1. Thriving communities, affordable homes Custom Build Briefing Newcastle City Council Self Build/Custom Build Event 17 November 2012 Victoria Keen Area Manager

2. Thriving communities, affordable homes Homes and Communities Agency – who are we?  The Homes and Communities Agency is the national housing, regeneration and social housing regulation agency for England.  The purpose of the HCA is to contribute to economic growth by helping communities to realise their aspirations for prosperity and to deliver quality housing that people can afford.

3. Thriving communities, affordable homes Custom Build  Housing Strategy for England –Government announced up to £30m of funding available to provide project finance to help unlock group custom build – or self-build – schemes –C£25m to be administered by HCA  Two objectives: –To stimulate the growth of the Custom Build Homes market by enabling more multi-unit custom build home projects and attract more commercial lenders and investors to this market –To focus on multi-unit ‘group’ projects to demonstrate to commercial funders that the lending model is a viable and sustainable business which can be taken forward by industry, without public funding support

4. Thriving communities, affordable homes Key documents  http://www.homesandcommunities.co.uk/ourwork/cust om-build http://www.homesandcommunities.co.uk/ourwork/cust om-build –Prospectus –Loan application form –Loan agreement heads of terms –HCA land

5. Thriving communities, affordable homes Eligibility: key requirements  Must be a registered or incorporated body –E.g. company, registered charity, housing association (NOT LAs)  Minimum 5 homes  Maximum loan £3m  Maximum cost (average per home) £250,000  Maximum Custom Build loan 75% of cost –Max loan (average per home) £187,500  Applicant must have minimum 25% funding  Applicant must have at least outline planning consent to draw down

6. Thriving communities, affordable homes Types of Homes/Projects  Loans available for residential use only including ‘Livework’ units  Both market and affordable custom build proposals will be eligible  The sales to occupiers could take the form of a serviced plot (without a built home) or a plot with a partially completed home or a home at practical completion built to the requirements of the identified purchaser  A single project may include a mix of all types

7. Thriving communities, affordable homes Eligible costs  Land acquisition costs  Site preparation costs  Construction of supporting infrastructure/utilities directly related to the construction of the homes  S106 planning obligations, Community Infrastructure Levy charges (a new levy that local authorities can choose to charge on new developments) and S278 agreements (works on existing highways)  Construction costs for the homes  Associated professional fees related to the project after planning permission has been granted

8. Thriving communities, affordable homes Loan terms  Project budget and cashflow agreed at start  Borrower reports on progress  Loan drawn down at agreed milestones –E.g. site acquisition, commencement of site works, fit out etc.  Interest rate (charged at commercial rates between 2.3 – 11.7% depending upon perceived risk)  Loan always secured by a charge on the land  Repayments due on each disposal –Serviced plot –Self-finish home –Commissioned home  HCA part-releases its charge on each disposal

9. Thriving communities, affordable homes  To shortlist: –Must meet key requirements E.g ≥ 5 units, incorporated body etc. –Must offer value for money –Scheme size and mix –Must offer good prospects of delivery Planning status (at least outline) and timing of completions Must have started on site and all loan drawn down by end March 2015 –Evidence of commitment from purchasers/final plot owners –Previous experience of delivery –Meeting local area planning design standards –Extent to which the project promotes innovation Assessment criteria

10. Thriving communities, affordable homes  Shortlisted sites will go through due diligence to: –Appraise the project’s financial position –Test that the builder is making contributions and has the funding available to do so –Identify the minimum funding needed to progress the development –Secure potential for recovery of funding through loan repayment –Set the interest rate  After due diligence projects recommended for Agency decision  HCA & borrower enter into agreement Due diligence

11. Thriving communities, affordable homes What Next? The fund is accessed through continuous market engagement (runs from now until 31 March 2015 but if funds run out prior to this date – fund will be closed). See HCA website for Prospectus and Expression of Interest form. If EOI is approved then the applicant is issued with a Due Diligence pack (explore details of finances and good standing).

12. Thriving communities, affordable homes Community Group or Charity?  Why not join the NE Community Led Development Network?  Meet fellow community groups, gain peer support, share experiences and best practice  Next meeting: Wednesday 19 December 2012 11.00 – 12.30 Presentation by Paul Chatterton re: Low Impact Living Affordable Community Project in Leeds 13.30 – 15.00 NE CLDN Meeting Leave your name with me or Maria if you would like to attend

13. Thriving communities, affordable homes Q and A Many thanks for your time. Any questions? Victoria.Keen@hca.gsi.gov.uk 0191 497 7619