(AGENPARL) - Roma, 30 Giugno 2022(AGENPARL) – LONDON gio 30 giugno 2022
3.1 General
3.1.1 This section contains the scheme types for which funding is available, and their requirements.
3.1.2 Providers should note that the scheme type classifications used by Homes England are driven by our funding issues, and are NOT recognised property development or project management terms familiar to architects, surveyors, developers, builders or others. Providers 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 and scheme types
3.2.1 Longevity requirement
These properties must have a life expectancy of at least 60 years. Please refer to the guidance below for further information.
Property longevity is not the same thing as grant liability – therefore the fact that the property is expected to last a specific number of years (e.g. 60 year for New Build and 30 for Rehabilitation) does not mean that the grant liability only lasts for that many years. Please see the Grant Recovery chapter for more details.
In addition, the construction system used must:
- Be capable of achieving necessary building regulations and other statutory approvals and
- Have been assessed and confirmed as suitable for housing by an independent approvals authority such as NHBC, Zurich, Building Life Plans or a body of equivalent standing
3.2.2 Scheme types
- Acquisition and Work
- New Build Works Only
- Off the Shelf (and Existing Satisfactory)
- Package Deal (Including Land)
Please refer to the guidance for further information.
Acquisition and Works
The construction of new dwellings on land purchased by the provider without the benefit of any public subsidy. In certain circumstances the provider may enter in to a building licence agreement.
Off the Shelf
A brand-new completed dwelling or dwellings, suitable for affordable housing letting, purchased from a contractor/developer or their agents, following an inspection by a suitably experienced or qualified person. Known in the industry as a Turnkey project, as it is ready for immediate use.
Works Only
The construction of new dwellings on land already owned by the provider, and for which the provider has received public subsidy in the past to help acquire it. This excludes land in the ownership of the provider which it purchased without the benefit of any public subsidy (Acquisition & Works).
Land Inclusive Package (aka Package Deal)
A Package Deal / Land Inclusive Package is a variation of Acquisition & Works. The land / property is acquired from the developer or building contractor who will also construct the dwellings on the land. Normally there will be separate contracts for the purchase of the land / property and for the development works. Usually these contracts are signed simultaneously with the building contract dependent upon the completion of the land acquisition contract. Exceptionally, a land inclusive package may include the acquisition of some partially or wholly completed dwellings. Land Inclusive Packages, which consist solely of completed dwellings, must be classified as Off the Shelf / Turnkey.
3.3 Rehabilitation requirements and scheme types
3.3.1 Longevity requirement
These properties must have a life expectancy of at least 30 years after the provider has completed the works, repair, or improvement. For further comment please see paragraph 3.2.1 above.
The provider 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. Please also refer to the Shared Ownership chapter of this guide (paragraphs 5.3.1-4) regarding lease requirements in respect of Shared Ownership provided under the rehabilitation route.
3.3.2 Scheme types
3.3.2.1 Rehabilitation schemes involving purchase:
- Acquisition and Works
- Existing Satisfactory
- Purchase and Repair
- Package Deal (including land)
3.3.2.2 Rehabilitation schemes not involving purchase
- Works Only
- Re-improvements
- Conversions
Whilst re-improvements and conversions are no longer bespoke scheme types, they are still allowable scheme types for providers to take. Please refer to the guidance for further information.
Acquisition and Works
The provider acquires a property, or properties, on the open market for refurbishment or conversion. The cost of the grant eligible repair and improvement work per dwelling must exceed £10,000 exclusive of VAT. A building contract will normally be entered in to, but sometimes work can be carried out under a building licence agreement. If the works cost less than £10,000 per dwelling, the property is classified as an Existing Satisfactory or Purchase and Repair scheme.
Existing Satisfactory
The provider acquires a second-hand existing dwelling, or dwellings, on the open market, which are already of a standard and condition suitable for affordable housing letting, after an inspection by a suitably experienced or qualified person. Works necessary for the scheme to be made fit for purposes must not exceed £1,500. Grant is paid in a single tranche at Practical Completion.
Purchase and Repair
The provider acquires a second hand dwelling on the open market, which requires some repair to bring it to a standard and a condition suitable for affordable housing letting. The estimated cost of the grant-eligible works should be between £1,500 and £10,000 per dwelling, exclusive of VAT.
Works Only
The property must already be owned by the provider, who purchased it with help from public subsidy, BUT no public funds have been paid for any previous refurbishment or conversion works. The property is in need of rehabilitation, improvement or conversion.
Re-improvements
The property must already be owned by the provider who purchased it with help from public subsidy and some form of grant or subsidy, such as Housing Association Grant, Social Housing Grant or Social Housing Assistance, has already been paid for construction, improvement or conversion at some time in the past. Unlike Major Repairs, Re-improvements can result in an increase in rent. The work may be improvement or conversion, but not just repairs. Re-improvement schemes will not normally be considered less than:
- 15 years after Practical Completion of the original rehabilitation scheme (or stock transfer in the case of Stock Transfer providers (e.g. Large Scale Voluntary Transfers)) or
- 30 years after Practical Completion of the original new build scheme
However, re-improvement schemes may be considered sooner where the property is difficult to let because it is no longer appropriate for the intended use, or there is a serious health risk to tenants. The improvement or conversion works carried out in a re-improvement scheme must bring those parts or elements of the property which have been subject to re-improvement up to current building regulations.
Conversions
Conversions in this context refers to property conversions (for example, the conversion of a large family home into smaller flats) and not the conversion of void Social Rent homes into Affordable Rent. Property must already be owned by the provider and priority should be given for the provision of smaller homes. Where properties are currently tenanted providers should make adequate provision for the existing tenants, which may possibly include a temporary move whilst work is undertaken, in which case the provider should ensure that conversion work is undertaken without undue delay. Conversions undertaken must bring those parts or elements of the property which have been subject to conversion up to any statutory planning and regulatory requirements.
3.4 Insurance requirements
3.4.1 It is a condition of grant for all schemes that both during development and thereafter, providers insure the accommodation with reputable insurers for its full replacement value. An exception to this is the ability for local authorities to adopt a self-insurance approach to their schemes (see paragraphs 3.4.6 to 3.4.10).
Please see guidance below for further information.
Providers may also wish to safeguard their insurance position by commissioning an independent professional opinion on reinstatement values every five years or more frequently as appropriate
3.4.2 In addition to the specified risks of loss or damage to the building caused by fire or aircraft, we require ‘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 (but not frost)
- Bursting, leaking or overflowing of water tanks, water apparatus, water pipes, or sewage pipes
For Rehabilitation and New Build 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
3.4.3 The cover outlined under ‘other risks’ above may be subject to the normal insuring exclusions e.g. 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.
3.4.4 Homes England requires prior notification of any other exclusions.
3.4.5 Terrorism is a normal insuring exclusion and falls outside our insurance requirements. Whether or not to insure for this risk is a matter for individual providers to decide according to the perceived risk.
3.4.6 Self-insurance by local authorities
3.4.7 Homes England has previously permitted local authorities to adopt self-insurance during and after development of their affordable housing schemes, rather than seeking insurance from an external organisation (with prior agency agreement).
3.4.8 In the AHP 2021 to 2026, where local authorities adopt a self-insurance approach on a programme or scheme basis, prior Homes England agreement is not required. As public bodies we expect local authorities to have appropriate insurance arrangements in place to mitigate the potential risk of unforeseen events.
3.4.9 Local authorities should consider their approach to insurance of AHP 2021 to 2026 schemes in light of the contractual requirements, obligations and actions in the case of any default as set out in their grant agreement with Homes England. In particular, clause 17 of the grant agreement regarding the events that may trigger a grant to be withheld by Homes England or other actions to be taken. This clause sets out a number of default trigger events including the issue of a section 114 report made under section 114(3) or section 114A of the Local Government Finance Act 1988, or a section 15 direction made by the Secretary of State under section 15 of the Local Government Act 1999.
3.4.10 All information concerning these self-insurance arrangements should be held on file by the local authority to meet Homes England’s compliance audit requirements.
3.5 Modern Methods of Construction (MMC) categories for schemes
3.5.1 Where homes are being produced using MMC, all providers are required to assign them to one (or more) of the seven category definitions of MMC listed and summarised below. For funding through the AHP 2021 to 2026, this is regardless of whether funding is accessed through CME or through a Strategic Partnership. This information will be collected through Homes England’s Investment Management System.
3.5.2 The seven categories are based on the framework developed by a specialist sub-group of the Ministry of Housing, Communities and Local Government’s MMC cross-industry working group. For more detail and the full report please see Modern Methods of Construction working group: developing a definition framework.
3.5.3 The seven MMC categories identified in the framework are as follows:
- Pre-manufacturing (3D primary structural systems)
- Pre-manufacturing (2D primary structural systems)
- Pre-manufacturing components (non-systemised primary structure)
- Additive manufacturing (structural and non-structural)
- Pre-manufacturing (non-structural assemblies and sub-assemblies)
- Traditional building product led site labour reduction / productivity improvements
- Site process led site labour reduction / productivity / assurance improvements
3.5.4 Please refer to the framework document for the full details but below is a summary of each category.
Category 1 – Pre-manufacturing (3D primary structural systems)
A systemised approach based on volumetric constriction involving the production of three-dimensional units in controlled factory conditions prior to final installation. Volumetric units can be brought to final site in a variety of forms ranging from a basic structure only to one with all internal and external finishes and services installed, all ready for installation.
Category 2 – Pre-manufacturing (2D primary structural systems)
A systemised approach using flat panel units used for basic floor, wall and roof structures of varying materials which are produced in a factory environment and assembled at the final workface to produce a final three dimensional structure. The most common approach is to use open panels, or frames, which consist of a skeletal structure only with services, installation, external cladding and internal finishing being installed on site.
Category 3 – Pre-manufacturing components (non-systemised primary structure)
Use of pre-manufactured structural members made of framed ort mass engineered timber, cold rolled or hot rolled steel or pre-cast concrete. Members to include load bearing beams, columns, walls, core structures and slabs that are not substantially in-situ workface constructed and are not part of a systemised design.
Category 4 – Additive manufacturing (structural and non-structural)
The remote, site based or final workface based printing of parts of buildings through various materials on digital design and manufacturing techniques.
Category 5 – Pre-manufacturing (non-structural assemblies and sub-assemblies)
A series of different pre-manufacturing approaches that includes unitised non-structural walling systems, roofing finish cassettes or assemblies (where not part of a wider structural building system), non-load bearing mini-volumetric units (sometimes referred to as ‘pods’) used for the highly serviced and more repeatable areas such as kitchens and bathrooms, utility cupboards, risers, plant rooms as well as pre-formed wiring looms, mechanical engineering composites, would fall into this category.
Category 6 – Traditional building product led site labour reduction / productivity improvements
Includes traditional single building products manufactured in large format, pre-cut configurations or with easy jointing features to reduce extent of site labour required to install.
Category 7 – Site process led site labour reduction / productivity / assurance improvements
This category is intended to encompass approaches utilising site based construction techniques that harness site process improvements falling outside the five main pre-manufacturing categories (1 to 5) or materials innovation in category 6. This category would also include factory standard workface encapsulation measures, lean construction techniques, physical and digital worker augmentation, workface robotics, exoskeletons and other wearables, drones, verification tools and adoption of new technology led plant and machinery.
3.5.5 In the AHP 2021 to 2026, Strategic Partnerships must achieve at least 25% of homes delivered as MMC. The selected 25% of homes should use the above framework to categorise the MMC delivered on a project. Organisations can deliver the requirement using any of the categories in the framework. However, we expect organisations to use categories 1, 2 or with construction processes that achieve a pre-manufactured value (PMV) score of 55% or above.
3.5.6 PMV is a measure of the proportion of construction activity that takes place away from the final worksite. The greater the PMV, the greater the value of works delivered off-site or near site and by proxy, the likely greater related improvements in site productivity, programme speed and final product quality.
3.5.7 The PMV is calculated as the financial proportion of a construction project’s Gross Construction Cost derived through pre-manufacturing. Pre-manufacturing includes all costs incurred prior to the final installation at the construction workface, including all materials, the total labour applied in pre-manufacturing processes, fixed and variable manufacturing overheads and associated plant, logistics and transportation costs. Gross Construction Costs include all pre-manufactured costs, on site labour costs, all preliminaries costs, overhead, profit and risk. For more information about PMV, including a tool to estimate and record the PMV of your projects, please see here.
3.5.8 Elements of schemes produced using MMC are considered a ‘component’ part contributing to the overall grant funded home. Whilst in some instances these component parts may be portable, once completed the grant funded home is deemed to be secure and providers cannot remove or relocate component parts without dismantling the entire home (pipes, plumbing, electrics, fixtures and fitting etc) – all of which are included in the build costs. Attempting to do so would make the home uninhabitable and would be deemed a cessation of use for grant purposes.
3.6 Valuations
3.6.1 Overview
Valuations are required to help ensure that value for money is achieved for the funding requested and to ensure that the provider is using appropriate, accountable, and transparent internal risk assurance procedures when acquiring land and property.
Not all schemes will require a valuation, for example, Works Only schemes. Homes England would expect a valuation to be carried out for all schemes that involve:
- an acquisition event of any kind (even for an acquisition at nil value/cost); and/or
- a grant payment in respect of acquisition (even where the land/property was already in the ownership of the provider)
All valuations must be carried out by a member of the Royal Institution of Chartered Surveyors (RICS) who is a Registered Valuer. All valuation reports must be completed in line with the RICS Valuation – Global Standards 2020 and the RICS Valuation – Global Standards 2017 UK national supplement, (collectively known as “The Red Book”), as amended, extended or updated from time to time.
A valuation does not necessarily need to be undertaken by an individual/organisation external to the grant recipient organisation, provided that the valuer is a MRICS Registered Valuer and adheres to the above standards (see 3.6.2 below for the exceptions to this). In particular, when appointing an individual/organisation that is not fully independent of the grant recipient organisation, due consideration should be given to ensure there is no actual, or potential for, conflict of interest in the assessment of the valuation and that the grant recipient organisation is fully satisfied that any valuation provided will be impartial.
A provider is required to have a valuation report on the scheme file when a bid is submitted, or for a Strategic Partnership when a site is activated. The valuation report should be made available at bid or Active Site stage if requested. A failure to provide the valuation report if requested may result in an unsuccessful bid or requirement to deactivate an Active Site.
The valuation report must be directly applicable to the grant funded homes. Where acquisitions (of land or property) have other mixed uses or tenures (for example, an office conversion with other ground floor uses, or a land parcel with Section 106 or market homes) the valuation should support only the homes contained in the bid.
The valuation report should include the market values and/or market rents of the completed homes to support the information submitted in IMS.
The valuation should be appropriate to the nature of the acquisition. For example, where the provider is acquiring a property on a short term rental lease the valuation should reflect this.
If providers are unsure about the valuation requirements for a particular scheme, they should contact their Homes England Provider Management Team lead in the first instance.
3.6.2 Sales Valuations
In the case of valuations supporting the initial sale (and future staircasing transactions) of a Shared Ownership home, and sales through the Rent to Buy, Right to Acquire and Social HomeBuy programmes, the valuation must be carried out by an external valuer as defined in the RICS Red Book. This is to ensure that the RICS valuer commissioned is an individual or organisation separate from the grant recipient. Please refer to the Shared Ownership chapter, section 2.3.1.
RICS offers a ‘Find a Surveyor’ service if required which can be found at ricsfirms.com.
3.6.3 Valuation requirements at bid submission stage and for Strategic Partnerships
As part of any bid for funding, a provider must submit in IMS the current value and the purchase price of the land or property. The current value in IMS should be supported by the valuation report and the expectation is that the purchase price is no higher than the valuation.
Where a leasehold interest is to be acquired (for example, Lease and Repair schemes where the lease length is between 5 and 30 years), the cost of the lease to the provider must be submitted as the purchase price. The cost of the lease should be the rent expressed as a capital sum. This figure should be supported by a Red Book valuation of the market rent based on the proposed lease terms.
Where an acquisition of land/property has occurred in the past and a bid was not submitted at the time of acquisition, providers will need to obtain a valuation report prior to submitting a bid for funding that confirms the value of the land/property as at exchange of contracts.
Indicative bids for schemes (see Programme Management chapter, section 2.2) do not require a Red Book valuation at bid stage. However, a valuation that confirms the value of the land or property on the date of exchange (for auction purchases refer to contract date) must be obtained prior to first grant claim (or date profiled out in IMS).
For Strategic Partnerships the purchase price of the land or property must be supported by the valuation report and the acquisition cost recorded in the Completion entry in IMS must be no higher than the valuation. Any acquisition costs recorded against an Active Site through the Quarterly Development Expenditure must also be supported by the valuation report. In all circumstances the valuation report must be valid at the point the acquisition took place.
3.6.4 Valuation validity period
Providers must ensure that the valuation is valid at exchange of contracts (for auction purchases refer to contract date). Homes England accept three months as a validity period unless otherwise stated on the valuation report. When a provider has to extend a valuation validity this must be completed in accordance with RICS guidance and the reason recorded on file for audit purposes.
If the original Red Book valuation’s validity period has expired at exchange of contracts, written confirmation that the original valuation remains valid at the date of exchange is required. The content and detail of the written confirmation should be proportionate to the complexity and/or value of the subject and must be prepared by a Registered Valuer. In circumstances where the Registered Valuer confirms a change to the current value, the written confirmation should clearly state the reasons for the change in the value.
Due to the possible value for money and grant implications, where a reduction to the original valuation has been subsequently confirmed in writing by the Registered Valuer or a reduction has occurred to the purchase price, providers must submit a relevant comment when updating IMS with the variances.
Fonte/Source: https://www.gov.uk/guidance/capital-funding-guide/8-procurement-and-scheme-issues
