Transcript Slide 1

Affordable Homes Programme 2011-2015
Framework for Package Proposals
Contents
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Outline of model and drivers
Products deliverable under the programme
Working in a local context
Conversion of existing properties
Package offers
Assessment and negotiations
Contracts and review
Next steps
Affordable homes – Spending
Review outcome
 Government investing over £6.5bn in housing over the next 4 years,
including over £2bn to make existing social homes decent and
£4.5bn to fund new affordable homes. Target to deliver up to
150,000 homes over 4 year period (incl est. 60,000 from
commitments). Forecast of £2.3b related to existing commitments
 £4.5bn includes provision for:
- Affordable Rent
- Bringing empty homes back into use
- Mortgage Rescue
- Places of Change
- Gypsy and Traveller sites
 Majority (c.£2b) directed to the delivery of homes for Affordable Rent
(including empty homes) option of Low Cost Home Ownership
allowed for.
The Delivery Model for new supply of
affordable housing
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‘Something for something’ deal with providers
Provider package proposals will cover both delivery of new homes, and
conversion of existing homes:
- Proposals for conversions of existing stock to affordable rent (plus
shared ownership or market sale)
- Information on capacity generated through conversions, contributions
from own resources and other sources (e.g. RCGF) being applied to
deliver new homes
- Proposals for a 4 year programme of new homes and HCA investment
being sought. Covering identified schemes (initial years) and indicative
numbers for the future years.
Following assessment and negotiation of offers, delivery of agreed
packages will operated on a framework basis. Flexibilities will be built into
the frameworks. HCA acting as co-investor, alongside delivery partners.
An ‘across programme’ approach, moving away from scheme by scheme.
Close collaborative working with local authorities, for both the HCA and
providers will be critical.
Products deliverable under the
programme
 Affordable Rent will be the principle element
 But will also include:
Affordable Home Ownership
Mortgage Rescue
Hostel provision through the Places of Change scheme
Gypsy and Traveller sites, and
Empty Homes packages
(using product options offered for temporary and permanent
solutions)
 Social Rent in exceptional circumstance – e.g. supported housing,
family homes (where issues of benefit caps) or regeneration
schemes involving relocation of existing social tenants. A strong
case needed.
Affordable Rent
 A form of social housing
 Let at up to 80% of market rent (inclusive of service charges)
 Must be provided by Registered Provider, subject to TSA
regulations. Revised tenancy standard being developed.
 Not subject to the rent restructuring policy for social rented housing
 Fixed term or Assured tenancies, according to needs. A minimum of
2 years tenancy, up to lifetime (older people, vulnerable leaseholds
and families)
 Maximum rent level assessed to reflect individual property
characteristics, using RICS valuation method.
 Annual increases of up to RPI + 0.5%, with rebasing of the rent on
each new tenancy
Affordable Rent continued
 80% of market rent a maximum, not a fixed requirement. But
providers expected to maximise financial capacity by working to
80%
 HCA would need to understand how any proposal to charge lower
rents would help to meet particular needs.
 May be circumstances where this is appropriate e.g. to keep rents
within the Local Housing Allowance or fragile local rented market.
 At end of tenancy, if provider does not issue a further tenancy, it will
be required to offer reasonable advice and assistance to the tenant
to find alternative accommodation
 Option of selling the property to tenant on shared ownership terms
 About flexibility
Affordable Rent continued
 Affordable rent is intended to allow greater flexibility, focus state
support on those in greatest need for as long as they need it and
secure greater value for money for available investment.
Other Products
 Affordable Home Ownership:
- will consider proposals including affordable home
ownership as part of overall mix for schemes –
supported by Local Authority and fitting local housing
market
- value for money important
- proposals that only include affordable home ownership
will not be considered
- strong presumption against subsidising on S106 sites
- two options of shared ownership or equity loans
(branded as Home Buy)
- no Rent to Home Buy or Intermediate Market Rent
Other Products continued
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Affordable Home Ownership:
- No change to eligibility requirement (up to £60k household income)
clear priority for assisting existing social tenants
- targeting and marketing plans
- Shared Ownership including HOLD and Older Persons
Shared Ownership. Same terms of 25% to 75% equity
purchase, and rent of 2.75% on unsold equity (cap of 3%)
- Equity Loans – 85% of purchase price
Other Products continued
 Supported Housing:
where case proven may be at social rent
HCA funding only for provision or improvement of
accommodation, cannot fund other services
providers to gather information at appropriate stage re:
local strategic prioritisation;
details of service(s);
intended outcomes;
identified revenue funding source; and
exit plans or alternative uses
HCA may request information to support firm proposals. Covered in
Quarterly Reviews as proposals are firmed up.
Other Products continued
 Mortgage Rescue:
- Funding available 2011/12 and 2012/13, small amount in 2013/14
for applications in the pipeline (no new applications in Spring 2013.
- Will discuss with RPs whether part of syndicate to support
mortgage rescue. Expecting existing lead providers to continue
their role.
- Seeking greater value for money
- Lead providers to work with local authorities to determine likely
levels of Mortgage Rescue cases over the period.
- A finite programme requiring careful management, and
prioritisation
Other Products continued.
 Empty Homes
- £100m indicative budget
- LAs lead in determining local empty property strategies
- Providers expected to respond as part of package proposals
- Options for short term affordable rent or permanent affordable rent
or home ownership solutions
- Value for money a key consideration
- LAs encouraged to use HCA resources alongside own resources
as part of Empty Homes Strategy
- Potential use of income from New Homes Bonus
Other Products continued
 Places of Change programme:
- Proposals invited from providers to develop new hostels or
improve existing, inadequate hostel provision for homeless people
- Accommodation will be the priority for funding but expect to see
proposals for joined up provision of services and accommodation.
- Not just about accommodation
- But large-scale non-accommodation proposals will not be
considered
Other Products continued
 Gypsies and Travellers sites:
Value for money a key consideration
Funding for new sites and additional pitches one existing sites
will be given priority over refurbishment proposals
Permanent (up to at least ten years), temporary or transit sites
considered
Interested in new solutions – including RPs buying land for
local community groups to build and manage sites or shared
ownership proposals
High level ‘indicative’ expressions of interest in participating in
Places of Change and/or Gypsies and Travellers programmes, as
part of package, where specific proposals not yet worked up.
Other Products continued
 Works to Existing Stock
- Will also consider proposals for re-improvements or major repairs
to existing stock;
e.g. remodelling supported or older persons stock
extensions or loft conversions to provide additional
accommodation
- Funding of repairs exceptional
 Home Ownership for social tenants
- we will continue to fund Right to Acquire and Social Home Buy on
an as needs basis.
Working in a local context
 Providers must work closely with local authorities in putting forward
packages and developing proposals, to ensure fit with priorities
 HCA will seek information on discussions with LA(s) (pre and post
submission of proposals)
 HCA will work closely with LAs in investing in new supply –
express LA support will be sought (as proposals firm up).
 HCA will work with LAs on on-going basis (building on existing
work and relationships) in delivering the packages
– to accommodate LIP priorities,
– to act as enabler between LAs and providers receiving investment to
allow LA priorities to be delivered
– Where requested, supporting LAs through our wider enabling role to
bring forward new supply
– Incorporating LA land and resources to meet needs through the 4 year
programme using commissioning opportunities as appropriate.
Conversion of Existing Properties:
 Critical element in generating additional financial capacity.
 Agreement to convert only given where RPs commit to use extra
capacity for new supply
 Will consider package offers which include a range of conversion
and/or disposal options, including conversion to shared ownership,
market rents or outright sale.
 Expect proposals for conversion/disposal to reflect a strategic
approach to local asset management consistent with local housing
needs, providers to have consulted LA partners on their approach.
 Scope to generate development capacity through conversions will
not be uniformally distributed between areas, and may not match
areas with opportunities for new supply
 We recognise that ring fencing capacity for re-investment in new
supply in a narrow area is unlikely to enable the new model to
work in practice
Conversion of Existing Properties:
continued
 But we will encourage providers to aim to reinvest in new supply
within the same broad LIP areas.
 Investment Partners are invited to consider whether they wish to
offer conversions of existing 2008/11 AHP commitments for Social
Rent to Affordable Rent
 Providers should also actively consider converting Intermediate
Market Rent/Rent to Buy properties at relet, to affordable home
ownership
 Unlikely that 100% conversion of relets in a location will be
acceptable.
Package Offers
 No groups of providers prevented from submitting proposals – but
will need existing stock to convert or access to other resources to
minimise HCA investment
 Want providers with capacity to participate and for existing
partnerships to continue in developing consortia bids, and provide a
route for smaller rural and community based providers to access
resources
 Overall offer
– Indicative quantum of new supply
– How capacity generated
 Level of detail sufficient to establish:
– that offers are credible
– that proposals meet identified needs and address priorities
– broad impact and geographical spread of the proposals
– comparisons between providers, particularly of value for money
Package Offers continued
 Recognise that it will not be possible to be precise about all details
of the 4 year programme. On-going engagement will be needed
 Understand need for flexibility (eg volume and location of re-lets in
any area)
 Contract captures at high level proposals and delivery intention
 Review (all aspects) on open book basis
 Adjust parameters, across the range of variables, based on progress
Package offers – information
requirements
New Supply:
 Quantum of new homes to be delivered
 Indicative location – by LIP area and LA (if known)
 Anticipated mix of homes, covering for example:
larger homes
number of homes in rural areas
anticipated delivery of supported housing and homes for the elderly
 Anticipated tenure of homes
 Timing of delivery (anticipated outputs by year)
 Estimated average and aggregate scheme costs (for each HCA
administrative area)
 New HCA investment requested (for each HCA administrative area)
 Anticipated income from net rental stream of new homes proposed
 Affordable home ownership – estimated aggregate and average
sales values, and anticipated average contribution from purchaser
Provider offers – information
requirements continued
New Supply:
 Estimated provider contribution from existing capacity
 Anticipated quantum of homes delivered at nil grant through S106
agreements.
 Outline of draw down requirements for new investment by year and HCA
administrative area (payment at completion)
 Outline of firm schemes and indicative proposals
 Outline of design and quality standards
Conversion of existing stock:
 Estimate of indicative number of re-lets to be converted to Affordable Rent,
and proportion of total relets this is anticipated to represent
 Estimated number of re-lets to be converted to other tenures
 Indicative location of anticipated conversions by LIP area (and LA if known)
 Anticipated annual rate of conversions
 Estimated average rent levels (and service charge)
 Estimate of additional borrowing capacity generated from re-let conversion.
Package Offers (general aspects)
 Achieving procurement efficiencies – procurement statement
required
 No need for providers to maximise delivery pipelines in a way which
drives up costs
 Expect providers to maximise S106 agreements which can be
delivered at nil grant. Reserve the right to test economics of
individual schemes through delivery appraisal model. Will make the
model available to local authorities to use in negotiations on S106
sites
 Supplementary information required for affordable home ownership
proposals outlining individual targeting and marketing plans to
maximise purchase of properties by existing social tenants.
 Skills and employment statement
Assessment/negotiation
 Single set of negotiations per provider or consortia led by an Agency
‘lead investor’ team
 How do offers meet identified needs?
 How do offers deliver local priorities identified in LIPs? Will verify fit
with LAs
 Is provider maximising capacity within proposals
– Volume, proportion and income from conversions
– Rationale for charging less than 80% of market rents (if
applicable)
– Assessment of broad balance across proposed areas between
capacity generated by conversion and new supply, and the
efficient use of that capacity
 Test realism of proposals
Assessment/negotiation continued
 Value for money (comparative)
– Costs and investment – aggregate value for money – across
high and low cost areas
– Number of conversions required to support new supply
– Payment profiling requirements
– Nil grant/s106 delivery
– Use of RCGF and DPF
– Driving costs down/not competing for early delivery
 Assessment of capacity/impact on viability (regulator)
Assessment/negotiation continued
 National aggregation and moderation to assure the consistency of
assessment and overall extent that need is matched to supply. Will
consider:
- Degree to which need is met and areas of potential under and
over supply
- Aggregate value for money
- Payment terms
- Comparison ratio of voids conversion to new supply
- Comparison of rent levels across areas between providers
- Proposals for use of RCGF
Key objective of considering aggregate impact of proposals against
need to ensure it does not lead to over supply, or conversely areas
of need not being addressed.
May require reviews to proposals before a package is agreed.
Contracts and review
 Standard Form framework contract covering delivery of new homes
and conversion of existing to new tenures
 Covering defined schemes (for early delivery) and indicative
proposals for latter stages of programme
 Recording aggregate costs, levels of investment, outline delivery
forecasts and parameters and range of flexibilities which will be
considered within frameworks, an open review process
 Will require local authority active support prior to our investment in
new schemes
Contracts and review continued
 Annexes covering:
New Homes
amount of investment to deliver specified number of homes
broad locations of new homes
broad mix
average anticipated costs
indicative number to be delivered through S106 at nil grant
amounts of RCGF to be applied
outline of payment terms for new supply
Existing Homes
proportions of voids to be converted to affordable rent or other
tenure, and anticipated total number
anticipated timescales for conversions
outline locations at sub-regional (LIP) level
investment capacity generated
Contracts and review continued
 Quarterly and open book, comparing assumptions with actual
delivery
 Look back at actuals and look forward to forecast delivery, for
conversions and new supply
 Agree flexibilities and variations to contract as required
 Variation could require increased levels of conversions, reduced
HCA investment or increased affordable housing supply
 Will consider:
Pace and volume of conversions and comparison to starts against
milestones
Income generated from conversions, impact on ability to deliver
Delivery of outputs – starts and completions
Costs of delivery
Evidence of need and LA support as schemes are firmed up
Affordable rent – next steps
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Developing programme framework
Stakeholder and provider engagement
Framework and information requirements – January/February
Partner offers and negotiations – February to April/May?
First contracts – May/June?