9. Procurement and Scheme Issues
This chapter sets out procurement and scheme delivery requirements.
1.1.1 This chapter sets out procurement and scheme delivery requirements in relation to the delivery of the agency’s programme.
1.2.1 The Agency is constantly striving for more efficient and effective ways of procuring affordable housing.
1.2.2 ‘Improving efficiency’ is another way of saying ‘getting better value’. This can be achieved in a number of ways (more dwellings of the same quality for the same cost, the same number of dwellings at a higher quality for the same cost, and many other permutations involving numbers, cost, quality and time). In all this, the quality of the dwellings is important, and the Agency encourages providers to pursue design excellence through a number of routes, including:
- The use of design champions within their organisation
- Appointing consultants who are able to provide high quality design services
- Partnering with suppliers
- Collating and making use of customer feedback and resident satisfaction
1.2.3 One way in which the Agency can increase its efficiency is if housing providers increase their cost efficiency, and therefore reduce their need for grant or Other Public Subsidy. The Agency therefore values cost-efficient providers as well as those who maintain quality.
1.2.4 Providers are expected to strive constantly to improve their efficiency and effectiveness in delivering affordable housing and to provide information on how they will achieve efficiencies in construction and procurement through the submission of a supporting statement in IMS to accompany their bids through the Shared Ownership and Affordable Homes Programme (SOAHP).
2.1.1 Effective procurement and project management are both crucial for the delivery of schemes on time, on budget and to ensure an appropriate level of quality is maintained.
2.2 Mortgageability and insurability of housing constructed using a non-traditional technique
2.2.1 When an innovative house building system is to be used, providers must seek suitable reassurances that:
- The system is capable of achieving the necessary statutory approvals, including Building Regulations
- The system has been assessed and confirmed as suitable for housing use by an appropriate independent technical approvals authority (the assessment should take account of the suitability of claddings and other elements proposed for use in conjunction with the system)
- The system, with reasonable cyclical and planned maintenance provision, has been designed for a life expectancy of at least 60 years
For comments on the background to this requirement, please see below.
Background to this Requirement
The Agency has a stake in the long-term sustainability of the housing procured by providers. The housing stock must not only meet the reasonable needs of tenants in terms of quality, comfort and affordability, it must also represent a reasonable investment to providers in terms of maintaining equity and value as a basis for sound future business planning.
To achieve these aims it is essential for the mortgage and valuation market to have confidence in the ability of any non-traditional house construction technique to produce housing which will last and maintain values equivalent to those for traditionally constructed dwellings. Whereas the mortgage and valuation market has experience based upon hundreds of years of traditional construction, this is not the case for many of the non-traditional techniques now making the transition from the commercial or foreign sectors into the housing sector. Such techniques are generally still regarded as innovative in the UK housing market.
Providers are required to specifically consider and suitably address mortgage and durability issues where traditional components are combined in innovative ways.
For a list of organisations who are able to make these assessments please see below.
Appropriate organisations for the purposes of technical assessment are deemed to be:
- Building Research Establishment (BRE)
- British Board of Agreement (BBA)
- Construction Audit Ltd
- WIMLAS or
- Any body authorised under Annex 4 of the Construction Products Directive
Other organisations such as CCMMA, TRADA and the Steel Construction Institute (SCI) will be accepted for some systems or components if suitability is endorsed by either NHBC, Zurich Municipal, BuildingLifePlans Ltd, Build offsite Property Assurance Scheme or equivalent for structural warranty purposes.
3. Scheme types and requirements
3.1.1 This section contains the scheme types for which funding is available, and their requirements.
3.1.2 Providers should note that the scheme type classifications used by the Agency are driven by Agency funding issues, and are NOT recognised property development or project management terms familiar to architects, surveyors, developers, builders or others. Providers should therefore avoid using this funding–specific jargon when communicating with others, and use more widely recognised terms, to avoid misunderstandings.
3.2 New Build requirements and scheme types
3.2.1 Longevity requirement These properties must have a life expectancy of at least 60 years
Please refer to the guidance for further information.
Property longevity is not the same thing as grant liability – therefore the fact that the property is expected to last a specific number of years (e.g. 60 year for New Build and 30 for Rehabilitation) does not mean that the grant liability only lasts for that many years. Please see the Grant Recovery chapter for more details.
In addition, the construction system used must:
- Be capable of achieving necessary building regulations and other statutory approvals and
- Have been assessed and confirmed as suitable for housing by an independent approvals authority such as NHBC, Zurich, Building Life Plans or a body of equivalent standing
3.2.2 Scheme types
- Acquisition and Work
- New Build Works Only
- Off The Shelf (& ES)
- Package Deal (Including Land)
Please refer to the guidance for further information.
Acquisition and Works
The construction of new dwellings on land purchased by the provider without the benefit of any public subsidy. In certain circumstances the provider may enter in to a building licence agreement.
Off The Shelf
A brand-new completed dwelling or dwellings, suitable for affordable housing letting, purchased from a contractor/developer or their agents, following an inspection by a suitably experienced or qualified person. Known in the industry as a Turnkey project, as it is ready for immediate use.
The construction of new dwellings on land already owned by the provider, and for which the provider has received public subsidy in the past to help acquire it. This excludes land in the ownership of the provider which it purchased without the benefit of any public subsidy (Acquisition & Works).
Land Inclusive Package (aka Package Deal)
A Package Deal/Land Inclusive Package is a variation of Acquisition & Works. The land/property is acquired from the developer or building contractor who will also construct the dwellings on the land. Normally there will be separate contracts for the purchase of the land/property and for the development works. Usually these contracts are signed simultaneously with the building contract dependent upon the completion of the land acquisition contract. Exceptionally, a land inclusive package may include the acquisition of some partially or wholly completed dwellings. Land Inclusive Packages, which consist solely of completed dwellings, must be classified as Off the Shelf/Turnkey.
3.3 Rehabilitation requirements and scheme types
3.3.1 Longevity requirement These properties must have a life expectancy of at least 30 years after the provider has completed the works, repair, or improvement.
For a comment please go to 3.2.1.
The provider must ensure that an inspection of all properties requiring works is carried out by relevantly qualified experienced and professionally indemnified technical consultants or relevantly qualified and experienced members of staff. Please also refer to shared ownership paragraphs 5.3.1-4 regarding lease requirements in respect of Shared Ownership provided under the rehabilitation route.
3.3.2 Scheme types
220.127.116.11 Rehabilitation schemes involving purchase:
- Acquisition and Works
- Existing Satisfactory
- Purchase and Repair
- Package Deal (including land)
18.104.22.168 Rehabilitation schemes not involving purchase
- Works Only
Whilst re-improvements and conversions are no longer bespoke scheme types, they are still allowable scheme types for providers to take. Please refer to the guidance for further information.
Acquisition and Works
The provider acquires a property, or properties, on the open market for refurbishment or conversion. The cost of the grant-eligible repair and improvement work per dwelling must exceed £10,000 exclusive of VAT. A building contract will normally be entered in to, but sometimes work can be carried out under a building licence agreement. If the works cost less than £10,000 per dwelling, the property is classified as an Existing Satisfactory or Purchase and Repair scheme.
The provider acquires a second-hand existing dwelling, or dwellings, on the open market, which are already of a standard and condition suitable for affordable housing letting, after an inspection by a suitably experienced or qualified person. Works necessary for the scheme to be made fit for purposes must not exceed £1,500. Grant is paid in a single tranche at Acquisition stage.
Purchase and Repair
The provider acquires a second hand dwelling on the open market, which requires some repair to bring it to a standard and a condition suitable for affordable housing letting. The estimated cost of the grant-eligible works will exceed £1,500 per dwelling, exclusive of VAT.
The property must already be owned by the provider, who purchased it with help from public subsidy, BUT no public funds have been paid for any previous refurbishment or conversion works. The property is in need of rehabilitation, improvement or conversion.
The property must already be owned by the provider who purchased it with help from public subsidy AND some form of grant or subsidy, such as Housing Association Grant, Social Housing Grant or Social Housing Assistance, has already been paid for construction, improvement or conversion at some time in the past. Unlike Major Repairs, Re-improvements can result in an increase in rent. The work may be improvement or conversion, but not just repairs. Re-improvement schemes will not normally be considered less than:
- 15 years after Practical Completion of the original rehabilitation scheme (or stock transfer in the case of Stock Transfer providers (e.g. Large Scale Voluntary Transders)) or
- 30 years after Practical Completion of the original new build scheme
However, re-improvement schemes may be considered sooner where the property is difficult to let because it is no longer appropriate for the intended use, or there is a serious health risk to tenants.
The improvement or conversion works carried out in a re-improvement scheme must bring those parts or elements of the property which have been subject to re-improvement up to current building regulations.
Conversions in this context refers to property conversions (e.g. converting a large family home in to smaller flats) not converting Social Rent in to Affordable Rent to support the delivery of the SOAHP.
Property must already be owned by the provider. Priority should be given for the provision of smaller homes.
Where properties are currently tenanted providers should make adequate provision for the existing tenants, which may possibly include a temporary move whilst work is undertaken, in which case the provider should ensure that conversion work is undertaken without undue delay.
Conversions undertaken must bring those parts or elements of the property which have been subject to conversion up to any statutory planning and regulatory requirements.
3.4 Insurance requirements
3.4.1 It is a condition of grant for all schemes that both during development and thereafter, providers insure the accommodation with reputable insurers for its full replacement value.
Please see guidance below for further information.
Providers may wish to search the Royal Institute of Chartered Surveyors (RICS) website for guides on the subject of insurance.
Providers may also wish to safeguard their insurance position by commissioning an independent professional opinion on reinstatement values every five years or more frequently as appropriate
3.4.2 Other risks In addition to the specified risks of loss or damage to the building caused by fire or aircraft, the Agency requires ‘other risks’ to be covered as follows:
For Rehabilitation property - from the exchange of contracts to purchase until practical completion of the whole or relevant part of the works:
- Explosion, lightening, earthquake
- Storm, tempest, flood (but not frost)
- Bursting, leaking or overflowing of water tanks, water apparatus, water pipes, or sewage pipes
For Rehabilitation and New Build property - from practical completion of the whole or relevant part of the works:
- As for rehabilitation property above plus
- Subsidence, ground heave, or landslip of the site on which the building stands
3.4.3 Exclusions The cover outlined under ‘other risks’ above may be subject to the normal insuring exclusions e.g. war, invasion, act of foreign enemy, hostilities, civil war, rebellion, revolution, insurrection, usurped power, loss or damage caused by ionising radiations or contamination by radioactivity from any nuclear fuel, radioactive toxic, explosive nuclear assembly or nuclear components thereof, or pressure waves caused by aircraft or other aerial devices travelling at sonic or supersonic speeds.
3.4.4 The Agency requires prior notification of any other exclusions.
3.4.5 Terrorism is a normal insuring exclusion and falls outside the Agency insurance requirements. Whether or not to insure for this risk is a matter for individual providers to decide according to the perceived risk.
3.5 Modern Methods of Construction (MMC) categories for schemes
3.5.1 In order to record the homes that are produced using MMC, associations will be required to assign a ‘build category’ to schemes at key stages in the processing route.
- Off site Manufacturing (OSM) – Volumetric
- OSM – Panellised
- OSM – Hybrid
- OSM – Sub-assemblies and components
- Non-OSM Modern Methods of Construction
- Not applicable
- Not known
Please refer to the guidance for further information.
OSM – Volumetric
Volumetric construction (also known as modular construction) involves the production of three-dimensional units in controlled factory conditions prior to transportation to site. Modules can be brought to site in a variety of forms ranging from a basic structure to one with all internal and external finishes and services installed, all ready for assembly. A family sized dwelling might typically be manufactured in four modules plus roof module(s).
OSM – Panellised
Flat panel units are produced in a factory and assembled on-site to produce a three dimensional structure. The most common approach is to use open panels, or frames, which consist of a skeletal structure only with services, insulation, external cladding and internal finishing occurring on-site. More complex panels - typically referred to as closed panels - involve more factory-based fabrication and may include lining materials and insulation. These may also involve include services, windows, doors, internal wall finishes and external claddings. Typically this category includes both timber and light gauge steel panels. It may also include engineered solutions such as cross-laminated timber or structural insulated panel systems (SIPs).
OSM – Hybrid
A method - also referred to as semi-volumetric - which combines both panellised and volumetric approaches. Typically, volumetric units (sometimes referred to as ‘Pods’) are used for the highly serviced and more repeatable areas such as kitchens and bathrooms, with the remainder of the dwelling or building constructed using panels. The hybrid approach is sometimes used to provide added flexibility on complex sites and those requiring additional communal areas. As with both volumetric and panellised approaches the degree of factory-based fabrication is variable.
OSM - Sub-assemblies and components
This category is intended to encompass approaches that fall short of being classified as systemic OSM but which utilise several factory fabricated innovative sub-assemblies or components in an otherwise traditionally built structural fabric. Typically, schemes incorporating the use of floor or roof cassettes, pre-cast concrete foundation assemblies, pre-formed wiring looms, mechanical engineering composites, etc. would fall into this category. Traditional constructed schemes utilising manufactured units – such as windows, door-sets, roof trusses, etc., which might otherwise be part of the fabrication process in the other OSM categories – should not be included as sub-assemblies or components in this category.
Non-OSM Modern Methods of Construction
This category is intended to encompass schemes utilising innovative housing building techniques and structural systems that fall outside the OSM categories. The presence of innovation is an essential feature that might manifest itself through an innovative non-OSM building system, through a building technique familiar in other sectors but new to house-building, or through traditional components being combined in innovative ways. Typically, ‘TunnelForm’ or H + H Celcon ‘Thin joint blocks’ would fall within this category.
This category is intended to encompass all ‘Traditional’ site-based new build schemes and site-based rehabilitation, refurbishment and conversion.
This category covers where none of the above build categories can be assigned to a development.
4. Other scheme types
4.1 Lease and repair to bring empty homes back into use
4.1.1 Registered Providers are able to bring empty homes back into use as Affordable Rented homes through lease and repair.
4.1.2 Eligible Properties
22.214.171.124 Empty properties must not be existing social housing owned by the Registered Provider or by another Registered Provider.
126.96.36.199 The minimum lease period for a property is five years and up to 30 years.
188.8.131.52 Lease and repair empty homes accommodation is excluded from the Right to Acquire although an empty homes tenancy might count towards a Right to Acquire applicant’s residency requirements. Please see Right to Acquire section 2.2.
184.108.40.206 Where appropriate for the client group, leased empty homes may be used for supported housing. Please see the Specialist Homes for Older, Disabled and Vulnerable People chapter for more information.
220.127.116.11 Properties should be refurbished to the Decent Homes standard as a minimum. Where it is proposed that properties will be leased for longer than 10 years, providers are encouraged to exceed the Decent Homes standard wherever possible
18.104.22.168 While existing social housing is not eligible other property owned by other Registered Providers and/or local authorities is eligible:
- Former Right to Buy properties that do not currently meet the definition of social housing and are in private ownership
- Non-residential properties owned by Registered Providers or local authorities that has had no public subsidy in the past e.g. commercial, agricultural buildings or community facilities such as community halls
- Properties acquired through Compulsory Purchase Orders (CPO) and Empty Dwelling Management Orders (EDMO) (in exceptional circumstances). Funding will not be available in respect of costs for CPOs and EDMOs
- Properties that are already owned by the Registered Provider (including other, registered or unregistered organisations that are part of the provider’s group structure) are not eligible for grant funding under lease and repair. Providers looking to bring their own properties back into use should see section 3 above
22.214.171.124 Aside from those listed above, there are no restrictions on the current ownership of properties to be brought back into the programme. These may include, for example:
- Public bodies e.g. health authorities, Ministry of Defence, government departments etc.
- Unregistered landlords and co-operatives which are not subsidiaries of Registered Providers
- Private individual(s) or companies.
4.1.3 Ending a tenancy (Lease and Repair)
126.96.36.199 Funding for lease and repair empty homes is provided to utilise properties with a ‘life’ of less than 30 years. At the end of the this ‘life’, Registered Providers will be required to offer timely and reasonable advice and assistance to the existing tenants to help them find suitable alternative accommodation in line with requirements of Housing for Rent section 3.
188.8.131.52 Acknowledging the time-limited availability of lease and repair properties, Registered Providers’ strategies must incorporate rental terms that sit within the overall lease length on the property.
4.1.4 Grant Recovery
184.108.40.206 Grant will be recoverable when a relevant event occurs as specified in the Grant Recovery chapter section 3. Grant will be recovered in respect of any unexpired term of the lease, regardless of whether the lease is terminated by the owner or the Registered Provider, and whether or not Registered Providers have been similarly reimbursed by the property owner.
4.2 Traveller Pitches
4.2.1 Funding is available to support the development of new traveller pitches to help meet the accommodation needs of traveller communities. Funding is provided to develop new traveller sites and to add new pitches onto existing sites.
For a definition of travellers, please see below.
Travellers means persons of the beneficiary type as defined in Section 225 of the Housing Act 2004 and the Government’s Planning policy for traveller sites, which for the avoidance of doubt includes Gypsies, Roma, Irish Travellers, New Age Travellers and Travelling Show People and the word ‘traveller’ should be construed accordingly.
4.2.3 Eligibility criteria
220.127.116.11 The priority for funding is new permanent supply. However, the Agency recognises that, in some areas, the needs of the local traveller communities are best met through other forms of provision, such as temporary or transit pitches provided on permanent sites. These are all eligible delivery routes. Funding is not available to develop emergency or temporary stopping places.
18.104.22.168 Landlords of Affordable Rent accommodation are required to be registered as a provider of social housing with the social housing Regulator.
22.214.171.124 For providers delivering only ‘standard’ traveller pitches (i.e. with an amenity building but not built sleeping accommodation) the requirement to be registered with the Regulator does not apply as this form of provision is not formally classed as accommodation.
126.96.36.199 Where providers intend to develop traveller pitches with fixed sleeping accommodation in a permanent structure, such as a bungalow or who are providing affordable housing on other non-traveller Affordable Rent schemes, the requirement to be registered as a provider of social housing applies.
188.8.131.52 Providers delivering rented traveller pitches are required to follow the requirements in the Mobile Homes Act 1983, including those covering rent increases.
4.2.4 Site design
184.108.40.206 Whilst there are no prescribed standards for the design and layout of traveller sites, the Agency expects site location and design to take account of the Department for Communities and Local Government good practice guidance on site design, and, where appropriate, relevant legislation.
220.127.116.11 For the purposes of this programme the Agency uses the following standard definition of a traveller pitch:
Traveller pitch means a space for a family unit comprising at least an amenity building, access to utilities and hard standing area to accommodate at least one large trailer or caravan, parking for one vehicle and drying space for clothes.
18.104.22.168 Each pitch should include an amenity building or suitable equivalent facilities, which may include:
- Hot and cold water supply
- Electricity supply
- A separate toilet and hand wash basin
- A bath/shower room
- A kitchen and dining area
5.1.1 This section sets out the Agency’s property purchase requirements.
5.1.2 Where providers make speculative purchases they do so at their own risk and cannot pre-empt the Agency’s investment decisions. The Agency cannot guarantee future funding and providers must accept the risks involved in making such purchases.
5.2 Public sector purchases
5.2.1 Purchases of land from local authorities and other public sector bodies must be considered carefully in order to avoid providers having to provide, non-monetary consideration but without an appropriate reduction in the monetary consideration (i.e. the price) paid by providers.
5.3 Property title
5.3.1 The Agency requires that when providers acquire an interest in a property or where works are to be done, the property must offer ‘good title’. For guidance on what ‘good title’ means, please see below.
Providers are said to have ‘good title’ when they are able to prove their title to such a degree that no third party can defeat it.
This definition is being used in its legal sense as understood by property lawyers.
Not having ‘good title’ to its land/property does not mean that a provider does not own that land/property. Rather it means that the proof that is being offered in support of its claim to ownership does not preclude the risk that some other party might be able to demonstrate a better claim to ownership.
How providers demonstrate ‘good title’ will vary depending upon whether the land is registered or unregistered.
For registered land, ‘good title’ means that land is classified as ‘absolute’ or ‘good leasehold’ by the Land Registry. Should proof of title be required this is demonstrated by supplying a copy of the Land Registry extract.
Holding land described by the Land Registry as ‘qualified’ or ‘possessory’ does not demonstrate ‘good title’ except where the lease has at least 60 years unexpired duration (or at least 99 years in the case of Affordable Home Ownership houses and 125 years for flats) and in each case defective title indemnity insurance in favour of the grant recipient with a limit of indemnity to at least the firm scheme grant for that site.
Demonstrating ‘good title’ to unregistered land is harder. Providers may, if they wish, have their deeds or other evidence of ownership considered by a solicitor familiar with property law and conveyancing and have that solicitor give an opinion as to whether the proof offered is sufficient to demonstrate ‘good title’. However such an opinion is just that, and would not bind third parties.
Consequently, the only formal legal mechanism for demonstrating ‘good title’ is to have the unregistered land registered with the Land Registry, and have the title classified as ‘absolute’ or ‘good leasehold’ as appropriate. The Land Registry may or may not agree to this, depending upon the circumstances.
Where providers are unable to demonstrate ‘good title’ some may seek indemnity insurance to guard against the risk of their title being found lacking. However this would still preclude those providers from meeting the Agency’s grant agreement and therefore the Agency would need to authorise receipt of grant as per section 4.3.2.
Please also see Finance 3.1.1.
5.3.2 The Agency understands that where providers are unable to demonstrate ‘good title’ they may have ‘possessory title’ supported by an indemnity insurance which could ‘pay off’ a third party, who at a later date was able to provide documentary evidence of ‘good title’ to that land. Where no other route is available to the provider the Agency will consider funding on the basis that:
- Providers agree to bear any risk if challenged
- They accept that grant repayment would be required if the property was no longer available for the purposes for which it was funded
5.3.3 In the unlikely event that a third party demonstrated ‘good title’ but was not willing to be ‘paid off’ by the insurer the Registered Provider would need to contact the relevant operating area accordingly.
6. Transfers to and between providers
6.1.1 Where a provider wishes to transfer property or land to another provider they may need to notify the Regulator (for example if it is occupied, or if the disposal is to a profit-making provider, or if the disposal will significantly reduce the provider’s level of stock). Please see the Regulation page for further details.
6.1.2 Providers must notify any local authority that has an interest in the property.
6.1.3 The Transfer of Properties procedure does not apply when providers enter in to management agreements without a change of property ownership (please see Management Arrangements in the Programme Management chapter.
6.1.4 The Transfer of Property procedure does not apply when non-profit providers that are community benefit societies dispose of their entire stock to another provider through a Transfer of Engagements (under section 110 Co-operative and Community Benefit Societies Act 2014). Providers should review the guidance on notifications of restructures on the Regulator’s website.
6.1.5 The disposing provider must comply with the terms of any loan secured on the property.
6.1.6 For all transfers between or to providers, where the property concerned has been allocated capital grant, receiving providers must maintain adequate records of that capital grant for future reference should that property become subject to the Agency’s grant recovery rules.
Please see comment at 5.2.3
6.2 Reporting transfers of grant funded property between providers
6.2.1 Where property has received Housing Association Grant, Social Housing Grant, or Social Housing Assistance (including Recycled Capital Grant Fund, Disposal Proceeds Fund or Rent Surplus Fund) providers must advise the Agency immediately the ownership of that property, or properties, has changed and no more than 30 days after the date of completion.
6.2.2 Property transfers or disposals between providers are not deemed a Relevant Event for grant recovery purposes. Responsibility for grant will pass from the transferring provider to the recipient provider. However, should a subsequent relevant event occur post transfer grant may be recoverable. Please see the grant recovery chapter.
6.3 Procedural requirements in respect of Transfer of Property (TOP) between providers
6.3.1 Immediately following the transfer (or disposal) of a property the donor provider must inform the Operating Area (for the property location) in writing titled ‘Request to Process and Notify a Transfer of Property’. A copy of form TOP 1 (R) should be included in the submission. The form and guidance can be accessed below.
6.3.2 Completion and approval of form TOP 1 (R) Prior to completion of the form providers must ensure they meet the following conditions:
- The donor provider must confirm that all relevant legal processes to transfer the property to the recipient provider have been completed
- Both donor and recipient provider must confirm that the TOP 1 (R) will be completed by an authorised signatory
- Both donor and recipient provider must agree to accept that the Agency must protect public funds
- Both donor and recipient providers must agree to accept that the Agency may use the information provided in this form to prevent and detect fraud
- Both donor and recipient providers must agree to accept that the Agency may share the information with other organisations that handle public funds
- Both donor and recipient providers must agree to accept that the Agency may use the information provided for statistical surveys and related purposes
- Both donor and recipient provider must agree to accept that the Agency may pass this information in confidence to the Department for Communities and Local Government and agencies working on its and the Agency’s behalf
- The recipient provider must confirm that they are to be held accountable for the Agency’s investment in property/properties received from the donor providers as stated on TOP 1 (R )
- Recipient providers must confirm that they will adhere to the Agency’s conditions regarding grant recovery, as detailed in the Grant Recovery chapter of this guide for property/properties received from the donor provider
6.3.3 Following completion by an authorised signatory providers must submit the completed TOP 1 (R) to the operating area.
5.4 Transfers from local authorities and other public sector bodies
6.4.1 Housing transfers (large scale stock transfers from public sector bodies) are designed to be fully funded over the period of the business plan without additional grant.
6.4.2 Grant shall not be paid towards the cost of acquiring or improving tenanted stock acquired from a public sector body. The DCLG Housing Transfer Guidance, says that the valuation and the provider’s business plan should provide for all works required over a 30 year period as a minimum, taking account of demand, viability and stock restructuring. Where there are known plans for regeneration, the housing costs should also be included in the business plan.
6.4.3 In exceptional circumstances the Agency may consider whether new grant may be made available where providers can demonstrate they are unable to fund delivery of local authority stock transfers, including those associated with regeneration proposals, without assistance. Eligibility for new grant for providers taking transfers of local authority stock will be subject to a full bid assessment against AHP parameters. In some cases eligibility will depend on the date of transfer – see 5.4.11.
6.4.4 When drawing up their business plans and considering future investment needs, providers cannot assume that grant will be available at any point in the future. The Agency will not consider bids for grant unless the proposals fit with the priorities for investment in the Local Investment Plans or similar agreed documentation and the resources are available. Please refer to the guidance for further information.
The Agency recognises that some costs cannot be foreseen and that some future programmes may not be reasonably quantifiable when the Business Plan is being drawn up. Additional costs arising from changes to the nature of works after transfer must be absorbed by adjustments to the business plan where possible, for example by re-phasing of works, by identifying capital or revenue savings elsewhere or by applying increases in income over and above those allowed for in the Business Plan.
6.4.5 Cases will only be considered for funding where the works are essential to provide good quality homes for the residents and the additional cost cannot be managed by adjustments to the Business Plan. For further guidance please see below.
When considering bids for funding, the Agency will require evidence that the costs were not reflected in the original valuation and business plan. Where there was some provision for works in the business plan, this must be deducted from the grant payable on the enhanced or replacement works to ensure there is no double subsidy.
6.4.6 Types of work
Major repairs are works which arise in the longer term from the renewal of major dwelling components (such as window frames), even though satisfactory maintenance and repair have been carried out. In all cases provision should have been made in the business plan for both cyclical maintenance and major repairs and in no cases will these works be eligible for grant.
Improvements and remodelling
Improvements are work to stock intended to raise the standard of the homes, for example energy efficiency measures, new kitchens. Remodelling would normally involve some structural alterations, for example conversion of shared units to self-contained flats or of smaller to larger units. The business plan should have taken account of the potential need for these works and grant will only be available in the following circumstances, where the need has arisen after transfer and could not reasonably have been foreseen:
- Where stock poses a safety hazard
- Where, because they are no longer appropriate for their intended use and/or demand has changed, the homes have become difficult to let
- Where new requirements, for example energy efficiency measures, have been introduced since the date of transfer, the necessary works have not been included in the business plan and are beyond what would normally be expected when giving properties a 30 year life (kitchen and bathroom replacement would, for example, be expected within a 30 year period)
Demolition and rebuilding
For transfers after 1 April 1997, provision should have been made in the valuation for demolition and new build rather than renovation where this is cost effective and supported by the tenants. This applies whether the replacement housing results in more or fewer homes overall. Priority should be for the refurbishment and upgrading of existing homes rather than demolition.
Where demolitions of existing housing stock are needed, these are expected to be on a small scale and can include:
- Where there is a need to open up access to developable land
- Where the housing being demolished is demonstrably no longer suitable nor viable for further use or
- Where non-housing buildings (for example, garages, community centres) included in the transfer are no longer used and are to be replaced by housing
New development of vacant sites
Works only new build or rehabilitation schemes are eligible for grant where the site or property (other than naturally occurring voids) was vacant at the time of transfer and no provision was made in the business plan for replacement.
Transfers of tenanted stock from other public sector bodies
Grant funding cannot be used to acquire tenanted stock from other public sector bodies. Vacant sites or properties are potentially eligible for funding. The only circumstances in which grant may be payable towards the cost of acquiring tenanted properties (other than those occupied by service tenants such as wardens or caretakers) from a public sector body are where:
- Less than 5% of the dwellings acquired are tenanted or
- In the case of a scheme involving acquiring dwellings from both the public sector bodies and private owners, the tenanted public sector dwellings are less than 5% of the total acquisition
6.4.9 The operating area will make decisions about funding in the context of Local Investment Plans or similar agreed documentation and local priorities. Requests for funding will be considered in the context of the overall programme and if it is not deemed to be of sufficient priority or resources are not available, it will not be funded, even if the circumstances set out above apply.
6.4.10 Where funding is made available, grant will only be paid on a ‘works only’ basis.
6.4.11 For stock transferred before 1 April 1997, grant may be available for redevelopment on an Acquisition and Works basis with the eligible acquisition cost being the lower of the outstanding attributable debt or the current valuation. This would only be on an exceptional basis where the project was accorded the highest priority by the local authority. Providers must be able to demonstrate that at the time of transfer the valuation assumed a continuing rental stream from those units and that it was reasonable to do so i.e. there were no plans to demolish.
6.5 Transfers of stock developed by unregistered bodies under section 27A of the Housing Act 1996/2004 (via the ADP 06-08 and NAHP 08-11)
6.5.1 Transfers of stock funded under section 27A of the Housing Act 1996/2004 developed and retained by an unregistered body.
22.214.171.124 Where an unregistered body has developed property with grant under section 27A and retained it as landlord (‘retained ownership model’), the property will be subject to an Agency rentcharge secured on the property title. The landlord will be contractually bound to manage and retain the properties for the agreed purposes strictly in accordance with the terms of the rentcharge and may only dispose subject to the Agency’s consent and recovery of grant and uplift as specified. Consent to disposals other than exempted disposals (such as owner occupier staircasing) is at the Agency’s absolute discretion and may be subject to additional conditions dependent on the status of the recipient.
6.5.2 Transfers of stock funded under section 27A of the Housing Act 1996/2004 that were developed by an unregistered body and transferred to a Registered Social Landlord at completion.
126.96.36.199 Where a Registered Provider is the landlord of property developed by unregistered body under section 27A and transferred to it at the completion (‘agreed transfer’ model) it will have automatically become obliged under section 27B of the Housing Act 1996/2004 to treat the vested grant as if it were section 18 grant received directly. The Registered Provider is therefore obliged to ensure the stock is managed in accordance with all current Regulatory standards.
6.5.3 Transfers of stock developed under section 27A of the Housing Act 1996/2004, developed by an unregistered body on land already in the ownership of the Registered Provider.
188.8.131.52 Where a Registered Provider is the landlord of property developed under section 27A by an unregistered developer on land (the Registered Provider) already owned (‘non owning model’) it will be subject to an Agency deed secured on the title. This deed contractually binds the landlord to treat the grant as if received directly under section 19 (as this transfer of obligations does not occur automatically in event of no transfer of land). The Registered Provider is obliged to ensure the stock is managed and disposed in accordance with the terms of the charge. Disposals where there is a charge and other than exempted disposals (as outlined in the Recovery Determinations - such as shared ownership staircasing) are subject to Agency approval and may be subject to additional conditions dependent on the status of the recipient.
6.6 Transfers of property funded under section 19(6) of the Housing and Regeneration Act 2008
6.6.1 Where property funded under section 19(6) of the above Act is transferred to another provider, the provisions of sub-sections 5.1 to 5.3 above will apply.
5.6.2 Where property funded under section 19(6) developed by a provider that is not a former Registered Social Landlord is transferred to an provider that was a Registered Social Landlord the provisions of sub-section 5.5 above will apply; unless the organisation was previously a Local Authority and the property was subject to a Large Scale Voluntary Transfer.
6.6.3 Where property subject to a Local Authority Large Scale Voluntary Transfer is involved the provisions of sub-section 5.4 will apply.
6.6.4 Reporting and audit requirements for providers
For grant funded property that has been transferred to other providers, providers must forward a letter to the transferring organisation requiring that it will adhere to the Agency’s published requirements in respect of rents, service charges and on-going management and marketing arrangements etc. A copy of this letter must also be sent to the operating area.
6.6.5 For transferred shared ownership property, providers must enter initial sales data on IMS at the point of transfer.
7. Planning Permission and Building Regulations
7.1.1 Providers must:
- Obtain detailed planning permission according to the requirements and timescales outlined in Programme Management 4.2.2
- Have obtained building regulation approval prior to the completion of the development and
- Have made best endeavours to have any planning conditions and/or reserved matters signed off by the planners prior to the completion of the development
It is noted that in some specific cases practical completion will be achievable for homes without sign off of all planning conditions or reserved matters. This occurrence is at the risk of the provider and should not impede occupation of homes or final sign off of any outstanding consent in the near future.
7.1.2 This section provides information on:
- The Agency’s requirements for grant funding
- The treatment of developer contributions towards the costs of grant funded housing
7.1.3 Providers should ensure that they are aware of the current guidance on planning produced by DCLG, the National Planning Policy Framework.
7.2 Planning conditions and obligations
7.2.1 In circumstances where the planning authority grants planning permission subject to conditions or makes the development subject to planning obligations (set out in a section 106 Agreement or Unilateral Undertaking) providers must ensure that any such obligations do not make the development ineligible for grant funding.
Examples of obligations that may make a development ineligible for grant include (please note this list is not exhaustive):
- Suitable nomination rights to local authorities are not preserved
- Nominations (whether for housing for rent or affordable home ownership) are inconsistent with national policy
- There are consents that are made personal to the applicant provider and/or voluntary agency managing the scheme to the exclusion of other providers
- There are consents that restrict the letting/sale of property in contradiction of any national policy of Government or the Agency
For example (a) please see below.
Example (a) - A planning consent should not exclude housing for rent from the provisions of the Right to Acquire (which gives a statutory right to purchase certain properties provided by providers) or restrict the equity in a shared ownership scheme (other than for rural restricted equity schemes).
- There are restrictions on use or sale of the property which make them unmortgageable or
- There are restrictions on grant recovery that contradict Agency policy, e.g. by restricting the location of spend of recycled receipts, or of requiring recycling to the local authority in a way which jeopardises the Agency’s interest
For example (b) please see below
Example (b) - A s106 might state that all staircasing and sales receipts from shared ownership, Right to Acquire or any future sale receipts from the affordable dwellings are re-invested on agreed sites within the local authority. However, this might conflict with future local investment priorities. Reclaimed grant has to be used in accordance with these priorities, and so there would be a conflict between the provisions of the s106 Agreement and the rules on grant. Such conflicts must be avoided.
7.2.2 If providers are uncertain as to whether a particular planning condition or obligation will make the development ineligible, they are advised to contact the contract manager.
7.2.3 Local planning authorities may attach section 106 obligations for offsite works and financial contributions to planning permissions obtained by providers. This may include, for example, the provision of community centres not primarily for providers’ tenants, or financial contributions for non-housing purposes.
7.2.4 Providers must ensure that they are acting within their own rules in complying with such obligations by obtaining legal advice as to whether the proposed activity is within their rules. The Agency will not dispute that advice unless there are strong grounds for doing so. Providers will also need to seek legal advice about the extent of their potential future legal liabilities to the local authority or other third parties relating to off-site works and also about any limitation measures that it might be prudent for providers to undertake.
7.3 Planning subsidy
7.3.1 Planners will often require the developer/landowner to provide affordable housing as a planning obligation. The purpose is to provide additional affordable housing.
Providers must ensure that the planning subsidy that they receive through such planning obligations is clearly quantified (in agreement with the local planners) and apportioned to the properties in a manner that is consistent with the Requirements for apportionment of grant.
7.3.2 The Agency expectation is that section 106 schemes will be delivered at nil grant input for both Affordable Rent and for affordable home ownership. For further information please see the SOAHP Prospectus.
8.1.1 Providers must comply with the Agency’s signboard requirements for all Social Housing Assistance, Social Housing Grant and Recycled Capital Grant Fund and Disposal Proceeds Fund funded schemes unless the Agency has given a specific exemption (see section 8.3.3 below).
8.2.1 The design of the Agency’s site signboard must be followed using official artwork. For information, please visit the Agency’s website.
8.2.2 There are two sizes available. The larger version - 2.440mm x 1.220mm (8 ft x 4 ft) - is the preferred design. The smaller version - 2.440mm x 610mm (8 ft x 2 ft) - may be used where space is limited. Deviation from these sizes must have prior written permission from the operating area.
8.2.3 The Agency’s corporate signature needs to be reproduced carefully. The branding must include the Agency’s logo. Artwork is available from the Agency’s website, as referred to in 7.2.1.
8.2.4 Providers producing these signboards by signwriting or other recognised techniques must ensure that the design is accurately followed. No artistic licence is permitted.
8.3.1 A signboard must be displayed in a prominent position on each new build development and/or rehabilitation development comprising of four or more properties using Agency funding. The display may also include a brief description of the scheme, for example ‘30 sheltered flats for older persons’.
8.3.2 Where more than one partner’s branding is displayed alongside the Agency sign, there is no specific order in which they must appear.
8.3.3 Where the provider considers that the provision of a site signboard is inappropriate or where a different sized board is required, exemption or waiver should be sought in writing from the operating area.
8.4 Advertising regulations and consents
8.4.1 Providers are responsible for obtaining any necessary statutory approvals or consents e.g. Town and Country Planning (Control of Advertisement) Regulations, 1992.
8.4.2 Compliance with the Agency’s signboard requirements will be checked as part of the Agency’s compliance audit.
9. Reporting and audit requirements
9.1.1 The SOAHP reporting and audit requirements are published on the Agency’s website. The requirements for schemes funded under previous programmes and are published below.
9.1.2 For schemes funded in 2015 to 2016 and 2011 to 2015, quality compliance will be assessed through a Quality Audit.
9.2 Partner programme agreement route
9.2.1 Investment Partners developing schemes under the Programme Partnering Agreement arrangements are required to carry out self-assessment procedural compliance tests. For details of the requirements, see Programme Management section 8.
Details of the Agency’s Quality requirements that apply to these schemes may be found in the Design and Quality Standards April 2007.