Band 4 - Advance Land Purchase (ALPs)

Band 4 - ALPs introduction

Exceptions

• the Advance Land Purchase (ALP) facility does not apply to NIHE Transfer Schemes.
• the ALP facility does not apply to Works Only and Off-the-Shelf schemes.
• the ALP facility is only available for identified schemes or requirements which are included in the Social Housing development Programme - only in exceptional circumstances where a low risk site becomes available that is not in the programme will an ALP be considered
• an Association’s Disposals Proceeds Fund cannot be used to fund ALP

Purpose

The purpose of this guidance is to:

• facilitate Associations acquiring, in advance, the land element of schemes due to start on site in Years 2 or 3 of the Programme – thus securing the land for development and reducing the possibility of the Association losing the site
• reduce the risk on the Association of increased building costs during any protracted delay from Acquisition stage to Start on Site stage – by allowing the Association access to the Acquisition Tranche to acquire the site, and for the TCI/scheme costs to be recalculated prior to the start on site stage

Where finance for the entire programme is restricted the allocation of finance for ALPs may be suspended to give priority to schemes due on site in the current programme year.

If an ALP scheme does not achieve a start on site within 2 years from the ALP approval date, or 3 years with the prior approval of DPG, then the ALP grant paid will normally be repaid in full plus interest. The timescale and terms of any repayment may in exceptional circumstances take into account the financial implications for the Association.

For more information read Recovery of Grant.

Band 4 - development milestones

Prequalifications are the major scheme development milestones that an Association must comply with in order to meet the agreed timetable in the Social Housing Development Programme (SHDP) and the Department’s project approval criteria. Each step represents what must be achieved or obtained at a particular stage according to scheme type and when followed in conjunction with other Certifications, allows the Association to apply for project approval and the first Tranche payment of Grant at Acquisition stage. Each 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 completed or still to be completed allows the progress of a scheme to be measured by the Association.

The following pre-qualifications are tailored to apply to the ALP scheme submission only. Read Band 3 - Other schemes: New Build/ Re-improvement/ Rehabilitation/ Supported Housing/ Works Only– Other Schemes should be followed for the subsequent full scheme submission.

Housing need

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

This will require the valuation of the site prepared by an independent valuer engaged by the Association. The Association will of course have to fully brief the valuer on the site, site boundaries, development constraints etc. For further guidance read Acquisition Issues and Valuations.

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)

Code for Sustainable Homes

Not applicable - see Site Appraisal guidance in the Design standards guide which refers to preparatory investigations.

Planning

Housing Associations must consult with the relevant district council planning office via a Pre-Application Discussion (PAD) in advance of making any ALP submission to the NIHE (DPG). A copy of the agreed PAD meeting minutes; including a statement from a planning officer confirming there is no reason in principle why a planning application similar to the PAD proposals for the proposed site could not be considered positively by planning officers whilst recognising that the ultimate decision will be taken by the council; must be submitted to NIHE (DPG). Associations should note councils will expect the association to provide, ahead of the PAD meeting, sufficient information to explain the development proposal, including existing plans or photographs and proposed sketch layouts.

Site appraisal

Site investigation, identification of potential constraints and assessment of estimated site development costs are the core elements in the site appraisal process. For more detailed guidance on Site Appraisal.

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
• 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

Consultants

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’- Feasibility Stage or equivalent. The purpose of this is to provide the Association with an appraisal and recommendation in order that “the Association may determine the form in which the project is to proceed, ensuring that it is feasible, functionally, technically and financially.” Realistic outturn cost estimates must be prepared for the proposals to allow completion of the Forms and TCI comparison – assuming for cost estimating purposes only that the Start on Site stage will directly follow the Acquisition of the site. 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.

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 the scheme exceeds TCI the reasons for this must be identified and arguments for the scheme representing Value for Money should be presented. Where costs are over TCI and exceed the (TCI) figure used for the Advance Acquisition of Land the Economic Appraisal must include an option to dispose of the site.

Scheme submission

ALP Schemes should be progressed to full scheme application status and submitted to the NIHE (DPG) for approval within 2 years from the date of site purchase. If a Housing Association can provide substantive evidence of the requirement to delay a scheme for up to 3 years, this should be submitted to the NIHE (DPG) for consideration and approval in advance.

Band 4 - scheme documentation

ALP Submissions – scheme documentation

ALP Submissions must include:

• Economic Appraisal
• copy of NIHE letter supporting need
• form ALP1
• form SFN1
• copy of valuation prepared by independent Valuer, and an accompanying plan, endorsed by the Valuer (i.e. signed and dated), that clearly identifies the site/property valued.
• site location plan (1:1250 or 1:2500) - the plan should contain either the Association’s licence number or Ordnance Survey acknowledgement
• drawings sufficient to highlight the main physical features of the site, explain the overall concept and outline the association’s preliminary proposals.
  
  ​Drawings submitted should be to an appropriate scale, annotated, and with a level of detail that is broadly commensurate with the value of the scheme. The drawings should also be reflective of the association’s level of design development at this current stage and should include as a minimum:
  • Site Analysis – the plan should indicate all key landscape and built features and highlight opportunities and constraints resulting from aspects such as topography and geology, context, orientation, protected species, access, existing services, water courses, boundaries, rights of way, planning constraints, views, etc.
  • Concept Plan – the plan should demonstrate a clear overall vision which draws upon and utilises the positive aspects within, and surrounding the site. The key design proposals that will help create a quality residential environment with a sense of place (sketch drawings are acceptable) should be outlined.
  • Indicative Site Layout* – the plan should be fully annotated and include the following site information and feasible layout proposals:
    - Site boundary outlined in red;
    - Site area (gross and net developable areas) in hectares;
    - Easements, rights of way etc. over the development site;
    - Context in terms of peripheral buildings, roads, paths and mainline services;
    - Vehicular and pedestrian points of access to the site;
    - Roads layout and car parking provision that is broadly compliant with Planning/TransportNI standards;
    - Building footprints that reflect the appropriate unit area bands. (A colour coded key that indicates unit types and area bands must be provided);
    - Density in dwellings per hectare (DPH) and bedspaces per hectare (BPH).
    
    * The site layout should be endorsed by an architect or planning consultant as being a viable draft proposal for the development site.
• copy of the Association’s brief to the Valuer will be required where there are evident issues affecting the land/property value not clearly taken account of in the valuation report
• where applicable, copy of solicitor’s letter showing agreed purchase price, date contract to purchase completed or due to be completed and date of purchase completion
• copy of the written response provided by Planning NI, or housing association minutes agreed with Planning NI, confirming that the development proposals are broadly acceptable following the PAD meeting”

​For more see Housing Association Guide - Scheme Approval forms

• TA1 explanatory notes and NT1 explanatory notes - gives guidance on supporting documentation requirements which may also assist with ALP submissions
• 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 a 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.

Where appropriate NIHE (DPG) approval on Form ALP2 will set out any conditions attached to the approval to be met by the Association.

Band 4 - scheme documentation post ALP

When the Association is in a position to consider the Start on Site stage, an application for Project Approval should be submitted to the NIHE (DPG) at the earliest possible opportunity. The normal project approval application will be made using the TCI/Grant Rates applicable at the date of the ALP approval. The procedures to be followed for Project Approval, where an Advance Acquisition has been agreed and claimed, are listed below.

Time Limit from the ALP acquisition to seeking full Project Approval - Associations should note the time limits for seeking Project Approval following the advance acquisition of land stage. More information on ALP Introduction. The NIHE (DPG) expects Associations to apply for project approval in time to meet the programmed target date for the start on site stage. The Association should immediately advise the NIHE (DPG), if for any reason, it is unable to fulfil its commitment to start on site. The NIHE (DPG) may require revaluation of the site for TCI/Grant purposes if there is any undue delay on the programmed start on site stage. Recovery of HAG and/or interest may have to be considered if appropriate.

Changes from the Original Proposal - It is at the stage of application for full project approval following an ALP that any change from the original proposals will need to be reconciled. Associations should explain what changes, if any, have occurred since the original proposal was assessed and approved by NIHE (DPG) and the reasons for the change; for example, an increase/decrease in the number of dwellings being proposed or changes to the type and sizes of dwellings. Associations should note that unit changes will require a revised letter of support in respect of continued housing need from the NIHE Area Planner. In addition, a revised valuation of the land value reflecting the revised number of units to be provided is required. The valuation assessment should be based on land values at the date of approved ALP valuation and some adjustment to the land value on the TA1 form may be required if the value changes. Associations should seek DPG advice on the particular circumstances and how the TA1 form should be completed. Substantive deviation from the original scheme proposal may have an impact upon the decision to approve the full scheme submission.

Applications for project approval

Applications for Project Approval following the Advance Purchase of Land Stage (Procedures)
All Schemes: Submissions must include:

• Economic Appraisal
• only if applicable, copy of NIHE letter on revised support for the need
• form NT1 (non-tariff funded schemes) or form TA1 (tariff schemes)
• form SFN1 (revised and updated from previous where necessary)
• response to ALP2 - any conditions attached to ALP approval (if applicable)
• 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)
• dwelling plans (1:50) including sections, elevations etc. the scale must be adequate to enable assessment, if required - plans must be fully dimensioned and show the minimum required furniture layout
• where units or site boundary have changed from approved ALP, copy of revised valuation prepared by independent valuer - if site boundary has changed this must be accompanied by plan, endorsed by the valuer (ie signed and dated), that clearly identifies the site/property valued
• outline specification - report to cover internal and external fabric of the building; M&E services and external works

For information on Internal Environment in the Design standards section which includes:

• minimum standards for kitchen storage units and appliance spaces
• minimum standards for living furniture space recommendations
• minimum standards for dining furniture space recommendations
• minimum standards for bedroom furniture space recommendations
  

You can find the following in the Housing Association Guide - Scheme Approval forms section:

• 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: this will only apply where the costs are over TCI and exceed the (TCI) figure used for the Advance Acquisition of Land.

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

The NIHE (DPG) approval (Form NN2/TA2) will set out any conditions attached to the approval, which have to be met by the Association.

Band 4 - guidance on ALP payment stages

ALP acquisition stage

If the NIHE (DPG) approves an application for the advance acquisition of land, the Association can access the Acquisition Tranche to acquire the land. Associations should follow the guidance for the standard Acquisition stage when claiming the approved ALP payment.

The grant available at acquisition tranche stage will be in respect of land purchase only and will be paid at 100% of the actual qualifying land value plus 5% of the total on-costs.

Note. Where appropriate, for supported housing schemes, any Special Projects Promotion Allowance payable must be claimed with grant payments for the full approved scheme.

Post ALP - acquisition and start on site stages

The NIHE (DPG) will pay a valid/approved application for the Acquisition Tranche and the Start on Site Tranche to the Association in respect of the fully approved scheme in the normal manner. Certain information provided at the ALP Acquisition Tranche claim, which is not subject to an 'expiry' date, may still be valid where the scheme content is unchanged at full scheme submission and so does not need to be provided a second time. The previous Grant paid for the Advance Acquisition of Land must be deducted from the Tranches as a Public Subsidy Deduction.

Post ALP - practical completion

After Start on Site stage, the scheme will be treated as normal, according to scheme and funding type, in respect of Practical Completion Stage, cost overrun etc.

Scheme abandonment

If an ALP scheme does not achieve a start on site within 2 years from the ALP approval date, or 3 years with the prior approval of DPG, then the ALP grant paid will normally be repaid in full plus interest. The timescale and terms of any repayment may in exceptional circumstances take into account the financial implications for the Association.

The amount of Grant to be repaid may be offset by a proportion of the Association’s allowable on-costs as determined by DPG. The costs must be directly related to the scheme and normally identifiable/eligible as on-costs.

For more information read Recovery of Grant.