Partnering Agreement sets out the Agency’s and Registered Providers’ obligations and rights. Each Programme Partnering Agreement includes an Annex listing the schemes to be developed, stating the amount of grant and forecast dates (milestones).
2.2.3 There may be Special Conditions stipulated in the agreement in addition to the standard Funding Conditions which have to be met before payment of grant can occur. The Programme Partnering Agreement continues to be valid for the duration of the schemes within it, but if funding is sought under the 2015 to 2018 AHP.
2.2.4 For a copy of the Programme Partnering Agreement please follow the link to the archived 2010 to 2011 CFG
2.2.5 Registered Providers must retain a copy of their signed Programme Partnering Agreement for their audit purposes. Only one Programme Partnering Agreement needs to be signed by the relevant partners regardless of how many schemes that Partnership will deliver.
2.2.6 The Agency will review progress against agreed milestones and targets at review meetings as detailed in the Programme Partnering Agreement. No adjustments to the programme will be permitted without the agreement of the Agency.
2.2.7 Where a number of associations form a consortium to develop schemes under the Partnering Programme route, one association must undertake the role of Lead Partner. The Lead Partner will be deemed responsible to the Agency for a number of additional responsibilities and obligations on behalf of the other associations within that partnership. These responsibilities are outlined in the Programme Partnering Agreement.
3. Scheme administration and data collection
3.1.1 This section applies to all schemes being developed as permanent housing for rent and sale under the 2008 to 11 NAHP.
3.2 Help to Buy Agents
3.2.1 Registered Providers developing shared ownership units must work collaboratively with the Help to Buy Agents to provide shared ownership opportunities to households in accordance with local priorities. Developing Registered Providers must enter in to and sign up to the Service Level Agreement with the Help to Buy Agents that operate in the localities where they are developing.
3.3 Submission Requirements
3.3.1 The scheme submission must comply with the Funding Conditions at Finance 2.2.4 as accepted by the Registered Provider’s Board and confirmed on line by the provider’s Security Administrator at the beginning of each financial year.
3.3.2 Registered Providers must submit the required information on to the Agency’s IMS prior to claiming grant.
3.3.3. Registered Providers will not be able to submit a scheme where the data input differs from the information provided by them at bid stage; only the Agency can make the changes to the allocation in order for the Registered Provider to submit the scheme in IMS. The Agency may require a revised bid submission from the Registered Provider before this can be done. Please see section 5.
3.3.4 Registered Providers must submit data in relation to the milestones to be met on to the Agency’s IMS following confirmation of their allocation.
There are 6 key events (milestones) in the processing of schemes (though not all of these apply to all products):
- Detailed planning permission
- Start on Site
- Final Cost (Practical Completion)
- Exchange of Contracts
Please see 4.1.4 for more details on milestones.
3.3.5 The Registered Provider must be able to confirm acceptance of the on-screen certifications.
3.3.6 Detailed guidance on how to input this data on to IMS is given as on-line help.
3.4 Scheme Cost Information
3.4.1 The Agency collects scheme cost information, broken down in to:
- Acquisition cost
- Building works cost; and
3.4.2 However, only certain types of expenditure are eligible for funding in each of these cost areas.
3.4.3 For acquisition costs, funding is available in respect of the purchase price of land/property only.
3.4.4 For building works costs, funding is available in respect of the following:
- Main works contract costs
- Major site development works (where applicable). These include piling, soil stabilisation, road/sewer construction, major demolition;
- Statutory agreements, associated bonds and party wall agreements (including all fees and charges directly attributable to such works) where applicable
- Additional costs associated with complying with archaeological works and party wall agreement awards (including all fees, charges and claims attributable to such works) where applicable
- Home loss and associated costs. This applies to new build only; and
- VAT on the above, where applicable.
3.4.5 For on costs, funding is available in respect of the following:
- Legal fees, disbursements and expenses;
- Stamp duty;
- Net gains/losses via interest charges on development period loans;
- Building society or other valuation and administration fees;
- Fees for building control and planning permission;
- Fees and charges associated with compliance with European Union directives;
- The Agency’s requirements relating to energy rating of dwellings and Housing Quality Indicators (HQIs);
- In-house or external consultants’ fees, disbursements and expenses (where the development contract is a design and build contract – please see 3.5.6 below);
- Insurance premiums including building warranty and defects/liability insurance (except contract insurance included in works costs);
- Contract performance bond premiums;
- Borrowing administration charges (including associated legal and valuation fees);
- An appropriate proportion of the Registered Provider’s development and administration costs and including an appropriate proportion of any abortive scheme costs;
- Furniture, loose fittings and furnishings;
- Post completion interest - for sale schemes only;
- Legal, administrative and related fees and costs associated with negotiating and arranging leases - for Temporary Social Housing only; and
- VAT on the above, where applicable.
3.4.6 Where the development contract is design and build, the on costs are deemed to include the builder’s design fee element of the contract sum. Therefore the amount included by the builder for design fees should be deducted from the works cost element submitted by the Registered Provider to the Agency.
3.4.7 Similarly, other non-works costs that may be included by the builder such as fees for building and planning permission, building warranty and defects liability insurance, contract performance bond and energy rating of dwellings should also be deducted from the works cost element submitted by the Registered Provider to the Agency.
4.1.1 The progress of each scheme will be monitored against a series of milestones as detailed below. Milestones consist of the milestone event and the date that event is forecast to take place. Not all milestones are mandatory for all schemes, and the number of milestones will depend of the type of scheme being developed.
Please note that these requirements apply to schemes being funded under the 2008 to 2011 NAHP.
4.1.2 A milestone is an event during the development of a scheme for which the Agency requires Registered Providers to forecast an achievement date. Milestones have two functions:
- To monitor performance (i.e. the Registered Provider’s reliability in predicting scheme progress); and
- To trigger liability to pay grant, which may be discharged by either payment of grant during that financial year; or by the raising of a year-end accrual.
4.1.3 There are therefore two sets of dates for each milestone:
- The Forecast date (allows the Agency to compare with the milestone achievement date to assess the reliability of the Registered Provider’s forecasts); and
- The milestone achievement date (if accepted by the HCA this becomes the liability date for payment purposes).
4.1.4 The Agency uses a defined set of milestones, shown in the table Milestones. All products bid for will have at least one milestone to forecast.
- Some milestones trigger payments
- Some non-payment milestones are not required for all schemes, depending on the programme under which they are funded
- Forecast dates for milestones on a scheme are set at Confirmation of Agreement
4.1.5 Social HomeBuy Registered Providers should forecast milestones for exchange of contracts and final cost. Claim for grant can only be made once an applicant has exchanged contracts.
4.1.6 Off The Shelf schemes and HOLD Registered Providers should only forecast the Final Cost Milestone as these units should be ready for occupation.
4.2.1 Acquisition of Land
The forecast date for the completion of acquisition contracts. This is a non-payment milestone for the NAHP 2008 to 2011.
4.2.2 Planning Permission
There are two types of planning permission – outline and detailed. Outline planning permission gives an indication of permitted development but may be subject to detailed planning permission being obtained before building can commence. Detailed planning permission must be submitted within three years of receiving outline planning permission. For grant funding purposes planning can be either ‘granted’ or ‘expected.’ Detailed planning must be ‘granted’ prior to achievement of the Practical Completion milestone.
4.2.3 Start on Site
The start on site grant claim is triggered by the date when the building contractor takes possession of the site or property and the Registered Provider and builder have both signed the building contract. This will generally represent 50% of the allocated grant. However, the Agency may have directed that a different split be used.
Start on site may also occur before a Registered Provider has completed purchase of or acquired a leasehold interest in the site. The Registered Provider will need to have a building agreement/licence in order for it to claim grant.
Please see Finance 3.5 for further information.
4.2.4. Practical Completion
This is a payment milestone and occurs when a scheme has been completed in accordance with the terms of the relevant building contract, as being fit for occupation as a residential development, in accordance with NHBC requirements.
Any planning conditions or reserved matters must also be signed off in order for practical completion to be achieved – please see Procurement and Scheme Issues 6.1.1.
This will generally represent 50% of the allocated grant. However, the Agency may have directed that a different split be used (see also Glossary entry).
For Social HomeBuy, HOLD, Leasehold Repurchase, Right to Acquire and Mortgage Rescue, Practical Completion will be the date when the home purchase is completed.
For the purposes of Off The Shelf products the units must be ready for immediate occupation. In the case of a new Off The Shelf development, a claim for grant should not be made prior to the completion date (as specified on the practical completion certificate issued by the duly authorised contractual party). However, there are circumstances when grant can be claimed on exchange of purchase contracts (please see Finance 3.3.2). Please see the guidance notes at Procurement and Scheme Issues, 3.2.2 and Finance 3.6.1 for more details on Off The Shelf schemes.
This milestone only applies to sale schemes and is achieved when all units in the scheme have been let or sold to the appropriate target group.
4.2.6 Exchange of Contracts
This milestone is relevant for Social HomeBuy and HOLD. It is met by the exchange of contracts for the individual home purchase not the exchange of contracts for the acquisition of land (covered by land acquisition above).
4.3 Milestones Forecasts
4.3.1 Milestone Alerts
As schemes progress they will be monitored against the series of milestones. Registered Providers will therefore be required to record within IMS when the various milestones have been achieved.
4.3.2 Registered Providers are expected to update and reforecast milestones as soon as they are aware of any changes. Registered Providers and operating areas will need to monitor schemes to be aware that milestones may be approaching. Registered Providers are required to confirm to the operating area, through email or telephone, that they are on track to achieve the current milestone forecasts, or reforecast.
4.3.3 Early Achievement of Milestone
Early achievement of a milestone will not automatically result in Registered Providers being paid early even if they amend the forecast date within IMS. Registered Providers will need to consider what impact early achievement may have on later milestones, and whether they will need to re-forecast some or all future milestones. For example, an earlier than expected achievement of planning permission may result in an earlier start on site, which could in turn lead to an earlier achievement of practical completion.
4.3.7 Milestone Achieved
Where a forecast date is reached and the Registered Provider certifies that the milestone is achieved in full by that date, the Registered Provider is required to confirm that the scheme information in the system is up-to-date. If the information needs updating, the Registered Provider will need to submit a scheme variation to the Agency prior to submitting a milestone achievement. Please see section 5 - Variations.
4.3.8 Registered Providers are also required to confirm that the milestone forecasts in the system are up-to-date each time a milestone achievement is submitted. If the forecasts need updating, the Registered Provider will need to submit a milestone reforecast request to the Agency before submitting a milestone achievement.
4.3.9 Milestone Not Met
Where a milestone is rejected the options which can be followed are:
- Allow reforecasting. The operating area will discuss the reasons for the rejection with the Registered Provider and the Registered Provider is able to propose a course of action for the scheme which is helpful, the operating area will invite them to reforecast the milestone date. This option will be followed if
- Registered Providers commit to any necessary remedial action (exactly what is required will be determined by the reasons for the initial rejection);
- The operating area believes the revised forecast date will be met; and
- The revised forecast and milestone achievement date will meet the assessment criteria used when a request for reforecasting of a milestone is submitted;
- Scheme variation. See Section 5 - Variations; and
- Terminate/replace scheme.
4.3.10 Scheme Delay
It is Agency policy that if schemes being developed under the NAHP are delayed (in aggregate) by two years or more, the scheme will be terminated and any grant previously paid will be reclaimed. Whilst this is the standing policy, operating areas have authority to agree, on a case-by-case basis, to reforecast milestones which take the delay beyond the two-year period in exceptional cases. Registered Providers should contact their operating area if they consider an exceptional case exists.
5.1.1 The Registered Provider must notify the Agency of any variation to the scheme from the original bid.
Please see below for examples of the changes that should be covered.
A variation could be any change to the:
- Number of dwellings;
- Number of people housed in those dwellings;
- Tenure mix;
- Proposed rent levels;
- Housing quality (as measured by compliance with standards scores provided at bidding);
- Long-term owner of the properties;
- Long-term manager of the properties; and
- Agreed delivery plan.
Registered Providers must keep supporting documentation on file for compliance audit purposes.
5.1.2 The Agency will decide whether to accept the variations on the basis of whether the strategic need for which the allocation of grant was given is still being met and whether the scheme still offers value for money, particularly in light of other bids for similar schemes.
5.1.3 The Agency may reject the scheme and reclaim any grant paid where variations are not acceptable, regardless of how far the scheme has progressed. For this reason it is in the Registered Provider’s interest that it seeks the Agency’s acceptance of the variation as soon as possible.
5.1.4 If a scheme cannot complete on all the proposed units by the original agreed final cost date, Registered Providers must inform their Agency lead, who will consider splitting the scheme into phased completions over an appropriate development period.
5.1.5 All variations must have been identified at the correct stage, i.e. before Registered Providers make any further claims of grant. Where variations are not disclosed to the Agency at the correct stage Registered Providers will have been falsely certifying on IMS that the data were correct and complied with funding conditions.
5.1.6 The Agency may terminate and reclaim any grant paid plus interest on the scheme where the scheme no longer meets the criteria on which the allocation of grant was originally given.
5.2 Variations identified before any payment of grant has been made
5.2.1 Registered Providers must notify the operating area of any variations to the scheme before claiming the first tranche of grant. The operating area will decide whether to accept the variations or terminate the scheme.
5.3 Variations to a scheme after a payment of grant has been made
5.3.1 The operating area must be notified of any variation together with the reasons behind the variations to be satisfied that the scheme still meets the original criteria on which the allocation was given. The Agency may terminate the scheme and reclaim any grant paid plus interest where the scheme no longer meets the allocation criteria.
5.3.2 All changes must have been identified at the correct stage, i.e. before any further claims of grant were made by Registered Providers. Where changes were not disclosed to the Agency at the correct stage, even if the changes are not fundamental, Registered Providers will have been falsely certifying on IMS that the data were correct and complied with funding conditions
5.3.3 Where data submitted following legal completion differs from the data input at programme approval, Registered Providers will be required to give reasons for the variations in order for the Agency to approve them.
6. Reporting and audit requirements
6.1.1. The Reporting and Audit requirements for the 2008 to 11 NAHP are the same as those for schemes funded under the 2015 to 18 AHP. Please refer to section 6 of the 2015 to 18 AHP chapter. Exceptions which apply to the 2008 to 11 NAHP are outlined in this chapter.
6.2 Audit Requirements - Programme Partnering Agreement
6.2.1 Registered Providers developing schemes under the Programme Partnering Agreement (for schemes being delivered under previous NAHP and Approved Development Programmes) are required to carry out self-assessment procedural compliance tests. In addition an operating area Design Manager will:
- Provide guidance and support to the independent accountant as required; and
- Reserve the right to carry out at least one shadowing visit on one of the planned procedural audit visits to monitor the process.
6.2.2 Procedural compliance must be undertaken on a self-assessment basis using an independent auditor operating under the relevant guidance.
6.2.3 For schemes being delivered under previous programmes, the relevant guidance is contained in Technical Release – Audit 03/03, Public Sector Special Reporting Engagements – Grant Claims” (September 2003) published by the Institute of Chartered Accountants of England and Wales (ICAEW
6.2.4 Annual Audit The Agency expects that there will be an annual audit carried out on a sample of schemes Programme Partnering Agreement agreements.
During the audit, the independent auditor checks each scheme for compliance using the relevant Agency checklist.
6.2.5 Programme Partnering Agreements: Where the agreement covers a three year period this will generally result in a minimum of four audits; for example, for a Programme Partnering Agreement covering the three financial years 2008/09, 2009/10 and 2010/11 there are likely to be four audits, 2008/09, 2009/10, 2010/11, and 2011/12 (to cover the run off of schemes from the previous year). If schemes in year 2010/11 were not to finish in 2011/12, then further audits will be required until the programme is complete.