These Funding conditions set out the requirements that must be met by a Registered Social Landlord (RSL) when using Social Housing Grant (SHG), Purchase Grant RTA/SHB provided by the Homes & Communities Agency (HCA) and its predecessor body the Housing Corporation (HC).

Grant Conditions applied to all Programmes

1 All funding is subject to the provisions of the Housing Act 1996 (or any amendment or re-enactment thereof) and any determinations made under that Act by the HCA.
 
2 All Grant applications and other scheme submissions relating to the achievement of forecast milestones must be made, and all Grants provided must be used, in accordance with the HCA's published criteria, procedures and audit arrangements. Non compliance with the HCA's procedural requirements could result in the withdrawal of allocations and recovery of Grant.
 
3 Grant funding is conditional upon the RSL meeting the TSA Regulatory Judgements; this will be monitored through regulatory engagements and will be assessed through the TSA's Self Assessment Compliance Statements. These judgements include standards for the housing and related services that RSLs should provide to their residents and communities.
 
4 Where the RSL is undertaking the role of Employer/Client on developments for which Grant is requested, funding is conditional upon the RSL undertaking grant funded projects in accordance with the principles set out in the '2012 Construction Commitments -Affordable Housing Provider version'. The HCA will exercise discretion in relation to RSLs undertaking small or occasional projects with insignificant construction activity.
 
5 All Grant paid must be applied to the provision of housing and must be used as prescribed in HCA guidance. RSLs should ensure appropriate financial appraisal of schemes to confirm their viability both during the development period and in the long term. Where RSLs have specified that schemes are to be developed to higher standards and/or incorporate Modern Methods of Construction (MMC) the schemes must be developed to incorporate these features unless specific prior approval to waive certain aspects is granted by the HCA. The dwellings produced should meet the HCA's Design & Quality Standards (April 2007) or, in limited exceptional circumstances as agreed in advance by the Agency, the HCA's Scheme Development Standards (April 2003). Housing Quality Indicators (HQI) assessments should be carried out at Feasibility, Scheme Design and Practical Completion stages and recorded within the HQI section of IMS.
 
6 Funding is conditional on the RSL either possessing a legal interest in the property already, or having entered into or an intention to enter into a binding legal agreement to acquire such an interest as part of a scheme, prior to drawing down Grant. Where the RSL is acquiring an interest in the property or where works are to be done, the property must offer good title. Property already in the RSL's ownership must comply with this condition. Where a leasehold interest is to be acquired, the outstanding term should be at least thirty years for rehabilitation schemes, sixty years for new build schemes, and at least 99 years for New Build HomeBuy schemes at the date of purchase completion.
 
7 Under the Programme Partnering Agreement (PPA) route Grant can be paid via the Lead Partner to other RSLs within the partnerships. In this case, the Lead Partner is simply a conduit for payment and not a grant recipient. Lead Partners do not, therefore, need an interest in the site to enable this transaction.
 
8 No member, employee, agent or consultant of the RSL or any partner organisation should have any interest in the proposed vendor, contractor or the land or property to be acquired, including properties purchased by individuals under HomeBuy or other such schemes. This includes any firm, partnership or organisation in which they or their families are involved.
 
9 There should be consistency between the rents, including Housing Benefits (HB) eligible service charges specified by RSLs at the time of Grant allocation, with those agreed at confirmation of Grant stage and those charged from first letting or point of sale onwards. The RSL will therefore charge rents, including HB eligible service charges, on first letting or point of sale which are no higher than those agreed at confirmation of Grant; and thereafter it will only change its rents in compliance with rent restructuring guidelines specified by the HCA. The TSA guideline limits also apply to HB eligible service charges, we expect service charge increases to be within the guideline limit for annual increases. Where this is not the case, the RSL must be able to demonstrate that the service charge increase is based on cost recovery. In the case of intermediate rent projects rents charges will be between market rents and social rents. Any rent increases must be inline with TSA rent requirements.
 
10 Where a scheme is to be developed by a different RSL from that which will ultimately own or manage the scheme, there must be a written agreement between the RSLs on the Terms of Transfer and the rents including HB eligible service charges to be charged for the scheme.
 
11 All funding is subject to RSLs complying with the EU Procurement Rules in relation to Works (Works Directive 93/37/EEC) and Services (Services Directive 92/50/EEC), where applicable.
 
12 RSLs must ensure that house builder warranties suitable for mortgage purposes together with the accompanying 'cover note' as required under the Council of Mortgage Lenders (CML) initiative are available upon completion of homes.
 
13 A sole RSL or single Group RSL following the PPA route is required to commission an appropriately qualified independent consultant or auditor to undertake a programme of self-assessment procedural compliance audit.
 
14 RSLs undertaking delegated development activities in partnership with a 'Lead' RSL under the PPA route shall fully co-operate with the Lead RSL in order to enable the Lead RSL to discharge its functions on behalf of its partner RSLs.
 
15 Where the RSL is acting as the 'Lead' for a group of other RSLs that are participating in the delivery and/or management of homes included within a PPA, then the RSL will be deemed responsible to the HCA for the following additional responsibilities and obligations on behalf of any of the participating RSLs:
 -monitoring programme delivery by all RSL members of the partnership and taking appropriate action to avoid slippage;
 -maintaining an acceptable performance as 'Lead' to be evidenced by HCA Assessment;
 -ensuring that the principles of the '2012 Construction Commitments AHP version' are understood and followed within the partnership;
 -appraising risk and financial status of individual projects and the overall programme;
 -determining the individual RSLs that will carry out development functions for specific projects;
 -usage of suitable legal and procedural documentation for all partnership members including an appropriate and binding agreement between the Lead RSL and the other participating RSLs that sets out the roles and responsibilities of all parties and details arrangements for resolving disputes within the partnership;
 -actively and effectively undertaking the role of Design Champion and promoting good design within the partnership; ensuring that relevant staff are trained in the use of 'Housing Quality Indicators' (HQIs) and in the assessment of projects using the 'Building for Life' criteria;
 -ensuring that house builder warranties suitable for mortgage purposes together with the accompanying 'cover note' as required under the Council of Mortgage Lenders (CML) initiative are available upon completion of homes;
 -where necessary, providing staff training and/or skills assistance to other partner RSLs participating in development activities;
 -where a development is carried out on behalf of another RSL within the partnership, ensuring that the build contract is assignable to the other RSL on completion, together with warranties from all design consultants and sub-contractors and where relevant, obtaining section 9 consent for the transfer;
 -arranging regular progress review meetings involving all members of the partnership;
 -agreeing and facilitating a programme of Quarterly Review meetings with the HCAs lead investor;
 -commissioning appropriately qualified independent 'auditors' to undertake a programme of self-assessment procedural compliance performance tests across the partnership in accordance with the HCA's published standardised terms of engagement. 
 
Additional requirements for: 
 
RENT
 
16 All properties developed for letting at social rents with SHG funding will be subject to the (Right to Acquire) provisions of the Housing Act 1996 (or any amendment or re-enactment thereof), unless they are exempted by Part V of the Housing Act 1985 as amended by the Housing (Right to Acquire) Regulations 1997 or under one of the Housing (Right to Acquire or Enfranchise)(Designated Rural Areas)Orders 1997 or because they are properties funded as part of a Temporary Social Housing scheme. In this context "developed for letting at social rents" includes newbuild, rehabilitation, off the shelf, existing satisfactory purchase, purchase and repair, re-improvement schemes.
 Properties developed for letting at intermediate rents should be let on an assured shorthold tenancy basis and will therefore not be subject to the Right to Acquire. Rent levels should be set at sub-market levels, which should be no more than 80% of market rent. 
 
SHARED OWNERSHIP
 
17 The shared ownership lease used by the RSL must include the Fundamental Clauses detailed in the HCA's Capital Funding Guide. Failure to include, a breach of, or variation (without the explicit consent of the Agency) of the fundamental clauses may be considered a Relevant Event under clause 7(e) of the HCA's The Recovery of Capital Grants and Recycled Capital Grant Fund General Determination 2006, or its replacement, for Grant recovery purposes. 
 
HOMEBUY
 
18 For all shared equity schemes (including MyChoice HomeBuy, Ownhome HomeBuy, HomeBuy Direct and Mortgage Rescue) the RSL must hold a valid Consumer Credit Licence and have received a Direction under section 60(3) of the Consumer Credit Act 1974 [as amended] as required by the HCA's HomeBuy procedures. 
 
PROGRAMME MANAGEMENT/ SYSTEM MANAGEMENT
 
19 The RSL must join and fully participate in the TSA's "Continuous Recording of Lettings System" (CORE); if it has a current development programme and if the RSL owns or manages:
 -more than 250 self contained homes; or
 -more than 250 hostel/shared housing bedspaces;
 Should this be the case, the RSL must join and fully participate in recording both:
 -any lettings made; and
 -any sales of RSL stock, including outright sales and shared ownership schemes, but excluding sales of additional equity shares purchased by existing shared owners (known as 'staircasing').
 
20 The RSL must follow the processes for re-forecasting milestones and for proposing any Grant variation as set out in the HCA's Capital Funding Guide. Decisions on accepting proposed variations will be made in the light of the HCA's available resources and the organisation's progress towards meeting its targets.
 
21 The HCA may impose penalties including amendment or withdrawal of allocations if forecast milestones are not met.
 
22 In the event of the RSL failing to comply with these Funding Conditions or if there is any cause for serious concern about the RSL's performance or financial viability, the HCA reserves the right to suspend funding.
 
23 If an RSL should fail to comply with these conditions specified under sections 18 (3), 20 (4) and 21 (4) of the Housing Act 1996, the HCA may recover all or part of the Grant in accordance with its determinations made under that Act and its published guidance -including the HCA's Capital Funding Guide.
 
24 RSLs must review their security arrangements and in particular:
 -ensure that the Agency is notified immediately if a Security Administrator leaves or changes posts and responsibilities;
 -ensure that the list of IMS users and their authorities is regularly reviewed to ensure they are correct and appropriate;
 -ensure that users are removed from IMS immediately they leave the organisation or are no longer required to work on  IMS; and
 -ensure that IMS passwords are not shared and that RSL users are prevented from entering IMS under a UserID other than their own.
 
25 Failure to comply with the above may result in the withdrawal of the RSL's IMS access.
 
26 The HCA reserves the right to issue additional conditions in year as deemed appropriate and necessary.
 
27 A copy of the relevant Committee minutes of the decision to agree to comply with the Funding Conditions must be retained by the RSL for Compliance Audit/Regulatory purposes. 

A printable PDF version of this information can be downloaded from the link below.

2009-10 National Funding Conditions