F2 - 22/01Total Cost Indicators, value limits and discount amounts, and administration allowances for 2002/2003
Distributed to: Registered social landlords (excluding co-ownership societies) their auditors and local authorities.
1 Introduction
1.1 The Total Cost Indicators, value limits, discount amounts and administration allowances which will apply to registered social landlord (RSL) schemes sponsored by the Housing Corporation or by local authorities and receiving grant confirmation on or after 1 April 2002 have now been determined. Grant rates are no longer set out in tables, but are calculated for individual schemes by a new grant rate calculator. Details of and guidance on Total Cost Indicators, grant rate calculator and administration allowances for 2002/2003, effective from 1 April 2002, are available on the Corporation's website at http://www.housingcorplibrary.org.uk/housingcorp.nsf/Categories/07?open&cat=A.
2 Total Cost Indicators (TCIs)
2.1 TCIs are the Housing Corporation's estimate of the norm total cost of providing different types of housing in different parts of the country. The 2002/2003 TCIs are available on the Corporation's website at http://www.housingcorplibrary.org.uk/housingcorp.nsf/Categories/07?open&cat=A.
2.2 The TCI system is the Housing Corporation's benchmark for assessing the value for money of estimated scheme costs at the point at which grant is formally confirmed.
2.3 Following a fundamental review of the TCI system and the introduction of a larger number of more finely grained cost groups, the Corporation's discretion to approve schemes is now limited to 110% TCI rather than 130% TCI as previously.
2.4 The changes from the 2001/2002 TCIs are set out below:
_ the methodology for the TCI framework has changed following a fundamental review. Details of the new methodology are available from the Corporation website;
_ the number of cost groups has increased from five to twelve, which has reduced the inter-group differences;
_ the works cost element within the TCI base table has been updated to take account of general and localised cost increases and the effect of the Building Regulation amendments to be implemented;
_ the supplementary multipliers have been adjusted to reflect the redistribution of costs caused by the new groupings;
_ the existing supplementary multipliers for Rural areas and National Parks have been further enhanced in recognition of the continuing difficulties of developing schemes in such areas; and
_ a new supplementary multiplier has been introduced specifically for Existing Satisfactory Purchases (ESP) in specified locations in order to address any excessive imbalances between local dwelling prices and TCIs.
3 Grant rate calculator
3.1 The grant rates as determined by the new grant rate calculator represent for each type of scheme in each area the maximum percentage of total qualifying scheme costs that may be funded with public capital subsidy. The grant rate calculator is available on the Corporation's website at http://www.housingcorplibrary.org.uk/housingcorp.nsf/Categories/07?open&cat=A
4 LCHO, Homebuy, VPG, RTA and Local Authority DIYSO
4.1 Low Cost Home Ownership factors, the value limits for Homebuy and the value limits and grant rates for local authority funded DIYSO have been amended. For LCHO and LA DIYSO grant rates see the grant rate calculator on the Corporation's website at http://www.housingcorplibrary.org.uk/housingcorp.nsf/Categories/07?open&cat=A.
4.2 The Homebuy value limit and RTA/VPG cost groupings have been amended. The number of groups has been increased to six rather than the previous five.
4.3 Discount amounts for the Voluntary Purchase Grant (VPG) and Right to Acquire (RTA) schemes have been amended.
4.4 On-costs for Homebuy and LA DIYSO are under review and will be published separately.
5 Administration allowances
5.1 The allowances for 2002/2003 are available on the Corporation's website www.housingcorp.gov.uk.
6 Limit on the management element of the service charge in leasehold schemes for the elderly (LSE)
6.1 A limit for 2001/2002 was announced in Circular R2-12/01 and the limit for 2002/2003 will be announced when RPI for September 2001 becomes known.
7. Further Information
7.1 The Housing Corporation publishes details of the methodology and data sources for TCI reviews and grant rate modelling. This is available on the Corporation's websiteat http://www.housingcorplibrary.org.uk/housingcorp.nsf/Categories/07?open&cat=A.
8. Enquiries
8.1 Please direct any enquires on this circular to the appropriate office of the Housing Corporation.
