3 Permitted uses of the fund

3.1 General

3.1.1 The main objective of the Fund is to provide replacement properties for rent, to equivalent standards and at no greater costs than properties provided through the National Affordable Housing Programme.

3.1.2 Replacement property must comply with all the Funding Conditions applicable to schemes undertaken in that financial year with SHG e.g. physical standards of property being procured, rent levels etc. For details see the relevant Prospectus and Bidding Guidance.

3.2 Eligible Scheme Types

3.2.1 An RSL may only use the Fund to provide dwellings for social rent (NOT for Intermediate Rent or LCHO). Specifically DPF funds can be used for:

• acquisition of dwellings for letting;
• acquisition and improvement, conversion or repair of dwellings for letting;
• acquisition of land followed by construction, on that land, of dwellings for letting;
• acquisition of land and buildings, followed by demolition and construction, on that land, of dwellings for letting;
• repairs to, or improvement of, dwellings which have been vacant for a time specified by the Agency in order that those dwellings might be let again;
• repairs to, or improvement of, dwellings that an RSL would otherwise demolish, in order that they might continue to be used for letting;

The DPF can also be used for:

• payment of unrelieved capital gains tax upon net disposal proceeds transferred into the Fund.

Social HomeBuy proceeds in the DPF (and ONLY Social HomeBuy proceeds) can be used for:

• Extensions/loft conversions undertaken to provide additional bedrooms /living areas in social rented homes to reduce the need for larger families to move to meet their housing requirements;
• Buying existing satisfactory properties to address the medical needs / overcrowding of existing tenants and shared owners. In the latter instance, the properties released by the shared owner to be sold on shared ownership terms to social housing tenants or households in priority need to release a home for social rent;
• A sum equivalent to the discount payable to a qualifying tenant in their current home to assist with the outright purchase of another home, not owned by their landlord which will release the current social rented property. However, provision will need to be made so that the Grant/ discount equivalent is recoverable should the property be sold within five years of the purchase.

3.2.2 Replacement units must meet the priority needs of local authorities and complement the Agency's regional housing strategy and guidance.

3.2.3 When deciding the type and location of a programme of replacement units, and the nomination arrangements, the RSL must consult in writing both:

1. the local authority where the original sale took place,
2. (if different) the destination local authority, and 
3. the Regional Investment Team. 
   

3.2.4 Rough Sleeper Initiative Requirement: If units sold had been provided by the RSL with funding from the Rough Sleeper's Initiative (RSI), the RSL should recycle the sale proceeds to provide replacement stock for RSI clients.

3.3 Supplementing DPF Resources

3.3.1 An RSL may combine money from the Fund with new allocations of Social Housing Grant, but only on schemes described in {para 3.2.1}, and if used in Bids, the RSL must record this (see {para 3.3.2}. 

3.3.2 The contribution from the Fund will be treated as Other Public Subsidy when the Agency assesses the value for money of the Bid which is to be part-funded from the DPF.

3.3.3 An RSL must always consult the Agency and local authority before making such a combination, in the same way as for combining Recycled Capital Grant Fund with Social Housing Grant

3.3.4 An RSL may also combine the Fund with the Recycled Capital Grant Fund; again, only on schemes described {para 3.2.1} above.

3.4 Tenancy Conditions

3.4.1 Conditions of tenancies granted to the properties built using DPF proceeds must be identical to those funded by SHG from the NAHP. 

3.4.2 The occupants of dwellings provided from the Fund, other than those covered by statutory exceptions, will have the Right To Acquire.  If they exercise their Right, the Net Disposal Proceeds will return to the Fund in the way prescribed in this guidance. Follow the asterisk for further guidance.  

 

3.4.3 If an RSL disposes of the dwellings in any other way, the RSL must return to the Fund the lesser of:

1. the Net Disposal Proceeds or
2. the original contribution from the Fund.

This is different from the "usual" requirements when properties are sold to someone other than the sitting tenant, and the Recycled Capital Grant Funding rules apply.