6. Programme Management
This chapter sets out the Agency’s requirements in relation to management of a provider’s approved allocation funded through one of the Agency’s affordable homes programmes.
1.1.1 This chapter sets out the Agency’s requirements in relation to management of a provider’s approved allocation funded through one of the Agency’s affordable homes programmes.
1.1.2 Approved bids (accepted offer lines in IMS) for the Shared Ownership and Affordable Homes Programme are subject to a Shared Ownership and Affordable Homes Programme (SOAHP) 2016 to 2021 contract. For further information see section 2 below. Throughout the Capital Funding Guide the SOAHP 2016 to 2021 contract is referred to as the contract.
1.2 Investment Management System (IMS)
1.2.1 All providers who have received an allocation for Agency funding or an agreement to deliver nil grant units will be required to manage their programme of schemes via the Agency’s 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.
1.3.1 To encourage and enable the provision of Specialist Housing only, Agency allows providers that have included conversions in their programme offers to convert void social rent stock to:
- Affordable Rent
- Shared Ownership or for
- Market sale disposal
1.3.1 Full details of conversions, which will be subject to Agency approval, are contained in the SOAHP 2016 to 21 Prospectus (please scroll down to bidding guidance). The impact of agreed conversions on recoverable grant is detailed in Grant Recovery 1.3.
1.4 The Homes and Communities Agency’s powers
1.4.1 The Agency’s powers in relation to payment and recovery of grant are set out in legislation, and where legislation requires according to such terms and conditions as the Agency considers appropriate and/or principles determined by the Agency. The main types of funding are:
- Social Housing Assistance payable under section 19(6) of the Housing and Regeneration Act 2008
- Financial Assistance payable under section 19(3) of the Housing and Regeneration Act 2008
1.4.2 Historically grant has been payable as:
- Social Housing Grant payable under section 18 of the Housing Act 1996
- Purchase Grant paid under section 21 of the Housing Act 1996
- Housing Association Grant paid under section 50 of the Housing Act 1988
1.4.3 The Agency’s terms and conditions for Financial Assistance (and Social Housing Assistance) provided under the SOAHP 2016 to 2021 are set out in:
Note that from April 2016 there is no longer a requirement for providers to sign up annually to Funding Conditions. For providers delivering the remaining NAHP 2008 to 2011 schemes separate arrangements will be put in place.
2. Shared Ownership and Affordable Homes Programme 2016 to 2021 contract
2.1.1 All grant recipients and providers wishing to deliver new Help to Buy: Shared Ownership, Rent to Buy or Affordable Rent homes are required to enter in to a new supply contract with the Agency. Robust contract management is a key principle of the 2016 to 2021 delivery model. This section summarises the contract management process providers must follow with regard to their contract.
2.1.2 The contract is a standard form contract that will be applied by the Agency to all Shared Ownership and Affordable Homes Programme 2016 to 2021 providers. There are a number of variations to reflect the specific nature of the grant recipient (e.g. Registered Provider, Local Authority or unregistered body) and/or to reflect consortium arrangements.
2.1.3 For details of programme management requirements for outstanding schemes bid for under the AHP 2011 to 2015 and for the National Affordable Homes Programme (NAHP) 2008 to 2011 please see section 8 below.
2.2.1 Following approval of funding, the Agency’s Contracts Team will draft and send the lead partner a legally binding contract to deliver the agreed number of starts and completions within the prescribed timeframe.
2.2.2 The contract details the Agency’s and provider’s obligations and rights. Each contract will include:
- Conditions of grant (including eligible expenditure)
- Total allocated grant;
- Conversion capacity (where these support the delivery of rented housing);
- A schedule summarising the approved bid including firm and indicative scheme details and the associated grant allocation. Note that the allocation will also comprise all current and subsequent offer and scheme level data submitted and accepted via IMS including cost contribution assumptions and milestone forecasts; representations and warranties
- Grant claim and payment procedures including the requirements that must be met before milestones can be achieved and grant claimed
- Reporting obligations
- Default and termination terms
- Dispute resolution
- Standard Agency boiler plate contract terms (e.g. on freedom of information, health & safety, intellectual property etc.)
2.2.3 The contract is valid for the duration of the allocation, but will allow for variations to account for flexibilities in delivery subject to agreement of such a change by the Agency – see section 5.
2.2.4 A copy of the standard form of contract is available.
2.3 Contract management
2.3.1 The Shared Ownership and Affordable Homes Programme 2016 to 2021 contract acknowledges that changes may be required to the agreed programme offer in order to ensure that:
- The allocated grant and conversion capacity is properly and effectively spent
- The delivery of affordable housing under the programme offer is maximised
- The provider remains capable of delivering the approved bid
2.3.2 It is a strong principle of the contract management process that any variation to delivery of the approved bid must always be discussed with the Agency as these circumstances arise
2.3.3 Changes to a provider’s allocation will be recorded through IMS. Where a material change is recorded, this will require the Agency’s approval. Please see below for guidance on material changes. Change is further sub-divided between pre- and post-start change for the SOAHP 2016 to 2021.
A material change is a specified variation from the contracted position between the Agency and the provider (i.e. a change to the funding required, capital contributions, units or delivery profile). A provider must obtain operating area approval for material changes before it can progress the allocation or scheme.
Non-material changes can be validated on IMS without requiring Agency input.
2.3.4 A pre-start change relates to changes to a scheme where a payment for start on site has not yet occurred. A post-start change relates to changes to a scheme where a payment for a start on site has already occurred but before the payment of the final tranche grant.
2.3.5 The Agency will regularly review providers’ progress and focus on:
- Actual delivery achieved, including the accuracy of previous forecasts
- Forecast delivery
2.3.6 The Agency will also undertake a full strategic annual review of providers’ programme of allocation to:
- Ascertain how the programme has been delivered and is forecast to deliver in future years
- Ensure the provider is meeting all of its contractual obligations
- Capture any variations agreed at previous review meetings
2.3.7 It is a requirement of the contract that data, including an Officer’s Certificate, are provided to the Agency on an open book basis to inform the contract management process. The Officer’s Certificate must be submitted in IMS within five working days of the quarter end.
2.3.8 Where a pre- or post-start change to an allocation is agreed, that change becomes part of the agreed programme and is subject to future review as part of the contract management process.
2.3.9 Where delivery progress is behind that agreed as part of the contract, a fundamental principle is that the provider will have an opportunity to put forward proposals to increase or accelerate delivery in the first instance. The Agency will take a view on the realism and likelihood of achievement of remedy, informed by the scale of variation and the stage reached in the programme (i.e. a risk assessment). The view taken will be informed by past performance of the provider in remedying delivery issues.
2.3.10 An increase in the amount of grant in a scheme or offer line, without a proportionate increase in homes, will not be accepted as a remedy
2.4 Indicative schemes
2.4.1 Providers are able to submit offer lines for both firm schemes and indicative proposals when submitting offers. Indicative proposals must become firm in accordance with the schedule specified in the Prospectus at paragraph 46. For further information please see guidance below.
Indicative proposals are where providers are not yet in position to be able to give precise scheme details required for schemes to be considered firm, such as a post code, x/y co-ordinates and details of ownership or control by the bidder. Indicative proposals can be bid at the following geographical levels; LA level, minimum geography (LEP or County geographies) or Agency operating area.
2.4.2 If insufficient progress is made by providers to convert indicative proposals to firm schemes in line with the agreed transition dates, then the number of indicative units proposed under the contract may be reduced, and a proportionate amount of allocation withdrawn for re-distribution to other providers.
2.5 Consortium arrangements
2.5.1 Where providers have formed a consortium to deliver a programme of affordable homes, one provider must undertake the role of consortium lead. The consortium lead is expected to work closely with other consortium members to deliver the anticipated supply throughout the contract period. Consortium leads are the initial recipient for the Agency’s grant and are responsible for collating and providing information to the Agency (including the quarterly Officer’s Certificate). They also have additional responsibilities and obligations on behalf of the other members as outlined in the contract.
2.6 Breach of contract
2.6.1 The contract specifies actions that may constitute a default. The levels of default range in severity from scheme to fundamental:
- Scheme default – usually capable of remedy and always scheme specific
- Specified default – capable of remedy and applying to approved bid level obligations such as reporting and other obligations
- Bid default – Agency determines (acting reasonably) that proper progress is not being made to deliver schemes
- Fundamental default – Less likely to be remedied such as a prohibited act
2.6.2 In most circumstances the Agency anticipates that the partner/consortium will be able to rectify a breach. However, a fundamental or severe bid default may give rise to the Agency terminating the agreement.
2.6.3 Within the levels of default listed above, default events are further graded within the contract with regard to the severity of the action resulting from these withholding events.
2.6.4 Grant withholding events are graded GW1 – GW3 operate at the level of the allocated programme:
- GW1 – usually capable of remedy such as a problem with reporting or repayment
- GW2 – more serious for example loss of Investment Partner status but still the opportunity to remedy
- GW3 – very serious such as a prohibited act
2.6.5 Scheme withholding events are graded SW1 – SW3 and are scheme specific:
- SW1 – failure to deliver a scheme in accordance with the scheme details;
- SW2 – a material breach, consents withdrawn, in delivering the scheme and steps taken have not provided remedy; and
- SW3 – failure to deliver a scheme in accordance with the agreed timetable.
2.6.6 Termination Events – Severe breaches may result in termination of the allocation for a specific scheme, or, in the case of a fundamental termination, the entire allocated programme for a provider may be terminated.
2.6.7 Although repayment of grant is expected to be a rare event, it could happen upon either a scheme or fundamental termination event. More detail on contract breaches, grant withholding and termination events can be found in the contract.
2.6.8 As per the Agency’s Grant Recovery Determination 2015 clause 17, a breach of the Agency’s requirements could result in the withdrawal of a provider’s use of its Recycled Capital Grant Fund (RCGF) and repayment of all or part of recycled grant held in its RCGF. For more information on the Determination and grant recovery please refer to the Grant Recovery chapter and in particular section 5.3.2.
3. Scheme administration and data collection
3.1 Offer capture
3.1.1 A provider’s offer may consist of any number of offer lines (bids). Each offer line represents an individual firm scheme or, in the case of indicative proposals, delivery of a given number of homes within a certain area. Each offer line within the offer will have its own funding requested amount which will be the grant required to deliver that particular offer line agreed with the Agency through the bid assessment and allocation process. This amount will be paid in agreed tranches on the achievement of milestones. Please see section 4.
3.1.2 Decisions will be made on an offer line basis, not for whole offers. A provider may therefore receive an allocation for some, all or none of their offer lines.
3.2 Updating profiles and scheme processing
3.2.1 When ready to deliver an agreed firm scheme, the provider must update the details in the scheme profile including complete scheme cost information and then create the scheme on IMS, which should be submitted to the relevant Agency operating area for review and approval. Once approved the scheme is eligible for grant payment at start on site (for Registered Providers and unregistered bodies who have agreed a start payment with the Agency and eligible scheme types). For other providers and scheme types grant is paid 100% on completion. For further details on scheme types please see Procurement and Scheme Issues chapter.
3.2.2 Providers who have received indicative allocations must have input the firm schemes in accordance with the schedule as set out in the Prospectus at paragraph 46 (called the Transition Longstop Date in the contract).
3.2.3 Please see the IMS help page for guidance on updating profiles and schemes.
3.2.4 Not less than five days prior to a scheme reaching the start on site milestone (please see 4.2.2), providers are obliged by the contract to have submitted details of the scheme to the Agency via IMS. However, owing to the practicalities of achieving this, especially where providers have large numbers of schemes starting on site, the Agency has agreed that in exceptional circumstances details may be submitted up to 30 business days after start on site has been achieved.
3.3 Submission requirements
3.3.1 Providers’ programmes must comply with the contract, which contains all Agency requirements.
3.3.2 Providers must submit the required information on to IMS prior to claiming grant. For details please see the Investment Management System: guidance documents - Detailed guidance.
3.3.3 Providers must submit the following data in relation to the milestones on to IMS following confirmation of their allocation. Please note that not all milestones will necessarily apply to all schemes (please see section 4 for details):
- Planning consent
- Development contract (off the shelf only)
- Acquisition of land
- Start on site date
- Final cost (practical completion)
3.3.4 Providers must review and confirm acceptance of the on-screen certifications.
3.3.5 Detailed guidance on how to input data on to IMS is provided on the IMS help page.
3.4 Scheme cost information
3.4.1 The Agency collects scheme cost information, in respect of the following areas:
- Acquisition cost
- Works cost
- On cost
3.4.2 Only certain types of expenditure are eligible for funding in each of these cost areas. The contract refers to actual development costs, meaning the expenditure actually incurred in developing the firm scheme units, as opposed to the projected expenditure. Public sector subsidy (i.e. grant plus all other public funding) must not exceed the actual development costs.
3.4.3 For acquisition costs, funding is available in respect of the purchase price of land/property and Stamp Duty Land Tax on the purchase price of the land/site.
3.4.4 For works costs, funding is available in respect of the following:
- Main works contract costs (excluding any costs defined as on 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
- Irrecoverable VAT on the above, where applicable
3.4.5 For on costs, funding is available in respect of the following:
- Legal fees and disbursements
- 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;
- In-house or external consultants’ fees, disbursements and expenses (where the development contract is a design and build contract)
- 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 provider’s development and administration costs
- Irrecoverable VAT on the above, where applicable.
3.4.6 Where the development contract is design and build, the on costs may include the builder’s design fee element of the contract sum. The amount included by the builder for design fees should be deducted from the works cost element referred to above, as should other non-works costs that may be submitted by the builder such as fees for building and planning permission, building warranty, defects liability insurance, contract performance bond and energy rating of dwellings.
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 provider to the Agency.
4.1.1 The progress of programmes and schemes will be monitored against a series of milestones as detailed below. Milestones consist of the milestone event and the milestone date that the milestone event is forecast to take place. The contract refers to forecast dates as milestone dates, but this section of the CFG will use the term forecast date, in line with IMS. Not all milestones are mandatory for all schemes, and the number of milestones will depend of the type of scheme being developed.
4.1.2 A milestone refers to each stage in the delivery of the firm scheme agreed by the parties and as set out in IMS (including a start on site and completion date). Milestones have two functions:
- To monitor performance (i.e. the provider’s reliability in predicting programme/scheme progress)
- To trigger liability to pay grant, which may be discharged by either payment of grant during that financial year, or raising a year-end accrual
4.1.3 The liability to pay grant is triggered by an agreed forecast date in IMS
4.1.4 The Agency uses a defined set of milestones, shown in the table below. 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
|Milestone||Relevant products||Triggers Payment?||Creates countable output?|
|Acquisition of land||All (excluding Social HomeBuy, HOLD, Leasehold Repurchase, and Off The Shelf purchases)||No||No|
|Planning Permission||All (excluding Social HomeBuy, HOLD, Leasehold Repurchase, and Off The Shelf purchases)||No||No|
|Start on site||All (excluding Social HomeBuy, HOLD, Leasehold Repurchase, and Off The Shelf purchases)||Is equivalent to 5o% of the firm scheme grant. Please note that start on site payments do not apply to unregistered providers||No|
|Practical Completion(PC)/Final Cost||All||100% (for unregistered providers), or 5o% of the firm scheme grant for Registered Providers.||Yes|
|Exchange of contracts (please note this applies to purchase contracts rather than build contracts)||Social HomeBuy and HOLD||100% of grant (Paid at final cost milestone)||HOLD (Yes), Social HomeBuy (No)|
|Occupancy||All (excluding Social HomeBuy, HOLD, Leasehold Repurchase, Affordable Rent and Social Rent)||No||No|
4.2.1 Acquisition of land
The date for the completion of acquisition contracts. This is a non-payment milestone for the Shared Ownership and Affordable Homes Programme 2016 to 2021.
4.2.2 Planning permission
There are two types of planning permission – outline and full planning permission. Outline planning permission gives an indication of permitted development but may be subject to full planning permission being obtained before building can commence. Full planning permission must be submitted within a specific time limit normally three years from the date outline planning permission was granted.
In order for a provider to achieve the planning consent milestone in IMS full planning permission must have been received.
4.2.3 Start on site
The start on site or first tranche grant claim, which applies as a payment event only to eligible schemes delivered by eligible providers where start on site is achieved, is triggered by the date when:
- The provider and the building contractor have entered in to a building contract
- The building contractor takes possession of the site or property
- The works have commenced
This will trigger payment of 50% of the grant for Registered Providers. Unregistered bodies may choose between (i) receiving 100% of the funding at practical completion of the scheme or (ii) receiving 50% at start on site and 50% upon practical completion and offering one of the forms of security accepted by the Agency.
4.2.4 Start on site works are defined as:
a) Excavation for strip or trench foundations or for pad footings
b) Digging out and preparation of ground for raft foundations
c) Vibrofloatation, piling, boring for piles or pile driving
d) Drainage works specific for the buildings forming part of the firm scheme or
e) Such works of demolition or service diversion as are expressly and strictly contemplated (please see Finance - Grant claims and payments.
4.2.5 It is not intended that the definition of start on site works in the grant agreement excludes schemes where demolition works have begun or where infrastructure works (such as excavations to install drainage or highways infrastructure works including where such works are the subject of a section 278 or section 104 agreement) to support the scheme have commenced, subject to the conditions below. Starts on site can therefore be recorded (and where relevant a grant claim submitted) in circumstances where:
a) A building contract has been signed and dated with a single building contractor to undertake both demolition and construction works or infrastructure and construction works
b) Demolition or infrastructure works have commenced
c) Upon completion of demolition works and site clearance, or of infrastructure works, construction works which meet one of the given above (4.2.4 a-e) will immediately follow on
d) A separate contract for demolition works or for infrastructure works has been signed and dated and a building contract with a building contractor has been signed and dated
e) Demolition works or infrastructure works have commenced
f) Upon completion of demolition works and site clearance or upon completion of infrastructure works, the building contract with the building contractor will be unconditional; and as soon as the building contract becomes unconditional, start on site works which meet one of the definitions in 4.2.4 will proceed
4.2.6 Start on site may occur before a provider has completed purchase of or acquired a leasehold interest in the site. In these circumstances, the provider will need to have a building agreement/licence in order to claim grant. Please see Finance 3.5 for further information
4.2.7 Practical completion
For grant purposes practical completion is when the last dwelling is handed over, the scheme having been completed in accordance with the terms of the relevant building contract and the terms of the contract, as being fit for occupation as a residential development, in accordance with NHBC requirements. This excludes minor defects and/or minor omissions at the time of inspection which are capable of being made good or carried out without materially interfering with the beneficial use and enjoyment of the firm scheme. For instance, a scheme can be classed as completed even though external works such as landscaping may remain to be completed.
4.2.8 Any planning conditions or reserved matters, as far as practicably possible, must also be signed off prior to the achievement of practical completion Procurement and Scheme Issues 6.1.1.
4.2.9 This will trigger payment of the practical completion tranche of funding (50% of the grant where a start on site tranche has been paid or 100% where all grant is paid on completion. Please refer to Finance 3.6 for further information on claiming practical completion payments.
4.2.11 For Social HomeBuy, HOLD, Leasehold Repurchase and Right to Acquire, practical completion will be the date when the purchase is completed.
4.2.12 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 3.6.2 for more details on Off the Shelf schemes. For these products, achievement of the practical completion milestone will trigger payment of 100% of the grant. Please refer to Finance 3.6 for further information on claiming practical completion payments.
4.3 Milestone forecasts
4.3.1 Milestone Alerts As schemes progress they will be monitored against the series of milestones. Providers are therefore required to record within IMS when the various milestones have been achieved.
4.3.2 Providers are expected to update and reforecast milestones as soon as they are aware of any changes. Procedures for dealing with changes to milestone dates are set out in section 7 of the grant agreement and will constitute a material change to the allocations (please see 2.3 and section 5).
5. Changes to agreed allocations
5.1.1 Changes or variations to a provider’s agreed allocations will be handled via IMS and, if material, will require approval by the Agency. Where the provider becomes aware of circumstances which give rise to the need for changes their allocations they must be submitted via IMS, specifying the reasons for the proposed change.
5.1.2 The Agency will decide whether to accept any changes on the basis of whether they will continue to meet the strategic need for which the allocations were originally approved.
5.1.3 Changes could consist of:
- A reduction or increase or other change to the number of dwellings to be delivered or to the conversion capacity
- A reduction or other adjustment to the allocated grant
- Changes to forecast dates
- Substitutions for schemes that are no longer able to be delivered within the programme requirements, including by the long stop date
5.1.4 Each change, submitted via IMS, will be considered on its own merits. However, the Agency may opt not to agree to proposals and, in some circumstances, may choose to withdraw funding regardless of how far a particular scheme has progressed. Therefore it is in providers’ interests to keep the Agency appraised of any proposed programme changes as soon as possible.
5.1.5 Where changes are acceptable and approved by the Agency, the Agency will pay grant on affected schemes upon receipt of a valid claim.
5.1.6 All material changes must be identified and discussed with the Agency before providers claim grant on affected schemes. Where changes are not disclosed to the Agency or have not been approved, providers will be at risk of falsely certifying on IMS that the data are correct and meet the requirements in the contract.
5.1.7 Where there are differences, not previously agreed via a request made through IMS, between data input following legal completion and the data input at programme approval, providers will be required to give reasons for the variations in order for the Agency to approve the grant payment.
5.1.8 In some situations, if a material change to the allocation results in reduced delivery outputs or value, they may result in a reduction of the allocated grant.
5.1.8 Where there are differences, not previously agreed via a request made through IMS, between data input following legal completion and the data input at programme approval, providers will be required to give reasons for the variations in order for the Agency to approve the grant payment.
5.1.9 In the case of a fundamental termination event (see section 2.6) the Agency may terminate the contract and reclaim any grant paid plus interest, except on schemes which competed before the default notice date.
5.1.10 The inclusion from the outset of the addition of nil grant schemes has no effect on the amount of payment of firm scheme grant for (only paid on schemes that require grant). The Agency will pay the actual grant required and approved on each firm scheme, rather than averaging grant and paying on all schemes.
6. Management arrangements
6.1.1 The Agency wishes to ensure that properties that are developed with the benefit of grant are managed and maintained in accordance with the Agency’s Regulatory Requirements and Standards.
6.1.2 This applies whether the properties are directly managed by the provider who developed them with grant, or by other organisations with whom the provider has contracted for management services.
6.1.3 All owners of properties that are offered for low-cost rent (whether Affordable, Intermediate or Social Rent), must be Registered Providers but may contract out management if they wish. Registered Providers are responsible for providing efficient and cost effective management in the best interests of tenants, and are accountable for the public funds invested in the scheme.
6.1.4 Registered Providers can adopt a variety of management arrangements, including outsourcing the work (commissioning another organisation to provide services on the provider’s behalf - such an organisation is often referred to as a ‘management agency’).
6.1.5 Regardless of whether or not the provision of services has been outsourced, ultimate responsibility for effective management of any tenants and/or leaseholders’ interests and the stock will remain with the provider that owns the properties.
6.2.1 The management of grant-funded homes may not be delegated to local authorities or other statutory bodies.
6.2.2 Where Registered Providers are commissioning another (non-statutory) organisation to provide services, they must do so in writing. The services to be provided must be clearly defined in the contract, as must the cost to the Registered Provider of receiving the services.
6.2.3 The contract for the provision of the services must be finalised and signed in time for the service provider to mobilise their resources to be able to deliver the services at an appropriate level of quality at the handover date.
6.2.4 The Agency does not provide a model management agreement.
6.3 Supported Housing issues
6.3.1 As noted at 6.2.1, Registered Providers cannot commission statutory bodies to provide housing management services to their residents. However, in Supported Housing schemes, Registered Providers may decide to enter in to a support agreement with a statutory body to ensure the non-housing needs of tenants are met.
6.3.2 Such support arrangements must be based on a written agreement that sets out the responsibilities of each party.
6.3.3 The agreement must address the issues of performance review, procedures to be followed in the event of breach of the agreement, and have provisions for termination by either party.
6.3.4 Where the arrangement involves a division of staff working in the scheme between two or more employers, Registered Providers must ensure that the agreement clearly states the responsibilities for the employment and management of staff, and include clear details of reporting lines.
7. Reporting and audit requirements
7.1.1 The reporting and audit requirements apply to schemes delivered under the Shared Ownership and Affordable Homes Programme 2016 to 2021. In addition, the Compliance Audit requirements set out below apply to all schemes selected for audit, regardless of funding period.
7.2 Reporting requirements
7.2.1 The operating area and the lead provider will agree a programme of review meetings throughout the period covered by this programme and close dialogue between the provider and Agency is encouraged. At each review meeting the operating area and the provider will:
- Review progress against the agreed targets
- Monitor compliance with the method statements submitted and any other obligations assumed as part of the bidding process
7.2.2 Representation on both sides must be at a senior level in order that decisions and actions can be agreed and implemented immediately if necessary.
7.2.3 Schedules indicating the status of each scheme including output delivery must be provided to the Agency’s nominated lead one week prior to each review meeting.
7.2.4 Additional liaison meetings may be called by either the Agency or lead provider to address any important issues that may arise between review meetings. Representation should include the Agency’s contract manager together with financial appraisal and/or representatives from the Social Housing Regulator as appropriate.
7.2.5 The lead provider is required to provide timely notification to the contract manager of any unresolved problems that:
- Have been encountered with complying with the funding conditions or meeting the specified targets
- Have been identified during the self-assessment process and which threaten the objectives set out
- Which affect the ability of the lead provider, or any other participating providers, to deliver their obligations
7.2.6 Where the provider is acting as the lead in a consortium, then the lead provider is responsible for the arrangement of regular delivery review meetings involving all members of the consortium. These meetings should be planned so that up-to-date information may be reported to the Agency at planned review meetings.
7.3 Audit requirements
7.3.1 Compliance Audit is the process by which the Agency will check the provider in terms of procedural compliance. The Agency expects that an annual audit will be carried out on a sample of eligible schemes by an independent auditor, appointed by each Provider being audited. Independent auditors will review schemes for compliance against a checklist of relevant questions and report any findings to the Agency. Providers must therefore maintain a comprehensive scheme file that contains all relevant documents for each scheme
7.3.2 The purpose of the audit is to verify that all requirements and the funding conditions have been met, and that the provider has properly exercised its responsibilities as set out elsewhere in this Guide. It does not reduce the responsibilities of the provider and the Agency to ensure that the costs in any claim for grant are appropriate and have been properly incurred.
7.3.3 If a local authority has concerns about a particular scheme they should contact the operating area to request that it be included in the next sample of schemes for audit.
7.3.4 The population of providers eligible for selection for compliance audit (eligible providers) is made up of developing providers with eligible schemes across all funding programmes. All schemes are eligible except:
- Previously audited schemes
- Terminated schemes
- Schemes with zero grant and no RCGF or DPF
- Help to Buy
7.3.5 Eligible schemes include both:
- Look-back schemes – any scheme which completed in the previous financial year
- In-year schemes – any scheme which, at start of year position, has a forecast payment event from April to December of the current financial year
7.3.6 Agency aims to audit all developing providers with schemes eligible for audit every financial year. However, providers which have received a Green audit grade in the preceding year may be eligible for a reduced or zero sample for up to two years.
Independent Auditor Appointment
7.3.7 Providers may commission any suitably experienced and qualified member of one of the following professional bodies:
- IACEW (Institute of Chartered Accountants in England) – ACA / FCA Chartered Accountant
- ACCA (Association of Chartered Certified Accountants) – ACCA / FCCA Chartered Certified Accountant
- RICS (Royal Institution of Chartered Surveyors) – FRICS / MRICS (but not Assoc RICS) Chartered Surveyor)
7.3.8 The independent auditor may be the provider’s external auditors or external accountants undertaking their internal audit function.
7.3.9 However, qualified accountants or surveyors directly employed by the provider or any of its fellow consortium members are excluded as they are not considered to be appropriately independent. Arrangements where qualified development consultants are employed by a qualified accountant or surveyor to act in their name are acceptable to the Agency, on condition that the arrangement maintains the duty of care required by the Agency and the commissioning agreement is between the provider and the accountant or surveyor.
7.3.10 Reciprocal arrangements between organisations with dedicated internal audit functions are permitted, as long as they comply with the requirements in paragraphs 7.3.7 – 7.3.9 above.
Standardised Terms of Engagement
7.3.11 The Agency will undertake to become a party to the commission via the ‘Standardised Terms of Engagement’ route utilising agreed upon procedures as set out in Appendix F of the Institute of Chartered Accountants of England and Wales (ICAEW) Technical Release – AAF 01/10 publication. For further guidance please see below.
By publishing Standardised Terms of Engagement, the Agency makes an offer to engage on these terms without the need to sign a commissioning document. The Agency will engage on these terms with suitably experienced and qualified Chartered Accountants, Chartered Certified Accountants and RICS Chartered Surveyors. If the offer to engage is accepted by a provider and an accountant or RICS surveyor, then an agreement is formed.
7.3.12 The provider must commission the independent auditor to undertake a programme of self-assessment procedural compliance tests. The Agency will discuss the scope of the audit and agree a provisional programme at the commencement of the programme to assist providers in planning the arrangements and budgeting to meet these requirements.
7.3.13 The Agency reserves the right to request copies of the signed ‘self-assessment agreement’ as and when necessary throughout the life of the agreement.
7.3.14 The provider is strongly advised to discuss the principles and planned arrangements for self-assessment with the Agency prior to commissioning the independent auditor.
7.3.15 The Agency will issue the provider with a scheme sample report listing the details of the schemes to be audited, forming part of the Audit Programme Agreement. The list is issued four weeks before the audit is to take place.
7.3.16 Detailed guidance on the compliance audit process can be found on the Compliance Audit web pages.
8. Legacy affordable homes programmes
8.1 Programme requirements
8.1.1 Progamme management guidance for previous affordable homes programmes can be found via the following links.
8.2 Payment of grant for outstanding 2008 to 2011 NAHP schemes
8.2.1 The Agency has the power to pay grant as Social Housing Assistance under section 19(6) of the Housing and Regeneration Act; and under transitional arrangements (SI 2010/862) it retained its power to pay Social Housing Grant under the Housing Act 1996 in certain circumstances.
8.2.2 Bids received under the NAHP 2008 to 2011, allocated and part paid prior to 1 April 2010 grant will continue to be paid under section 18 of the Housing Act 1996.
8.2.3 Bids received under the NAHP 2008 to 2011 and allocated prior to 1 April 2010, but not paid at that date will continue to be paid under section 18 of the Housing Act 1996
8.3 The Social Housing Grant (Capital) General Determination 2003
8.3.1 Following amendments to section 18 of the Housing Act 1996, principles are only to be determined in respect of section 18(7), relating to the proportioning of grant for properties transferred between ex-Registered Social Landlords. These principles are contained within clauses 37 and 38 of the determination, and supplemented in Procurement and Scheme Issues section 5. To access the determination, please see the archived CFG 2004.