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Capital Funding Guide

Homes and Communities Agency
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9. Repair

This chapter sets out eligibility and procedures for works to registered providers’ existing rental stock.

1. Overview

1.1 Purpose

1.1.1 This chapter sets out eligibility and procedures for works to Registered Providers’ existing rental stock. Registered providers are asked to note that the Agency will usually not to agree to allow the use of recycled grant for the funding of repairs. Please see guidance below for more details. The Agency does not provide funding for works to local authority-owned property.

Funding for works to existing affordable housing stock will be made only in the most exceptional circumstances. For example we have previously made funding available, for this purpose, to almshouse charities, to ensure that these homes remain in a standard that allows them to remain habitable, where the individual charities do not have access to resources to undertake the work.

1.2 Context

1.2.1 The Agency’s Shared Ownership and Affordable Homes Programme (SOAHP) heading of Works to Existing Stock consists of:

  • Major Repairs
  • Re-improvements

1.2.2 Major repairs As a general rule the Agency expects Registered Providers to fund repairs to their existing stock through their business plans. However the Agency will in exceptional cases consider funding major repairs in respect of eligible properties (see section 3), which are essential for the property to remain habitable; and where the Registered Providers can demonstrate it has no access to resources of its own to undertake the work.

1.2.3 The criterion for deciding whether work is classed as major repairs is that the works do not lead to any rent increase. For additional details please see guidance below.

Major repairs are repairs that do not fundamentally change the nature of the property in a way that would enable a landlord to charge a higher rent.

Even if the tenant is required to be re-housed on an interim basis whilst the major repairs are completed; it is expected that the tenant would return to the property on the same tenancy terms.

1.2.4 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. Please see Procurement and Scheme Issues for further information.

1.2.5 As the works undertaken will not result in an increased rent, there would be no additional rental income to fund the works or to fund any loan repayments. Where the Registered Providers is able to demonstrate it cannot use its own resources, Recycled Capital Grant Fund, and is unable to afford to pay for the major repair by taking out a loan, the cost of the works may be covered entirely by grant. However, any excessive or non-qualifying costs must be paid for by the provider. Please see section 4 for details of eligible and ineligible works.

1.2.6 Re-improvements Re-improvements are works to property in the provider’s ownership which was originally produced with public sector funding. The re-improvement work can be improvements or conversion, and be sufficient to justify an increase in rent. If no rent increase is justifiable, the work is likely to be classed as Major Repairs. Whilst re-improvements are works to a Registered Provider’s existing stock they are not classified as repairs. The requirements and criteria for re-improvements are detailed at Procurement and Scheme Issues 3.3.

1.3 Key features

1.3.1 The Agency will only consider funding major repairs on an exceptional basis. Where it does so the following characteristics will apply.

1.3.2 Fixed grant Grant will be payable on up to 100% of eligible costs declared in the offer. However, once funding is agreed, grant is fixed.

1.3.3 Payment Grant is required to be claimed and then paid following practical completion.

1.3.4 Where payment on completion would put a provider in severe financial difficulty, a limited facility to release payment in tranches may be available. The Agency will consider individual requests on a case by case basis.

1.3.5 In certain circumstances a Registered Provider may undertake a range of repair and improvement activities under a single building contract. Where the Agency considers funding on an exceptional basis they may favourably consider applications from the Registered Provider for grant for the eligible works in such combined schemes where it is practicable and cost effective for the works to be carried out at the same time.

1.3.6 Technical scrutiny The Agency will scrutinise the proposed works to ensure that they:

  • Are realistic
  • Are reasonable
  • Represent value for money

Depending on the degree of scrutiny at offer stage the Agency may require supporting documents to be submitted.

1.4 Eligible properties

1.4.1 Not all properties are eligible for major repairs funding. Details of eligible and ineligible properties are described in section 3 of this chapter.

1.4.2 As many properties will be ineligible for Agency funding and any funding from the Agency is available only in exceptional circumstances, providers must account for and fund their own ‘major repairs’ provision within their business plans.

1.5 Eligible works

1.5.1 Categories of work which the Agency may consider funding in exceptional circumstances are set out in section 4.3 of this chapter.

1.6 Non-qualifying costs

1.6.1 Not all works and costs are eligible for grant funding, and these will be required to be funded by the Registered Provider.

1.6.2 The term non-qualifying cost relates to any capital costs of ineligible works.

2. Asset Management

2.1 General

2.1.1 Registered Providers should deliver effectively managed resources as expected in the Regulator’s Governance and Financial Viability Standard This will involve a business plan which covers:

  • The management of assets
  • Obtaining the finance required to maintain assets
  • An assessment of the risks to delivering the plan

Any queries should be referred to the Regulator.

3. Property Eligibility

3.1 General

3.1.1 This section sets out the categories of property which would be eligible for major repairs funding, should the Agency consider an exceptional case exists.

3.2 Eligible properties

3.2.1 Except for those listed at paragraph 3.3, all rental properties are eligible for major repairs funding, if they were funded under pre-1988 Housing Act procedures.

3.2.2 The above includes property funded under the pre-1988 Housing Act Supported Housing Procedures which were eligible for Special Needs Management Allowance/Supported Housing Management Grant and were funded by Housing Association Grant.

3.3 Ineligible properties

3.3.1 The following types of properties are ineligible for major repairs grant funding:

The following types of properties are ineligible for major repairs grant funding:

  • Temporary Social Housing schemes
  • Any property transferred from a public sector body to a Registered Provider on or after 1 April 1989;
  • Any property owned by a local authority
  • Properties produced out of the following internal Registered Provider funds
  • Disposal Proceeds Fund
  • Recycled Capital Grant Fund
  • All pilot mixed funding schemes approved in 1987/88 and 1988/89 including Challenge, Job Movers and Homeless Families schemes
  • Properties funded under the Tariff, Non-Tariff, and Cash Programme procedures (i.e. funded after April 1989), EXCEPT supported housing schemes which also received a Special Needs Management Allowance/Supported Housing Management Grant approval under the Special Needs Funding and Supported Housing Arrangements introduced in April 1991 and 1995
  • All grant funded Affordable Home Ownership properties
  • Properties developed by the Registered Provider without any form of public subsidy (such as Business Expansion Schemes (please see definition in Glossary), market rent schemes, privately-funded home ownership schemes) unless the properties are let at Affordable Rent or Social Rent

3.3.2 Large Scale Voluntary Transfer landlords that received stock transfers prior to 31 March 1996 are not eligible in principle to receive major repairs funding regardless of when these properties were originally funded.

4 Major Repairs - Eligible Works

4.1 General

4.1.1 Should the Agency consider in exceptional cases that it would be appropriate to fund major repairs this section defines the types of work that would normally be acceptable.

4.1.2 The repaired or replaced systems and components paid for by major repairs funding must have a (remaining) life of at least 15 years, once works are completed.

4.2 Establishing Eligibility

4.2.1 It is not possible to give a definitive list of works that might qualify for funding, and Registered Providers will be required to contact the relevant operating area of the Agency to discuss the likelihood of whether their proposed works might be eligible for funding. For an example of the difficulty in providing clear-cut rules please see below.

An example of where the same work may and may not qualify for major repair funding is the replacement of kitchen base units.

The routine replacement of units, for example following wear and tear is considered routine or cyclical maintenance and therefore not eligible for major repair funding.

However, where those units have been damaged beyond reasonable repair and are required to be replaced as a consequence of a failed damp proof course (which in itself is eligible for major repair funding), the cost of their replacement could qualify for funding.

Therefore, the main ‘grey area’ to be considered is whether the need for the repairs arises as a direct consequence of something else rather than from routine maintenance needs.

4.3 Categories of work

4.3.1 For guidance on what type of works the Agency considers essential for the property to remain habitable please see below.

Major repairs works can be:

  • Major works arising from structural or environmental deterioration or
  • Replacement or repairs to services or features or
  • Works arising from legislative changes occurring after completion of the original development or rehabilitation work

In some instances tenants will need to be temporarily re-housed to enable major repairs to be carried out. The necessity to vacate properties can indicate the urgency or priority of the works.

4.4 Standards and types of work

4.4.1 The types of major repair works are:

  • Structural works
  • Secondary elements
  • Site works
  • Service installations
  • Investigations
  • Consequential works
  • Emergency repairs

Structural works

These are defined as works essential to safeguard the basic functions of stability and weather resistance in the main structural elements of a dwelling i.e. in floors, walls and roofs. Examples of major repairs works falling within this category include:

  • Underpinning and reconstruction of foundations
  • Rebuilding load-bearing walls including retaining walls
  • Damp proof course works and associated reduction of external ground levels
  • Treatment of wet or dry rot or insect attack
  • Tanking or lining to prevent moisture penetration
  • Lining and insulation in cases of severe condensation
  • Replacing roof/floor timbers, roof decks and covering
  • Re-pointing, re-rendering and re-cladding external load-bearing walls

Secondary elements

Extensive works (but not cyclical maintenance) to secondary elements of the structural envelope of a dwelling such as:

  • Stairs
  • Non-load-bearing walls
  • Balconies
  • Windows and external doors
  • Chimneys
  • Parapets and gutters

But excluding:

  • Internal doors
  • Fittings
  • Finishes and equipment

These works must be essential to preserve the weather resistance of the building or the security of the tenants and/or their possessions.

Site works

Site works around the dwelling or dwellings that are essential to the safety, security and protection of the tenants. Examples of works in this category include:

  • Replacement or reconstruction of unstable boundary walls, fences and retaining walls
  • Replacement or reconstruction of steps, paving, hard standings, un-adopted footpaths and roads damaged by subsidence or collapse
  • Removal of trees affected by disease or storm
  • Demolition of unsafe out-buildings including garages

Service installations

These are works to building services that have reached the end of their useful life such that the basic amenities of sanitation, health and safety in a dwelling could be seriously impaired. Works in this category comprise renewal of installations including:

  • Gas, water and electricity supplies
  • Drainage above and below ground
  • Heating and ventilation (in cases of severe condensation renewal or provision of heating, ventilation, dehumidification and insulation in accordance with the BRE Digest 297 (formerly Building Research Establishment) will be eligible)
  • Lifts; fire alarm, warden call, security and emergency lighting systems
  • External windows and doors replacement
  • Certain types of external works e.g. resurfacing roads and paved areas


Works required to investigate, report, expose and prepare for any of the above categories of major repairs works can be approved by the Agency. This category of works also includes preventive treatments to areas under threat as a result of defects undergoing major repairs.

Consequential and other works

Works required consequential upon major repairs works in the above categories. This includes works of reinstatement or making good to finishes and fittings (including decorations, internal doors and equipment) unavoidably damaged to an extent that has significant adverse effect on its function or longevity in the course of, or in connection with, major repairs works.

Health and safety

From time to time suspected health hazards arise from particular materials used in building. In addition, changing circumstances may lead to measures being required to address personal safety concerns of tenants within the building. Proposals appropriate to dealing with such cases as major repairs can only be assessed on their merits. Registered Providers should consult their relevant operating area in the first instance.

Damage not covered by insurance claims

In exceptionally inclement weather conditions, such as flood or storm, buildings can suffer unusual damage. Where such risks are uninsurable, the operating area of the Agency will give consideration to using major repairs funds in cases requiring extensive renewal.

Emergency major repairs

In some circumstances substantial repairs will be necessary because of extensive vandalism or damage or neglect by tenants. Where the costs of such works are not recoverable through insurance or charges to the tenant they can be considered by the Agency for major repairs funding. In such cases the Agency will need to be satisfied that the Registered Provider has taken all reasonable steps to secure the property and/or to recover any costs.

Emergency major repairs are works carried out as a matter of the utmost urgency, such as on receipt of a Dangerous Structure Notice from a local authority or health authority. As with other major repairs, providers are expected to explore all aspects of liability. Emergency work must be strictly limited to what is immediately necessary, and where possible, permanent reinstatement must be carried out as a separate scheme.

Where possible, the Agency will actively assist with emergencies by giving in principle, oral approval, and prior to approval of the scheme.

4.5 Additional Major Repair Provision

4.5.1 Previously referred to as minor miscellaneous works, the following are also classified as major repairs where such work to Registered Provider’s properties, is required to meet statutory requirements and address health hazards.

4.5.2 The following are examples of the types of works eligible for funding.

  • Asbestos removal
  • Fire Precautions
  • Dealing with lead in drinking water
  • Dealing with radon

4.5.3 Asbestos Works Funding can be paid to cover the cost of the treatment of hazards arising from asbestos in building materials.

4.5.4 For guidance on how the Agency will appraise the proposed works costs, please see below. This will enable schemes to be submitted and evaluated under a common set of criteria.

The list below contains information on asbestos used in the manufacture of domestic consumer products such as kitchen appliances and heating equipment. The guidance makes a number of key points which must be satisfied:

  • Dangers from asbestos in buildings are likely to arise only when asbestos is damaged, either accidentally or during maintenance or repair
  • In general, undisturbed materials in good condition present little risk but once the presence of asbestos material has been determined it is important to distinguish the type of asbestos and the potential for fibre release
  • Asbestos materials which are sound, undamaged and not releasing dust must be undisturbed. A system of management must be introduced involving regular inspection and labelling
  • Frequently the most appropriate action will be to leave the material in place and to seal or encapsulate it
  • When it is not possible to seal an asbestos material effectively and it is likely to release dust, the Registered Provider must seriously consider removing it completely
  • It will generally be more cost effective to undertake work on asbestos as part of a programme of general refurbishment or maintenance than to undertake such work separately. Any programme of work on asbestos must therefore take account of other planned work and factors such as the availability of suitable contractors and temporary re-accommodation of tenants whilst work is being carried out. It is important that there must be adequate liaison with tenants

Asbestos removal must be performed only by licensed contractors. Demolition involving any form of asbestos is subject to relevant health and safety legislation. Asbestos waste is classified as a controlled waste to be disposed of only at licensed sites.

4.5.5 Fire Precautions

These are works recommended by the relevant Fire Authority to upgrade existing fire precautionary measures, or install new services as defined by the Fire Authority. Registered Providers should follow the professional advice of the Fire Authority, although they are not strictly obliged in statute to do so.

4.5.6 Lead in Drinking Water Funding can be provided to cover the costs of replacing existing, or installing new pipe work due to the presence of lead in drinking water. In certain circumstances, the only solution to this problem will be to carry out replacement works of varying degrees. In many cases, attendant health risks associated with lead will be of paramount importance. Eligible works include the replacement, installation or re-routing of pipe work.

4.5.7 For further information please refer to the Drinking Water Inspectorate’s (DWI’s) A-Z search facility.

4.5.8 Radon

What is Radon?

Radon is a natural radioactive gas that results from the decay of small amounts of uranium present in soils and rocks. Where the gas seeps out of the ground in to the open air there is little or no danger, but where it escapes from underlying soil in to dwellings a buildup of radon could become a health hazard. Radon has no taste, smell or colour. Special equipment is needed for detection.

For detailed information prior to any action Registered Providers are advised to seek guidance from Public Health England. Public Health England provides advice on matters of radiation protection and has carried out various surveys in order to monitor levels of Radon.

Further advice can also be found on the BRE website.

4.5.9 The cost of remedial works to existing dwellings contaminated by Radon will be eligible for funding subject to the Registered Provider obtaining a survey report from the Health Protection Agency indicating that the remedial works are necessary. Only survey reports from the Health Protection Area will be considered for eligibility purposes. Where the Health Protection Area considers that a radon survey of an existing dwelling is unwarranted, funding will not be available.

4.6 Ineligible works

4.6.1 The following are not eligible for major repairs funding:

  • Re-improvements (see Procurement and Scheme Issues 3.3 for guidance on funding for re-improvements)
  • Day to day maintenance
  • Cyclical maintenance
  • Aids and adaptations
  • Works required because of the provider’s neglect and inefficiency