Band 3 - Other schemes: New Build/ Re-improvement/ Rehabilitation/ Supported Housing/ Works Only

Part of: Housing Association Guide, Development Guide, Scheme Approval

Certain milestones need to be achieved before payment of grant. These milestones should be detailed in the timetable.

Development Milestones

Prequalifications are the major scheme development ‘steps’ or ‘milestones’ that an Association must comply with in order to meet the agreed timetable in the Social Housing Development Programme (SHDP) and the Departments’s project approval criteria.  Each ‘step’ or ‘milestone’ represents what must be achieved or obtained at a particular stage and, in association with other Certifications, allows the Association to apply for project approval and payment of Grant at Acquisition stage.  

Each ‘step’ or ‘milestone’ is an essential part of a project and uncertainty or failure in any of the ‘steps’ can delay or put at risk the project.  It is essential that the Association works with the NIHE (DPG), various stakeholders, its Solicitor and Consultants on all the Prequalifications. Each ‘step’ or ‘milestone’ completed or still to be completed allows the progress of a scheme to be measured by the Association.  

Housing Need - All Schemes

Housing need must be already identified and site/scheme included in the Social Housing Development Programme (SHDP).  The Association will require a letter from the NIHE supporting the need.  The Association will of course have to write to the NIHE requesting support for the Association’s proposals, a copy of which shall be retained on file.  The breakdown of property types on both letters must correspond.

Valuation - All Schemes with an Acquisition Stage

This will require the valuation of the site prepared by an independent valuer.  The Association will of course have to fully brief the valuer on the site, site boundaries, development constraints etc.  For more guidance on Acquisitions & Valuations.

Consultation

Associations are statutorily obliged to consult secure tenants on decisions of housing management as defined in Article 40(2) of the Housing (Northern Ireland) Order 1983.  However to secure best value and enhance public involvement when making decisions, the range of issues on which Associations should consult needs to be more extensive. For more guidance on Consultation.

Land/Property

Legal Aspects - All Schemes

Associations must ensure that the normal pre-purchase legal and site/property checks have been carried out by the Association’s Solicitor and the land/property to be developed offers good title, is in the Association’s ownership and no restrictive covenants exist that which would impede the development of the land/property as proposed.

Details of any restrictions, easements, covenants, pre-emption clauses or any provisions of the contract, draft lease or conveyance which might adversely affect the proposed scheme must be referred to the NIHE (DPG) for notification prior to the Association being committed to the acquisition of the property.

Leasehold - The interest to be acquired must be freehold or leasehold for a term of years certain.  Associations should always seek to acquire the vendor’s full interest in a site or property, rather than accepting a newly created lease or sub-lease.  In other words:

  • if the vendor owns the freehold, the Association should seek to buy the freehold;
  • if the vendor owns a long lease or sub-lease, the Association should seek to buy the residue of the leasehold estate, provided the lease or sub-lease still has at least 150 years to run

Where, however, an Association finds it impossible to negotiate a purchase on the above terms and judges that a HAG-subsidised scheme should still proceed on that site or property, the Association may acquire a newly created lease or sub-lease (depending on whether the vendor owns the freehold or leasehold interest, respectively). The terms of such a lease or sub-lease should be as long as possible and at least 35 years for Rehabilitation schemes and 65 years for New Build schemes at the date of start on site;

Auctions and Tenders - where the proposed purchase is via auction or tender, the NIHE (DPG) approval will take the form of a letter of approval, in principle only.  If the Association is successful at auction/tender, it must also confirm to the NIHE (DPG) forthwith so that a full Project Approval may be issued.  The Association must state on its Project Approval application the date by which a decision is required.  The NIHE (DPG) will normally need a minimum of 7 working days to consider the application for Project Approval.

Note:The Association must be aware that it is normally expected to execute the contract immediately following a successful bid at auction.  It must therefore obtain from its solicitors confirmation that the title offered is satisfactory and that the conditions of sale permit the proposed development.  It must also be satisfied that it can meet any conditions of the approval in principle.  The Association needs to be aware that it is working at risk without any formal commitment from the NIHE (DPG).

Acquisition of Tenanted Property - in normal circumstances an Association will wish to improve properties that are acquired with sitting tenants as soon as it is practicable to do so.

Occasionally however a tenant will be unwilling to move out of the property and it will be impossible to undertake the improvement works.  In some cases, the Association is aware of the problem at the outset, before buying the property, in other cases the situation will not become apparent until a later stage.  In either type of case, the Association incurs initial costs upon which interest continues to accrue for an indefinite period.  To resolve this problem the following alternative procedures can be used:

  • where the Association is aware at the outset that the tenant will not move and that improvement works cannot be effected within 18 months of completion of property purchase, the Association may apply for Project Approval as if the property were an Off-the–Shelf purchase.
  • where the Association has proceeded under the terms of a full acquisition and improvement scheme, but has been unable to improve the property within 18 months of completion of property purchase, the NIHE (DPG) will review the case and will ask the Association to confirm the proposed Start on Site date.
  • if the Association is unable to confirm a date for Start on Site, the NIHE (DPG) will reassess the scheme as if it had been originally presented as an Off-the-Shelf purchase and will re-determine grant. For more guidance on Revised Approvals

When the property is eventually available for improvement, the Association will make a new project approval application for a Works Only scheme. Any grant already approved will be brought into the grant calculation as part of the project approval.

Planning

Acquisition of Land Schemes: As a minimum, this will require liaison with Planning Service or an appropriate opinion from a Planning Consultant to ensure that the site is suitable for housing use and the proposals would be broadly acceptable.  At an early stage, it is unlikely that Planning Service would be prepared to provide written confirmation on the proposals, especially as some matters can only be resolved by an application for full planning permission.  In such cases the Association and its Consultants must ensure that after consultation:

  • the proposals would be broadly acceptable to Planning Service, subject to a detailed Planning Application being made; and
  • a note of the various Association/Consultant contacts and matters discussed with Planning Service on the site and proposals must be kept on the Association’s file for audit purposes

NIHE (DPG) would expect the scheme, and negotiations with Planning Service, to be at a more advanced stage.  This is necessary to reduce the delay between the Association acquiring the land, and obtaining full Planning Permission to allow the Start-on-Site stage.

Rehabilitation

‘Permitted Development’ would normally cover any minor alterations/changes to the dwelling(s).  In larger schemes and in Conservation Areas etc, Planning Permission may be required for alteration/change.       

Site Appraisal

Site investigation, identification of potential constraints and assessment of estimated site development costs are the core elements in the site appraisal process. More detailed guidance on Site Appraisal can be found in the Design Standards Guide.

All New build Schemes

The Association must appoint Consultants to assess the suitability of the site for its intended purposes and to identify any problem areas that would affect the proposals and costs.  This will require assessing the site and proposed need in relation to:

  • the location;
  • vehicular/pedestrian access to the site;
  • services available; and
  • the nature of the ground conditions above and below ground for economic development of the site

In respect of the nature of the ground conditions, it may not be practical to confirm the nature of the conditions below the ground at an early stage, and reliance may have to be placed on information readily available on adjacent sites. If the Association is not satisfied with the information obtained, it is advised to obtain a specialist report.  Areas that may need special investigation include:

  • slopes greater than 1:10;
  • reclaimed ground, peat layers, rock;
  • landfill sites, refuge tips;
  • water courses, potential for flooding, high water table
  • existing services;
  • pits, soft ground, potential mining subsidence;
  • wells, old mines, old foundations/buildings;
  • environmental and Archaeological features etc;
  • aggressive chemicals in the ground, contaminated land etc

Rehabilitation

The Association must appoint a Consultant to assess the suitability of the dwelling for its intended purpose and to identify any problem areas that would affect the proposals and costs.

Tender Stage

In obtaining tenders for the works the Association must select the procurement method it considers most cost effective, subject to the criteria and advice contained in Procurement.

On receipt of tenders - the Association must reassess the scheme costs.  If scheme costs at tender stage exceed the Project Approval estimate, the Association will need to consider reductions and/or how the additional costs will be met.  It is important to bear in mind that the eligibility for grant for cost overruns is not determined until Final Cost Assessment at Practical Completion, so the Association needs to take a view of how it will meet:

  • either - the total amount of the cost increase (in the event that none of the overrun is eligible for grant);
  • or - the Association’s share of the cost increase as determined by the grant percentage set at Project Approval.

Consultants

Acquisition of Land Schemes

The Association must appoint Consultants to assess the site constraints and to prepare - and cost - proposals for meeting the proposed need.  The Association must properly brief Consultants and proposals must be developed to at least RIBA  ‘Plan of Work’- Scheme Design Stage or equivalent.  This completes the brief and decides on particular proposals, including planning arrangement, appearance, construction methods, outline specification, cost issues and approvals etc.  Realistic outturn cost estimates must be prepared for the proposals to allow completion of the Forms and TCI comparison.  Where the scheme is expected to exceed TCI, the reasons for this must be identified and costed.  Appointments must meet with the requirements of Procurement.

Rehabilitation

The Association must appoint Consultants to assess the condition of the existing dwelling and its environs, and to prepare - and cost – proposals or necessary repairs/checks/upgrading etc to meeting the proposed need.

Economic Appraisal

An Economic Appraisal must be prepared to take account of alternative sites and proposed solutions for the intended need. The EA should include any qualitative benefits the project may bring to sustaining local communities. Where costs exceed TCI levels, reasons for exceeding TCI must be provided.

Supported Housing schemes

The EA should include confirmation that the proposal has been agreed to proceed by the relevant Area Supporting People Partnership (ASPP) and that revenue streams are in place, (see related requirement for memoranda of understanding) For more information on Economic Appraisal.

Scheme Documentation

Submissions for other schemes need to include various documents, if all supporting documents are not present the association will be contacted by NIHE.

Other Schemes - New Build/ Reimprovement/ Rehab/ Supported Housing/ Works Only Submissions – Scheme Documentation

All Schemes (including Disposals Proceeds Fund schemes) - Submissions must include:

  • economic appraisal;
  • site location plan (1:1250 or 1:2500). The plan must contain either the Association’s licence number or Ordnance Survey acknowledgement;
  • Site Layout Plan (1:200);
  • block plans (1:100) (if applicable);
  • where applicable, copy of DPG's permission to demolish and confirmation (or otherwise) that recoupment of grant is required from a previously HAG fund scheme.
  • Density statement (mandatory for schemes over £3.5m grant and, where requested by DPG for schemes over TCI)

For more see Forms

  • TA1 Explanatory Notes
  • NT1 Explanatory Notes
  • Scheme Submission Documents – Ready Reckoner

Costs over TCI

The Association’s explanation for costs exceeding TCI, the outline specification and the structural/ground condition report (if appropriate) should together cover all abnormal cost factors and ensure that the content of the proposals can be understood. The Association should also include a cost analysis.

Note: In order to expedite matters the Association should submit readily available documentation in support of this paragraph.  Supporting documentation will vary depending on scheme type but should, as a minimum, include an independent Consultant’s or Technical Agent’s report confirming that the scheme represents value for money.  Where submitted documentation does not contain sufficient detail to permit assessment the NIHE (DPG) will contact the Association.

Supported Housing Schemes Only

  • memorandum of understanding or letter of support from sponsor agency
  • copy letter from JMA Partner confirming agreement in principle to enter into a JMA

Project Approval

The Project Approval (Form NT2/TA2) will set out any conditions attached to the approval, which have to be met by the Association.

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