Successful places with homes and jobs A NATIONAL AGENCY WORKING LOCALLY Shared Ownership and Affordable Homes Programme Housing Forum 9 June 2016 Michael Clegg

Government’s ambition 1.One million homes by £8bn investment for 400,000 affordable housing starts in : £2.3bn for 60,000 (of 200,000) Starter Homes. Expressions of interest from local authorities for £1.2 billion Starter Home Land Fund (supporting brownfield site preparation) closed 13 May. £5.7bn grant funding for other affordable housing: 135,000 shared ownership homes 10,000 rent to buy homes 8,000 specialist rent homes Balance through existing – largely rental – commitments. All the numbers above include the Greater London Authority.

Government’s ambition 2 3.Help to Buy Equity Loans Over 73,000 families have purchased a home through the scheme Over 2,000 builders are signed up; over 80% small or medium sized Programme extended: to 2020/21 with an additional £1.55bn; to provide 40% equity loans in London On top of existing £6bn commitment, total value of programme in is now £8.6bn with an aim to help up to 145,000 more households. 4.Voluntary Right to Buy The historic agreement between Government and housing associations gives 1.3m families the chance to buy a home with Right to Buy discounts. Housing associations will deliver an additional home through new supply for every home sold.

Why Home Ownership?  86% of people want to own their own home, but it’s increasingly difficult for many people to ever hope of achieving this ambition.  Over the last twenty years, the proportion of under 40 year olds who own their home has fallen by over a third from 61% to 38%.  The average house price to earnings ratio for successful first time buyers is now 4.3, compared to 2.7 in 1993.

Contents  Programme Themes –Supporting Home Ownership –Supporting Specialist Housing –Encouraging New entrants –Encouraging Construction Innovation  Who Can Bid?  How to Bid  Assessment  Timetable

Shared Ownership and Affordable Housing Programme  Reflects the Government’s home ownership agenda  Continuity in the bidding, assessment and contracting processes  Funding profile announced in the Spending Review is back-loaded

Home Ownership  The SOAHP marks a decisive shift towards support for home ownership  Help to Buy: Shared Ownership o Retains existing product structure, with changes to eligibility announced in Jan including an £80k pa income cap. o We are looking for bids which: o maximise affordability of homes within their market o demonstrate intelligent consideration of affordability in the local context o evidence thorough assessment of sales risk  Rent to Buy o An opportunity for the tenant to save for a deposit, with an option to buy. o Flexibility for the provider at year 5.

Help to Buy: Shared Ownership  allows a home buyer to purchase a share in a new home, paying rent on the remainder.  that share is owned by the Provider, who receives the rent.  the relationship between provider and buyer is determined by a lease; under the SOAHP 16-21, the lease must incorporate the HCA’s Fundamental Clauses. –The initial share sold must be between 25% and 75%; this should not be fixed in advance but determined by the buyer’s circumstances. –Rent should be less than 2.75% of the value of the unsold share and is capped at 3%; rises are capped at RPI + 0.5% per annum (but providers must maximise affordability). –Buyers are able to purchase additional shares, in 10% + tranches, up to full ownership (with some exemptions).

Supporting Specialist Housing  Funding is available for new specialist rental homes for older, disabled or vulnerable people  Rents can be social or affordable  We are looking for bids which: o are supported by local commissioning bodies o are well thought through for the client group in terms of typology, location and design (noting the Housing Our Ageing Population Panel for Innovation principles and the HCA’s non- mainstream housing design guidance, both on.GOV.uk) o demonstrate an exit plan, should commissioning priorities change  Specialist Home Ownership development can be bid through Help to Buy: Shared Ownership

New Entrants  Existing HCA partners are essential to output ambitions  Government is keen for new organisations to be involved, especially in shared ownership delivery  For the SOAHP we: o Have confirmed the landlord for Shared Ownership homes can be an unregistered body o Have offered the option to unregistered bodies of receiving 50/50 tranche payments, subject to appropriate security o Will support new entrants to understand the bids process and to navigate our Investment Management System  By statute sub-market rental homes must be owned by a Registered Provider; but we have a successful transfer model

Construction Innovation  Government is keen to encourage innovation in the UK construction sector  We expect increasing quantities of innovative delivery within SOAHP  The potential advantages in cost and delivery speed match our core criteria of value for money and delivery  We are asking for additional bid information on replicable construction innovation

Who can bid?  Any type of organisation can bid, on its own or as a member of a wider consortium  To receive funding an organisation must qualify as an HCA Investment Partner or join an already qualified Consortium  Provider Consortia arrangement offer access to the skills, capacity and experience needed for bidding, development and programme management. –We encourage organisations to maintain existing consortia. –We encourage small, specialist, rural, community-led or new bidders to investigate joining an existing consortium.

HCA Investment Partner Status  Our existing Investment Partners for the programme don’t need to re-qualify (but are subject annual review).  For new applicants, there is a link to the ‘qualification questionnaire’ in the Prospectus.  Assessment of applications looks at: –financial and technical capacity to undertake development; –good financial standing.  If a new provider joins an existing Investment Partnership, we will want to understand that the organisation has the financial capacity to undertake its proposed programme.

How to Bid  All bidders must have a working IMS account. We recommend this is set up early. See Prospectus for contacts.  A programme of IMS training is available, aimed in particular at new providers. More information has been published on the SOAHP page here ownership-and-affordable-housing- programme-2016-to-2021-ims- training-for-bidders ownership-and-affordable-housing- programme-2016-to-2021-ims- training-for-bidders

Firm and Indicative Schemes  Firm schemes must include: –name of the scheme and X/Y coordinates –details of land ownership and planning status  Indicative schemes: –must be associated with a location: HCA Area; HCA minimum geography or LA. –must progress to firm to the schedule set out in the Prospectus  A bid can include firm schemes, indicative schemes, or a combination. There are no constraints on the proportion of each type.  We will maximise allocations to firm schemes at initial bid assessment.

Bid requirements  Bids are for new supply in England ( outside London)  Homes provided under a S106 agreement are expected to be nil grant  Any homes where the use of grant (new or recycled) must be demonstrably additional to receive grant: we will give detailed scrutiny to any request  We welcome bids for nil grant schemes of any tenure; if RCGF or DPF is used these must be included in the Programme  We use location data to identify multiple bids for the same scheme.  For commercial providers we will conduct a due diligence check under our Know Your Customer policy  For Registered Providers we will seek assurance from the regulator on financial standing and that its bid is consistent with continued viability  There is no pre-defined split of funding between geographic areas  We will monitor bids in rural settlements, defined as those with a population of 3,000 or fewer.

Assessment – key points  Quantitative Assessment: –Value for money (50%) minimising costs in build and over the life of the home; maximising other cost contributions; minimising land costs. –Deliverability (50%)  Qualitative Assessment: –Affordability and sales risk for shared ownership –Meeting local needs, design and future-proofing for specialist rent –Construction innovation for all schemes. –We recognise information may be high level for indicative bids. –Assessment of value for money outliers to review reasons for high costs

Assessment  Programme building: schemes ranked based on value for money and deliverability  Ranked bids reviewed against qualitative criteria  Period of clarification to check bids and verify queries  Expect that bids will be best and final and independent

Timetable  Close of bid round: 02 September  Clarification of bids: 02 September to 28 October  Announcement of successful allocations: December  Following the announcement of successful allocations we expect to open for Continuous Market Engagement bidding

Keep in touch  Additional information may be posted on the SOAHP page on GOV.uk and providers are advised to check regularly: /homes-and-communities-agency  Providers can submit queries to