thriving communities, affordable homes custom build briefing newcastle city council self...

Thriving communities, affordable homes

Custom Build Briefing

Newcastle City Council Self Build/Custom Build Event

17 November 2012

Victoria KeenArea Manager


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.


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


Key documents

http://www.homesandcommunities.co.uk/ourwork/custom-build

– Prospectus– Loan application form– Loan agreement heads of terms– HCA land


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


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


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


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


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


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


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).


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


Q and A

Many thanks for your time.

Any questions?

[email protected]

0191 497 7619

thriving communities, affordable homes custom build briefing newcastle city council self...

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