2008-11

FUNDING CONDITIONS

These Funding conditions set out the requirements that must be met by a
Registered Social Landlord (RSL) when using Social Housing Grant (SHG),
Purchase Grant VPG/RTA/SHB provided by the Housing Corporation (HC).

Grant conditions applied to all programmes

1. All funding is subject to the provisions of the Housing Act 1996 (or any
amendment or re-enactment thereof) and any determinations made
under that Act by the HC.

2. All Grant applications and other scheme submissions relating to the
achievement of forecast milestones must be made, and all Grants
provided must be used, in accordance with the HC’s published criteria,
procedures and audit arrangements. Non compliance with the HC’s
procedural requirements could result in the withdrawal of allocations
and recovery of Grant.

3. Grant funding is conditional upon the RSL meeting the HC’s Regulatory
Code; this will be monitored through regulatory engagements and will
be assessed through the Housing Corporation Self Assessment
Compliance Statements. Our judgements are recorded in Housing
Corporation Assessments. (HCA). The code includes standards for the
housing and related services that RSLs should provide to their residents
and communities.

4. Where the RSL is undertaking the role of Employer/Client on
developments for which Grant is requested, funding is conditional upon
the RSL undertaking grant funded projects in accordance with the
principles set out in the '2012 Construction Commitments - Affordable
Housing Provider version'. The HC will exercise discretion in relation to
RSLs undertaking small or occasional projects with insignificant
construction activity.

5. All Grant paid must be applied to the provision of housing and must be
used as prescribed in HC guidance. RSLs should ensure appropriate
financial appraisal of schemes to confirm their viability both during the
development period and in the long term. Where RSLs have specified
that schemes are to be developed to higher standards and/or
incorporate Modern Methods of Construction (MMC) the schemes must
be developed to incorporate these features unless specific prior
approval to waive certain aspects is granted by the HC. The dwellings
produced should meet the HC’s Design & Quality Standards (April 2007)
or, in limited exceptional circumstances as agreed in advance by the
Corporation, the HC's Scheme Development Standards (April 2003).
Housing Quality Indicators (HQI) assessments should be carried out at
Feasibility, Scheme Design and Practical Completion stages and
recorded within the HQI section of IMS.

6. Funding is conditional on the RSL either possessing a legal interest in
the property already, or having entered into or an intention to enter
into a binding legal agreement to acquire such an interest as part of a
scheme, prior to drawing down Grant. Where the RSL is acquiring an
interest in the property or where works are to be done, the property
must offer good title. Property already in the RSL’s ownership must
comply with this condition. Where a leasehold interest is to be acquired,
the outstanding term should be at least thirty years for rehabilitation
schemes, sixty years for new build schemes, and at least 99 years for
New Build HomeBuy schemes at the date of purchase completion.

6a Under the Programme Partnering Agreement (PPA) route Grant can be
paid via the Lead Partner to other RSLs within the partnerships. In this
case, the Lead Partner is simply a conduit for payment and not a grant
recipient. Lead Partners do not, therefore, need an interest in the site
to enable this transaction.

7 No member, employee, agent or consultant of the RSL or any partner
organisation should have any interest in the proposed vendor,
contractor or the land or property to be acquired, including properties
purchased by individuals under Homebuy or other such schemes. This
includes any firm, partnership or organisation in which they or their
families are involved.

8. There should be consistency between the rents, including Housing Benefits (HB) eligible service charges specified by RSLs at the time of Grant allocation, with those agreed at confirmation of Grant stage and those charged from first letting or point of sale onwards. The RSL will therefore charge rents, including HB eligible service charges, on first letting or point of sale which are no higher than those agreed at confirmation of Grant; and thereafter it will only change its rents in compliance with rent restructuring guidelines specified by the HC. The HC guideline limits also apply to HB eligible service charges, we expect service charge increases to be within the guideline limit for annual increases.  Where this is not the case, the RSL must be able to demonstrate that the service charge increase is based on cost recovery. In the case of intermediate rent projects rents charges will be between market rents and social rents. Any rent increases will be restricted to a maximum of RPI + 0.5%.

9. Where a scheme is to be developed by a different RSL from that which
will ultimately own or manage the scheme, there must be a written
agreement between the RSLs on the Terms of Transfer and the rents
including HB eligible service charges to be charged for the scheme.

10. All funding is subject to RSLs complying with the EU Procurement Rules
in relation to Works (Works Directive 93/37/EEC) and Services
(Services Directive 92/50/EEC), where applicable.

11. RSLs must ensure that house builder warranties suitable for mortgage
purposes together with the accompanying ‘cover note’ as required
under the Council of Mortgage Lenders (CML) initiative are available
upon completion of homes.

12. A sole RSL or single Group RSL following the PPA route is required to
commission an appropriately qualified independent consultant or
auditor to undertake a programme of self-assessment procedural
compliance audit.

13 RSLs undertaking delegated development activities in partnership with
a ‘Lead’ RSL under the PPA route shall fully co-operate with the Lead
RSL in order to enable the Lead RSL to discharge its functions on behalf
of its partner RSLs.;

14 Where the RSL is acting as the ‘Lead’ for a group of other RSLs that are
participating in the delivery and/or management of homes included
within a PPA, then the RSL will be deemed responsible to the HC for
the following additional responsibilities and obligations on behalf of any
of the participating RSLs:

• monitoring programme delivery by all RSL members of the partnership and taking appropriate action to avoid slippage;
• maintaining an acceptable performance as ‘Lead’ to be evidenced by the Housing Corporation Assessment;
• ensuring that the principles of the '2012 Construction Commitments
  - AHP version' are understood and followed within the partnership;
• appraising risk and financial status of individual projects and the overall programme;
• determining the individual RSLs that will carry out development functions for specific projects;
• usage of suitable legal and procedural documentation for all partnership members including an appropriate and binding agreement between the Lead RSL and the other participating RSLs that sets out the roles and responsibilities of all parties and details arrangements for resolving disputes within the partnership;
• actively and effectively undertaking the role of Design Champion and promoting good design within the partnership; ensuring that relevant staff are trained in the use of 'Housing Quality Indicators' (HQIs) and in the assessment of projects using the 'Building for Life' criteria
• ensuring that house builder warranties suitable for mortgage purposes together with the accompanying ‘cover note’ as required under the Council of Mortgage Lenders (CML) initiative are available upon completion of homes;
• where necessary, providing staff training and/or skills assistance to other partner RSLs participating in development activities;
• where a development is carried out on behalf of another RSL within the partnership, ensuring that the build contract is assignable to the other RSL on completion, together with warranties from all design consultants and sub-contractors and where relevant, obtaining section 9 consent for the transfer;
• arranging regular progress review meetings involving all members of the partnership;
• agreeing and facilitating a programme of Quarterly Review meetings with the HC’s lead investor and financial appraisal and lead regulation representatives as appropriate;
• commissioning appropriately qualified independent 'auditors' to undertake a programme of self-assessment procedural compliance performance tests across the partnership in accordance with the HC’s published standardised terms of engagement

Additional requirements for:

RENT

15 All properties developed for letting at social rents with SHG funding will
be subject to the “Right to Acquire” provisions of the Housing Act 1996
(or any amendment or re-enactment thereof), unless they are
exempted by Part V of the Housing Act 1985 as amended by the
Housing (Right to Acquire) Regulations 1997 or under one of the
Housing (Right to Acquire or Enfranchise)(Designated Rural Areas)
Orders 1997 or because they are properties funded as part of a
Temporary Social Housing scheme. In this context “developed for
letting at social rents” includes NewBuild, rehabilitation, off the shelf,
existing satisfactory purchase, purchase and repair, re-improvement
schemes.

Properties developed for letting at intermediate rents should be let on
an assured shorthold tenancy basis and will therefore not be subject to
the Right to Acquire. Rent levels should be set at sub-market levels,
which should be no more than 80% of market rent.

SHARED OWNERSHIP SCHEMES (Including NewBuild HomeBuy and
Social HomeBuy)

16 The shared ownership lease used by the RSL must include the
Fundamental Clauses detailed in the HC's Capital Funding Guide.
Failure to include, a breach of, or variation (without the explicit consent
of the Corporation) of the fundamental clauses may be considered a
Relevant Event under clause 7(e) of the HC's The Recovery of Capital
Grants and Recycled Capital Grant Fund General Determination 2006,
or its replacement, for Grant recovery purposes.

OPEN MARKET HOMEBUY

17 The RSL must hold a valid Consumer Credit Licence and have received
a Direction under section 60(3) of the Consumer Credit Act 1974 [as
amended] as required by the HC’s Homebuy procedures.

PROGRAMME MANAGMENT/SYSTEM MANAGEMENT

18 The RSL must join and fully participate in the “Continuous Recording of
Lettings System” (CORE); if it has a current development programme
and if the RSL owns or manages:
- more than 250 self contained homes; or
- more than 250 hostel/shared housing bedspaces;
Should this be the case, the RSL must join and fully participate in
recording both:
- any lettings made; and
- any sales of RSL stock, including outright sales and shared ownership
schemes, but excluding sales of additional equity shares purchased
by existing shared owners (known as 'staircasing').

19. The RSL must follow the processes for re-forecasting milestones and for
proposing any Grant variation as set out in the HC's Capital Funding
Guide. Decisions on accepting proposed variations will be made in the
light of the HC's available resources and the organisations’ progress
towards meeting its targets.

20. The HC may impose penalties including amendment or withdrawal of
allocations if forecast milestones are not met.

21. In the event of the RSL failing to comply with these Funding Conditions
or if there is any cause for serious concern about the RSL’s
performance or financial viability, the HC reserves the right to suspend
funding.

22. If an RSL should fail to comply with these conditions specified under
sections 18 (3), 20 (4) and 21 (4) of the Housing Act 1996, the HC may
recover all or part of the Grant in accordance with its determinations
made under that Act and its published guidance - including the HC's
Capital Funding Guide.

23. RSLs must review their security arrangements in accordance with the
Security Administrator and Good Practice Guide available at
www.housingcorp-online.org. In particular, RSLs must:

• ensure that the Corporation is notified immediately if a Security Administrator leaves or changes posts and responsibilities;
• ensure that the list of IMS users and their authorities is regularly reviewed to ensure they are correct and appropriate;
• ensure that users are removed from IMS immediately they leave the organisation or are no longer required to work on IMS; and
• ensure that IMS passwords are not shared and that RSL users are prevented from entering IMS under a UserID other than their own.

24. Failure to comply with the above and with the conditions set out in
Annex 2 of the Security Administrator and Good Practice Guide may
result in the withdrawal of the RSL’s IMS access.

25. The HC reserves the right to issue additional conditions in year as
deemed appropriate and necessary.

26. A copy of the relevant Committee minutes of the decision to agree to
comply with the Funding Conditions must be retained by the RSL for
Compliance Audit/Regulatory purposes.

RSLs following only the Specialist route need not adhere to clauses
12-14

To download a printable version of these conditions, please open the PDF below.

 

Funding Conditions 2008-11