2  Funding Principles

2.1   General

2.1.1 Social HomeBuy is funded by Capital Grant.  However, SHB Grant is not Social Housing Grant (SHG) but is a Purchase Grant (PG) paid under section 21 of the Housing Act 1996. 

2.1.2 The Requirements for calculating the contribution to the Disposal Proceeds Fund from the Initial Sale & Staircasing Sale proceeds arising from SHB schemes are set out in the Disposal Proceeds Fund 2.2.

2.1.3  Where an Initial Sale is less than a 100%, and the Social HomeBuy purchaser purchases further shares, a similar approach as used for Shared Ownership / New Build HomeBuy is adopted. 
 
2.1.4  Social HomeBuy sales must be based on the Market Value of the property carried out by a qualified independent valuer.  
 
2.1.5   Sales on shared ownership terms are based on a percentage of the full market value of the property. Valuations are required at the initial Social HomeBuy sale and on staircasing. The cost of the valuation for an initial sale is met by the RSL and can be met from the proceeds of sale. The cost of valuation for staircasing sales is met by the purchaser under the terms of the staircasing provisions in the lease. 

 
2.2  Rents and Service Charges 

2.2.1  The Requirements regarding the rent and service charges for SHB are the same as for New Build HomeBuy. See NBHB Section 4.3. Also see additional requirements at 7.2.1.
 
2.2.2  The level of service charge should not vary from the proposed service charge at formal offer stage, see 7.2.
 
2.2.3  Unacceptable levels of rent could lead to Grant being denied or PG being withheld until the rents including HB eligible service charges are brought in line.

2.3  Financial Viability 

2.3.1  The Requirements regarding the financial viability for SHB are the same as for New Build HomeBuy. See NBHB Section 5.2.
 
2.3.2  It is expected that the proposed Social HomeBuy receipt  and rent income will have been considered and that, in the long term operational costs including the repayment of loan principal and interest can be met. Any initial revenue deficits should be within the general capacity of the RSL.  The Regulation teams of the Agency will monitor the effect of development and the general financial status of the RSL. RSLs need to be mindful of the permitted uses under DPF rules in regards to the proposed application of these receipts.