Scheme types

New build

Acquisition and works – is an arrangement whereby the Association acquires land or property and commissions the construction of new dwellings. New build dwellings generally must meet the design requirements contained in Design Standards Guide and, on completion, must have a ‘structural’ life expectancy of at least 60 years and comply with all Statutory Requirements on completion of the construction works.

More information: Band 3 – Other Schemes: new Build/ Rehabilitation/ Re-improvement/ Supported Housing/ Works only

Design & build (competitive tendering) - is an arrangement whereby an Association produces a detailed brief and then advertises for suitable Design and Build contractors to apply for inclusion on a select list to be asked to tender. The contractors are responsible for undertaking or developing the design – either in-house or by appointing consultants to undertake this task – and for the construction of the property.

As for Acquisition and Works, new build dwellings generally must meet the design requirements contained in Design Standards Guide and, on completion, must have a ‘structural’ life expectancy of at least 60 years and comply with all Statutory Requirements on completion of the construction works.

More information: Band 3 – Other Schemes: new Build/ Rehabilitation/ Re-improvement/ Supported Housing/ Works only

Design & build package deals - is an arrangement where the land is owned by a contractor/ developer who will only sell on condition that the Association contracts with the contractor/ developer for the design and construction of the new dwellings. Important - this type of arrangement is in breach of EU Procurement regulations and, therefore, is not acceptable.

Off-the-Shelf schemes - An 'Off the Shelf purchase is where an Association purchases either:

• newly constructed properties ready for first-time occupation by Registered Housing Association tenants;
• newly constructed properties that have been occupied privately for period not exceeding 12 months from completion, and are ready for occupation by Registered Housing Association tenants;
• newly refurbished properties that are now ready for first-time occupation by Registered Housing Association tenants; or
• newly refurbished properties that have been occupied privately for period not exceeding 12 months from completion of works, and are ready for occupation by Registered Housing Association tenants.

‘Newly refurbished’ property(ies) are where an existing dwelling(s) or other building(s) has been subject to substantial repair and improvement, conversion or extension.

In all cases the properties must meet the OTS requirements, set out below, and the relevant required standards of the Housing Association Design Guide generally.

Off the Shelf properties should as standard practice have been publicly advertised in the property market. This is to encourage openness, transparency and equality of opportunity for other potential private purchasers. If a contractor/developer or their agent directly approaches an Association offering an Off the Shelf property for purchase that has not been publicly advertised for sale, a submission at application for project approval will be required from the Association confirming:

• how the contractor/developer or their agent approached the Association and the timeline?
• whether there are any potential conflicts of interest between the Association’s staff and the contractor/developer or their agent? If the Association considers that there are potential conflicts of interest, how these are being managed?
• the rationale for the contractor/developer or their agent directly approaching the Association rather than offering the property for sale via public advertisement on the property market?

NIHE DPG may request further clarification and information as part of the project approval process.

Off the shelf properties will be subject to inspection and independent valuation by the Association prior to purchase. The property as advertised on the property market or offered for direct sale by a contractor/developer or their agent shall meet the Association’s requirements and those of the Housing Association Guide, as far as is reasonably practicable. The opportunity for alteration to the property is not provided in this procurement albeit with the exception of minor ancillary works.

Acquisition of Off the Shelf properties is to be via a purchase contract. Association shall not enter into negotiations with the vendor to carry out alterations to the property as marketed, other than those that would be deemed to be minor or ancillary in nature. This could be construed to change the nature of the contract from a purchase to a construction works contract requiring a procurement exercise compliant with PCR2015 and NIPPP.

If an Association engages with a developer at some point prior to completion and specifies detailed or significant construction works within a purchase contract for an OTS property it is likely to be construed as the Association exerting a decisive influence on the project and therefore creating, in effect, a construction works contract which should have been procured.

For further guidance on acceptable minor or ancillary works see Annex D Specific ESP & OTS Design Issues. No additional allowances will be available to the Association in relation to the cost of any minor ancillary works; consequently such costs should be set against the 'on-cost' allowance due to the association.

For further guidance see Scheme Approval Forms:

• TA1 Explanatory notes
• NT1 Explanatory notes

An Association shall, under no circumstances, engage a Clerk of Works (COW) to regularly monitor the quality of work during the construction phase.

The purchase contract may have Special Conditions annexed thereto requiring the vendor to provide legal and/or technical documentation to the Association which may facilitate, amongst other things, future property management, for example, documentation relating to Title, statutory approvals, drawings, specifications, health and safety files or the like.

OTS dwellings generally must meet the design requirements contained in the Department’s Design Standards including Annex D-Specific ESP and OTS Design Issues and, on completion, must have a ‘structural’ life expectancy of at least 60 years and comply with all Statutory Requirements on completion of the construction works. The Department’s Design Standards can be found in the Design standards section of the HAG Development Guide.

An Association's Board of Management is responsible for the effective management of all procurement risks including those associated with OTS purchases. It is therefore recommended that Associations seek legal advice in constructing their contracts for OTS purchases.

For further guidance see:

• Band 2 Off-the-Shelf Schemes
• Procurement Guide - Development Options

Off the shelf multi-unit properties - OTS properties can vary considerably in terms of construction type and complexity. This will undoubtedly influence the approach taken by an Association in assessing whether to procure a property via this delivery route. OTSs are considered to fall into two broad categories:

• traditional Single Unit Residential Property: terrace; semi-detached; or detached properties; and
• multi-Unit Property: flats; apartments; or maisonettes in a block. These are characterised by common access/egress areas, complex services and additional statutory requirements for fire detection/evacuation due to increased risks. Associations may consider the purchase of an individual flat or apartment in a complex or potentially a complete block.

In comparison with a traditional residential property, a more detailed investigation of structure, mechanical and electrical services, fire evacuation/detection requirements, statutory compliance etc. will be required for Multi-Unit Properties. Associations when considering the procurement of OTSs which are Multi-Unit Properties shall when scoping inspection reports and appointing consultants take account of the complex nature of these types of properties. In addition maintenance requirements are highly likely to be more onerous. The Association should consider the appointment of a multi-discipline professional team to inspect the property, assess it and to provide expert advice to minimise risk when procuring such properties.

In schemes with: common areas; mixed tenures; management agents; and companies, Associations shall ensure that there is clarity on ownership and responsibility for:

• external element, common areas and structure;
• routine, cyclical and planned maintenance requirements;
• statutory compliance;
• lease holder contributions; and
• facility management.

Associations should consider the appointment of legal consultants with appropriate experience and knowledge of the varied contractual relationships in Multi-Unit Properties to provide guidance as required by the Association.

Consultation may be required for the procurement of OTS properties, when the purchase of 6 or more units is planned in one location. The consultation process should last for a minimum of three weeks and is deemed to have commenced on the issue of neighbour notification letters.

For further guidance see consultation.

Works only (new build) - involve the development of land already in the Association’s ownership and for which no acquisition costs (other than legal charges) apply. Development costs are assessed against the TCI particular to works only (new build) scheme.

More information: Band 3 – Other Schemes: new Build/ Rehabilitation/ Re-improvement/ Supported Housing/ Works only

Social Housing via Planning Gain (SHPG)

Councils in Northern Ireland have the power to allocate land for housing to facilitate the appropriate mix of housing tenures which can include affordable housing. Councils will identify the requirements and policies for delivery of affordable housing in their Local Development Plans which will include Social Housing via Planning Gain (SHPG).

Affordable Housing as defined by DfC, is stated as being applicable to the DfI Strategic Planning Policy Statement and for the purposes of planning. The DfC definition of affordable housing is available.

The HA Guide identifies the required procedures and standards for the delivery of ‘Social rented housing’ via planning gain as a requirement of Local Development Plans.

The Housing Executive is responsible for the assessment of social housing need under the 1981 Housing Order and produces the Social Housing Needs Assessment for each council area. The Housing Executive are also a statutory consultee where a development proposal is likely to require a statement of affordable housing need, thus assisting councils in the process of identifying affordable housing requirement when assessing proposed developments.

Councils’ Local Development Plans will define the parameters when a requirement for Social Housing via Planning Gain will form part of the planning approval process. The requirement may be applied on the basis of the number of units proposed to be constructed or on the development plot size, with the council requiring a percentage/number to be affordable housing as defined by DfC.

To implement the requirement for a developer to construct affordable housing, councils will include as part of the planning process:

1. ‘Section 76’ planning agreement shall be signed. Section 76 of the Planning Act (NI) 2011 relates to legally binding contract(s) which are usually entered into between a council and a developer, before planning permission is granted; or
2. ‘Planning condition’(s) will be applied to approvals.

The number of units or percentage of social rented housing to be provided as a Social Housing via Planning Gain (SHPG) scheme will be determined by the relevant council with input from consultees including NIHE. The requirement will be defined either via a planning condition or as part of a section 76 planning agreement. Therefore, any social rented housing units in excess of the percentage or number defined by the council as part of the planning permission, would not be eligible to form part of a Band 5 SHPG scheme. The control lies with the council and its’ consultees to identify the number of units/percentage to provide as part of planning permission, however gaining planning permission may not necessarily guarantee Scheme Approval and HA Grant funding.

Housing Association Procurement of Affordable Housing delivered as Social Housing via Planning Gain (SHPG)

Social rented housing to be constructed as affordable housing as part of either a Section 76 Planning Agreement or as a Planning Condition, shall be stated as being required to comply with the standards and processes identified in the Housing Association Guide. Housing Associations shall note that the purchase of social rented housing as Social Housing via Planning Gain is subject to the site registration, scheme approval and condition of Housing Association Grant as detailed in the Housing Association Guide and they shall ensure compliance with Guide requirements.

Social rented housing to be procured as SHPG shall comply with the Housing Association Guide, Design Standards; in particular the standards for new build ‘General Needs Housing’ and if appropriate those stated for ‘Wheelchair Housing’ or ‘Housing for older people’. The required DfC Design Standards for social rented housing to receive Housing Association Grant or use Disposal Proceeds Funds are available.

The social rented housing shall be acquired via a purchase contract for the completed housing units and for first–time occupation by the Housing Association’s tenants. When entering into purchase contracts with Developers the Housing Association should seek legal advice in respect of the established case law (Helmut Muller [2010] EUECJ C-451/08). It is suggested that the Association carry out a check on the 5 key elements to a public works contract namely:

1. there is a contract in writing
2. for pecuniary interest
3. the contractor has a direct or indirect obligation to carry out the works
4. there is a direct economic benefit to the authority
5. the authority specifies its requirements by taking measures to define the type of work or by having a decisive influence on its design

The Housing Association should share the results of these checks with their legal consultant for a legal opinion to help identify if the proposed purchase contract is or is not liable to procurement law/policy? This does not preclude the Association from entering into a conditional purchase contract on the basis of the developer’s proposed detailed design, specification etc. which shall confirm compliance with the Housing Association Guide. Associations should note that the final payment tranche of grant will not occur until construction of the housing units are certified as complete and Housing Association Guide compliance has been confirmed and agreed by the Housing Executive’s DPG.

Housing Associations shall avoid decisive influence on the design, layout, structure or specification of the proposed housing units that has the potential to change the nature of the procurement from a purchase to a works contract and therefore creating the subsequent risk of challenge under the Public Contract Regulations 2015. This does not prevent the Housing Association providing advice to a developer on the implementation of Housing Association Guide, Design Standards or in specifying ancillary works. As general guidance for Associations, ancillary works should not exceed those that a private individual would normally expect to specify when purchasing a new home ‘off-plan’ from a developer, or prior to completion of the works. No additional allowances will be available to the Association in relation to the cost of any minor ancillary works; consequently such costs should be set against the 'on-cost' allowance due to the association.

An Association shall not engage a Clerk of Works (COW) or other representative to regularly monitor the quality of work during the construction phase. It is however acceptable, when the housing units are nearing completion or completed for an association’s representative to confirm that the properties constructed are in compliance with the design and specification requirement as referenced in the purchase contract.

The purchase contract may have Special Conditions annexed thereto requiring the vendor to provide legal and/or technical documentation to the Association which may facilitate, amongst other things, future property management, for example, documentation relating to title, statutory approvals, drawings, specifications, health and safety files or the like.

An RHA's Board of Management is responsible for the effective management of all legal risks associated with a purchase contract. It is therefore strongly recommended that RHAs seek legal advice when drafting or considering their purchase contracts.

Types of social rented housing to be procured by SHPG

SHPG properties can vary considerably in terms of construction type and complexity. This will undoubtedly influence the approach taken by an Association in assessing whether to procure a property via this delivery route. SHPG are considered to fall into two broad categories:

• traditional single unit residential property: terrace; semi-detached; or detached properties; and
• multi-unit property: flats; apartments; or maisonettes in a block. These are characterised by common access/egress areas, complex services and additional statutory requirements for fire detection/evacuation due to increased risks. Associations may consider the purchase of an individual flat or apartment in a complex, or potentially a complete block.

In comparison with a traditional residential property, a more detailed investigation of structure, mechanical and electrical services, fire evacuation/detection requirements, statutory compliance etc. will be required for Multi-Unit Properties. Associations, when considering the procurement of SHPG which are Multi-Unit Properties, shall, when scoping design reviews, inspection reports and appointing consultants, take account of the complex nature of these types of properties. In addition, maintenance requirements are highly likely to be more onerous. The Association should consider the appointment of a multi-discipline professional team to review the design and inspect the property, assess it and provide expert advice to minimise risk when procuring such properties.

In schemes with: common areas; mixed tenures; management agents; and companies, Associations shall ensure that there is clarity on ownership and responsibility for:

• external elements, common areas and structure;
• routine, cyclical and planned maintenance requirements;
• statutory compliance;
• lease holder contributions; and
• facility management.

Associations should consider the appointment of legal consultants with appropriate experience and knowledge of the varied contractual relationships in Multi-Unit Properties to provide guidance as required by the Association.

Consultation may be required for the procurement of SHPG properties, when the purchase of 10 or more units is planned in one location.

For further guidance see Consultation - Scheme Approval.

Existing dwellings

Acquisition and works (rehabilitation) - is where existing dwellings are purchased and require substantial repair and improvement, conversion or extension for social housing for rent use. The total works cost of each unit should exceed £10,000 (excluding VAT). Existing dwellings generally must meet the design requirements contained in Design Standards Guide and, on completion, have a ‘structural’ life expectancy of at least 30 years and comply with all Statutory Requirements on completion of the construction works.

Works only (rehabilitation) - is similar to Acquisition and Works (Rehab), but where the Association contracts for the construction works only, and involves the development of property already in the Association’s ownership which has hitherto been unimproved. For example, this scheme type would apply in the case of 'gifted' or donated property. Development costs are assessed against the TCI particular to works only (rehab) schemes.

Rehabilitation ‘works only’ to a previously HAG funded scheme should be dealt with under the association’s major repairs programme.

Re-improvement schemes - are a category of ‘works only’ rehabilitation to Association owned property.

Definition of re-improvement schemes - Improvement is generally defined as “providing something that was not there before”. Improvement works to properties requiring substantial improvement and repair may be eligible for grant aid. However to be eligible the works must normally involve:

• a major redefining of the layout and/or
• a fundamental change in the accommodation and
• where the size, layout and type of the existing accommodation is no longer suitable for the purpose originally intended

Examples of improvements can include: alterations to the dwelling/ block to provide additional/ reduced/ adequate dwelling/ communal space, or conversion of a dwelling or dwellings, or communal space to provide additional dwelling units.

N.B. Works to the property may be either improvement and repair, or conversion and repair, but not repairs only. Like-for-like replacements, repairs and maintenance type works are not eligible for grant-aid.

In deciding whether individual items in a comprehensive scheme are eligible for grant-aid, the “providing something that was not there before” test must FIRST be applied.

As an example, re-roofing a defective tiled or slated roof is a ‘repair’ and does not qualify for grant-aid. However, if part of the re-roofing involves the first-time provision of an underlay of roofing felt, all the associated work would qualify for grant. Similarly, replacing defective plaster would not normally qualify for grant, unless disturbed due to the necessary installation of a damp-proof course or other waterproof treatment, or necessary thermal insulation provision.

Re-improvement schemes eligibility criteria - In order to be considered for grant-aid, the property must fulfil ALL of the following eligibility criteria:

• be in the ownership of the Association and
• have been - at some time in the past - the subject of some form of grant or subsidy (grant or otherwise) for construction, rehabilitation or conversion and
• eequire substantial improvement and repair (see definition above).

Re-improvement schemes eligible repair works - Subject to meeting the definition and eligibility criteria, the following repair works can only be considered for grant if being carried out in association with ‘improvements’ or as part of a comprehensive re-improvement scheme:

• first-time major changes to the building fabric to provide adequate weatherproofing, waterproofing, thermal or sound insulation to modern standards and/or
• first-time installation of necessary fire precautions – including structural alterations, fire compartmentation, fire exits, smoke/ heat detectors and fire alarms/sounders, front and rear access ramps, lifts, stairs, central heating, electrical services etc

Permitted timescales for funding re-improvements - A re-improvement scheme will not normally be approved less than 15 years after the date of Practical Completion of the original scheme in the case of rehabilitation projects, and not less than 30 years after the date of Practical Completion of the original scheme in the case of new build projects. However, re-improvement schemes may be approved within shorter timescales in cases where the condition of the property is such that it is extremely difficult to let or it is causing a serious health risk to tenants.

Additionally, in the case of existing Supported Housing schemes, early re-investment may also be considered where there is a housing need for additional units to meet the needs of the current client group. This exception can apply where the only feasible design solution available is to provide the additional units as an integral part of the existing scheme rather than as a separate new build extension.

The housing need must be supported by a robust business case approved and prioritised by the relevant Area Supporting People Partnership. The business case should demonstrate the value for money efficiencies in capital and/or revenue costs delivered by the re-improvement option as compared to other options. Only those works deemed essential to the provision of the additional units will be considered for grant aid.

The Association’s delivery of its maintenance responsibilities, as set out in the Housing Maintenance Guide, will be subject to consideration when assessing the reasonability of such requests. In such cases, the TCI will normally be reduced on a pro rata basis to the 15 or 30 year rule. In re-improvement schemes normally a rent increase is required to service the Private Finance element.

Re-improvement standards - The improvement or conversion works carried out in a re-improvement scheme should, where practicable, bring the property up to current design and construction standards, having regard to the Department's Design and Procurement requirements (see Design Standards Guide and Procurement). The Association should attempt wherever possible to re-improve entire buildings rather than individual units within them. However in the case of blocks of flats and houses converted into flats, it may not always be possible to re-improve the whole property because of the problems of gaining vacant possession. Exceptionally therefore it will be acceptable for individual flats or parts of buildings to be re-improved separately where necessary.

More information: Band 3 – Other Schemes: new Build/ Rehabilitation/ Re-improvement/ Supported Housing/ Works only

Existing Satisfactory Purchases (ESPs) - The purchase of ESP’s can be a useful method of procurement in areas of high need where the opportunity to develop is very limited. The ESP Multiplier is used where existing satisfactory properties are purchased, after inspection, following an open advertisement, by the vendor’s agent, in the property market, unless the property is being offered for sale back to the Association under the terms of the Statutory House Sales Scheme or is being sold directly to the Association by the NIHE. An ESP shall have been occupied as a residence for at least 12 months from completion. The conditions of these properties must be such that they do not require full rehabilitation, but may require a degree of repair/ checks/ upgrading to bring them up to an acceptable standard for letting, works are procured after the purchase contract has been completed.

ESP properties can vary considerably in terms of construction type and complexity. This will undoubtedly influence the approach taken by an Association in assessing whether to procure a property via this delivery route. ESPs are considered to fall into two broad categories:

• traditional single unit residential property: terrace; semi-detached; or detached properties and
• multi-unit property: flats; apartments; or maisonettes in a block. These are characterised by common access/egress areas, complex services and additional statutory requirements for fire detection/evacuation due to increased risks. Associations may consider the purchase of an individual flat or apartment in a complex or potentially a complete block.

In comparison with a traditional residential property, a more detailed investigation of structure, mechanical and electrical services, fire evacuation/detection requirements, statutory compliance etc. will be required for Multi-Unit Properties. Associations when considering the procurement of ESPs which are Multi-Unit Properties shall, when scoping condition reports and appointing consultants take account of the complex nature of these types of properties. In addition maintenance requirements are highly likely to be more onerous. The Association should consider the appointment of a multi-discipline professional team to inspect the property, assess the condition and to provide expert advice to minimise risk when procuring such properties and to ensure the required upgrading/repair works are within the ESP financial limits.

In schemes with: common areas; mixed tenures; management agents; and companies, Associations shall ensure that there is clarity on ownership and responsibility for:

• external elements, common areas and structure
• routine, cyclical and planned maintenance requirements
• statutory compliance
• lease holder contributions and
• facility management

Associations should consider the appointment of legal consultants with appropriate experience and knowledge of the varied contractual relationship in Multi-Unit Properties to provide guidance.

Consultation may be required for the procurement of ESPs when 6 or more units are planned to be purchased in one location. The consultation process should last for a minimum of three weeks and is deemed to have commenced on the issue of neighbour notification letters.

For further guidance see consultation.

The repairs, checks and upgrading works for an ESP unit should not exceed £15,000 excluding VAT. If an Association needs to spend in excess of this limit to deliver the property to the required standard, the scheme cannot be considered an ESP. The correct delivery route would be as an Acquisition and Works (Rehabilitation) scheme, requiring DPG approval. (It should be noted that Acquisition and Works (Rehabilitation) schemes are delivered to a higher standard than an ESP.)

The property must be in the Association’s full ownership prior to any works being undertaken by the consultants and contractor appointed by the Association in line with best practice procurement policy. Such appointments are to be in compliance with the Procurement section of this guide.

• £15,000 is the amount of money included in the TCI calculation for the checks, repairs and upgrading work
• tariff schemes get the £15,000 included in TCI regardless of whether £1 or £14,999 is spent and
• a non-tariff scheme gets the actual money it has spent, subject to the assessment of qualifying costs and the specified ESP cost limit

In comparing costs for TCI purposes qualifying costs include:

• purchase price
• repair/checks/upgrading works (up to £15,000 per unit)
• VAT on repair/checks/upgrading works and
• ESP on-cost, on purchase price, works and VAT

In looking for suitable properties to acquire Associations need to ensure that such properties are in good condition and meet satisfactory standards. The properties need not meet new build standards, but generally must provide satisfactory accommodation, appropriate services, a safe environment etc. Although it is not essential to meet all the design requirements contained in Design Standards Guide, it is essential that the condition and the suitability of the accommodation will still fully meet the needs of the people to be housed. For more information on ESP Design Issues.

For further guidance see Specific ESP Design Issues

Procurement - In arranging for the repairs/checks/upgrading works to be undertaken Associations are reminded that the method of procuring the repairs/checks/upgrading works must comply with the requirements of Procurement as set out in Northern Ireland Public Procurement Policy (NIPPP) and associated/applicable Procurement Guidance Notes to ensure Best Value for Money has been obtained.

For further guidance see Procurement Guide

Completion - Associations are reminded that the actual cost of undertaking the repairs / checks / upgrading must be identified prior to application to the NIHE (DPG) for project approval, and must be on a ‘firm’ price basis as there is no provision for adjustment upwards on the application for the final Tranche. Cost overruns will not be funded.

Grant is paid in 2 Tranches, at Acquisition and Completion stages, in accordance with Claiming Payment.

An authorised statement of the repair/checks/upgrading works completed showing the actual costs is required to be submitted to support the completion claim. The authorised statement should take the form of a table/list on Association headed paper showing each address, an itemised complete list of repairs for each individual property with associated costs beside each individual item. The full works costs for each property must be individually totalled to equal the full amount paid to the contractor in respect of that property and finally, be signed by an authorised signatory for the association. All works must be declared. The total cost of works carried out to all properties in the scheme must tally with the information provided on the GP2 form. This statement is then submitted to NIHE (DPG) along with the completed GA1 payment request form. See Forms within this guide and Claiming Payment for details. All relevant invoices must be retained on the association’s file for inspection as required.

N.B. The completion tranche can only be paid once the acquisition has completed and any works have been carried out.

N.B In non-tariff schemes grant payable will be adjusted downwards where costs come in under the approved amount. Where actual works costs exceed the £15,000 ESP threshold, depending on the no of units, the scheme must be re-approved as a Rehabilitation Acquisition & Works scheme.

For Further Guidance see Band 1 ESP