CAPITAL FUNDING GUIDE 2007

This version of the guide was extracted from the Housing Corporation Website on 5th September 2007, and copied into this Word document.

Main headings were then set to Heading 1 style using find and replace, and a list of contents was created.

All hyperlinks are retained, so that you can jump to the relevant section on the Corporation’s website. This could be used to update this guide where appropriate. When doing so, please record this on page 2 in Revision History

Dave TreanorM3 Housing

1

http://www.housingcorp.gov.uk/?PHPSESSID=d0eac3880bf34f6b5b15a4832b93c884

Revision History

Date What was replaced By

2

Contents...................................................................................................... .................1CAPITAL FUNDING GUIDE 2007.......................................................................1Revision History......................................................................................... .....2Contents............................................................................................. ............3Introducing the Revised Capital Funding Guide 2007.....................................7Introduction..................................................................................... ...............9Overview................................................................................ ........................9Updating................................................................................................. ......11Introduction - Updating................................................................................11Programme management.............................................................................12Overview.............................................................................. ........................12Programme partnering agreement route......................................................13Non programme partnering agreement route..............................................14Scheme Administration................................................................................14

4 Scheme Administration .....................................................................14Milestones........................................................................... .........................16

Milestones ............................................................................. ...............16Variations.....................................................................................................17

6 Variations ..........................................................................................17Reporting and auditing requirements...........................................................18Procurement and Scheme Issues..................................................................26Overview.............................................................................. ........................27Procurement................................................................................... ..............27Scheme types and requirements..................................................................28Acquisition........................................................................................... .........30Property title................................................................................................ .31Planning permission and building regulations..............................................33Signboards...................................................................................................34Reporting and auditing requirements...........................................................36Management arrangements.........................................................................37Overview.............................................................................. ........................37Requirements......................................................................... ......................38Finance......................................................................................... ................39Overview.............................................................................. ........................40Funding conditions.......................................................................................41Grant claims and payments.........................................................................42VAT...................................................................................... .........................46Money laundering regulations......................................................................47Glossary.......................................................................................................48Housing for rent...........................................................................................62

Contents............................................................................................. .......62Rent.................................................................................................... ..........62

3

Overview.............................................................................. ........................62Rents...................................................................................... ......................63Reporting and Audit..................................................................................... .64Repair............................................................................................. ..............65Overview.............................................................................. ........................65Asset management......................................................................................67Property eligibility........................................................................................67Works eligibility............................................................................................69Major repairs................................................................................................69Minor Miscellaneous works...........................................................................70Temporary Social Housing - TSH...................................................................73Overview.............................................................................. ........................73Eligibility criteria for grant funding...............................................................74Management arrangements.........................................................................75Tenancy conditions.......................................................................................76Grant recovery.............................................................................................77Reporting and Audit Requirements...............................................................77Housing for sale............................................................................................78

Housing for Sale.....................................................................................78New Build HomeBuy - NBHB.........................................................................78

Contents............................................................................................... ..78Overview.............................................................................. ........................79Funding principles........................................................................................84Rents...................................................................................... ......................87Leases................................................................................. .........................88Assessing Applicants Financial Capacity.......................................................95After sales....................................................................................................97Rural repurchase..........................................................................................99Reporting and audit requirements..............................................................102Open Market HomeBuy..............................................................................104Expanded Open Market HomeBuy (EOMHB)...............................................105EOMHB - Contents......................................................................................105

Contents............................................................................................. ..105 EOMHB - Overview....................................................................................106EOMHB - Applicant Eligibility......................................................................109EOMHB - Property Eligibility........................................................................110EOMHB - Processing the Purchase..............................................................112EOMHB - Post Sales Procedures..................................................................118EOMHB - Reporting and Audit Requirements..............................................122Open Market HomeBuy - Government Loan Only (OMHB-glo)....................123OMHB (glo) - Contents................................................................................123

Contents............................................................................................. ..123OMHB (glo) - Overview...............................................................................124

1 OVERVIEW......................................................................... ................124

4

OMHB (glo) - Applicant Eligibility................................................................126OMHB (glo) - Property Eligibility.................................................................126OMHB (glo) - Processing the Purchase........................................................126OMHB (glo) - Post Sales Procedures............................................................127OMHB (glo) - Reporting and Audit Requirements........................................128Social HomeBuy - SHB......................................................................... .......129

Contents............................................................................................. ..129Overview............................................................................ ........................130Funding principles......................................................................................133Scheme Administration..............................................................................134Applicant eligibility.....................................................................................134Property eligibility......................................................................................135Leases............................................................................... .........................136Rents and service charges..........................................................................137Processing the sale............................................................................... ......138Post sales procedures.................................................................................144Reporting and audit requirements..............................................................145Right to Acquire - RTA.................................................................................147

Contents............................................................................................. ..147Overview............................................................................ ........................148Applicant eligibility.....................................................................................149Property eligibility......................................................................................152Application processing...............................................................................153Post sales procedures.................................................................................161Reporting and audit requirements..............................................................163Voluntary Purchase Grant - VPG.................................................................164Overview............................................................................ ........................164Repayment of discount............................................................................ ...165Conveyance of freehold and grant of lease................................................166Reporting and audit requirements..............................................................166Grant recovery and disposal proceeds.......................................................167Disposal Proceeds Fund - DPF.....................................................................167Overview............................................................................ ........................167Contributions to the fund...........................................................................168Permitted uses of the fund.........................................................................168Accounting requirements...........................................................................170Reporting and audit requirements..............................................................171Recycled Capital Grant Fund - RCGF...........................................................173

Contents............................................................................................. ..173Overview............................................................................ ........................174Relevant Events......................................................................................... .175Calculation of Net Sales Receipt.................................................................177

3.9 Equity Loan redemptions ..............................................................182Grant Liability................................................................................. ............188

5

4.5 Leasehold Schemes for the Elderly (LSE), Rural Restricted Equity, and Rural Buyback...............................................................................189

RCGF...........................................................................................................191Permitted Uses...........................................................................................196Reporting and Audit................................................................................... .201Key Worker Living - KWL.............................................................................203Overview............................................................................ ........................203Applicant eligibility.....................................................................................204KWL products.............................................................................................212Funding conditions.....................................................................................217Scheme Administration..............................................................................218Reporting and Audit................................................................................... .219

6

Introducing the Revised Capital Funding Guide 2007

The Capital Funding Guide contains the rules and procedures for housing associations that have received capital grants/allocations from the Housing Corporation.

The Guide gives details on procedure and further guidance. The Guide has been revised and republished. The new Guide will be much easier to use and with the help of internal and external links to help you navigate information can now be accessed quickly.

One of the main features of the Guide is the separation between the requirements (what 'must' be done) from guidance and explanatory notes. The main body of the text outlines the requirements which the Corporation has and where it is needed this is then

supplemented by guidance notes accessed by clicking on an asterisk icon:

The Guide now has five main 'books' containing 'chapters'. These chapters are similar to those previously used, the only exception being the creation of six new chapters from the previous General chapter. These can be accessed from the left hand side of the page.

Older versions of the Guide, starting with October 2006, are available for reference.

For New Announcements - giving details on amendments, additions and updates to the Guide please click on the exclamation mark. Error! Hyperlink reference not valid.

Books Chapters

General

Introduction Programme Management Procurement and Scheme Issues Management Arrangements Finance

Glossary

Housing for Rent

Rent Repair

TSH (Temporary Social Housing)

Housing for Sale

NBHB (New Build HomeBuy) OMHB (Open Market HomeBuy SHB (Social HomeBuy) RTA (Right to Acquire)

VPG (Voluntary Purchase Grant)

Grant Recovery and Disposal Proceeds

RCGF (Recycled Capital Grant Fund)

DPF (Disposal Proceeds Fund)KWL KWL (Key Worker

7

http://www.housingcorp.gov.uk/server/show/ConWebDoc.8695?PHPSESSID=d0eac3880bf34f6b5b15a4832b93c884http://cfg.housingcorp.gov.uk/server/show/ConWebDoc.10974http://cfg.housingcorp.gov.uk/server/show/ConWebDoc.10974

Living)

Queries on the interpretation of the guidance should be directed to the Enquiries Team on 0845 230 7000 or via our contact page.

8

http://cfg.housingcorp.gov.uk/server/show/nav.001002

IntroductionContents

Overview

1.1 Purpose1.2 Status of Guidance1.3 Scope and Format

Updating

2.1 General 2.2 Summary of Changes

Overview1 Overview

1.1 Purpose1.1.1 This version of the Capital Funding Guide supersedes all previous, paper-based editions. It must be used for all schemes using allocations of Social Housing Grant on or

after 1st April 2007. For advice on how to access previous versions of the Guide

1.2 Status of Guidance1.2.1 The powers of the Housing Corporation in relation to payment and recovery of SHG

are set out in Determinations: (Follow asterisk for further information)

1. For the payment of SHG it’s : Social Housing Grant (Capital) General Determination 20032. For Purchase Grant (for RTA and SHB), Grant is paid under s21 of the Housing Act 19963. Recovery of Grant is covered by The Recovery Of Capital Grants And Recycled Capital Grant Fund General Determination 2006, see Recovery 1.2.1

1.2.2 The Corporation is in the process of obtaining advice on the legal status of these Requirements. This will be published when it is available.

1.3 Scope and Format

1.3.1 The Guide is now organised into a number of Books, each with Chapters:

GENERAL

Introduction - General points applicable to Social Housing Grant (SHG) & Purchase Grant (PG) funding through the Housing Corporation; Procurement & Scheme Issues

9

http://cfg.housingcorp.gov.uk/server/show/ConWebDoc.10426http://cfg.housingcorp.gov.uk/server/show/ConWebDoc.10261http://cfg.housingcorp.gov.uk/server/show/ConWebDoc.10409http://cfg.housingcorp.gov.uk/server/show/ConWebDoc.10408http://cfg.housingcorp.gov.uk/gserver.php?show=conWebDoc.10606&outputArea=2http://cfg.housingcorp.gov.uk/gserver.php?show=conWebDoc.10606&outputArea=2

Programme Management Finance Management Arrangements Glossary

HOUSING FOR RENT

Rent- permanent rented housing which is new build, rehabilitation, and re-improvement; Repair - Major repairs and Minor Miscellaneous Works, including adaptations; TSH - Temporary Social Housing;

HOUSING FOR SALE

New Build HomeBuy - shared ownership, shared ownership for the elderly, rural repurchase, and rehabilitation for outright sale; Open Market HomeBuy - Open Market HomeBuy (Government Loan Only) and Expanded Open Market HomeBuy Social HomeBuy; RTA - Right To Acquire; VPG - Voluntary Purchase Grant;

GRANT RECOVERY & DISPOSAL PROCEEDS

Grant Recovery, Repayment & Recycling - including Recycled Capital Grant Fund; Disposal Proceeds including the Disposal Proceeds Fund;

KEYWORKER LIVING PROGRAMME

KWL - Key Worker Living

1.3.3 The Capital Funding Guide does not duplicate Corporation requirements relating to the Bidding process, or Regulatory requirements. Users should consult the appropriate Bid for funding or the Our Regulatory Code for information on these requirements. 1.3.4 Please note that where this guide refers to the Corporation’s Publications Department, contact should be made by email to publications@housingcorp.gsx.gov.uk 1.3.5 In many instances throughout this guide it requires RSLs to contact their local Corporation office for further guidance or approval on investment matters. Unless specified otherwise RSLs should initially contact their local Investment Officer.

For all other queries please contact the Corporation’s Enquiry Team on 0845 230 7000 and select Option 1 or email enquires@housingcorp.gov.uk

Top of page

10

http://cfg.housingcorp.gov.uk/server/show/nav.3475#ov#ovmailto:enquires@housingcorp.gov.ukmailto:publications@housingcorp.gsx.gov.ukhttp://cfg.housingcorp.gov.uk/server/show/nav.493http://cfg.housingcorp.gov.uk/server/show/nav.451http://cfg.housingcorp.gov.uk/server/show/ConWebDoc.10322http://cfg.housingcorp.gov.uk/server/show/ConWebDoc.10287http://cfg.housingcorp.gov.uk/server/show/ConWebDoc.10280http://cfg.housingcorp.gov.uk/server/show/ConWebDoc.10315http://cfg.housingcorp.gov.uk/server/show/ConWebDoc.10194http://cfg.housingcorp.gov.uk/server/show/ConWebDoc.10200http://cfg.housingcorp.gov.uk/server/show/ConWebDoc.10254http://cfg.housingcorp.gov.uk/server/show/ConWebDoc.10245http://cfg.housingcorp.gov.uk/server/show/ConWebDoc.10310http://cfg.housingcorp.gov.uk/server/show/ConWebDoc.10298http://cfg.housingcorp.gov.uk/server/show/ConWebDoc.10304http://cfg.housingcorp.gov.uk/server/show/ConWebDoc.10436http://cfg.housingcorp.gov.uk/server/show/ConWebDoc.10429http://cfg.housingcorp.gov.uk/server/show/ConWebDoc.10435http://cfg.housingcorp.gov.uk/server/show/ConWebDoc.10416

Updating

Introduction - Updating2 Updating

2.1 General

2.1.1 The CFG will be regularly updated to reflect new and amended policy, requirements and guidance. From April 2007 updates are likely to be more frequent than the previous quarterly revisions. Updates will be made to the relevant text and also published in the Capital Funding Guide library area of the CFG website. Details will also be signposted in the Corporation's weekly Website Update. Users of the guide are strongly advised to sign up to the automatic weekly Website Update alert to ensure they are kept informed of future CFG revisions. Information on how to subscribe to this weekly email can be found on the Corporation's website, under News & Events and then Newsletter.

2.2 Summary of Changes

2.2.1 This version of the Capital Funding Guide has been produced as a result of a significant review and edit. It is therefore impractical to highlight all the changes made from previous versions.

2.2.2 For the future, the Corporation will maintain a Change Log for changes to the Capital Funding Guide since 1st April 2007. Please see New Announcements.

11

http://cfg.housingcorp.gov.uk/server/show/ConWebDoc.10974http://cfg.housingcorp.gov.uk/server/show/nav.00100d005http://cfg.housingcorp.gov.uk/server/show/nav.00100f00200d

Programme managementContents

Overview

1.1 Purpose

Programme Partnering Agreement Route

2.1 General 2.2 Process2.3 Authorised Signatories

Non Programme Partnering Agreement Route

3.1 General

Scheme Administration

4.1 General4.2 HomeBuy Agents4.3 Variations4.4 Submission Requirements4.5 Scheme Cost Information4.6 Phased schemes

Milestones Variations

6.1 General6.2 Variations identified before any payment of Grant has been made6.3 Variations to scheme after a payment of Grant has been made6.4 Social Homebuy

Reporting and Audit requirements

7.1 General 7.2 Reporting Requirements7.3 Audit Requirements - PPA7.4 Audit Requirements – non PPA

Overview1 Overview

1.1 Purpose

1.1.1 This chapter sets out the Corporation’s requirements in relation to management of an RSL’s Development Programme funded through NAHP. There are two routes:

Programme Partnering Agreement Non- Programme Partnering Agreement

12

http://cfg.housingcorp.gov.uk/server/show/ConWebDoc.10415http://cfg.housingcorp.gov.uk/server/show/ConWebDoc.10558http://cfg.housingcorp.gov.uk/server/show/ConWebDoc.10554http://cfg.housingcorp.gov.uk/server/show/ConWebDoc.10553http://cfg.housingcorp.gov.uk/server/show/ConWebDoc.10414http://cfg.housingcorp.gov.uk/server/show/ConWebDoc.10413http://cfg.housingcorp.gov.uk/server/show/ConWebDoc.10412

Programme partnering agreement route2 Programme Partnering Agreement route

2.1 General

2.1.1 This section sets out the process that RSLs must follow with regard to the Programme Partnering Agreement. The following will not be relevant to RSLs who will have been allocated funding under the non-Programme Partnering Agreement Route (Specialist Route).

2.2 Process 2.2.1 Once funding has been approved, a legally binding contract, referred to as the Programme Partnering Agreement (PPA), must be signed by the RSL 2.2.2 The PPA sets out the Corporation’s and RSLs’ obligations and rights. Each PPA will include an Annex listing the schemes to be developed, stating the amount of Grant and forecast dates (Milestones). 2.2.3 The programme of schemes, as detailed in the Annex will be input into the Corporation’s Investment System (IMS / PiMS). 2.2.4 There may be Special Conditions stipulated in the agreement (in addition to the standard Funding Conditions, see Finance 2 which have to be met before payment of Grant can occur. An example might be that a Black and Ethnic Minority RSL must join the partnership. The PPA will last for the duration of the schemes within it.

2.2.5 For a copy of the current PPA follow the asterisk.

2.2.6 RSLs will be sent the PPA for signature. This must be signed by the RSLs’ authorised signatory and returned to the Corporation. RSLs must retain a copy for their own purposes. Only one PPA should be signed by the relevant partners regardless of how many schemes that Partnership will deliver. 2.2.7 RSLs must confirm within the IMS / PIMS system that they agree to the terms of the PPA; the developing RSL(s) will sign off on-line first, then the Lead RSL will sign, and then the HC Lead Investor will approve/accept the submission on-line. 2.2.8 RSLs must not seek changes to the programme contained within the PPA, however the Corporation understands the need for flexibility regarding the client groups to be housed.

2.2.9 The Corporation will review progress against agreed milestones and targets at Quarterly Liaison Meetings as detailed in the PPA. No adjustments to the programme will be permitted without the agreement of the Corporation,

2.2.10 The amount of Grant payable by the Corporation under the PPA remains fixed regardless of the actual costs of projects to the RSL. 2.2.11 Where a number of associations form a consortium to develop schemes under the Partnering Programme route, one association must undertake the role of Lead as nominated at pre-qualification. RSL. The Lead RSL will be deemed responsible to the Corporation for a number of additional responsibilities and obligations on behalf of the other associations within that partnership. These responsibilities are outlined in the PPA.

2.3 Authorised Signatories

13

http://cfg.housingcorp.gov.uk/server/show/ConWebDoc.10431http://cfg.housingcorp.gov.uk/gserver.php?show=conWebDoc.10680&outputArea=2

2.3.1 To use the Corporation’s Investment Management System (IMS / PiMS) the RSL must nominate at least one RSL Security Administrator.

2.3.2 RSLs must inform the Housing Corporation of any change of RSL Security Administrator by submitting a SIGRSLv3 form (available in the Help page of www.housingcorp-online.org) to the Housing Corporation. SIGRSL forms must be signed by one of the senior officers of the RSL as recorded on the Housing Corporation's On-line Register. RSLs can have up to four RSL Security Administrators.

2.3.3 RSLs who have not previously accessed IMS / PIMS but would like to gain access should email THCHelpdesk@housingcorp.gsx.gov.uk in order to obtain the necessary information and application pack.

2.3.4 The RSL Security Administrator(s) have delegated authority in IMS / PIMS to confirm the Authorised Signatories in IMS / PIMS for their organisations by setting up each Authorised Signatory with the relevant security authority in IMS / PIMS.

2.3.5 RSL Security Administrators can also add the ‘Maintain Register’ Authority to a user in IMS / PIMS which will allow that user to update the Housing Corporation's On-line Register if there are any changes to the RSL details in-year e.g. if there are changes to senior officers.

Non programme partnering agreement route3 Non Programme Partnering Agreement route

3.1 General 3.1.1 The Requirements for an RSL to undertake schemes on a non-Programme Partnering Agreement basis (aka the Specialist Route) are exactly the same as under a PPA, except that the RSL does not need to sign a formal PPA. For some additional

comments, highlighting specific issues click on the asterisk.

3.1.2 The RSL must confirm via the IMS / PIMS system that they agree to the Funding Conditions for the project.

Scheme Administration4 Scheme Administration

4.1 General

4.1.1 This section applies to all schemes being developed as permanent housing for rent and sale.

4.1.2 There are 5 key events (Milestones) in processing the scheme:

Acquisition Detailed Planning permission Start on Site

14

mailto:THCHelpdesk@housingcorp.gsx.gov.ukhttp://www.housingcorp-online.org/http://cfg.housingcorp.gov.uk/gserver.php?show=conWebDoc.10557&outputArea=2

Final Cost (Practical Completion) Occupancy.

For RSLs, two of these five Milestones trigger a Grant claim (Start on Site and Practical Completion)

For Open Market HomeBuy schemes there is one Milestone: Exchange of Contracts

4.2 HomeBuy Agents

4.2.1 RSLs offering New Build HomeBuy units must work collaboratively with HomeBuy Agents to provide HomeBuy opportunities to households in accordance with regional and local priorities. Developing RSLs must enter into and sign up to the Service Level Agreement with the HomeBuy Agents that operate in the localities where they are developing.

4.3 Variations

4.3.1 For details on the Requirements on scheme Variations, see section 6.

4.4 Submission Requirements

4.4.1 The scheme submission must comply with the Funding Conditions (see Finance Section 2 ) as accepted by the RSL’s Committee and confirmed on line by the RSL’s Security Administrator at the beginning of the financial year.

Key Worker Living schemes: The funding conditions must set out:

Grant allocation and key worker categories eligible for assistance in each financial year; and Financial information: - Total IMR requirement by financial year and in total; - Total administration cost by financial year and in total; - Total SHG payable; - Additional contribution from RSL (if any);- Additional contribution from employer/other (if any).

4.4..2 The RSL must submit the required information on to the Corporation’s Programme Investment Management System (IMS / PIMS) prior to claiming Grant. For details {click here LINK TO IMS / PIMS GUIDANCE}

4.4.3 The RSL will not be able to submit a scheme where the data input differs from the information provided by the RSL at Bid stage; only the Corporation can make the changes to the allocation in order for the RSL to Allocation Match and submit the scheme in IMS / PIMS. The Corporation may require a revised bid submission from the RSL before this can be done. 4.4.4 RSLs must submit the following data in relation to the milestones to be met onto the Corporation’s IMS / PIMS system following confirmation of their allocation. (see IMS / PIMS guidance at www.housingcorp-online.org) [link]:

Planning Permission expected/ granted Exchange of Contracts (for EOMHB) Acquisition of Land Start on site date Final Cost (Practical Completion) Occupancy .

15

http://www.housingcorp-online.org/http://cfg.housingcorp.gov.uk/server/show/ConWebDoc.10431http://cfg.housingcorp.gov.uk/server/show/ConWebDoc.10431http://cfg.housingcorp.gov.uk/server/show/ConWebDoc.10558

4.4.5 The RSL must be able to confirm acceptance of the on-screen certifications. 4.4.6 Where a charge is to be given to secure private finance form HACON 6 Application for Section 9 Consent may be required and should be sent to the local Regulation office of the Corporation.

Detailed guidance on how to input this data on to IMS / PIMS is given as on-line help on www.housingcorp-online.org 4.4.7 KWL Delivery Plans

Investment regions will require RSLs with significant KWL funding to draw up and agree delivery plans specifying the funding to be spent in each zone on each key worker group.

4.5 Scheme Cost Information

4.5.1 The Corporation collects scheme costs information, broken down into:

1. Acquisition cost 2. Building works cost 3. On-costs.

4.5.2 The RSL must ensure that the declared Works costs does not include any:

design fees; planning and building regulation charges; structural warranty/NHBC fees; minor pre-tender works.

4.5.3 RSLs must take particular care on to accurately declare the Works figure for a scheme when using Design & Build contracts, as the Contract Sum will include various fees as well as the Works. These fees must be disaggregated and included in the On-cost figure, not the Works figure. 4.5.4 The RSL must retain supporting documents on file for compliance audit.

4.6 Phased schemes

RSLs must have the agreement of the Corporation’s local office for all phases of the scheme before making a submission for the first phase

Milestones Milestones

This section is in draft and will be uploaded shortly.

16

http://www.housingcorp-online.org/

Variations6 Variations

6.1 General

6.1.1 The RSL must notify the Corporation of any variation to the scheme from the original Bid (i.e. any change to the requirements that worked hard of an allocation condition recorded in the Corporation's IMS / PIMS or successor system after the original Bid).

What sort of changes? Click on the asterisk.

The RSL must also provide reasons for the variation.

The RSL must keep supporting documentation on file for compliance audit purposes.

6.1.2 The Corporation will decide whether to accept the variations on the basis of whether the strategic need for which the allocation of Grant was given is still being met and whether the scheme still offers value for money, particularly in light of other bids for similar scheme

6.1.3 The Corporation may reject the scheme and reclaim any Grant paid where variations are not acceptable, regardless of how far the scheme has progressed. For this reason it is in the RSL’s interest that it seeks the Corporation’s acceptance of the variation as soon as possible.

6.1.4 If a scheme cannot complete on all the proposed units by the original agreed final cost date, RSLs must inform their Investment Officer, who will consider splitting the scheme into phased completions over an appropriate development period. 6.1.5 All variations must have been identified at the correct stage, i.e. before RSLs make any further claims of Grant. Where variations are not disclosed to the Corporation at the correct stage RSLs will have been falsely certifying on IMS / PiMS that the data was correct and complies with funding conditions.

6.1.6 The Corporation may terminate and reclaim any Grant paid plus interest on the scheme where the scheme no longer meets the criteria on which the allocation of Grant was originally given. 6.1.7 Where the variations are acceptable the Corporation will pay Grant.

6.2 Variations identified before any payment of Grant has been made

6.2.1 RSLs must notify the Corporation’s local Investment Officer of any variations to the scheme before claiming the first tranche of Grant. The Corporation will decide whether to accept the variations or terminate the scheme. 6.2.2 Where the termination occurs within the same financial year as allocation the allocation of Grant may be made available for an alternative scheme that offers value for money and meets local strategic needs. RSLs must discuss whether replacement

17

http://cfg.housingcorp.gov.uk/gserver.php?show=conWebDoc.10555&outputArea=2

bids will be acceptable with the Corporation’s local office who will decide which bids received will best meets this criteria. 6.2.3 Where scheme termination occurs after the financial year in which the allocation was given, it cannot be used on alternative schemes. 6.2.4 On schemes for Sale the RSL must notify the Corporation where demand has reduced from Bid stage, in order for the Corporation to change the allocation of Grant for the programme. 6.2.5 The RSL must notify the Corporation as soon as it believes that it is unlikely to meet its sale targets in terms of units or spend.

6.3 Variations to scheme after a payment of Grant has been made

6.3.1 The Corporation’s local Investment Officer must be notified of any variation together with the reasons behind the variations to be satisfied that the scheme still meets the original criteria on which the allocation was given. The Corporation may terminate the scheme and reclaim any Grant paid plus interest where the scheme no longer meets the allocation criteria. 6.3.2 All changes must have been identified at the correct stage, i.e. before any further claims of Grant were made by the RSL. Where changes were not disclosed to the Corporation at the correct stage, even if the changes are not fundamental, the RSL will have been falsely certifying on IMS / PiMS that the data was correct and complies with funding conditions 6.3.3 Where the changes are acceptable the Corporation will pay the Grant. 6.3.4 Differences in the programme revealed by data input following legal completion to the data input at programme approval will require the RSL’s to give reasons for the variations in order for the Corporation to approve.

6.4 Social Homebuy

6.4.1 Where extra Purchase Grant is sought for the programme:the RSL will need to contact the Corporation to review the programme allocation, The Corporation will assess whether the revised Bid still offers value for money.

6.4.2 Where there have been any significant changes (e.g. rises in programme costs, fewer units sold) or a number of other changes the local office of the Corporation may ask the RSL to review the programme allocation. The programme may be terminated if it no longer meets the strategic needs or offers value for money on which the allocation of PG was given.

Reporting and auditing requirements7 Reporting and Audit Requirements

7.1 General

7.1.1 The Reporting & Audit requirements apply to all schemes.

7.1.2 For schemes funded under the Specialist Route, the Reporting requirements relating to the relationship between Lead RSL's and Partnership RSLs obviously do not apply.

18

7.2 Reporting Requirements

7.2.1 The Corporation and the RSL (Lead) will agree a programme of Quarterly Review Meetings (QRM) throughout the period covered by this PPA. At each QRM the Corporation and the RSL (Lead) will:

1. Review progress against the agreed targets; 2. Discuss impact assessments, the value for grant comparator and such other

issues as either party may think relevant; and 3. Monitor compliance with the method statements submitted and any other

obligations assumed as part of the bidding process.

7.2.2 Representation on both sides must be at a senior level in order that decisions and actions can be agreed and implemented immediately if necessary.

7.2.3 Schedules indicating the status of each scheme including output delivery must be provided to the Corporation’s nominated Lead Investor one week prior to each QRM.

7.2.4 Additional liaison meetings may be called by either the Corporation or RSL (Lead) to address any important issues that may arise between QRMs. Representation should include the Corporation’s Lead Investor together with financial appraisal and/or lead regulation representatives as appropriate.

7.2.5 The RSL (Lead) has the responsibility to provide timely notification to the Corporation’s Lead Investor of any unresolved problems that:

1. are encountered with complying with the funding conditions or meeting the specified targets;

2. are identified during the self-assessment process and which threaten the objectives set out;

3. indicate shortfall in financial capacity and which affects the ability of the RSL (Lead), or any other participating RSLs, to deliver their obligations.

7.2.6 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 via this PPA, then the RSL (Lead) is responsible for the arrangement of regular delivery review meetings involving all members of the Partnership. These meetings should be planned so that up-to-date information may be reported to the Corporation at planned QRMs.

7.2.7 During the course of the PPA the Corporation’s Innovation and Development Managers (IDMs) and/or Advisers (IDAs) will liaise with the RSL (Lead) on technical performance issues and to maintain working relationships with the nominated Design Champion.

7.3 Audit Requirements - PPA

7.3.1 RSLs developing schemes under the PPA arrangements are required to carry out self-assessment procedural compliance tests. In addition a member of the Corporation’s Innovation and Development team will:

visit schemes to monitor the standards and quality of those schemes or projects forming part of the PPA; reserve the right to carry out at least one shadowing visit on one of the planned procedural audit visits to monitor the process; and provide guidance and support to the independent accountant as required.

19

7.3.2 Procedural compliance must be undertaken on a self-assessment basis using an independent accountant operating under the guidance contained in “Technical Release – Audit 03/03, Public Sector Special Reporting Engagements – Grant Claims” (September 2003) published by the Institute of Chartered Accountants of England and Wales (ICAEW).

Note: The Corporation is in advanced discussions with the RICS over an agreement whereby RICS Surveyors may undertake the above audit function in their own right where operating under guidance to be published by the RICS. This option is expected to be available for the commencement of the 2008-2011 NAHP.

7.3.3 The Corporation will undertake to become a party to the commission via the “standardised terms of engagement” route utilising agreed upon procedures as set out in Appendix 3 of the ICAEW publication. The Corporation’s standardised terms of

engagement can be viewed by following the asterisk.

Compliance Checklists can be accessed from the CFG homepage under the related information tab. Please click on the asterisk to go to the homepage.

Error! Hyperlink reference not valid.

7.3.4 RSLs may commission any suitably experienced and qualified accountant to undertake this audit function, including either their External Auditors or external accountants undertaking the RSL’s Internal Audit function.

7.3.5 However, qualified accountants directly employed by the RSL or any other of its RSL partners are excluded as they are not considered to be appropriately independent.

7.3.6 Arrangements where qualified surveyors and/or development consultants are employed by a qualified accountant to act in its name, are acceptable to the Corporation on condition that the arrangement maintains the duty of care required by the Corporation and the commissioning agreement is between the RSL and the accountant.

7.3.7 Exceptionally, any RSL (Lead) wishing to use independent consultants that are not Chartered Accountants must obtain prior approval from the Corporation’s Procurement section, Investment Division, Headquarters. However, the Corporation may elect not to exercise its discretion to approve the use of non-accountants.

7.3.8 The RSL (Lead) must commission the independent auditor to prepare and undertake a programme of self-assessment procedural compliance tests. The Corporation will discuss the scope of the audit and agree a provisional programme at the commencement of the PPA to assist RSLs in planning the arrangements and budgeting to meet these requirements, but the actual schemes to be audited should be finally agreed just prior to any planned audit visit: the nearer to the visit, the better, as this will enable the sample to be updated to reflect any changes to the programme see 7.3.11 below.

Note1: The HC reserve the right to request copies of the signed ‘self assessment agreement’ as and when necessary throughout the life of the partnership.

7.3.9 The RSL (Lead) is strongly advised to discuss the principles and planned arrangements for self-assessment with the Corporation prior to commissioning the independent auditor.

20

http://cfg.housingcorp.gov.uk/server/show/ConWebDoc.10671http://cfg.housingcorp.gov.uk/gserver.php?show=conWebDoc.10559&outputArea=2

7.3.10 The schemes to be selected for self-assessment performance will be determined by the Corporation regional office and notified to the Lead RSL and to the commissioned independent auditor prior to the start of the self-assessment process.

7.3.11 The Lead Auditor at the Corporation will provide the Lead RSL with a Scheme Sample Report listing proposed schemes to be audited. The Scheme Sample Report is part of the Audit Programme Agreement (APA) and must be agreed with the Lead RSL and the Corporation regional office. Each financial year a new APA is prepared and submitted to the relevant Lead RSL for agreement for each active partnership as set up in the HC IMS/PiMS system

7.3.12 There will be instances where an RSL is ‘Lead’ for partnerships in different ‘bid years’, i.e. 04-06, 06-08 etc. When this is the case the Corporation regional office will produce an Audit Programme Agreement (APA) for each active partnership in that ‘audit year’; this may therefore result in more than one audit programme agreement being issued to the Lead RSL.

7.3.13 The Lead RSL must be aware that the audit programmes relating to different bid years need to be kept separate as different rules may apply.

Note 2: Schemes developed by partners RSLs which have been bid for under the ‘specialist’ route will be audited by the HC; see Procurement and Scheme Issues chap 8.

7.3.14 Annual Audit

The Corporation expects that there will be an annual audit carried out on a sample of completed schemes. As the agreement covers a two year period this will generally result in a minimum of at least 3 audits for example, for a PPA covering the two financial years 06/08 there are likely to be three audits, 06/07, 07/08, and 08/09 (to cover the run off of schemes from the previous year). If schemes in year 07/08 were not to finish in 08/09, then further audits maybe required until the programme is complete. Equally, if in the first year (06/07, in this example) insufficient schemes reach completion to warrant an audit the RSL may defer it to the first part of 07/08 if prior approval is obtained from the Corporation.

7.3.15 Compliance Audit Management Process

Procedural compliance audits are expected to be carried out over a 3 to 4 months period within the audit year (this is likely to happen within the period running from June to December).

7.3.16 The Lead RSL is required to notify the Corporation regional office of the date/s when the independent auditors will commence the audits.

7.3.17 The Corporation regional office will confirm the addresses of the schemes to be audited 4 weeks before the audit is due to commence.

7.3.18 The completed independent auditor report must be received by the Corporation’s regional office by, and not later than, the end of December of that audit year.

7.3.19 Independent Auditor Report

Copies of the subsequently completed Independent Auditor Report (IAR) signed by both the RSL (Lead) and the independent auditor must be provided to the Corporation regional office within two months of the audit visit, for each financial year and beyond until completion of the schemes contained within the programme. The audit represents a snap shot of the documentation available at the time of the audit. Where information

21

is not available at time of audit this should be recorded as such in the independent auditor report.

From audit year 2007 supporting and completed procedural checklists need no longer be submitted to the Corporation with the independent auditor report. However the Corporation reserves the right to request copies of the completed checklists as and when considered necessary.

7.3.20 Where required, it is recommended that the completed procedural checklists are returned to the HC Lead Auditor via email. This is to facilitate electronic storage of the checklists.

Note 3:The individual performance of current lead investment partners is to be one of the prime considerations of pre-qualification for future partner status. Therefore the impact of the Corporation not receiving the independent auditor's report by the due date may find reflection in an adverse development performance assessment.

7.3.21 Identified Deficiencies

Where the independent auditors report highlights deficiencies or shortfall in procedural compliance the RSL (Lead) should submit to the Corporation an initial response to these findings within 14 days of receipt of the independent auditor report setting out the reasons for the deficiencies and the corrective measures being undertaken. Upon receipt of the independent auditor report and the RSL’s response the Corporation will consider the results of the auditor’s factual assessment and form an opinion on the extent that the Corporation may be assured that procedures and funding conditions have been complied with, and that public funds have been used for the intended purposes.

If the RSL fails to respond within the 14 days, the Corporation will form an opinion based solely upon the independent auditor report without any mitigating considerations.

7.3.22 Quality Checks The Corporation Innovation and Development staff will independently carry out quality visits on a sample of rent and sale schemes.

7.3.23 Corporation Final Audit Report

The Corporation will issue a Final Audit Report summarising salient audit findings of both the procedural compliance audit and quality checks to the Lead RSL within 2 months (eight working weeks) of receiving the independent auditor report.

7.4 Audit Requirements – non PPA7.4.1 Compliance audit is the process by which the Corporation will check the quality of schemes developed by the RSL and procedural compliance. The Corporation’s Requirements are set out in this Capital Funding Guide, Scheme Development Standards (SDS) and the Design and Quality Standards. For comments on

compliance audit, click on the asterisk.

7.4.2 If a local authority has concerns about a particular scheme they should contact the local office of the Corporation to request that this be included in the next sample of schemes for audit.

7.4.3 RSLs with a SHG a specialist funded programme, can expect a Compliance Audit visit every two years, or more frequently at the discretion of the Corporation. The visit

22

http://cfg.housingcorp.gov.uk/server/show/ConWebDoc.10783http://cfg.housingcorp.gov.uk/server/show/conWebDoc.2919http://cfg.housingcorp.gov.uk/server/show/conWebDoc.2919http://cfg.housingcorp.gov.uk/gserver.php?show=conWebDoc.10559&outputArea=2

may be combined with a regulatory visit by the Corporation, embracing both investment and regulatory issues relating to SHG funded schemes.

7.5 Audit Document File

7.5.1 The RSLshould maintain a comprehensive scheme file that contains all relevant documents. Phased schemes should be identified separately on documentation. The following list is indicative, but not comprehensive, of the types of documents which will be examined.

7.5.2 PPA and Specialist RSLs scheme files:

valuation report for the site/property acquired. The report should:o take account of all the relevant factors affecting the site/property and its development;o carry the Valuer’s original signature;o clearly identify the site/property which is the subject of the valuation on an accompanying plan endorsed by the valuer;o be valid at the date of exchange of purchase contracts;o for historic acquisitions the original valuation and a valuation of the property at Grant Confirmation;o be unfettered of any s106 requirements. where vendor is a local authority - letter from authority endorsing valuation; confirmation from the RSL’s solicitor of the dates of exchange of purchase contracts and of completion, the purchase price paid and a comprehensive report on title; documentary evidence to indicate that the procurement arrangements used agree with arrangements and procedures approved by the RSL’s Governing Body; where the RSL is receiving any other subsidy the RSL must maintain on file a funding profile showing that SHG is not being received in respect of costs subsidised by any other body; where capital contributions to the scheme from other sources, including other public sources, are involved, confirmation of the amounts on offer and the sources of funding should be retained, including any correspondence with the third party (parties); s106 - full details of off-site works required by vendor or obligations imposed by the local authority; s106 - detailed estimated costs associated with s106 works; surveys, drawings, specifications, specialist and other consultants’ reports; terms of appointment of consultants; evidence of the basis of selection of consultants and building contractor; copies of the building contract document and final account documentation; TSH schemes - copy of lease/licence agreement; TSH schemes where a lease from a local authority was not signed before the start on site - a letter from the local authority confirming their agreement to lease, written confirmation from the RSL’s solicitor that the local authority’s letter is legally binding and copies of the relevant pages of the draft lease; TSH schemes - local authority agreement to rents above prospective rents; planning permissions, building regulations approval and any other statutory consents; details of the insurance of the property during construction and following completion; sale valuations (Sale schemes only); details of prospective rents must be documented on the RSL’s development files; copy of leases (Shared Ownership only); certificate of Practical Completion; copy of the latest certificate relevant to SHG claimed at Final Cost stage;

23

for major site development works and VAT - final certificate/account in respect of the pre works and VAT certificates equating to the actual works costs above; Consultant’s estimate of final works costs and, where appropriate (Design and Build and Package Deals, etc) a separate estimate of the non-works elements, eg on costs; SPPA claimed - copy of any Management Agreement between RSL and agency; detailed description of Major Repairs and Minor Miscellaneous Works including estimated prices and recent maintenance history, where these documents had not been previously submitted to the Corporation; written confirmation from the appropriate Social Services authority, general practitioner or other suitably qualified professional that works are necessary and appropriate to the need of the individual concerned (Aids and Adaptation schemes only); for charitable RSL’s that have claimed SHG to cover VAT - a letter from Customs & Excise or the RSL’s professional adviser confirming that the supply cannot be zero rated; Rural Repurchase - record of surpluses made on staircasing transactions.

7.5.3 Additional documents required for the HomeBuy Programme

The RSL must keep on file all relevant documentation, in particular:

a copy of the tenant’s application form; evidence of the purchase price; evidence that the applicant has been nominated by the local authority (where the applicant was on the waiting list of either the RSL or local authority); evidence of exchange of contracts; a copy of the buyer’s legal representatives undertaking to secure the RSL loan; a copy of the charge certificate as evidence the loan has been secured; evidence that a household in priority housing need has been directly or indirectly housed; where a RSL or local authority property has been vacated and the relet is not to a local authority nominee, written confirmation from the local authority that it could not provide a suitable nomination;

7.5.4 Additional documents required for Key Worker Living Programme Intermediate Rent Schemes

copies of all promotional literature and information booklets; copies of all correspondence with employers and sponsoring local authorities; copies of desk instructions for RSL staff responsible for prioritising applicants;details of applicants who have benefited from the scheme in terms of occupation, household income etc; similar details for rejected applicants; ethnic origin of applicants and those who are successful; the RSL’s assessment of accepted and rejected applications; details of tenants who cease to be entitled and the treatment of this by the RSL.

7.5.5 Other Home Ownership Schemes

copies of all promotional literature and information booklets; copies of all leases, covenant and legal charges; copies of all correspondence with employers and sponsoring local authorities;Solicitor’s correspondence confirming dates of purchase completions and purchase prices;

24

copies of desk instructions for RSL staff responsible for prioritising applicants; details of purchasers who have benefited from the scheme in terms of occupation, household income etc; similar details for rejected applicants; ethnic origin of applicants and purchasers; the RSL’s assessment of accepted and rejected applications; details of grant repaid by purchasers on disposal or other event and the treatment of this by the RSL; details of any surpluses arising from KWHO and the treatment of this by the RSL.

7.5.6 NewBuild HomeBuy

RSLs must retain on file the following for Compliance Audit purposes.

certificate of Practical Completion or equivalent. A certificate of Partial Completion is acceptable provided that all the units have been handed over leaving external works to be completed; solicitors’ letter confirming that the purchase has been completed and setting out the sum paid and date of completion (except works only schemes); latest interim certificate showing actual costs to date; where major site development works and VAT are included in the works cost, the final certificate/account in respect of the pre-works and VAT certificates must be provided. (NB: these figures must together equate to the actual works cost element included in the final costs statement mentioned above); a property schedule showing addresses, floor areas, and valuations for the completed properties, together with actual rents and HB eligible service charges. This is populated by valuation and rents so useful; Consultant’s estimate of final works costs and, where appropriate (Design and Build and Package Deals, etc) a separate estimate of the non-works elements, e.g. on costs.

7..5.7 Self Build Shared Ownership Schemes

The RSL must ensure that the following supporting documents are kept on file for Compliance Audit purposes:

details of the individual mortgages being obtained by the self builders or evidence of mortgageability e.g. an in principle offer from building society/bank; details that the self builders’ incomes are sufficient; (if the self builders do not at the time of the submission have the necessary level of skills to complete the scheme) information on training arranged for the group and details of site supervision; evidence that the majority of the self builders are first-time buyers who are unable to afford to purchase outright a home sufficient for their housing needs; the cost/value relationship for the scheme is less than 80% ; copy of Membership Details Form. See relevant Section of the Self Build Housing Procedure Guide. Self Builders’ Governing Instrument; audited accounts (if any); Self Build Group’s Certification of Registration issued by the Registrar of Friendly Societies; if not available the RSL must certify that the Registrar’s Certificate is expected to be available within the next three months.

25

Procurement and Scheme IssuesContents

Overview

1.1 Purpose1.2 Context

Procurement

2.1 General 2.2 Efficiency2.3 Mortgageability of housing constructed using a non-traditional technique

Scheme Types and Requirements

3.1 General 3.2 New Build Requirements & Scheme Types3.3 Rehabilitation Requirements & Scheme Types3.4 Insurance Requirements3.5 MMC Categories for Schemes

Acquisition

4.1 General4.2 Mortgage Rescue4.3 Public Sector Purchases4.4 Property Title

Transfer between RSLs

5.3 Grant Recovery on Transfer

Planning Permission and Building Regulations

6.1 General6.2 Planning Conditions and Obligations6.3 Planning Subsidy

Signboards

6.1 General6.2 Planning Conditions and Obligations6.3 Planning Subsidy

Reporting and Audit Requirements

8.1 General 8.2 Partner Programme Agreement Route8.3 Non-Programme Partnering Agreement8.4 New Build HomeBuy

26

http://cfg.housingcorp.gov.uk/server/show/ConWebDoc.10425http://cfg.housingcorp.gov.uk/server/show/ConWebDoc.10424http://cfg.housingcorp.gov.uk/server/show/ConWebDoc.10422http://cfg.housingcorp.gov.uk/server/show/ConWebDoc.10421http://cfg.housingcorp.gov.uk/server/show/ConWebDoc.10420http://cfg.housingcorp.gov.uk/server/show/ConWebDoc.10419http://cfg.housingcorp.gov.uk/server/show/ConWebDoc.10418http://cfg.housingcorp.gov.uk/server/show/ConWebDoc.10417

Overview1 Overview

1.1 Purpose

1.1.1 This chapter sets out Requirements on issues of procurement and scheme delivery.

1.2 Context

1.2.1 The Housing Corporation is constantly striving for more efficient and effective ways of procuring social housing. To this end, we have developed, adopted and published a Procurement Strategy and now require RSL's to provide Annual Efficiency Statements.

1.2.2 “Improving efficiency” is another way of saying “getting better value”. This can be achieved in a number of ways (more dwellings of the same quality for the same cost, the same number of dwellings at a higher quality for the same cost, and many other permutations involving numbers, cost, quality and time). In all this, the quality of the dwellings is important, and so the Corporation encourages RSLs to pursue design excellence through the use of influential Design Champions.

1.2.3 One way in which the Corporation can increase its efficiency is if housing providers increase their cost efficiency, and therefore reduce their need for Grant or Other Public Subsidy. The Corporation therefore values cost-efficient providers as well as those who maintain quality.

1.2.4 RSL's are expected to strive constantly to improve their efficiency and effectiveness in delivering affordable housing.

Procurement2 Procurement

2.1 General

2.1.1 Effective procurement and project management is crucial for the delivery of schemes on time, on budget and to of the required quality. The Egan Reports, and subsequent government initiatives such as the Gershon Review, have set the agenda for change in this area and are described in detail below.

2.2 Efficiency 2.2.1 The Construction Task Force chaired by Sir John Egan produced its report Rethinking Construction in 1998, and its follow up report Accelerating Change in 2002. Both reports were aimed at encouraging improvements in the efficiency of the construction industry generally and clients in particular. 2.2.2 It is government policy for all sponsoring departments and associated non-departmental public bodies (NDPBs) including the Housing Corporation, to fully implement the principles set out in these reports. From 2003/04 onwards, the Corporation has only funded Egan compliant bids. For some Guidance on the principles of the Rethinking Construction Task force click on

27

http://cfg.housingcorp.gov.uk/server/show/ConWebDoc.7499http://cfg.housingcorp.gov.uk/server/show/ConWebDoc.7499http://cfg.housingcorp.gov.uk/server/show/conWebDoc.3862

the asterisk.

2.3 Mortgageability of housing constructed using a non-traditional technique

2.3.1 When innovative house building systems are to be used. RSLs must seek suitable reassurances that: -

the system is capable of achieving the necessary statutory approvals, including Building Regulations; the system has been assessed and confirmed as suitable for housing use by an appropriate independent technical approvals authority (the assessment should take account of the suitability of claddings and other elements proposed for use in conjunction with the system); and the system, with reasonable cyclical and planned maintenance provision, has been designed for a life expectancy of at least 60 years.

For comments on the background to this Requirement, click on the asterisk.

For a list of organisations who are able to make these assessments, click on the asterisk.

Scheme types and requirements3 Scheme Types

3.1 General

3.1.1 This section lists the Scheme Types, and their Requirements.

3.1.2 RSLs should note that the Scheme Type classifications used by the Corporation are driven by Corporation funding issues, and are NOT recognised property development or project management terms familiar to architects, surveyors, developers, builders or others. RSLS should therefore avoid using this funding–specific jargon when communicating with others, and use more widely recognised terms, to avoid misunderstandings.

3.2 New Build Requirements & Scheme Types

3.2.1 Longevity Requirement

These properties must have a life expectancy of at least 60 years.

In addition, the construction system used must:

be capable of achieving necessary Building Regulations and other statutory approvals;

28

http://cfg.housingcorp.gov.uk/gserver.php?show=conWebDoc.10582&outputArea=2http://cfg.housingcorp.gov.uk/gserver.php?show=conWebDoc.10582&outputArea=2http://cfg.housingcorp.gov.uk/gserver.php?show=conWebDoc.10582&outputArea=2

have been assessed and confirmed as suitable for housing by an independent approvals authority such as NHBC, Zurch, Building Life Plans of a body of equivalent standing.

3.2.2 Scheme Types

Acquisition and Works Off The Shelf Works Only Land Inclusive Package (aka Package Deal)

Click on asterisk for further details.

3.3 Rehabilitation Requirements & Scheme Types

3.3.1 Longevity Requirement

These properties must have a life expectancy of at least 30 years after the RSL has completed the works or repair, & improvement .

The RSL must ensure that an inspection of all properties requiring works is carried out by relevantly qualified, experienced and professionally indemnified technical consultants or relevantly qualified and experienced members of staff.

3.3.2 Scheme Types

Acquisition and Works Existing Satisfactory Purchase and Repair Works Only Re-improvements

Click on asterisk for further details.

3.4 Insurance Requirements

3.4.1 It is a condition of SHG payment Rent and Sale schemes that the RSL, both during development and thereafter, insures the accommodation provided with Reputable Insurers and keeps insured for its Full Replacement Value.

For some Guidance click on the asterisk.

3.4.2 The RSL is responsible for all costs of insurance, including premiums, excess or other costs.

3.4.3 Other risks

29

http://cfg.housingcorp.gov.uk/gserver.php?show=conWebDoc.10583&outputArea=2http://cfg.housingcorp.gov.uk/gserver.php?show=conWebDoc.10583&outputArea=2http://cfg.housingcorp.gov.uk/gserver.php?show=conWebDoc.10583&outputArea=2

In addition to the specified risks of loss or damage to the building caused by fire or aircraft, the Corporation requires ‘other risks’ to be covered as follows:

For Rehabilitation property - from the exchange of contracts to purchase until practical completion of the whole or relevant part of the works:

explosion, lightening, earthquake; storm, tempest, flood (not frost); bursting, leaking or overflowing of water tanks, water apparatus, water pipes, or sewage pipes.

For Rehabilitation and Newbuild property - from practical completion of the whole or relevant part of the works:

as for rehabilitation property above; plus subsidence, ground heave, or landslip of the site on which the building stands.

3.4.4 Exclusions

The cover outlined under ‘other risks’ above may be subject to the normal insuring exclusions i.e. war, invasion, act of foreign enemy, hostilities, civil war, rebellion, revolution, insurrection, usurped power, loss or damage caused by ionising radiations or contamination by radioactivity from any nuclear fuel, radioactive toxic, explosive nuclear assembly or nuclear components thereof, or pressure waves caused by aircraft or other aerial devices travelling at sonic or supersonic speeds.

3.4.5 The Corporation requires prior notification of any other exclusions.

3.4.6 Terrorism is a normal insuring exclusion and falls outside the Corporation’s insurance requirements. Whether or not to insure for this risk is a matter for individual RSLs to decide according to the perceived risk.

3.5 MMC Categories for Schemes

3.5.1 In order to record the homes that are produced using Modern Methods of Construction , associations will be required to assign a “build category” to schemes at key stages in the processing route. The following Categories are available.

3.5.2 Categories:

OSM – Volumetric OSM – Panellised OSM - Hybrid OSM - Sub-Assemblies and Components Non-OSM Modern Methods of Construction Not Applicable

Click on asterisk for further details.

Acquisition4 Acquisition

30

http://cfg.housingcorp.gov.uk/gserver.php?show=conWebDoc.10583&outputArea=2

4.1 General

4.1.1 This section sets out the Corporation’s Requirements in respect of RSLs purchasing property

4.1.2 Where the RSL makes a speculative purchase it does so at risk and cannot pre-empt the Corporation’s investment decisions. The Corporation cannot guarantee future funding and the RSL must accept the risks involved in making such purchases

4.2 Mortgage Rescue

4.2.1 Mortgage Rescue cannot be funded by SHG whether paid through the Corporation’s National Affordable Housing Programme (NAHP), the RCGF, or the Disposal Proceeds Fund. NB – Mortgage Rescue is not the same as Flexible Tenure. For details of Flexible Tenure see Recovery sub section 6.6

4.3 Public Sector Purchases

4.3.1 Purchases of land from local authorities and other public sector bodies must be considered carefully in order to avoid the RSL having to provide, non-monetary consideration but without an appropriate reduction in the monetary consideration (the

price) paid by the RSL. For Guidance click on the asterisk.

4.4 Property Title4.4.1 The Corporation requires that when RSLs acquire an interest in a property or where works are to be done, the property must offer “good title”. For guidance on what “good

title” means, click on the asterisk.

Property title5 Transfers Between RSLs

5.1 General

5.1.1 Where an RSL wishes to transfer property or land to another RSL, the Corporation’s prior consent to the disposal is required under Section 9 of the Housing Act 1996.

5.1.2 RSLs must notify any local authority that has an interest in the property.

5.1.3 The transfer of properties procedure does not apply when RSLs enter into management agreements without a change of property ownership {link to Management Arrangement chapter}

5.1.4 The transfer of properties procedure does not apply when RSLs dispose of their entire stock to another RSL, known as Transfer Of Engagement. On these occasions RSLs should seek further advise from the Corporation’s Registry section.

5.1.5 The disposing RSL must comply with the terms of any loan secured on the property.

31

http://cfg.housingcorp.gov.uk/server/show/ConWebDoc.10598http://cfg.housingcorp.gov.uk/gserver.php?show=conWebDoc.10584&outputArea=2http://cfg.housingcorp.gov.uk/gserver.php?show=conWebDoc.10584&outputArea=2

5.2 Section 9 Consent

5.2.1 Information on disposals and consents is contained in the Corporations’ circulars 03/03 (and its associated booklet Disposing of Land) and 08/03.

5.3 Grant Recovery on Transfer

5.3.1 Following section 9 consent and where property has received Housing Association Grant (HAG), or Social Housing Grant (SHG), (including Recycled Capital Grant Fund, Disposal Proceeds Fund or Rent Surplus Fund) RSLs must advise the Corporation immediately the ownership of that property, or properties, has changed and no more than 30 days after the date of completion.

5.3.2 Where no HAG/SHG is involved and section 9 consent has been granted there is no need to notify the Corporation when the legal ownership has changed.

5.4 Procedural Requirements

5.4.1 Immediately following the transfer or disposal of a property the donor RSL must inform the Corporation’s Regional Office Investment Team (where the property is located) in writing titled “Request to Process and Notify a Transfer of Property” and ask to be sent form TOP 1 (R)

5.4.2 On receipt of a request as above Regional Office investment staff will, within 10 working days, acknowledge receipt of the request and send the donor RSL a copy of the procedures and guidance for completion of TOP 1 (R) together with a copy of the form.

5.4.3 Completion and approval of form TOP 1 (R)

Prior to completion of the form RSLs must ensure they meet the following conditions:

The donor RSL must confirm that all relevant legal processes to transfer the property to the recipient RSL have been completed; Both donor and recipient RSLs must confirm that the TOP 1 (R) will be completed by an authorised signatory; Both donor and recipient RSLs must agree to accept that the Corporation must protect public funds; Both donor and recipient RSLs must agree to accept that the Corporation may use the information provided in this form to prevent and detect fraud; Both donor and recipient RSLs must agree to accept that the Corporation may share the information with other organisations that handle public funds; Both donor and recipient RSLs must agree to accept that the Corporation may use the information provided for statistical surveys and related purposes; Both donor and recipient RSLs must agree to accept that the Corporation may pass this information in confidence to the Office of the Deputy Prime Minister and agencies working on its and the Corporation’s behalf; Recipient RSLs must confirm that they are to be held accountable for the Corporation’s investment in property/properties received from the donor RSL as stated on TOP 1 (R ); Recipient RSLs must confirm that they will adhere to the Corporation’s conditions regarding recovery of Capital Grants as detailed in the Corporation’s Capital Funding Guide for property/properties received from the donor RSL.

5.4.4 Following completion by an authorised signatory RSLs must return the completed TOP 1 (R) to the regional office.

32

http://cfg.housingcorp.gov.uk/server/show/nav.539http://cfg.housingcorp.gov.uk/server/show/nav.539

5.4.5 Regional investment staff will examine the form, in line with internal procedures, to ensure it has been fully and correctly completed before approving it and forwarding it to the Investment Performance Team at Maple House.

5.4.6 Within 20 days of receipt of a regional office approval Maple House will notify the regional office, the donor and the recipient RSLs of the effective change together with an IMS TOP reference number in writing titled “IMS TOP Request Approval and Notification”.

5.4.7 For all regional enquiries relating to a Transfer of Property, the regional reference number must be quoted and the IMS TOP reference number must be quoted.

Planning permission and building regulations6 Planning Permission and Building Regulation

6.1 General

6.1.1 RSLs must:1. have a valid planning permission before starting building works (one with conditions and reserved matters is acceptable so long as the conditions / reserved matters are capable of resolution during the course of construction)2. have obtained building regulation approval prior to the completion of the development3. have had any planning conditions and / or reserved matters signed off by the planners prior to the completion of the development.

6.1.2 This section provides guidance on:

the Corporation’s Requirements for SHG funding; the treatment of developer contributions towards the costs of SHG funded housing.

6.1.3 RSLs should ensure that they are aware of the current guidance on planning produced by Communities and Local Government, Planning Policy Statement 3 (Housing).

6.2 Planning Conditions and Obligations

6.2.1 In circumstances where the planning authority grants planning permission subject to conditions or makes the development subject to Planning Obligations (set out in a section 106 Agreement or Unilateral Undertaking) the RSL must ensure that any such Obligations do not make the development ineligible for SHG funding including (but not limited to):

1. The quality of the housing provided 2. Suitable nomination rights to local authorities are preserved 3. Nominees (whether for housing for rent or Low Cost Home Ownership) are

consistent with national policy . 4. Consents that are made personal to the applicant RSL and/or voluntary agency

managing the scheme to the exclusion of other RSLs; 5. Consents that restrict the letting/sale of property in contradiction of any national

policy of Government or the Housing Corporation. For an example {click here} 6. Restrictions on use or sale of the property which make them unmortgageable 7. Restrictions on Grant Recovery that contradict HC policy, e.g. by restricting the

location of spend of recycled receipts, or of requiring recycling to the LA in a way

33

http://www.communities.gov.uk/index.asp?id=1504592http://www.communities.gov.uk/index.asp?id=1504592

which jeopardises the Corporation’s interest. For an example click on the

asterisk.

6.2.2 If the RSL is uncertain as to whether a particular planning condition or obligation will make the development ineligible, it should contact the Corporation’s local Investment Officer for guidance. 6.2.3 Local planning authorities may attach s106 Obligations for off site works and financial contributions to planning permissions obtained by the RSL. This may include, for example, the provision of community centres not primarily for the RSL’s tenants, or financial contributions for non-housing purposes. 6.2.4 RSLs must ensure that they are acting within their own rules in complying with such Obligations. by obtaining legal advice as to whether the proposed activity is within their rules. The Corporation will not dispute that advice unless there are strong grounds for doing so. RSLs will also need to seek legal advice about the extent of their potential future legal liabilities to the local authority or other third parties relating to off-site works and also about any limitation measures that it might be prudent for RSLs to undertake.

6.3 Planning Subsidy

6.3.1 Planners will often require the developer/landowner to provide affordable housing as a Planning Obligation. The purpose is to provide additional affordable housing, either directly or by reducing the SHG requirement for those dwellings so the Grant thereby saved can be used elsewhere for more affordable housing.

6.3.2 RSLs must ensure that the Planning Subsidy that they receive through such Planning Obligations is clearly quantified (in agreement with the local planners), and apportioned to the properties in a manner that is consistent with the Requirements for apportionment of Grant.

Signboards7 Signboards

7.1 General

7.1.1 RSLs must comply with the Corporation’s signboard requirements for all SHG, RCGF & DPF funded schemes unless the Corporation has given a specific exemption, see para 7.3.2 below.

7.1.2 In addition, it has been agreed with Communities and Local Government that major capital projects receiving significant Government funding must display signage acknowledging that contribution by displaying the wording: ‘HM Government: Building for the Future’.

7.1.3 For this purpose, a major capital project is a grant aided development, or phase of a development, of 30 dwellings or more. This includes New Build, Rehabilitation and Re-improvement schemes, and excludes Miscellaneous Works schemes. It applies to any new development funded by SHG through the Corporation or funded with money from the RSL’s Recycled Capital Grant Fund or Disposal Proceeds Fund, or any combination of these. For details see para 7.2.5 below.

34

http://cfg.housingcorp.gov.uk/gserver.php?show=conWebDoc.10585&outputArea=2

7.2 Design7.2.1 The design of the Corporation’s site signboard must be followed using official

artwork. For contact details click on the asterisk.

7.2.2 There are two sizes: the 2.438m by 1.219m (8 ft x 4 ft) is the preferred design; the smaller the 2.438m by 0.610m (8 ft x 2 ft) version may be used where space is limited. Deviation from these sizes must have prior written permission from the relevant field office of the Corporation. In the first instance RSLs should contact their Investment Officer.

7.2.3 The Corporation’s corporate signature needs to be reproduced carefully. The wording on the signboard must read ‘with funding from Communities and Local Government’. 7.2.4 RSLs producing signboards by signwriting techniques must ensure that the design grids are accurately followed. There must be no artistic licence. Copies of the grids are available from the Corporation’s website. 7.2.5 The CLG branding signage is required for Major Projects. For contact details click

on the asterisk.

7.2.6 Where the RSL considers that the provision of the additional branding signboard is inappropriate (for example, where SHG input is less than £1 million or where consents are refused) exemption should be sought in writing from the appropriate field office of the Corporation, which will not withhold consent unreasonably. 7.2.7 RSLs producing these signboards by signwriting or other recognised copying techniques must ensure that the design is accurately followed. No artistic licence is permitted.

7.3 Display

7.3.1 A signboard must be displayed in a prominent position on each new build development and/or rehabilitation development comprising of four or more properties using Corporation funding. The display may also include a brief description of the scheme, for example ‘30 sheltered flats for older persons’. 7.3.2 Where the RSL considers that the provision of a site signboard is inappropriate (e.g. where it would be inappropriate to publicise the client group) or where a different sized board is required, exemption or waiver should be sought in writing from the appropriate field office of the Corporation, see 6.3 above.

7.4 Advertising Regulations and Consents

7.4.1 RSLs are responsible for obtaining any necessary statutory approvals or consents i.e. Town and Country Planning (Control of Advertisement) Regulations, 1992. 7.4.2 Compliance with the Corporation’s signboard requirements will be checked as part of the Corporation’s compliance audit.

35

http://cfg.housingcorp.gov.uk/gserver.php?show=conWebDoc.10586&outputArea=2http://cfg.housingcorp.gov.uk/gserver.php?show=conWebDoc.10586&outputArea=2

Reporting and auditing requirements8 Reporting and Audit Requirements

8.1 General

8.1.1 Schemes funded via the Partner Programme Approach (PPA) route are subject to Corporation scrutiny in regards to their Quality compliance only. These schemes must still comply with Corporation’s Procedural requirements but RSLs will self-regulate. A certification is required to be completed by an independent suitably qualified, experienced and professionally indemnified consultant or auditor on PPA schemes.

8.2 Partner Programme Agreement Route

8.2.1 RSLs developing schemes under the PPA arrangements are required to carry out self-assessment procedural compliance tests. For details of the Requirements, see Programme Management Section 7

8.3 Non-Programme Partnering Agreement

8.3.1 Compliance audit is the process by which the Corporation will check the quality of schemes developed by the RSL and procedural compliance. The Corporation’s requirements are set out in this Capital Funding Guide and Design & Quality Standards (DQS). For details of the Requirements, see Programme Management Section 7

36

http://cfg.housingcorp.gov.uk/server/show/ConWebDoc.10415http://cfg.housingcorp.gov.uk/server/show/ConWebDoc.10415

Management arrangementsContents

Overview

1.1 Purpose1.2 Context

Requirements

2.1 General2.2 Supported Housing Issues

Overview1 Overview

1.1 Purpose

1.1.1 The Corporation wishes to ensure that properties that are developed with the benefit of Grant are managed and maintained in accordance with the Corporation's Regulatory Requirements and good practice.

1.1.2 This applies whether the properties are directly managed by the RSL who developed them with Grant, or by other organisations with whom the RSL has contracted for management services.

1.2 Context

1.2.1 RSLs are responsible for providing efficient and cost effective management in the best interests of tenants, and are accountable for the public funds invested in the scheme.

1.2.2 RSLs can adopt a variety of management arrangements, including outsourcing the work (commissioning another organisation to provide services on the RSL's behalf, often referred to as "management agency").

1.2.3 Regardless of whether or not the