1  Overview

1.1  Purpose

1.1.1  This chapter sets out the conditions and procedural requirements which aim to ensure that public subsidy is:

• Used correctly in accordance with general fiscal legislation.
• Is accounted for accurately
• That the correct procedures are carried out. 

1.2  Context

1.2.1  Use of Social Housing Grant is controlled by the Social Housing Grant (Capital) General Determination 2003 , see Introduction section 1

1.2.2  The use of Purchase Grant (for Right to Acquire and Social HomeBuy) is also controlled, by statute. How? Click on the asterisk.  

 

1.2.3  The use of Recycled Capital Grant is controlled by the Recovery of Capital Grants and Recycled Capital Grant Fund General Determination 2006 - see Recovery 1.2.1

 

1.3 Other Sources of Funding 

1.3.1   SHG can be combined with other sources of funding, including:

• Long-term loan from a bank / building society / other (a mortgage)
• Recycled Capital Grant Fund  - see the Recovery chapter  
• Disposal Proceeds Fund  - see the DPF chapter
• Other public subsidy e.g gap-funding Grant from a local authority
• Discount on land from the public sector
• Discount on land from the private sector (arising from the local authority planners imposing a Planning Obligation, enforced through a S106 Agreement).
• RSLs’ own funds
• Charitable donations. 

1.4 Other Public Subsidy / Additional Affordable Housing Subsidy 

1.4.1  Previously the CFG has drawn a distinction between Deductible and Non-deductible Other Public Subsidy (OPS,) with Deductible OPS reducing entitlement to grant.  This concept is no longer relevant, with grant levels for projects set through competitive bidding rather than a formula.  Grant is not adjusted due to the receipt of OPS.

1.4.2 However, the competitive assessment of bids is conducted in terms of value-for-total public-subsidy, and hence a value for relevant OPS needs to be given (note this applies to Unregistered as well as Registered organisations.)  Relevant OPS is termed Additional Affordable Housing Subsidy.  As funding streams are subject to frequent change we do not provide a listing of those which should be considered Additional Affordable Housing Subsidy.  Instead all subsidy should be treated as Additional Affordable Housing Subsidy where:

• it is from a public body;
• it is paid directly to the developing organisation; and
• it is for housing works which are part of the same building contract as the SHG funded works;
• except: (i) where the subsidy is paid to reach higher standards than Agency minima in an area for which we set standards; (ii) where the subsidy derives from a commuted sum paid by a developer under a S106 obligation on another site.
  

1.5 Other Public Subsidy: Discounted Land

1.5.1  Where land is sold to the developing organisation at a discount this is considered  Additional Affordable Housing Subsidy for the purpose of bid assessment.  The Additional Affordable Housing Subsidy will be the difference between the total consideration paid by the RSL and the Restricted Value of the property. The Restricted Value takes into account any reduction in value brought about by any fettering of the future use of the property by the seller.  If no such restrictions are placed on the property, the Restricted Value will be the same as the Unrestricted Value. 

For an example click on the asterisk.   

 

1.5.2 Both the Restricted Value and the Unrestricted Value should reflect the uses for which a planning permission is likely to be obtained.

1.5.3 RSLs must obtain professional valuation advice on the effect on value of any restrictions placed on land by the seller.

1.5.4 RSLs must also note the difference between "total consideration" and "price".  The Agency will count the organisation's scheme as being in receipt of Additional Affordable Housing Subsidy if the value of the monetary consideration paid (the price) AND the consideration-in-kind provided is less than the Restricted Value of the property.

1.5.5 The Government is currently considering the production of a Guide to valuing local authority land that is sold for social housing purposes.