14. Strategic Partnerships

This chapter sets out our requirements for Strategic Partnerships with Homes England that are funded as part of the Shared Ownership and Affordable Homes Programme (SOAHP) 2016 to 2021 and the Affordable Homes Programme (AHP) 2021 to 2026.

1. Overview

1.1 Purpose

1.1.1 Strategic Partnerships allow for the delivery of affordable housing new supply under the principles of the Affordable Homes Programme (AHP) 2021 to 2026 and the Shared Ownership and Affordable Homes Programme (SOAHP) 2016 to 2021 with different contractual terms.

1.1.2 Each Grant Recipient will have a separate Grant Funding Agreement for the delivery of additional grant funded homes, outside of an existing AHP 2021 to 2026 and SOAHP 2016 to 2021 contract. This chapter sets out the requirements that must be followed in addition to the relevant guidance elsewhere in the Capital Funding Guide (CFG). These requirements include the administration, management and monitoring of the Strategic Partnership Grant Agreement.

1.2 Context

1.2.1 Development undertaken through a Strategic Partnership Grant Agreement operates under the same parameters as the AHP 2021 to 2026 and SOAHP 2016 to 2021 as set out in the CFG, except where otherwise stated. This chapter should therefore be read in conjunction with other chapters in the CFG.

2. Strategic Partnership Grant Agreement

2.1 General

2.1.1 Each Grant Recipient is required to enter into a new supply contract with Homes England. Robust contract management is a key principle of the delivery model. This section summarises the contract management process Grant Recipients must follow with regard to their contract.

2.1.2 The Strategic Partnership Grant Agreement is a standard form contract for affordable housing supply to be delivered in addition to any existing contractual commitments. The Strategic Partnership Grant Agreement is in addition to, and will not replace, any existing contracts with Homes England.

2.2 Process

2.2.1 The Strategic Partnership Grant Agreement details both Homes England and the Grant Recipient’s obligations and rights. Each contract will include:

  • Conditions of grant (including eligible Development Expenditure)
  • Total Allocated Grant Funding
  • The Housing Outputs to be delivered including the number to be made available at a Social Rent
  • Grant claim and payment procedures including the requirements that must be met before grant drawdown
  • Obligations to meet strategic priorities
  • Reporting obligations
  • Default and termination terms
  • Dispute resolution

2.2.2 Specifically for the AHP 2021 to 2026:

  • The housing outputs to be delivered by Government Office Region and tenure
  • The housing outputs to be delivered as MCC categories 1-7 and/or a pre-manufactured value (PMV) score of 55% or above
  • The housing outputs to be delivered as either rural and/or community-led
  • The grant that has been allocated for MMC Categories 1 or 2 and/or PMV score of 55% or above and number of housing outputs associated with this grant
  • The grant that has been allocated for rural and community and/or community-led delivery and the number of housing outputs associated with this grant

2.2.3 The contract is valid for the duration of the grant allocation but will allow for variations to account for flexibilities in delivery, subject to the agreement of such a change by Homes England.

2.3 Contract Management

2.3.1 The housing delivery of the Strategic Partnership Grant Agreement is monitored through the Programme Management Board.

2.3.2 The Programme Management Board (PMB) is responsible for the monitoring of the delivery of the grant funded affordable housing units in accordance with the Strategic Partnership Grant Agreement. The PMB is the mechanism for reviewing progress in delivering the Housing Outputs in the Strategic Partnerships Grant Agreement and agreeing the quarterly grant claims.

2.3.3 The PMB will monitor the commitments made by the Strategic Partner in relation to Strategic Priorities.

2.3.4 The PMB will consider the Agreed Profile in the first quarter of each financial year to ensure that the grant paid against development expenditure or milestones achieved remains in line with the Agreed Provider Profile. Should the number of affordable units be reduced from previous forecasts, or the delivery profile have substantially changed, the Strategic Partner will be expected to in the first instance make appropriate adjustments to their delivery forecasts to remedy any gaps in delivery. Ultimately, accounting adjustments may need to be considered by PMB for Homes England’s consideration and approval

2.3.5 Where a Grant Recipient wishes to collaborate with another organisation to deliver the Housing Outputs in the Strategic Partnership Grant Agreement, it must request approval from Homes England prior to enabling any other organisation to deliver grant funded homes as a Delivery Partner.

2.3.6 Approval of a new Delivery Partner can be sought at any time during the Term of the Strategic Partnership Grant Agreement but must be obtained in advance of submitting a claim including any Active Sites or Development Expenditure incurred or milestones achieved by that Delivery Partner. The Grant Recipient is responsible for undertaking due diligence to ensure any proposed Delivery Partners can meet the Delivery Partner obligations set out in the Strategic Partnerships Grant Agreement. In addition, the Grant Recipient will be required to enter into a separate legal agreement with its Delivery Partners, which is outside the contract with Homes England.

2.3.7 For the AHP 2021 to 2026 we do not expect delivery partners to join more than one strategic partnership, but delivery partners can also bid under Continuous Market Engagement (CME) outside the geographical regions covered by the strategic partnership.

2.3.8 Approval of a Delivery Partner will be subject to completion of Homes England’s Investment Partner Qualification and Know Your Customer (KYC) due diligence processes and a review of the Delivery Partner’s continued compliance with the Regulator of Social Housing’s Governance and Viability standards.

2.3.9 It is anticipated that the introduction of new Delivery Partners will lead to increased Housing Outputs for the Strategic Partnership, and any request for additional grant funding would be subject to resource. The Grant Recipient is responsible for all activity undertaken by a Delivery Partner through the Strategic Partnerships Grant Agreement, to the point that a Delivery Partner Deed is completed for each scheme at Practical Completion.

2.3.10 It is expected that the Grant Recipient will deliver all of its additional grant funded homes through the Strategic Partnership Grant Agreement, with the grant allocation available, rather than bidding through Continuous Market Engagement (CME). The exception is for schemes seeking funding under specialist programmes for which separate bidding arrangements are in place.

2.3.11 The Grant Recipient may continue to lead an existing consortium for administration purposes to support smaller providers but is not expected to deliver any schemes or draw down funding through that consortium.

2.3.12 The grant rate paid per home to Delivery Partners must be at the prescribed rate (i.e. based on tenure and location) within the Strategic Partnerships Grant Agreement.

2.3.13 Where a Grant Recipient or Delivery Partner will deliver their Housing Outputs through a Group Company (e.g. a subsidiary, sibling or holding company of the Grant Recipient or Delivery Partner, such as a DevCo), the following points are to be noted:

  • Any Development Expenditure incurred by organisations in Group structures, which are neither a Grant Recipient nor an approved Delivery Partner is ineligible and this Development Expenditure should not feature in any Grant claims, forecasts or monitoring returns
  • Group Companies can have an active role in the delivery of the Housing Outputs and the Strategic Partnership Grant Agreement does allow a Group Company of either the Grant Recipient or the Delivery Partners to hold the secure legal interest in an Active Site which will lead to the delivery of Housing Outputs
  • A Grant Recipient or Delivery Partner making a relevant payment to a Group Company (e.g. to their DevCo) to procure land or development services can be considered an eligible cost
  • For a Strategic Partner who is a not-for-profit Registered Provider, provided a Group Company is a not-for-profit Registered Provider, the Grant Recipient may propose the Group Company to become a Delivery Partner (subject to Homes England approval in line with the agreed process as set out at 2.3.6 above)
  • Specifically for the AHP 2021 to 2026 - Strategic Partners who are for-profit Registered Providers, provided a Group Company is a for-profit Registered Provider, the Grant Recipient may propose the Group Company to become a Delivery Partner (subject to Homes England approval in line with the agreed process as set out at 2.3.6 above)
  • Any Group Company which will own and manage completed units must be approved as a Delivery Partner and complete the Delivery Partner Deed to confirm the grant in the units and secure the grant once the units have been completed

3. Site Administration and data collection

3.1 Submitting Active Sites and Completions in IMS

3.1.1 Details of Active Sites will be required to be input in IMS to enable Development Expenditure or milestones to be recorded and grant claims made using costs incurred or milestones achieved. Active Site details will capture information about:

  • Location
  • Planning status
  • Acquisition status
  • Build contract progress
  • Forecast start and completion dates
  • Forecast number of units and tenure mix
  • Indicative information about MMC delivery (where applicable)
  • Indicative information about rural and community-led delivery (where applicable)

3.1.2 The status of starts will be on a forecast only basis to enable flexibility to change tenure up to the point of Practical Completion. Once Practical Completion has occurred a Completion should be submitted for approval by Homes England through its Investment Management System (IMS). Once Homes England has approved Practical Completion for a Completion, the scheme will become fixed, and start and completion dates will be firm. Where the use of grant has been specifically approved for regeneration through a CME assessment to fund regeneration schemes, tenures will be fixed unless otherwise agreed by Homes England.

3.1.3 Grant Recipients must submit a Completion in IMS within a month of Practical Completion. This is the only stage in entering Active Site and scheme details in IMS requiring Homes England’s approval for Strategic Partners who are not-for-profit Registered Providers. Specifically for the AHP 2021 to 2026 Strategic Partners who are for-profit Registered Providers - all milestones will need to be approved by Homes England.

3.1.4 A Completion will require all unit details to be input, including property type, tenure, floor area and any associated supported housing information. It is expected that all units will achieve the Required Standards (see 6 below) unless prior approval has been obtained in writing from Homes England.

3.1.5 For the AHP 2021 to 2026 a Completion will also require the provider to confirm the MMC category achieved as part of the unit details and/or PMV score %. The unit details will also confirm if the unit is to be counted as a rural or community-led unit. Where grant is to be attributed to a unit that is delivered as MMC Category 1 or 2 and/or a PMV score of 55% or above, or as rural or community-led, the associated additional cost will need to be identified.

3.1.6 When Practical Completion is approved by Homes England in IMS, the tenure is fixed and grant requirement for the scheme confirmed on the basis of the prescribed rate (i.e. based on tenure and location) in the Strategic Partnerships Grant Agreement. This is needed for the purposes of grant recovery.

3.2 Activating a Site and Start on Site – clarification

3.2.1 A Strategic Partner or a Delivery Partner who is a not-for-profit Registered Provider may be able to Activate a Site in IMS and achieve a start on site where the requirements set out in section 3.5 of the Finance chapter have been met and Start on Site Works as defined in the Grant Agreement have been achieved. However, development expenditure should not be recorded against an Active Site until a Secure Legal Interest can be demonstrated in line with limbs (a), (b) or (c) in the definitions of Secure Legal Interest in the 2018 to 2023 Strategic Partnership Grant Agreement or Qualifying SLI (SO Accommodation)/Qualifying SLI (Rented Accommodation) in the 2021 to 2026 Strategic Partnership Grant Agreement.  

3.2.2 For AHP 2021 to 2026 Strategic Partnerships where the processing route of a Site is ‘off the shelf’, a Site may be made Active once the Strategic Partner or Delivery Partner has exchanged on a purchase contract to obtain a Secure Legal Interest in line with the definition of Qualifying SLI (SO Accommodation)/Qualifying SLI (Rented Accommodation) in the 2021 to 2026 Strategic Partnership Grant Agreement. A start on site may also be recorded where Start on Site Works as defined in the Grant Agreement have been achieved and the date recorded in IMS should be the later of: (1) the date Start on Site Works were commenced; or (2) the date the purchase contract was exchanged. Development expenditure should not be recorded against an Active Site until a Secure Legal Interest has been obtained in line with limbs (a), (b) or (c) in the definitions of Qualifying SLI (SO Accommodation)/Qualifying SLI (Rented Accommodation) in the 2021 to 2026 Strategic Partnership Grant Agreement. 

Where a Strategic Partner or Delivery Partner is paid against milestone achievement, no grant drawdown is eligible until Practical Completion where a Site processing route is ‘off the shelf’.  

3.3 Onward Sales in the Affordable Homes Programme 2021 to 2026

3.3.1 If the Grant Recipient or a Delivery Partner intends to dispose of a scheme or unit(s) to a for-profit provider after Practical Completion but before occupation (i.e. an Onward Sale), they must first notify and secure Homes England consent through an Onward Sale Notification (OSN), in accordance with the Strategic Partnerships Grant Agreement (Schedule 5, Operational and Disposal Conditions).

3.3.2 Onward Sale Notification means a written notification provided in such form as Homes England may identify from time to time and in accordance with any applicable requirements of the Capital Funding Guide, and which, amongst other matters, identifies the:

  • nature of the Disposal
  • address of the Subject Site comprised within the Disposal
  • disponee and confirmation that such disponee is a for-profit Registered Provider or Unregistered Body
  • amount of Allocated Grant Funding allowed to Subject Site (as endorsed in each case by Homes England)
  • price at which Subject Site was acquired by the Grant Recipient or Delivery Partner
  • proposed sale price of the Subject Site comprised in the Disposal

3.3.3 Upon completion of an Onward Sale, liability for Homes England grant funding in the scheme or units(s) will transfer to the Onward Disponee (the purchasing organisation). The Onward Disponee is required to acknowledge and accept compliance with the Homes England grant terms and conditions prior to completion. Grant liability will continue to pass to any future disponees of a scheme/unit(s) in perpetuity until a relevant event for recovery or repayment occurs.

3.3.4 As part of the process for agreeing an Onward Sale, Homes England will reassess the value for money of the grant attributed to the scheme or unit(s) and, where relevant, seek to reclaim any over-subsidy. Details of how this calculation will be determined are set out in section 3.5 of this guide.

3.3.5 Where a Strategic Partner or a Delivery Partner disposing of a scheme or unit(s) is a for-profit Registered Provider, the provider may also be required to repay to Homes England an uplift amount for any increase in value of the grant-funded properties identified over and above the attributed final scheme costs. The scenarios under which an uplift would be required and worked examples are set out in paragraph 3.4 of the Grant Recovery chapter.

3.3.6 Disposal of a grant-funded scheme or unit(s) after Practical Completion and after occupation by homeowners/residents is not an Onward Sale and should be treated in line with the Grant Recovery Determination 2017 and Homes England’s standard grant notifications process. See the Grant Recovery chapter for details of this process.

3.4 Onward Sales process

3.4.1 The required notification and approval stages for an Onward Sale are set out below.

i: Initial Notification - Within 5 Business Days from when a Strategic Partner identifies a prospective Onward Sale or is notified by a Delivery Partner of a prospective Onward Sale, it must notify Homes England in writing.

ii: Onward Sale Notification - At least 5 Business Days prior to the next Programme Management Board or 6 months prior to completion of the proposed Onward Sale (whichever is soonest), the Strategic Partner must submit an Onward Sale Notification form to Homes England. The Strategic Partner must also provide a copy of the initial sales Valuation for the property alongside the OSN form. Use the Onward Sales Notification form for Strategic Partners (.docx, 48kb) template.

iii: At any point following an Onward Sale Notification, Practical Completion of the homes can occur and submission of the Firm Scheme in IMS can be progressed. Homes England may accept the scheme and at that point attribute grant to the Housing Outputs. The Firm Scheme and associated Practical Completion must be approved in IMS prior to the units being transferred to the purchasing for-profit Registered Provider.

iii(a): Revised Onward Sale Notification - If the Strategic Partner becomes aware of any changes to the information in the OSN, it must provide a revised OSN to Homes England no later than 10 Business Days prior to submission of the Firm Scheme details in IMS.

iv: Confirming Onward Sale Notification Details - At least 20 Business Days prior to the proposed date of exchange, the Strategic Partner must confirm in writing to Homes England that there has been no change to the information provided in the OSN, or if the sale details have changed to provide an updated OSN form in the template provided above.

v: Homes England Check Subsidy/Reattribute Grant - Upon receipt of a final OSN form, Homes England will check the grant amount in the scheme/unit(s) to ensure value for money continues to be achieved. Homes England may seek to reclaim any over subsidy identified (where relevant) and reattribute grant to the Firm Scheme in IMS. See section 3.5 of this chapter for details of the checks and calculation to be used to identify an over subsidy.

vi: Onward Disponee (Purchaser) Acknowledgement - No earlier than 10 Business Days prior to exchange, the Strategic Partner must provide written acknowledgement to Homes England obtained from the Onward Disponee (i.e. the for-profit Registered Provider purchasing the scheme or units) confirming that the OSN details are correct and their acceptance of the Homes England grant terms and conditions. The Onward Disponee should use the Onward Disponee Acknowledgement Letter (.docx, 33kb) standard template. Letters should be submitted on the Onward Disponee’s letter headed paper.

vii: Exchange of Sales Contracts - When the Strategic Partner and the purchasing organisation (the Onward Disponee) exchange contracts the sale price is set. At this point the Strategic Partner must confirm to Homes England (in writing) that the final sale price identified is in line with the OSN form and the Onward Disponee Acknowledgement letter provided. If there are any changes, a new OSN form and Onward Disponee Acknowledgement must be provided.

viii: Homes England Check Subsidy/Reattribute Grant - Upon receipt of the final sale price confirmation, Homes England will re-check the grant amount in the funded property and seek to reclaim any over subsidy (where relevant) and reattribute grant to the Firm Scheme in IMS.

ix: Homes England Consent - Once all information is received and verified, Homes England will issue an Onward Sale consent letter to the Strategic Partner to confirm approval (conditional on notification of any changes to the agreed terms at completion).

x: Onward Sale Completion Notification - Within 10 Business Days following completion of an Onward Sale, the Strategic Partner must provide Homes England with an OSN Completion Notification form to confirm the final sale price at which the funded property was disposed at. Use the Onward Sale Completion Notification form (.docx, 45kb).

xi: Post Onward Sale Completion Check - Upon receipt of the completion notification, Homes England will complete a review post completion to check the final details are correct. Any discrepancies will be raised with the Strategic Partner.

3.5 Calculation of Over Subsidy and Uplift

3.5.1 Where a Strategic Partner intends to seek consent for an Onward Sale, they will need to provide supporting financial information so that an assessment of subsidy and uplift (if applicable) can be undertaken by Homes England. This will include the following details:

  • IMS details of the scheme/unit(s)
  • details of the for-profit Registered Provider who is acquiring the scheme or unit(s)
  • schedule of accommodation including rents and open market values
  • total scheme cost and transfer price
  • capital contributions

3.5.2 Homes England will provide a spreadsheet pro-forma that must be completed by the Strategic Partner and the for-profit Registered Provider who is acquiring the scheme or unit(s). This should be submitted along with the Onward Sale Notification.

3.5.3 Where a Strategic Partner is a for-profit Registered Provider, uplift will be due where the agreed transfer price is greater than the attributable total scheme costs. The uplift will be calculated as a proportion of this differential in line with the grant intervention rate as a percentage of attributable total scheme costs.

For example: a Site subject to an Onward Sale has an attributable total scheme cost of £4 million and has a total of £1 million attributable grant. Attributable grant as a percentage of total scheme cost is 25%. The agreed transfer price is £4.5 million, therefore uplift will be calculated as 25% of the £500,000 differential between the attributable total scheme cost and the agreed transfer price (£125,000).

3.5.4 The Firm Scheme and Practical Completion will not be approved in IMS until this assessment has been completed.

3.5.5 Homes England will notify the Strategic Partner if a recalculation of subsidy is necessary following a review of the supporting financial information, or if any uplift is due.

4. Funding Principles

4.1 Tenure requirements

4.1.1 Grant funding is available to deliver affordable housing for:

4.1.2 For the SOAHP 2016 to 2021 Strategic Partners can only deliver Social Rent as a tenure in areas of high affordability pressures — see SOAHP Addendum — Social Rent.

4.1.3 Where a Strategic Partner intends to deliver Social Rent in the local authority areas not listed in SOAHP Addendum — Social Rent (for SOAHP 2016 to 2021) then the maximum level of grant that can be attributed will be the prescribed Affordable Rent grant rate for that location.

4.1.4 The Affordable Homes Programme (AHP) 2021 to 2026 initially continued to provide funding for Social Rent within areas of high affordability pressure. However, this position changed in February 2023 when providers could access Social Rent-specific grant rates in all parts of the country — see the Housing for Rent chapter, section 4 (Social Rent) for more information.

4.1.5 For the AHP 2021 to 2026, Affordable Rent homes delivered through a Strategic Partnership are subject to the Right to Shared Ownership.

4.1.6 Nil grant homes, such as those delivered through Section 106, should not be administered and cannot secure grant funding through the Strategic Partnerships Grant Agreement.

4.1.7 For more information on Homes England permission to charge Affordable Rent on new nil grant homes delivered by Strategic Partners and Delivery Partners refer to the Housing for Rent chapter, section 2.2 (‘The Grant Agreement’).

4.2 Modern Methods of Construction (MMC), Rural and Community-led Grant

4.2.1 For the AHP 2021 to 2026 Grant funding is available for the delivery of an agreed number of housing outputs that meet Category 1, 2 or a premanufactured value (PMV) score of 55% or above. Further guidance on MMC categories and PMV scoring methodology is in the Procurement and Scheme Issues section. The amount of grant allocated and the number of housing outputs that are required to be delivered that meet this criteria will be identified in the Agreed Provider Profile.

4.2.2 Grant funding is available for the delivery of an agreed number of housing outputs that can be categorised as rural or community-led. The amount of grant allocated and the number of housing outputs that are required to be delivered that meet this criteria will be identified in the Agreed Provider Profile.

5. Grant claims

5.1 Grant claims made by Strategic Partners who are not-for-profit Registered Providers

5.1.1 Grant claims made by Strategic Partners who are not-for-profit Registered Providers under a Strategic Partnership Grant Agreement are drawn down against relevant eligible Development Expenditure rather than against the achievement of milestones.

5.1.2 For AHP 2021 to 2026 this includes any grant that has been allocated for the delivery of housing outputs achieving MMC Category 1 or 2 or a PMV score of 55% or above, or as rural or community-led housing.

5.1.3 Grant claims will be submitted by the Strategic Partner on a quarterly basis for eligible Development Expenditure incurred during the previous quarter against named Active Sites. Grant claims against Development Expenditure incurred earlier than the date at which the Strategic Partnership Grant Agreement has completed is subject to approval by Homes England.

5.1.4 Grant should only be drawn down against eligible Development Expenditure where the Grant Recipient or a Delivery Partner has incurred costs and made a payment. Costs that are committed but not yet defrayed are not eligible for inclusion in the claim (i.e. costs must be incurred).

5.1.5 Grant Recipients should note that the quarter 1 grant claim submitted in a new financial year (i.e. for expenditure incurred in the period January to March) will be accounted for against eligible Development Expenditure incurred in the last quarter of the previous financial year. This will be treated as an accrual for the purposes of Homes England budget and accounting treatment. This is because Homes England is an Arm’s Length Body to a Government Department and, as such, our financial year end is 31st March.

Example

Where qualifying development expenditure of £2 million was incurred in quarter 4 (January to March) it is expenditure that has been defrayed in that financial year, and so as the claim for that period will not be submitted until quarter 1 (April to June) this expenditure is counted as an accrual for accounting purposes. It will be certified by the Chief Financial Officer (CFO) and external auditor through the annual Statement of Grant Usage (see section 8 below).

5.1.6 Grant can only be claimed against eligible Development Expenditure for an Active Site where the Grant Recipient or Delivery Partner has a secure legal interest (see section 3.1.1 of the Finance chapter).

5.1.7 Eligible Development Expenditure must relate to the delivery of grant funded affordable housing only. Where other tenures are provided on the same site costs should be apportioned appropriately and signed off by an independent consultant or the Development Director or Finance Director. Eligible Development Expenditure should only be claimed against affordable homes that are eligible for grant funding. It is not expected to include expenditure against any delivery through a Section 106 Agreement or similar planning obligation.

5.1.8 Grant can be claimed against eligible Development Expenditure in line with the agreed forecast profile to the point that the total allocation for the Strategic Partnership is reached. Cumulative grant claims cannot exceed incurred eligible Development Expenditure at any time.

5.2 Grant claims made by Strategic Partners who are for-profit Registered Providers or Unregistered Bodies in the AHP 2021 to 2026

5.2.1 For AHP 2021 to 2026, grant claims made by Strategic Partners who are for-profit Registered Providers or Unregistered Bodies under a Strategic Partnership Grant Agreement are drawn down against the achievement of milestones calculated in line with an agreed blended grant rate.

5.2.2 The agreed blended grant rate will be calculated as the total grant allocation (excluding grant that has been allocated for the delivery of housing outputs achieving MMC Category 1 or 2 or a PMV score of 55% or above, or as rural or community-led housing) divided by the total number of housing outputs.

5.2.3 The milestones applicable will be determined by the processing route for each Active Site and may comprise of the following milestone payments (see sections 3.2 and 3.3 of the Procurement and Scheme Issues chapter):

  • Acquisition (equivalent to 40% of the blended grant rate per unit)
  • Start on Site (equivalent to 35% of the blended grant rate per unit)
  • Practical Completion (equivalent to 25% of the blended grant rate per unit)

5.2.4 Grant that has been allocated for the delivery of housing outputs achieving MMC Category 1 or 2 or a PMV score of 55% or above, or as rural or community-led housing, will be paid as an additional payment at Practical Completion where these requirements have been achieved.

5.2.5 Grant Recipients will need to record in IMS within the first 10 days of each quarter how much eligible Development Expenditure has been incurred in the previous quarter.

5.2.6 Grant claims will be submitted by the Strategic Partner on a quarterly basis for milestones achieved during the previous quarter against named Active Sites. Grant claims against milestones achieved earlier than the date at which the Strategic Partnership Grant Agreement has completed are subject to approval by Homes England.

5.2.7 Grant should only be drawn down against milestones achieved where the Grant Recipient or a Delivery Partner has incurred costs and made a payment. Costs that are committed but not yet defrayed are not eligible (i.e. costs must be incurred).

5.2.8 Grant Recipients should note that the quarter 1 grant claim submitted in a new financial year (i.e. for milestones achieved in the period January to March) will be accounted for against milestones achieved in the last quarter of the previous financial year. This will be treated as an accrual for the purposes of Homes England budget and accounting treatment. This is because Homes England is an Arm’s Length Body to a Government Department and, as such, our financial year end is 31 March.

Example

Where milestones to a value of £2 million were achieved in quarter 4 (January to March) it is milestones that have been achieved in that financial year, and so as the claim for that period will not be submitted until quarter 1 (April to June) this expenditure is counted as an accrual for accounting purposes. It will be certified by the Chief Financial Officer (CFO) and external auditor through the annual Statement of Grant Usage (see section 8 below).

5.2.9 Grant can only be claimed against milestones achieved for an Active Site where the Grant Recipient or Delivery Partner has a secure legal interest (see section 3.1.1 of the Finance chapter).

5.2.10 Development Expenditure must relate to the delivery of grant funded affordable housing only. Where other tenures are provided on the same site, costs should be apportioned appropriately and signed off by an independent consultant or the Development Director or Finance Director. Eligible Development Expenditure should only be claimed against affordable homes that are eligible for grant funding. It is not expected to include expenditure against any delivery through a Section 106 Agreement or similar planning obligation.

5.2.11 Grant can be claimed against milestones achieved in line with the agreed forecast profile to the point that the total allocation for the Strategic Partnership is reached. Cumulative grant claims cannot exceed the value of milestones achieved or incurred eligible Development Expenditure at any time.

5.2.12 Where the blended grant rate changes as a result of a change to the Agreed Provider Profile, a reconciliation will take place at the point of the change and any additional payment or reclaim will be processed. Future milestones will be calculated in line with the new blended grant rate.

5.3 General

5.3.1 Grant claims will be administered through the Homes England Investment Management System (IMS).

5.3.2 Grant is made available for the delivery of net new additional affordable homes. It cannot be applied for replacement properties (for example under Voluntary Right to Buy) or for the redevelopment of existing affordable homes unless by express approval from Homes England. Any such requests will be considered on an exceptional basis.

5.3.3 Individual claims must not exceed £20 million. Where claims are higher than £20 million, separate claims should be submitted to the total value of the claim. The necessary arrangements in these circumstances must be agreed in advance with Homes England.

5.3.4 The Grant Recipient has flexibility to apportion the total approved Recycled Capital Grant Fund (RCGF) figure within the contract between completed units. This is provided that the Registered Provider can demonstrate that subsidy is required and that total public subsidy does not exceed 90% of scheme costs. The PMB will monitor costs and funding sources throughout the term of the grant agreement.

5.4 Grant attribution

5.4.1 Grant is attributed to units at Practical Completion at the prescribed rate within the Strategic Partnership Grant Agreement, according to tenure and geography.

5.4.2 Where units are completed by a Delivery Partner, the same grant rate should be attributed to those units as prescribed within the Grant Funding Agreement. The grant rate will be noted in the Delivery Partner Deed.

5.4.3 Where a Grant Recipient wishes to deliver homes for a specific tenure or in an area where they do not have a grant rate, this should be discussed at PMB to determine appropriate terms such as grant levels and scale of delivery in light of the impact of the overall delivery of the terms of the grant agreement.

5.4.4 For the AHP 2021 to 2026 where grant has been allocated for the delivery of housing outputs that achieved MMC Categories 1 or 2 or PMV 55%+, or are rural or community led, the associated grant will be attributed at Practical Completion. The Grant Recipient is required to attribute this grant on a pro-rata basis. The maximum number of units that grant can be attributed to will be in line with the number of housing outputs identified in the Agreed Provider Profile.

6. Required Standards

6.1 General

6.1.1 In addition to any other requirements of the Capital Funding Guide, all Housing Outputs delivered through the Strategic Partnership Grant Agreement are required to meet the following Required Standards:

6.2 National Design Guide

6.2.1 For the AHP 2021 to 2026 all new schemes will be expected to deliver well designed places and bidders will be required to indicate how the scheme delivers against the 10 characteristics set out in the National Design Guide, which include sustainability and environmental impact. While it is not a mandatory requirement, Strategic Partners are also encouraged to use the Building for a Healthy Life (BHL) criteria in their scheme design and to record their score in their bid on IMS.

6.3 Nationally Described Space Standards (NDSS)

6.3.1 For the AHP 2021 to 2026 all new homes should aim to meet NDSS. Where the floor area of any units is likely to fall below 85% NDSS, the Grant Recipient should raise the issue at PMB and seek written approval from Homes England for consideration on a case by case basis. Approval should be sought as soon as the floor area is known, which is usually as progress towards securing detailed planning has been made and well ahead of Practical Completion.

6.4 Modern Methods of Construction (MMC)

6.4.1 For the AHP 2021 to 2026 every strategic partnership must deliver at least 25% of homes using MMC. The number of homes that the Grant Recipient will be required to deliver will be detailed in the Agreed Provider Profile.

6.4.2 The Grant Recipient will need to confirm at Practical Completion, as part of a housing output unit, details of which categories of MMC have been achieved. This will be in accordance with the categories in the MMC definition framework.

6.4.3 Read more about the MMC Definition Framework and PMV in the MMC section of the Capital Funding Guide.

7. Reporting and Audit Requirements

7.1 General

7.1.1 Reporting and Audit requirements must follow the same processes as the SOAHP 2016 to 2021 and the AHP 2021 to 2026 as set out in the Programme Management chapter of this guide.

7.1.2 Housing outputs delivered through a Strategic Partnership Grant Agreement will be subject to Compliance Audit in the usual way and will use the existing AHP 2021 to 2026 and SOAHP 2016 to 2021 arrangements. However, as the details of the units will not be known until Practical Completion, Compliance Audit will only be applicable to completed units.

7.2 Statement of Grant Usage and annual financial audit

7.2.1 A Statement of Grant Usage (SoGU) must be submitted by each Grant Recipient to Homes England no later than 30 April each year.

7.2.2 The annual SoGU will be produced in IMS to be submitted by the Chief Finance Officer (CFO) who will certify that the statement is supported by a sample audit carried out by an external auditor.

7.2.3 The SoGU will be used to inform and support the annual reconciliation (i.e. look back on activity and look forward on forecasts) by confirming details of the grant received and attributed. This will include details of eligible Development Expenditure incurred or milestones achieved in quarter 4 of the preceding financial year and the associated grant claim to be made in quarter 1 (i.e. the accrual).

7.2.4 A financial audit should be undertaken by an external auditor on a sample of schemes within the Grant Recipient’s programme prior to the CFO signing the SoGU. The SoGU will provide assurance that the correct procedures and financial records of Development Expenditure are in place in respect of making grant claims. The SoGU will confirm that the attribution of grant for completed units so that the Development Expenditure and grant draw down submitted in IMS can be taken as an accurate record of the relevant development activity (quarterly and annually) and that grant has been claimed in line with requirements within the Grant Funding Agreement.

8. Grant Recovery

8.1 General

8.1.1 The main provisions of The Recovery of Capital Grants and Recycled Capital Grant Fund General Determination 2017 and the Grant Recovery chapter apply to Strategic Partnerships. Please see this Grant Recovery chapter of this guide for further details.

8.1.2 Partners should also refer to their Strategic Partnership Grant Agreement which sets out additional criteria.

8.2 End of Programme Reconciliation

8.2.1 The annual reconciliation at the end of the Grant Recipient’s programme will take account of total grant paid against Housing Outputs delivered. Where there have been changes to the delivery profile that result in grant payments being higher than the attributed grant amount Homes England will be entitled to recover the unattributed sum.