14. Strategic Partnerships
This chapter sets out our requirements for Strategic Partnerships with Homes England that are funded through the Shared Ownership and Affordable Homes Programme 2016 to 2021, the Affordable Homes Programme 2021 to 2026 and the Social and Affordable Homes Programme 2026 to 2036.
This chapter provides guidance specific to Strategic Partnerships and should be read together with the relevant Grant Agreement and the other chapters in the Capital Funding Guide (CFG), which form the basis for the guidance outlined here.
Strategic Partners will need to use the Investment Management System or such other digital system as specified by Homes England to record delivery information and to support management of the Grant Agreement. Together these digital systems are referred to as “the System” in this chapter.
1.1 Purpose
1.1.1 Strategic Partnerships allow for the delivery of affordable housing new supply under the principles of:
- Shared Ownership and Affordable Homes Programme (SOAHP) 2016 to 2021
- Affordable Homes Programme (AHP) 2021 to 2026
- Social and Affordable Homes Programme (SAHP) 2026 to 2036
Contractual terms for Strategic Partnerships vary depending on the funding programme; however, there are common elements for Strategic Partnerships across funding programmes.
1.1.2 Strategic Partners will have a separate Grant Agreement for each funding programme. This chapter sets out the requirements that must be followed in addition to the relevant guidance elsewhere in the CFG. These requirements support the administration, management and monitoring of the Grant Agreement.
1.2 Context
1.2.1 Development undertaken through a Strategic Partnership Grant Agreement operates under the same parameters as SOAHP 2016 to 2021, AHP 2021 to 2026 and SAHP 2026 to 2036 as set out in the CFG, except where otherwise stated in this chapter. This chapter should be read along with other chapters in the CFG.
1.3 Definitions
1.3.1 There are a number of terms used in this chapter of the CFG which are specific to Strategic Partnerships:
Active Site — A site that a Strategic Partner or a Delivery Partner has a qualifying secure legal interest in and is a site that Housing Outputs will be delivered on (also refer to 3.8 of this chapter where the qualifying secure legal interest is held by a Group Company).
Agreed Profile — Information set out in the system that includes the Agreed Provider Profile and all other information relevant to the Strategic Partnership including delivery forecasts, grant and expenditure forecasts, cost and funding assumptions, grant payment details, Development Expenditure information, permitted RCGF, and Delivery Partner details.
Agreed Provider Profile — Information set out in the System that includes the number of homes to be delivered and the per unit grant rates that apply to the homes to be delivered, set out by tenure and Region, and any other applicable grant rate information.
Completion Entry — Information submitted in the System in relation to Housing Outputs delivered on an Active Site that have achieved practical completion.
Delivery Partner — Another organisation who will deliver a proportion of the Strategic Partner’s Housing Outputs that is eligible to access SAHP funding and is either a Registered Provider or Local Authority. Section 4 of this Chapter provides full details.
Development Expenditure — Eligible development expenditure incurred by the Strategic Partner or Delivery Partner according to the Grant Agreement.
Grant Agreement — The contract between Homes England and the Strategic Partner which sets out details of the Strategic Partnership grant allocation under the respective affordable homes funding programme, along with all relevant contract terms and conditions. A separate Strategic Partnerships Grant Agreement is required for each respective affordable homes programme with specific terms and conditions.
Housing Outputs — Affordable homes delivered through the strategic partnership that will be or have been attributed grant funding.
Profile Change — A change made to the Agreed Profile or Agreed Provider Profile that is subject to Homes England’s approval.
Region — The 9 defined Government Office Regions (GOR) for England.
Strategic Priorities — Strategic funding priorities that apply to the specific affordable homes funding programme that the strategic partnership relates to.
System — The Investment Management System or such other digital system as specified by Homes England to record funding, forecasts and delivery information to support management of the Grant Agreement.
2.1 General
2.1.1 For all Strategic Partnerships grant funding is available to deliver affordable housing for the following tenures:
- Affordable Rent
- Social Rent
- Shared Ownership (including Older Persons Shared Ownership)
- Rent to Buy
- Supported Housing for Rent
2.1.2 Social and affordable homes secured by developer contributions through Section 106 of the Town and Country Planning Act 1990 or equivalent planning condition, cannot secure grant funding through any Grant Agreement.
2.1.3 For more information on Homes England permission to charge Affordable Rent on new nil grant homes delivered by Strategic Partners and Delivery Partners refer to the Housing for Rent chapter, section 2.2.
2.14 For all Strategic Partnerships all new homes should aim to meet the Nationally Described Space Standards (NDSS). Where the floor area of any homes is likely to fall below 85% of the NDSS requirement, the Strategic Partner will need to seek approval from Homes England for consideration on a case by case basis. Approval should be sought as soon as the floor area is known, which is usually as progress towards securing detailed planning has been made and well ahead of practical completion and submitting the Completion Entry for approval. Refer to the Programme Management chapter, section 9.3 of the CFG.
2.2 SOAHP 2016 to 2021 Strategic Partnerships
2.2.1 Specific tenure requirements
2.2.2 For SOAHP 2016 to 2021 Strategic Partners can only deliver Social Rent as a tenure in areas of high affordability pressures — refer to SOAHP Addendum — Social Rent.
2.2.3 Where a Strategic Partner intends to deliver Social Rent in local authority areas not listed in SOAHP Addendum — Social Rent then the maximum level of grant that can be attributed will be the prescribed Affordable Rent grant rate for that Region in their Strategic Partnership.
2.3 AHP 2021 to 2026 Strategic Partnerships
2.3.1 Specific tenure requirements
2.3.2 AHP 2021 to 2026 initially continued to provide funding for Social Rent within areas of high affordability pressure. However, this changed in February 2023 when providers could access Social Rent specific grant rates in all Regions — refer to Housing for Rent chapter, section 4 for more information.
2.3.3 For AHP 2021 to 2026, Affordable Rent and Social Rent homes delivered through a Strategic Partnership are subject to the Right to Shared Ownership. Refer to the Shared Ownership chapter, section 12 of the CFG.
2.3.4 Specific required standards
2.3.5 In addition to any other requirements of the CFG, all Housing Outputs delivered through AHP 2021 to 2026 Grant Agreement are required to meet the following required standards:
2.3.6 National Design Guide
2.3.7 For AHP 2021 to 2026 all new schemes will be expected to deliver well designed places and bidders will be required to indicate how the scheme delivers against the 10 characteristics set out in the National Design Guide, which include sustainability and environmental impact. While not a mandatory requirement, Strategic Partners are also encouraged to use the Building for a Healthy Life (BHL) criteria in their scheme design and to record this information in the Completion Entry for the scheme.
2.3.8 Modern Methods of Construction (MMC), rural and community-led grant
2.3.9 For AHP 2021 to 2026 grant funding is available for the delivery of an agreed number of Housing Outputs that meet Category 1, 2 or a premanufactured value (PMV) score of 55% or above. Further guidance on MMC categories and PMV scoring methodology is in the Procurement and Scheme Issues chapter, section 3.5. The amount of grant allocated and the number of Housing Outputs that are required to be delivered that meet this criteria will be identified in the Agreed Provider Profile in the System.
2.3.10 For AHP 2021 to 2026 every strategic partnership must deliver at least 25% of homes using MMC. The number of homes that the Strategic Partner will be required to deliver will be detailed in the Agreed Provider Profile in the System.
2.3.11 The Strategic Partner will need to confirm as part of the Completion Entry in the System at practical completion, which categories of MMC have been achieved for each home funded. This will be in accordance with the categories in the MMC definition framework.
2.3.12 Read more about the MMC Definition Framework and PMV in the MMC section of the CFG.
2.3.13 Rural and community-led grant
2.3.14 Grant funding is available for the delivery of an agreed number of Housing Outputs that can be categorised as rural or community-led. The amount of grant allocated and the number of Housing Outputs that are required to be delivered that meet this criteria will be identified in the Agreed Provider Profile in the System.
2.3.15 Acquisition of homes intended for open market sale
2.3.16 Up to a maximum of 30% of the total number of homes delivered through the strategic partnership can comprise homes that were originally built for market sale. These are new homes purchased ‘off the shelf’ from developers or existing market tenure homes that were intended for sale on the open market. This includes existing market tenure homes that are purchased and remodelled or re-improved for Supported Housing for Rent.
2.4 SAHP 2026 to 2036 Strategic Partnerships
2.4.1 Specific tenure requirements
2.4.2 The Right to Shared Ownership that was introduced under AHP 2021 to 2026 does not apply to rented homes funded through SAHP 2026 to 2036.
2.4.3 Required standards
2.4.4 In addition to any other requirements of the CFG, all Housing Outputs delivered through the SAHP 2026 to 2036 Grant Agreement are required to meet the following required standards:
2.4.5 Acquisition of homes intended for open market sale
2.4.6 Up to a maximum of 10% of the total number of homes delivered through the strategic partnership can comprise homes that were originally built for market sale. These are new homes purchased ‘off the shelf’ from developers or existing market tenure homes that were intended for sale on the open market. This includes existing market tenure homes that are being purchased and remodelled or re-improved for Supported Housing for Rent.
2.4.7 Replacement of existing affordable homes as part of estate regeneration
2.4.8 SAHP 2026 to 2036 funding can be used to support the regeneration of existing social housing estates and support the delivery of replacement social and affordable homes, where this will unlock the delivery of additional social and affordable homes. Replacement social and affordable homes can form no more than 10% of homes delivered through a Strategic Partnership.
2.4.9 Design and Sustainability
2.4.10 Strategic Partners should refer to paragraph 2.1.4 of this chapter and the Programme Management chapter, section 9.3 of the CFG.
3.1 General
3.1.1 Each Strategic Partner is required to enter into a Grant Agreement with Homes England. Robust contract management is a fundamental principle of the Strategic Partnership delivery model. This section summarises the contract management process Strategic Partners must adhere to.
3.1.2 The Grant Agreement is a standard form contract for affordable housing supply to be delivered in addition to any existing contractual commitments. The Grant Agreement is in addition to, and will not replace, any existing contracts with Homes England.
3.1.3 The Grant Agreement details both Homes England and the Strategic Partner’s obligations and rights. Each Grant Agreement will include:
- conditions of grant (including Development Expenditure)
- total Allocated Grant Funding
- the Housing Outputs to be delivered including the number to be delivered for Social Rent
- grant claim and payment procedures including the requirements that must be met before a grant can be paid
- obligations to meet strategic priorities
- reporting obligations
- default and termination terms
- dispute resolution
3.1.4 The Grant Agreement is valid for the duration of the corresponding funding programme but will allow for variations to account for flexibilities in delivery, subject to the agreement of such a change by Homes England.
3.1.5 It is expected that a Strategic Partner will deliver all of its additional grant funded homes through the Grant Agreement, rather than bidding through Continuous Market Engagement (CME). The exception is for schemes seeking funding under specialist programmes for which separate bidding and contracting arrangements will be in place.
3.1.6 The Strategic Partner may continue to lead a CME consortium for administration purposes to support smaller providers to access grant funding through CME but the Strategic Partner is not expected to deliver any schemes or drawdown funding through that consortium other than for consortium members’ delivery.
3.1.7 For further details on the role of Delivery Partners refer to section 4 of this chapter.
3.1.8 Under SOAHP 2016 to 2021, and AHP 2021 to 2026, Strategic Partners in a joint partnership will have individual Grant Agreements and are responsible for their own delivery. However, they can work together when submitting Profile Changes, for example one Strategic Partner is able to deliver more where the other has a shortfall in their programme. Refer to section 3.6 of this chapter for further information on Profile Changes.
3.2 Additional requirements and strategic priorities for SOAHP 2016 to 2021 Strategic Partnerships
3.2.1 Grant agreement examples for SOAHP 2016 to 2021 have been produced.
3.2.2 Specifically, SOAHP 2016 to 2021 Grant Agreement covers:
- the Housing Outputs to be delivered by region and tenure
- Social Rent delivery targets and penalties for non-delivery
3.3 Additional requirements and strategic priorities for AHP 2021 to 2026 Strategic Partnerships
3.3.1 Grant agreement examples for AHP 2021 to 2026 have been produced.
3.3.2 Specifically, AHP 2021 to 2026 Grant Agreement covers:
- the Housing Outputs to be delivered by region and tenure
- the Housing Outputs to be delivered as MMC categories 1 to 7, or a pre-manufactured value (PMV) score of 55% or above
- the Housing Outputs to be delivered as either rural or community-led (or both)
- the grant that has been allocated for MMC Categories 1 or 2 or a PMV score of 55% or above (or both) and number of Housing Outputs associated with this grant
- the grant that has been allocated for rural and community-led, or solely community-led delivery and the number of Housing Outputs associated with this grant
- Social Rent delivery targets and penalties for non-delivery
3.4 Additional requirements and strategic priorities for SAHP 2026 to 2036 Strategic Partnerships
3.4.1 Grant agreement examples for the Social and Affordable Homes Programme 2026 to 2036 have been produced.
3.4.2 Specifically, the SAHP 2026 to 2036 Grant Agreement covers:
- the Housing Outputs to be delivered by Region and tenure
- application of the Grant Enhancement Rate
- Social Rent delivery targets and penalties for non-delivery
3.5 Grant Agreement management
3.5.1 The housing delivery of the Grant Agreement is monitored through the Programme Management Board (PMB).
3.5.2 The PMB is the mechanism for monitoring and reviewing the Strategic Partner’s progress delivering the Housing Outputs in the Grant Agreement and agreeing the quarterly forecast of delivery, Development Expenditure and grant drawdown and quarterly grant claims.
3.5.3 The PMB will monitor the delivery of commitments made by the Strategic Partner in relation to Strategic Priorities for the relevant Strategic Partnership and the Strategic Partner’s Agreed Profile.
3.5.4 The Agreed Profile includes all details of the Strategic Partner’s contractual obligations, including the Strategic Partner’s approved delivery forecast. The Agreed Provider Profile contains information about the number of homes that partners need to deliver by region and tenure, which includes all per unit grant rates and details of any other Strategic Priorities that relate to the Housing Outputs that must be delivered.
3.5.5 The PMB will consider the Agreed Profile in the first quarter of each financial year to ensure that the grant paid against Development Expenditure and, where relevant milestones achieved, remains in line with the Agreed Provider Profile. Accounting adjustments may need to be considered at PMB for Homes England’s consideration and approval.
3.5.6 Quarterly forecasts will be submitted by the Strategic Partner through the System and these will be reviewed at the PMB. Quarterly forecasts will include:
- actual and forecast Development Expenditure
- forecast of grant drawdown
- actual and forecast Housing Outputs for starts and completions
3.5.7 Where quarterly forecasts are not approved at the PMB, the forecast will be referred back for amendment and resubmission by the Strategic Partner. Quarterly grant claims may only be submitted when the quarterly forecast has been approved by Homes England, and the value of the grant claim must be in line with the approved quarterly forecast.
3.6 Changes to the Agreed Profile and Agreed Provider Profile
3.6.1 There may be certain instances over the course of a funding programme period where a Strategic Partner may request a Profile Change. A Profile Change refers to anything that affects any of the delivery details set out in the Agreed Profile or the Agreed Provider Profile (or both). This includes but is not limited to:
- an increase or decrease in the number of Housing Outputs to be delivered
- an increase or decrease in the number of Housing Outputs to be delivered by tenure or region (or both)
- an increase or decrease in the allocated amount of grant or Recycled Capital Grant Funding to be attributed to Housing Outputs delivered
- a change to the Strategic Partner’s overarching forecast capital cost of delivering the Strategic Partnership and the Strategic Partner’s associated financial contributions and revenue assumptions
- a change that impacts delivery of the Strategic Priorities of the Strategic Partnership
3.6.2 A Profile Change is subject to Homes England’s approval and requests will be assessed on a case-by-case basis. Implementation of any approved Profile Change to the Agreed Profile or Agreed Provider Profile will be through an Allocation Change Notice as detailed in the Grant Agreement.
3.6.3 Strategic Partners may request a Profile Change at any time during the funding programme period. Requests and approvals will be monitored at the PMB. Where a Profile Change is approved a Strategic Partner must make appropriate adjustments to their quarterly forecast, to ensure it aligns with the revised Agreed Profile or Agreed Provider Profile (or both) for future quarters. The revised quarterly forecast is subject to Homes England’s approval.
3.6.4 Where a Profile Change results in a reduction to a Strategic Partner’s grant allocation and the amount of grant that has already been paid to the partner exceeds this amount, this will need to be repaid to Homes England.
3.6.5 Where a Profile Change for a Strategic Partner who is paid by milestones results in a change to the Blended Grant Rate(BGR) an adjustment will be made to account for the value of milestones achieved prior to the date the new BGR was approved. Where the BGR decreases this will result in a negative adjustment to recover grant paid to date at the higher rate, or Homes England may agree, at its absolute discretion, to offset the amount to be repaid from the grant claim in the subsequent quarter. Where the BGR increases this will result in a positive adjustment and the Strategic Partner may request to include this amount in their forecast grant claim for the subsequent quarter, subject to budget availability and the Strategic Partner having incurred sufficient Development Expenditure to support the grant claim amount. For further details on the BGR refer to section 6.3 of this chapter.
3.7 Reconciliation
3.7.1 There will be reconciliations after the start on site longstop date and the Practical Completion longstop date that will take account of total grant paid to a Strategic Partner against Housing Outputs forecast to be delivered or delivered. Where Housing Outputs delivered or forecast to be delivered are not in line with the Agreed Provider Profile which results in grant paid to date being higher than the amount of grant attributed or forecast to be attributed to completed homes, Homes England will be entitled to recover the unattributed sum as per the terms of the Grant Agreement.
3.8 Group companies
3.8.1 Where a Strategic Partner or Delivery Partner will deliver their Housing Outputs through a Group Company (for example, a subsidiary, sibling or holding company of the Strategic Partner or Delivery Partner, such as a Development Company), the following points are to be noted:
a) Any Development Expenditure incurred by organisations in Group structures, which are not a Strategic Partner or an approved Delivery Partner is ineligible and this Development Expenditure should not feature in any grant claims, forecasts or monitoring returns.
b) Group Companies can have an active role in the delivery of the Housing Outputs and the Grant Agreement does allow a Group Company of either the Strategic Partner or the Delivery Partners to hold the qualifying secure legal interest in an Active Site. This will lead to the delivery of Housing Outputs, as long as the qualifying secure legal interest is transferred to the Strategic Partner or Delivery Partner, prior to practical completion and approval of the Completion Entry, by Homes England in the System.
c) A Strategic Partner or Delivery Partner making a relevant payment to a Group Company (for example, to their Development Company) to procure land or development services can be considered an eligible cost.
d) A Strategic Partner may propose the Group Company to become a Delivery Partner where that Group Company will own the homes delivered and tenanted or sold on Shared Ownership terms.
e) Any Group Company which will own and manage completed units must be approved as a Delivery Partner and enter a DPD. The Delivery Partner will need to confirm and acknowledge the amount of grant attributed to the homes through the Completion Entry before the Completion Entry can be approved by Homes England in the System.
f) Delivery Partners must meet the eligibility requirements that apply to the specific Strategic Partnership and must be approved by Homes England. For more details refer to section 4 of this chapter.
4. Working with Delivery Partners
4.1 General
4.1.1 A Delivery Partner is another organisation that is eligible to access SAHP funding and is either a Registered Provider or Local Authority. This can include a subsidiary or company within the group structure of the Strategic Partner. The Delivery Partner must own the completed homes that have been attributed grant through the Strategic Partnership and be the landlord of the homes at first let or sale where the homes are Shared Ownership tenure.
4.1.2 Strategic Partners can work with Delivery Partners to deliver a proportion of Housing Outputs under their Grant Agreement, subject to Homes England approval. Approval must be requested by a Strategic Partner and confirmed by Homes England prior to a Strategic Partner enabling any other organisation to deliver grant funded homes through its Strategic Partnership as a Delivery Partner.
4.1.3 Delivery Partners are not permitted to join more than one Strategic Partnership in the same affordable homes funding programme, but Delivery Partners can bid under Continuous Market Engagement (CME) outside the Regions covered by that Strategic Partnership.
4.2 Eligibility requirements for Delivery Partners
4.2.1 Approval of a Delivery Partner by Homes England will be subject to the proposed Delivery Partner completing Homes England’s Investment Partner Qualification and Know Your Customer (KYC) due diligence processes and a review of the Delivery Partner’s continued compliance with the Regulator of Social Housing’s Governance and Viability standard.
4.2.2 The Strategic Partner is responsible for undertaking due diligence to ensure any proposed Delivery Partners can meet the Delivery Partner obligations set out in the Grant Agreement.
4.2.3 Approval of a new Delivery Partner can be sought at any time during the Grant Agreement period. A site being delivered by a Delivery Partner should not be made an ‘Active Site’ until the Delivery Partner has been approved by Homes England in the System and the Delivery Partner Contract is in place.
4.3 Delivery Partner Deed (DPD) and Delivery Partner Contract
4.3.1 The Strategic Partner will be required to enter into a separate legal agreement with each of its Delivery Partners, which is outside the Grant Agreement with Homes England. This is known as the Delivery Partner Contract.
4.3.2 The Strategic Partner is responsible for all activity undertaken by a Delivery Partner through the Grant Agreement.
4.3.3 A DPD must be entered into by the Delivery Partner and Homes England. The DPD must be entered into prior to the Delivery Partner being approved by Homes England in the System.
4.3.4 The form of DPD is included as an annex to the Grant Agreement.
4.4 Grant attribution for Delivery Partners
4.4.1 The grant rate paid per home to Delivery Partners must be at the prescribed fixed grant rate (based on tenure and Region) within the Grant Agreement. The total amount of grant that a Strategic Partner advances to a Delivery Partner must be the same as the amount of grant attributed to the homes as per the relevant fixed grant rate.
4.4.2 When a Delivery Partner Active Site achieves practical completion, both the Strategic Partner and Delivery Partner must complete an online declaration in the System pursuant to the DPD before the Completion Entry can be approved by Homes England.
4.5 Additional requirements for SOAHP 2016 to 2021 Strategic Partnerships
4.5.1 Delivery Partner Active Sites completed under the 2016 to 2021 Strategic Partnerships programme now follow the same process as AHP 2021 to 2026 Strategic Partnerships programme. This process replaces the need for site specific Delivery Partner Deeds with a single overarching DPD which covers all delivery by that Delivery Partner under the Strategic Partnership.
4.6 Additional requirements for AHP 2021 to 2026 Strategic Partnerships
4.6.1 For Profit Registered Providers cannot act as a Delivery Partner of a Strategic Partner who is a Not For Profit Registered Provider if:
- the For Profit Registered Provider is not a subsidiary of the Strategic Partner, or part of the same group structure as the Strategic Partner
- the Strategic Partner, or its parent company, does not hold a controlling interest in the For Profit Registered Provider
4.7 Additional requirements for SAHP 2026 to 2036 Strategic Partnerships
4.7.1 Strategic Partners who have applied for a strategic partnership through the Developer delivery entry route, and are not Unregistered Bodies, are only permitted to work with Delivery Partners that are a subsidiary or company within their own group structure.
4.7.2 Strategic Partners who are Unregistered Bodies are not permitted to work with Delivery Partners.
4.7.3 In all other cases Strategic Partners are permitted to work with Delivery Partners who are either Not For Profit Registered Providers, For Profit Registered Providers or Local Authorities, subject to the proposed Delivery Partner meeting the eligibility requirements and being approved by Homes England.
5.1 Pipeline of Indicative Sites and Active Sites
5.1.1 Strategic Partners will need to provide information about their pipeline of sites that they intend to deliver Housing Outputs on in the System. This pipeline includes Indicative Sites as well as Active Sites. An Indicative Site is a site that a Strategic Partner is considering delivering Housing Outputs on but has not yet made an Active Site in the System.
5.1.2 Information such as location of the site, the proposed tenure mix, high level financial assumptions and the delivery route will need to be provided for both Indicative Sites and Active Sites in the System. The pipeline of sites must include sites being delivered by Delivery Partners.
5.1.3 Strategic Partners delivering under SAHP 2026 to 2036 will need to ensure that at least 50% of their forecast Housing Outputs are visible in the System, as either Indicative Sites or Active Sites, by 31 March 2031.
5.2 Submitting Active Sites
5.2.1 An Active Site is a site that the Strategic Partner or Delivery Partner has a qualifying secure legal interest in, as per the requirements of the grant agreement and is a site that Housing Outputs will be delivered on.
5.2.2 Details of Active Sites will be required to be inputted into the System to enable incurred Development Expenditure and, where relevant, milestones to be recorded. Active Site details will capture information about:
- the region
- planning status
- acquisition status
- build contract progress
- forecast start and completion dates
- forecast number of homes, indicative tenure mix, attributable grant rates and RCGF amount
- indicative information about MMC delivery where applicable
- indicative information about rural and community-led delivery (where applicable)
5.3 Recording start on site
5.3.1 The status of starts will be on a forecast only basis to enable flexibility to change tenure up to the point of practical completion. Once practical completion has occurred a Completion Entry should be submitted for approval by Homes England through the System. Once Homes England has approved a Completion Entry, the scheme will become fixed and start and completion dates will be firm.
5.3.2 For further guidance on recording start on site for Active Sites that are being delivered by a Strategic Partner using a Golden Brick and Development Agreement structure refer to the Finance chapter of the CFG.
5.3.3 Where a Strategic Partner or Delivery Partner is paid against milestone achievement, no grant drawdown is eligible until practical completion and approval of the Completion Entry where the processing route for an Active Site is ‘off the shelf’.
5.4 Recording practical completion
5.4.1 Strategic Partners must submit a Completion Entry in the System within a month of the last home in that Completion Entry achieving practical completion. This is the only stage that scheme details, entered for an Active Site by Strategic Partners, require approval by Homes England. For Strategic Partners, who are paid against milestone achievement, all milestones will also need to be approved by Homes England in the System.
5.4.2 A Completion Entry will require the inputting of all details of individual homes including property type, tenure, floor area and any associated Supported Housing for Rent information. It is expected that all homes will achieve the required standards (refer to section 2 of this chapter) unless prior approval has been obtained from Homes England.
5.5 Grant attribution
5.5.1 Grant is attributed to homes at practical completion through the Completion Entry at the prescribed rate within the Grant Agreement, according to tenure and region.
5.5.2 Where a Strategic Partner or Delivery Partner wishes to deliver homes for a specific tenure, or in an area where they do not have a grant rate, that should be discussed at PMB. This is to determine appropriate terms, such as grant rates and scale of delivery, considering the impact of the Strategic Partner’s overall delivery of Housing Outputs under the Grant Agreement. Any changes agreed will be implemented using the Profile Change process detailed in section 3.6 of this chapter.
5.5.3 For AHP 2021 to 2026 Strategic Partnerships, where grant has been allocated for the delivery of Housing Outputs that achieved MMC Categories 1 or 2 or a PMV of 55% and above, or are rural or community led, the associated grant will be attributed at practical completion through the submitted Completion Entry. The Strategic Partner or Delivery Partner is required to attribute this grant on a pro-rata basis. The maximum number of homes attributable to that grant will be in line with the number of Housing Outputs identified in the Agreed Provider Profile.
5.5.4 For SAHP 2026 to 2036 Strategic Partnerships Housing Outputs that have been delivered, which benefit from the Grant Enhancement Rate, the associated grant will be attributed at practical completion through the Completion Entry. The Strategic Partner or Delivery Partner is required to attribute this grant on a pro-rata basis at the prescribed amount. The maximum number of homes attributable to that grant will be in line with the number of Housing Outputs identified in the Agreed Provider Profile. For further details refer to section 5.6 of this chapter.
5.5.5 A Strategic Partner can use an agreed amount of funding from their RCGF to fund part of the cost of delivering their Housing Outputs that has been approved by Homes England. This cannot include RCGF that any delivery partners may want to use where those delivery partners are not a subsidiary, or a company within the same group structure, as the Strategic Partner. The Strategic Partner has flexibility to apportion the total approved figure within the contract between completed Housing Outputs. This is provided that the Strategic Partner can demonstrate that subsidy is required and that total public subsidy does not exceed 90% of total scheme costs. The PMB will monitor costs and funding sources throughout the Grant Agreement period.
5.5.6 When the Completion Entry is approved by Homes England in the System, the tenure is fixed and grant amount attributed to the scheme is confirmed on the basis of the prescribed fixed grant rate (based on tenure and Region) in the Grant Agreement. This is needed for the purposes of grant recovery.
5.6 AHP 2021 to 2026 Strategic Partnerships specific requirements
5.6.1 Where the use of grant has been specifically approved for regeneration through a CME assessment to fund regeneration schemes, tenures will be fixed unless otherwise agreed by Homes England.
5.6.2 For AHP 2021 to 2026 a Completion Entry will also require the provider to confirm the MMC category achieved as part of the home details or the PMV score %. The home details will also confirm if the home is to be counted as a rural or community-led home. Where grant is to be attributed to a home that is delivered as MMC Category 1 or 2 or a PMV score of 55% or above (or both) or as rural or community-led, the associated additional cost will need to be confirmed.
5.7 SAHP 2026 to 2036 Strategic Partnerships specific requirements
5.7.1 For Strategic Partnerships under SAHP 2026 to 2036, a single Grant Enhancement Rate may be applied on a per unit basis for an agreed number of homes.
5.7.2 The Grant Enhancement Rate will help Strategic Partners and Delivery Partners distribute grant by allowing a higher amount of grant to be attributed to homes that have higher capital costs or lower revenues (or both).
5.7.3 The Grant Enhancement Rate will be attributed by a Strategic Partner in the Completion Entry based on a fixed amount per home. For example, if a Strategic Partner received a grant amount of £2,500,000, to be attributed to 500 homes, the fixed Grant Enhancement Rate will be calculated at £5,000 per home.
5.7.4 The use of SAHP 2026 to 2036 grant funding for replacement homes on a regeneration site, comprising existing social and affordable housing estates, is subject to the Strategic Partner providing detailed scheme information and Homes England’s approval. This information includes supporting evidence, that confirms the replacement homes are within the 10% cap on homes that fall in this category for the Strategic Partnership, as detailed in the Strategic Partner’s bid submission or agreed as part of any Profile Change approval.
6.1 General
6.1.1 For Strategic Partnerships grant claims will be administered through the System.
6.1.2 Before any grant payment can be made a Strategic Partner will need to record Development Expenditure incurred for Active Sites that the Strategic Partner or Delivery Partner has a secure legal interest in (refer to section 5.1 of this chapter and the Finance chapter, section 3.1.1).
6.1.3 The mechanism for payment of grant is set out in the Grant Agreement.
6.1.4 The following Strategic Partners are paid grant against Development Expenditure incurred for Active Sites:
- SOAHP 2016 to 2021 Strategic Partners who are Not For Profit Registered Providers
- AHP 2021 to 2026 Strategic Partners who are Not For Profit Registered Providers
- SAHP 2026 to 2036 Strategic Partners who are local authorities or Registered Providers that have not applied for a Strategic Partnership through the ‘Developer delivery’ entry route
6.1.5 The following Strategic Partners are paid grant against the value of milestones achieved supported by Development Expenditure for Active Sites:
- AHP 2021 to 2026 Strategic Partners who are For Profit Registered Providers or Unregistered Bodies
- SAHP 2026 to 2036 Strategic Partners who are Unregistered Bodies or local authorities or Registered Providers that have applied for a Strategic Partnership through the ‘Developer delivery’ entry route
6.2 Recording eligible Development Expenditure
6.2.1 All Strategic Partners will need to record within the first 10 days of each quarter how much Development Expenditure has been incurred by the Strategic Partner or Delivery Partner in the previous quarter against each Active Site.
6.2.2 Development Expenditure must relate to the delivery of grant funded affordable housing that is eligible for grant funding. Where other ineligible tenures are provided on the same site (including any developer contribution affordable homes secured under a S106 Agreement or other similar planning obligation) costs should be apportioned appropriately and signed off by an independent consultant or the Development Director or Finance Director.
6.2.3 The Strategic Partner or Delivery Partner must have incurred the cost and have made a payment for the cost to be deemed Development Expenditure. Costs that are committed but not yet defrayed are not eligible to be recorded as incurred Development Expenditure (costs must be incurred by the Strategic Partner or Delivery Partner).
6.2.4 Where a Strategic Partner intends to record Development Expenditure that has been incurred against an Active Site prior to the date the Grant Agreement was entered into, or prior to the date the site was made an Active Site, this must be recorded in the first quarterly Development Expenditure entry for that Active Site and is subject to Homes England review and approval. This is referred to as Historical Expenditure in the Grant Agreement.
6.3 Recording milestones
6.3.1 Strategic Partners, that are paid against the value of milestones achieved, will need to record milestone achievement against Active Sites in addition to Development Expenditure incurred.
6.3.2 Each milestone will have a value associated with it based on the agreed per unit BGR.
6.3.3 For AHP 2021 to 2026 Strategic Partnerships, the agreed per unit BGR will be calculated as the total baseline grant allocation divided by the total number of Housing Outputs to be delivered. The baseline grant is the value of the total amount of grant allocated to a Strategic Partner, less the value of grant allocated for MMC, rural or community-led delivery.
6.3.4 For SAHP 2026 to 2036 Strategic Partnerships, the agreed per unit BGR will be calculated as the total grant allocation divided by the total number of Housing Outputs to be delivered. The total grant allocation includes all grant associated with the Grant Enhancement Rate.
6.3.5 The milestones applicable will be determined by the processing route for each Active Site and may comprise the following milestones (refer to the Procurement and Scheme Issues chapter, sections 3.2 and 3.3):
- acquisition
- start on site
- practical completion
6.3.6 The value of each milestone as a percentage of the agreed per unit BGR will be set out in the Grant Agreement and may be varied from time to time as determined by Homes England.
6.3.7 Strategic Partners are expected to record milestone achievement for each Active Site promptly and the value of all milestones achieved will be calculated to the end of each quarter.
6.3.8 Strategic Partners cannot achieve the acquisition milestone unless the amount of Development Expenditure incurred, that directly relates to the Active Site, is equal to or greater than the value of the acquisition milestone for that Active Site.
6.4 The value and timing of grant claims
6.4.1 Grant claims will be submitted by the Strategic Partner on a quarterly basis following review and approval by Homes England of the Strategic Partner’s quarterly forecast for grant drawdown, Development Expenditure, start achievement and completions achievement at the PMB.
6.4.2 The value of the quarterly grant claim must align with the value of the approved quarterly forecast at PMB. The value of the grant claim must not result in the cumulative total of grant paid exceeding the cumulative value of Development Expenditure incurred against Active Sites to the end of the previous quarter. And, where applicable, the cumulative value of milestones achieved against named Active Sites to the end of the previous quarter.
6.4.3 Strategic Partners should note that the grant claim submitted in quarter one of a new financial year will be accounted for against Development Expenditure incurred, or milestones achieved, in the last quarter of the previous financial year (Development Expenditure or milestones incurred in the period January to March). This will be treated as an accrual for the purposes of Homes England budget and accounting treatment. This is because Homes England is an ‘Arm’s Length Body’ to a government department and, as such, our financial year end is 31 March.
Example
Where Development Expenditure or milestones totalling £2 million in value was incurred or achieved in quarter 4 (January to March) it is Development Expenditure or milestones that has been defrayed or achieved in that financial year. As the claim for that period will not be submitted until quarter 1 (April to June) this Development Expenditure or milestone achievement is counted as an accrual for accounting purposes. It will be certified by the Strategic Partner’s Chief Financial Officer (or equivalent officer) and external auditor through the annual Statement of Grant Usage (refer to section 8.2 of this chapter).
6.4.4 The grant claim can only be submitted by the named individual authorised to do so in writing by the Strategic Partner’s Chief Executive.
6.4.5 Individual grant claims must not exceed £20 million. Where claims are higher than £20 million, separate claims should be submitted to the total value of the claim. The necessary arrangements in these circumstances must be agreed in advance with Homes England.
6.5 Additional requirements for AHP 2021 to 2026 Strategic Partnerships
6.5.1 For AHP 2021 to 2026, Strategic Partners are able to apply for additional grant for the delivery of an agreed number of Housing Outputs achieving MMC Category 1 or 2 or a PMV score of 55% or above, or that are rural or community-led housing. This amount will be attributed to homes in addition to the region per unit tenure grant rate at practical completion through the Completion Entry.
6.5.2 For Strategic Partners that are paid grant based on the value of milestones achieved, this will be treated as an additional milestone at the agreed per unit rate at practical completion, through the Completion Entry where these requirements have been achieved for an Active Site. The milestone value will be included in the cumulative value of milestones achieved, to the end of the previous quarter, and will be considered when agreeing the quarterly grant claim amount.
6.5.3 For all other Strategic Partners this element of grant will be drawn down for Development Expenditure incurred against Active Sites, as part of the standard grant drawdown process.
6.6 Additional requirements for SAHP 2026 to 2036 Strategic Partnerships
6.6.1 Where Strategic Partners have a Grant Enhancement Rate this element of grant will be drawn down against Development Expenditure incurred and, where relevant, milestones achieved against Active Sites, as part of the standard grant drawdown process. The Grant Enhancement Rate will need be attributed to the applicable homes, in addition to the Region per unit tenure grant rate at practical completion through the Completion Entry.
7.1 Where a Strategic Partner can demonstrate delivery against their contractual commitments under the Grant Agreement, Homes England may consider additional grant funding requests from a Strategic Partner where this will secure delivery of an additional number of Housing Outputs.
7.2 Additional grant funding requests must demonstrate alignment with the strategic priorities of the funding programme and be deliverable. Any additional funding request will be subject to budget availability and assessment. The additional funding will remain subject to the terms of the Grant Agreement.
7.3 SAHP 2026 to 2036 Strategic Partnerships- rolling funding cap
7.3.1 SAHP 2026 to 2036 Strategic Partnerships will be subject to a rolling funding cap of £700 million. Strategic Partners will be eligible to request additional funding where they can demonstrate delivery against their existing allocation and there is headroom against the rolling funding cap. This will apply to all Strategic Partners, regardless of organisation type or entry route.
7.3.2 The rolling funding cap is not a maximum cap on the amount of funding a Strategic Partner can receive over the programme period.
7.3.3 Additional funding requests must demonstrate alignment with the strategic priorities of the programme and be deliverable. Any additional funding request will be subject to budget availability and assessment. The additional funding will remain subject to the terms of the Grant Agreement and the requirements set out in this guidance.
7.3.4 When additional funding requests are considered, the headroom against rolling funding cap will be calculated. To do this calculation the amount of grant attributed to completed homes will be subtracted from the total amount of grant funding allocated to the Strategic Partner to date. This sum is then subtracted from the £700,000,000 rolling cap, which calculates the available headroom and the maximum amount of additional grant funding a Strategic Partner can apply for.
7.3.5 For example, a Strategic Partner receives an initial grant funding allocation of £250,000,000 and £100,000,000 has been attributed to completed homes. Headroom against the £700,000,000 rolling funding cap is £550,000,000, which means a Strategic Partner can request additional grant funding up to a maximum of £550,000,000. If £550,000,000 is requested, then the overall amount of grant funding awarded to the Strategic Partner would total £800,000,000.
8.1 General
8.1.1 Reporting and Audit requirements must follow the same processes as set out in the Programme Management chapter of this guide.
8.1.2 Housing Outputs delivered through a Grant Agreement will be subject to Compliance Audit in the usual way. However, as the details of the home will not be known until Practical Completion, Compliance Audit will only be applicable to completed homes where the Completion Entry has been approved.
8.2 Statement of Grant Usage and annual financial audit
8.2.1 A Statement of Grant Usage (SoGU) must be submitted by each Strategic Partner to Homes England no later than 30 April each year.
8.2.2 The annual SoGU will be produced in the System and must be submitted by the Strategic Partner’s Chief Finance Officer (or equivalent officer) who will certify that the SOGU is supported by a sample audit carried out by an external auditor (the financial audit).
8.2.3 The SoGU will be used to inform and support the annual reconciliation (the look-back on activity and look-forward on forecasts) by confirming details of the grant received and attributed to completed homes to date. This will include details of Development Expenditure incurred, or milestones achieved, in quarter 4 of the preceding financial year and the associated grant claim to be made in quarter 1 (the accrual).
8.2.4 A financial audit should be undertaken by an external auditor on a sample of schemes within the Strategic Partner’s programme prior to the Chief Financial Officer (or equivalent officer) signing the SoGU. The SoGU will provide assurance that the correct procedures and financial records of Development Expenditure are in place, in respect of making grant claims. The SoGU will confirm the attribution of grant for completed homes, so that the Development Expenditure and grant drawdown submitted in the System can be taken as an accurate record of the relevant development activity (quarterly and annually). And that grant has been claimed in line with requirements within the Grant Agreement.
8.3 Delivery of non-grant funded homes
8.3.1 All Strategic Partners will need to provide information about the type and number of homes they are delivering, in addition to the grant funded homes being delivering through their Strategic Partnership.
8.3.2 All Strategic Partners will need to provide this information as part of their initial application for funding. Strategic Partners will need to regularly report - on no more than a quarterly basis - the actual number of non-grant funded homes they have delivered and the number of homes forecast to be delivered over the duration of the StrategicPartnership delivery period.
8.3.3 Delivery against these forecasts will be reviewed and taken into account by Homes England when additional funding requests from Strategic Partners are considered.
9.1 General
9.1.1 The main provisions of The Recovery of Capital Grants and Recycled Capital Grant Fund General Determination 2017, and the Recovery of Capital Grants from Unregistered Providers General Determination 2017, apply to Strategic Partnerships.
9.1.2 Disposal of grant-funded homes after practical completion, and approval of the Completion Entry in the System, should be treated as a Relevant Event in line with the Grant Recovery Determination 2017 and Homes England’s standard historical grant notifications process applies. Refer to the relevant Grant Recovery chapter in the CFG for details of this process.
9.1.3 For grant-funded homes through the AHP 2021-26 only, if the Strategic Partner or Delivery Partner intends to dispose of grant funded homes to a For Profit Registered Provider, after practical completion and approval of the Completion Entry but before occupation of the homes, this is deemed an Onward Sale and requires compliance with the Onward Sale approval process.
9.1.4 Strategic Partners should also refer to their Grant Agreement which sets out the provisions for grant recovery.
9.2 Onward Sale notification requirements for AHP 2021 to 2026 Strategic Partnerships
9.2.1 The Strategic Partner or Delivery Partner must first notify and secure Homes England consent through an Onward Sale Notification (OSN), in accordance with the Grant Agreement (Schedule 5, Operational and Disposal Conditions). Once all information is received and verified, Homes England will issue an Onward Sale consent letter to the Strategic Partner or Delivery Partner to confirm approval.
9.2.2 As part of the process for agreeing an Onward Sale, Homes England will reassess the value for money of the grant attributed to the scheme or homes and, where relevant, seek to reclaim any over-subsidy.
9.2.3 Where a Strategic Partner or a Delivery Partner disposing of grant funded homes is a For Profit Registered Provider, the Strategic Partner may also be required to repay to Homes England an uplift amount, based on the amount of profit that may be generated from the sale. The Completion Entry will not be approved in the System until this assessment has been completed.
9.3 Onward Sales notification process
9.3.1 The required notification and approval stages for an Onward Sale are set out here.
i)Initial Notification — Within 5 Business Days from when a Strategic Partner identifies a prospective Onward Sale or is notified by a Delivery Partner of a prospective Onward Sale, it must notify Homes England in writing.
ii) Onward Sale Notification — At least 5 Business Days prior to the next Programme Management Board or 6 months prior to completion of the proposed Onward Sale (whichever is soonest) the Strategic Partner must submit an Onward Sale Notification form to Homes England. The Strategic Partner must also provide a copy of the initial sales Valuation for the property alongside the OSN form. Use the Onward Sales Notification form for Strategic Partners (.docx, 48Kb) template.
iii a) At any point following an Onward Sale Notification, practical completion of the homes can occur and submission of the Completion Entry in IMS can be progressed. Homes England may accept the scheme and at that point attribute grant to the Housing Outputs. The Completion Entry must be approved in IMS prior to the homes being transferred to the purchasing For Profit Registered Provider.
iii b) Revised Onward Sale Notification — If the Strategic Partner becomes aware of any changes to the information in the OSN, it must provide a revised OSN to Homes England no later than 10 Business Days prior to submission of the Completion Entry details in IMS.
iv) Confirming Onward Sale Notification Details — At least 20 Business Days prior to the proposed date of exchange, the Strategic Partner must confirm in writing to Homes England that there has been no change to the information provided in the OSN or, if the sale details have changed, to provide an updated OSN form in the template provided.
v) Homes England Check Subsidy, Reattribute Grant — Upon receipt of a final OSN form, Homes England will check the grant amount in the scheme or homes, to ensure value for money continues to be achieved. Homes England may seek to reclaim any over subsidy identified (where relevant) and reattribute grant to the Completion Entry in IMS. Refer to section 9.4 of this chapter for details of the checks and calculation to be used to identify an over subsidy.
vi) Onward Disponee (Purchaser) Acknowledgement — No earlier than 10 Business Days prior to exchange, the Strategic Partner must provide written acknowledgement to Homes England obtained from the Onward Disponee (that is, the For Profit Registered Provider purchasing the scheme or homes) confirming the OSN details are correct and their acceptance of the Homes England grant terms and conditions. The Onward Disponee should use the Onward Disponee Acknowledgement letter (.docx, 33kb) standard template. Letters should be submitted on the Onward Disponee’s letter headed paper.
vii) Exchange of Sales Contracts — When the Strategic Partner and the purchasing organisation (the Onward Disponee) exchange contracts the sale price is set. At this point, the Strategic Partner must confirm to Homes England (in writing) that the final sale price identified is in line with the OSN form and the Onward Disponee Acknowledgement letter provided. If there are any changes, a new OSN form and Onward Disponee Acknowledgement must be provided.
viii) Homes England Check Subsidy, Reattribute Grant — Upon receipt of the final sale price confirmation, Homes England will re-check the grant amount in the funded property and seek to reclaim any over subsidy (where relevant) and reattribute grant to the Completion Entry in IMS.
ix) Homes England Consent — Once all information is received and verified, Homes England will issue an Onward Sale consent letter to the Strategic Partner to confirm approval (conditional on notification of any changes to the agreed terms at completion).
x) Onward Sale Completion Notification — Within 10 Business Days following completion of an Onward Sale, the Strategic Partner must provide Homes England with an OSN Completion Notification form, to confirm the final sale price at which the funded property was disposed at using the Onward Sale Completion Notification form (.docx, 45Kb).
xi) Post Onward Sale Completion Check — Upon receipt of the completion notification, Homes England will complete a review post completion to check the final details are correct. Any discrepancies will be raised with the Strategic Partner.
9.4 Calculation of over subsidy and uplift for Onward Sales
9.4.1 Where a Strategic Partner intends to seek consent for an Onward Sale, they will need to provide supporting financial information so that an assessment of subsidy and uplift (if applicable) can be undertaken by Homes England. This will include the following details:
- IMS details of the scheme and homes details of the For Profit Registered Provider who is acquiring the homes
- schedule of accommodation including rents and open market values
- total scheme cost and transfer price of the homes
- capital funding contributions
9.4.2 Homes England will provide a spreadsheet pro-forma that must be completed by the Strategic Partner and the For Profit Registered Provider who is acquiring the scheme or homes. This should be submitted along with the OSN.
9.4.3 Where a Strategic Partner is a For Profit Registered Provider, uplift will be due where the agreed transfer price is greater than the attributable total scheme costs. The uplift will be calculated as a proportion of this differential, in line with the grant intervention rate, as a percentage of attributable total scheme costs.
Example
An Active Site subject to an Onward Sale has an attributable total scheme cost of £4 million and has a total of £1 million attributable grant. Attributable grant as a percentage of total scheme cost is 25%. The agreed transfer price is £4.5 million, therefore uplift will be calculated as 25% of the £500,000 differential between the attributable total scheme cost and the agreed transfer price (£125,000).
9.4.4 The Completion Entry will not be approved in IMS until this assessment has been completed.
9.5.5 Homes England will notify the Strategic Partner if a recalculation of subsidy is necessary, following a review of the supporting financial information, or if any uplift is due.