This part of GOV.UK is being rebuilt – find out what beta means

HMRC internal manual

# Living Accommodation: housing for key workers: rented housing: new property

## Rented housing: new property

For information on the scheme for Key Housing and the Starter Homes Initiative, see EIM21735.

The assistance for key worker rented housing may take the form, not of a cash rental subsidy, but of land provided free or at a discounted price to (usually) a registered social landlord (RSL), or a subsidy for the land purchase or towards the building costs.This subsidy is a contribution towards the cost of the accommodation. Where the amount of the contribution exceeds £75,000 there will be a benefit under S106 ITEPA 2003. EIM11480 explains how to calculate the value of this benefit and EIM11483 gives an example.

Where there is more than one person contributing to the costs, only the highest contribution is taken into account. (See EIM11430 for the definition of the person involved in providing the accommodation.)

Example: In May 2004, a local authority sells land (which it has owned for a number of years) to a RSL for a 40-home key worker rented housing development. At the date of sale, the land has a market value of £3m but, since key workers include employees of the local authority, the authority sells it for £2m. Building costs to the RSL are £4m. The RSL receives a £400,000 grant from Central Government to assist the scheme. Notional GRV for each home is £1200 pa. Each employee pays £100 per week rent(£5200 pa.)

Answer: The cost of the property is the highest of the amount contributed by

1. the local authority who provided land worth £3 million* and
2. central government contribution of £400,00 and
3. the RSL whose total cost was £6 million (land at £2 million plus building costs of £4 million)

The highest cost is that of the RSL at £6 million. The cost of 1 unit is £150,000.The amount of the benefit from the living accommodation is

 Cost of accommodation £150,000 Less £75,000 Additional yearly rent of £75,000 at 5% = £3750 Plus S105 benefit (GRV) £1200 Less rent paid by employee of £1200 Nil Total £3750 Less excess rent of Rent paid by employee £5200 Minus set against GRV of £1200 Excess rent is £4000 £4000 Amount of benefit is Nil

The benefit is nil because the excess rent is more than the additional yearly rent.

*If the provider of the land acquired it less than 6 years before the sale, for the purposes of S106, the cost to the provider of acquiring that land is its actual cost and not its market value. See EIM11473, which explains whether market value or cost applies.