Foreword to Scheme Approval (Housing for Rent)
Scheme Approval Guidance sets out The Department's requirements to be followed by Registered Housing Associations in providing social housing, with the aid of Housing Association Grant (HAG) from the NIHE Development Programme Group (DPG), including Disposals Proceeds Fund monies. The provision of social housing is controlled by way of the Social Housing Development Programme managed by the NIHE Development Programme Group (DPG) and funded by the Department.
See Programme Management Guide for more information.
Scheme approval responsibilities of association’s board of management
As this Part of the Guide covers the main procedures and conditions for accessing / receiving Grant from the NIHE (DPG), the Association’s Board need to be aware of the importance of these and the responsibilities and implications for the Association and its management.
Certifications - The certification system within the scheme approval processes is designed to minimise the NIHE (DPG) examination of development proposals. An Association confirms that it has undertaken agreed actions at various stages of the development.
The importance of the certifications made by the Association cannot be overstressed and it is the responsibility of the Board of Management to ensure the validity of the certifications being made on its behalf by authorised signatories.
The NIHE (DPG) will wish to check that certifications have been made with the Association’s Committee of Management authority and will require the Association to annually submit a record of its current authorised signatories, including:
- specimen signatures of members or officers concerned; and
- the relevant extract from the minutes of the Management Committee meeting confirming that such authority has been approved.
Where a certified action is subsequently found not to have been completed NIHE (DPG) will seek clarification from the Association in the first instance and where appropriate refer the matter to the Department’s Inspection team. Any matters relating to the Department’s regulatory role in respect of Associations that come to NIHE’s attention through its management of the programme and scheme approval will be notified to the Department. Where serious problems are identified the Department may reduce, suspend or withdraw financial support to the Association or take other action as deemed necessary, proportionate and appropriate.
Overview of scheme approval procedures
The Procedures apply to the following social housing projects:
- housing for rent;
- developments involving the acquisition of land or property, or on land/property already in the ownership of the Association (Works Only and Re-improvement schemes);
- all schemes to be funded using the Association’s Disposals Proceeds Fund (DPF) and
- supported housing which satisfies the grant eligibility
Tariff funding - the Department has determined that broadly schemes are to be funded under a universal tariff system, with a non-tariff approach used by exception and in particular circumstances. Tariff funding is the term applied to a scheme where the maximum grant funding allocated is broadly based on the calculated Total Cost Indicator (TCI) allowances based on the scheme features and the associated grant rate. TCI is a benchmark tool that the Department uses to assess funding subsidies for the delivery of social housing.
Subsidy entitlement is the result of the following calculation:
- TCI for the cost group x grant rate = grant in £
The actual costs for delivering the scheme under each of the TCI elements are considered by NIHE (DPG) as part of its value for money assessment in the scheme approval process. Associations are required to lever in a private finance element to aid delivery of the scheme. This contribution is the difference between TCI allowances before and after application of the grant rate multiplier. There is normally no recalculation or adjustment to the amount of grant paid at project completion with this funding route except where a Departmental Adjustment is implemented. Schemes will not normally be approved at more than 130% of TCI.
Funding exceptions - There are two circumstances where schemes are removed from the tariff system and ‘non-tariff’ funding is the term applied to such schemes. Funding is allocated based on the actual qualifying scheme costs and the associated grant rate:
- re-improvement schemes
- extraordinary cases
In exceptional circumstances the funding threshold may be raised for schemes with costs exceeding the TCI norm allowances and lowered for schemes with costs under the TCI norm allowances. Adjustments increasing allowable grant may exceptionally be considered for complex schemes which require a higher capital investment to ensure that priority housing programme objectives are being realised. Adjustments reducing allowable grant may be considered for schemes where the actual costs of delivering the scheme are proportionately significantly lower than approved grant. See Calculating Grant - Departmental Adjustments for more information.
The key differences between tariff and non-tariff funding routes are that in the above cases, schemes with costs exceeding or under the TCI norm allowances may be considered for additional or reduced funding based on the total qualifying scheme costs, with a private finance contribution. Funding is considered where the Economic Appraisal provides a robust case in support of the scheme as proposed in meeting key objectives. Again, exceptional schemes will not normally be approved at more than 130% of TCI. 100% grant aid is not normally provided.
The scheme payment procedures apply generally to Associations undertaking both Non-Tariff schemes and/or Tariff Schemes. Where the procedures vary these are listed at the appropriate stage.
Main approval stages
- Site registration stage
The purpose of this stage is to prevent unnecessary duplication of effort by two or more Associations investigating the development potential of the same site. This allows one Association a reasonable period to investigate the feasibility of developing an identified site/property and reduces abortive work in the preparation of schemes to the minimum;
Read more in the Programme Management Guide - Advance purchase of land
This facility allows Associations undertaking Acquisition and new build developments to acquire - in advance - the land element of the scheme with Grant-aid from the NIHE (DPG). Conditions apply to this facility. The Advance Purchase of Land (ALP) does not apply to NIHE Transfer schemes, Works Only and Off-the-Shelf schemes; - Scheme approval stage
This is the key assessment stage and normally takes place prior to acquisition of the site/property selected for development, or in the case of ALP schemes or Works Only schemes, prior to start on site.
It is at this point that the NIHE (DPG) will examine the Association’s proposals in detail and confirm:
(i) The grant percentage rate which will apply to the scheme;
(ii) The total amount of grant to be made available;
(iii) Any Public Subsidy deduction;
(iv) Any Private Finance contribution; and
(v) The amount to be paid in each Tranche to the Association.
It is therefore essential that the Association’s development proposals are formulated as accurately as possible at this stage. Scheme Approval clears the way for the Association to purchase and/or develop the site/property without further intervention from the NIHE (DPG).
NIHE’s Development Programme Group (DPG) will apply proper judgement to the standards laid out in the Guide to ensure that scheme specific circumstances are taken into account and that value for money is maximised.
Associations should endeavour to ensure that the minimum standards are addressed for all scheme types. However, the Department accepts that strict adherence to minimum standards, in respect of Rehabilitation, Off the Shelf and ESP schemes, could result in:
- abortive works
- substantial delay
- a level of costs disproportionate to the benefits
In such schemes, Associations must document the case as to why it is necessary to disregard particular items and that they are satisfied the resultant scheme will provide suitable accommodation for the people to be housed. Associations should also retain all relevant information which provides the basis of non-compliance and this should be retained for Audit purposes. NIHE (DPG) may request any relevant information they deem necessary to provide assurance and to allow them to carry out their technical assessment to allow approval of a scheme.
Revised approvals - After the NIHE (DPG) issues project approval, revised approvals can only be issued in certain circumstances. For information on circumstances where a Revised Approval may be considered refer to Revised Approvals.
Housing association grant and private finance - Social Housing projects are funded partly through Housing Association Grant (HAG) and partly through private finance provided by the Association. Private finance is acquired from a number of sources which include, among others, private sector loans based on an Association’s assets and reserves generated from tariff funding or where historic market value of land has resulted in a surplus for the Association. The proportion of private finance to be invested is normally determined by the appropriate grant rate for that scheme.
See the Calculating Grant Guide for more information.
Grant Payment to Associations is advanced, subject to the Association’s current financial allocation, in 3 tranches (stages) following or within 60 days of three key events:
- acquisition of land or property;
- start on site); and
- practical completion of the scheme (or phase of the building contract).
Further information about timescales for claiming and receiving payment can be found at Grant Timetable. Fewer stages are needed for certain types of development such as Works Only and Off-the-Shelf schemes and the arrangements are laid out in a table located in the introduction to Claiming Payment.
The Housing Association Grant for Eligible Housing Activities General (Northern Ireland) Determination 1992, known as the ‘General Determination’, gives details of a number of relevant events that trigger grant recovery. For further guidance on Recovery of Grant.
Disposals proceeds fund (DPF) - Replacement properties provided from the DPF must be social housing for rent, but may include works to the Association’s existing stock in the circumstances described below. The provision of replacement units can be either through:
- the construction of New Build properties
- the purchase of New Build ‘Off the Shelf’ properties
- existing satisfactory purchases (ESPs) and associated repair/ checks/ upgrading etc
- purchase and associated works to properties requiring Rehabilitation
- undertaking re-improvement type works to the Association’s own stock, provided this will bring long-term voids back into use or will avoid the need for demolition.
NB: It is permitted to provide houses of a different type or size from those which were sold. Funds must not be used for maintenance or repairs other than those described above.
DPF funded scheme submission requirements - Schemes may be funded in part or wholly using an Association’s DPF monies and all such schemes require a formal scheme approval. There are no circumstances where DPF can be utilised without scheme approval from NIHE (DPG). Schemes funded using an Association’s DPF monies with no direct Housing Association Grant (HAG) element and/or partial HAG are required to be submitted to NIHE (DPG) for assessment and scheme approval using the relevant scheme submission form. Scheme submission procedures relevant to the scheme type should be followed. Such schemes will be assessed in line with the conditions of grant for direct HAG funded schemes.
At completion or final Acquisition stages (in the case of OTS schemes) the Association must submit a [DPF-C] form together with all relevant supporting documentation as listed on the form for a final costs assessment of the scheme.
NB: All schemes using DPF monies - the amount to be taken out of the DPF in respect of a scheme is not to exceed the total qualifying costs of the scheme.
The full procedures for scheme approval can be accessed by following the appropriate link below relevant to the type of scheme.