HOMES FORLONDONERSAFFORDABLE HOMES PROGR AMME 2016-21FUNDING GUIDANCENOVE MB E R 2016HOMES FOR LONDONERSCOPYRIGHTGreater London AuthorityNovember 2016Published by Greater London AuthorityCity HallThe Queen’s WalkLondon SE1 2AAwww.london.gov.ukEnquiries 020 7983 4100Minicom 020 7983 4458ISBN 978-1-84781-636-8PhotographsCover image – Mayor of London, Sadiq Khan, visiting Brent – © GLAPage 4 – Wornington Green, Kensington – by permission of Catalyst HousingPage … Continue reading “Greater London Authority | My Assignment Tutor”
HOMES FORLONDONERSAFFORDABLE HOMES PROGR AMME 2016-21FUNDING GUIDANCENOVE MB E R 2016HOMES FOR LONDONERSCOPYRIGHTGreater London AuthorityNovember 2016Published by Greater London AuthorityCity HallThe Queen’s WalkLondon SE1 2AAwww.london.gov.ukEnquiries 020 7983 4100Minicom 020 7983 4458ISBN 978-1-84781-636-8PhotographsCover image – Mayor of London, Sadiq Khan, visiting Brent – © GLAPage 4 – Wornington Green, Kensington – by permission of Catalyst HousingPage 9 – Hale Village, Tottenham – © Eleanor BentallPage 14 – Catford Green, Lewisham – © GLAPage 19 – Woodberry Down, Hackney – © Eleanor BentallPage 22 – Kings Crescent, Hackney – © Eleanor BentallPage 27 – Cannon Road, Tottenham – © Eleanor BentallPage 30 – Greenwich Millennium Village – © GLACopies of this report are available from www.london.gov.ukIf you would like this report in a different format,please contact the Public Liaison Unit on tel: 020 7983 41003CONTE NT SFOREWORD 5PART 1: PRODUCTS 6Delivering affordable homes for Londoners 6London Affordable Rent 7London Living Rent 8London Shared Ownership 10Supported and specialised housing 12Design 14Larger homes and wheelchair units 14PART 2: FUNDING 16Available routes for affordable housing funding 16Set grant rates 16Approved provider route 17Developer-led route 18Negotiated grant rates 19PART 3: BIDDING FOR FUNDING 22Introducing GLA Open Project System 22Eligible providers 22Bidding mechanisms 25Use of RCGF and DPF 26Grant payment 26Land acquisition 27Additional Mayoral priorities 28Branding 29PART 4: ASSESSMENT 31Assessment 31Assessment of bids for Approved Provider and Developer-led routes 31Negotiated grant rates 32Contracts and programme management 32State aid compliance 34Compliance audit 34Timetable 35Questions 35ANNEX A – FUNDING AND EXPECTED OUTPUTS 36HOMES FOR LONDONERS5London is open. We are a leading global city with a strong economy, with businessesthat trade internationally, and with people drawn from all over the world.Our city’s success is reflected by the number of people becoming Londoners. With70,000 new Londoners every year, we are a bigger city than we have ever been, and ourpopulation is set to top 10 million within 25 years.But our city’s great success has brought huge challenges too. In recent years, we knowthat London has built nowhere near the number of new and affordable homes we need.As a result, too many Londoners can’t afford a decent home to rent or buy.We know we won’t be able to turn round London’s housing crisis overnight. It’ll bea marathon, not a sprint. But I’m determined to get started, working with councils,housing associations, the development industry, central government, and Londonersthemselves.That’s why I am pleased to set out my ‘Homes for Londoners: Affordable HomesProgramme 2016-2021’. Working with government, I have secured £3.15bn to startbuilding at least 90,000 new affordable homes. We will help Londoners who wouldotherwise struggle to rent or buy, by building a range of new affordable homes. This willinclude homes for low-cost rent, London Living Rent, and shared ownership.My long-term aim is for half of all new homes to be affordable. Most homes in thisprogramme will be built by partners who are meeting or exceeding this target. I will alsoincrease the amount of affordable housing delivered through the planning system, andbring forward more public land for affordable homes. Together, these steps will set us inthe direction I want us to take.I want to build a city for all Londoners. A place where no community feels left behind,and where everyone can benefit from the opportunities London has to offer. New andaffordable housing is essential to this goal, and together, we can build the homes thatLondoners need.FORE WORDSadiq KhanMayor of LondonHOMES FOR LONDONERSDE LI V E R ING AFFOR DAB LE HOME S FOR LONDONE R S1 The Mayor has secured £3.15bn from the Government to fund new affordablehomes for Londoners. This funding is expected to support starts for at least 90,000new affordable homes in London through to 2021. The Mayor and Government haveagreed at least 58,500 of this total will be a combination of London Living Rent andshared ownership. A detailed breakdown of funding and expected outputs can befound in annex A.2 The Mayor is committed to delivering homes that are tailored to the differentneeds of Londoners. His Homes for Londoners: Affordable Homes Programme 2016-21 will help increase the supply of new homes and the number of those that will begenuinely affordable. The majority of homes delivered through this programme areexpected to be built by partners who are delivering half, or more, of their homes inLondon as affordable. Homes funded in this programme are expected to be primarilycomposed of three affordable products:• London Affordable Rent;• London Living Rent;• London Shared Ownership.3 Other products may be funded under the Mayor’s programme where they aregenuinely affordable to Londoners. They may also be funded by providers’ ownresources or secured through the planning system. Existing pipeline schemes mayhave affordable housing tenures fixed already, in which case there will be someflexibility during the transitional period.4 The GLA expects the majority of the funding in this programme to be used as grantto support affordable housing delivery, but is also keen to identify how this fundingcan be used in flexible and innovative ways. This will include supporting new housingproducts through an Innovation Fund, and other interventions such as those tosupport land assembly and to increase affordable housing delivery in Housing Zones.This guidance also sets out other opportunities for providers to bid for funding todeliver supported and specialised housing, and to work with the GLA on the basis ofsharing risk and reward to a greater extent.5 Providers are invited to bid for funding to deliver affordable homes in Londonwhich start on site by 31 March 2021. A full definition of start on site is available inthe GLA’s Capital Funding Guide.PART 1:PRODUCT S7LONDON AFFOR DAB LE R E NT6 The Mayor and the Government have a shared aspiration to support bothaffordable home ownership and much-needed sub-market rented homes. Low-costrented homes are needed in the capital to help low-income households, typicallynominated by London Boroughs, who are unable to secure or sustain housing on theopen market. To this end, the Government has agreed the GLA may use funding tosupport new homes for Affordable Rent. The GLA is keen to make good use of thisflexibility, whilst bearing in mind the need to meet the target of 58,500 London LivingRent / London Shared Ownership homes.Setting rents7 Government rules require that, nationally, Affordable Rent homes cannot be let atmore than 80 per cent of market rents, inclusive of service charges. The Mayor doesnot consider 80 per cent of market rents to be genuinely affordable in most parts ofLondon and he therefore expects most homes let for London Affordable Rent to besubstantially below this level.8 The starting point for London Affordable Rent should be the benchmarks forhomes which are let in 2017/18, set out in the table below. These benchmarks reflectthe formula rent cap figures for social rents uprated by CPI for September 2016plus one per cent. These benchmarks will be uprated each April by the increase inCPI (for the previous September) plus one per cent and updated benchmarks will bepublished by the GLA on an annual basis.Table 1: London Affordable Rent benchmarks for 2017-189 Other rent levels for London Affordable Rent will also be considered, where theprovider is able to demonstrate to the GLA’s satisfaction that the homes would begenuinely affordable.Bedroom size 2017-18 Benchmark(weekly rents, exclusive of service charge)Bedsit and one bedroom £144.26Two bedrooms £152.73Three bedrooms £161.22Four bedrooms £169.70Five bedrooms £178.18Six or more bedrooms £186.66HOMES FOR LONDONERS10 Once let, London Affordable Rent homes will be subject to rent-setting guidanceissued by the Social Housing Regulator and will be subject to the annual one per centrent reductions up to 2020. Providers will be able to re-let at up to the applicablebenchmark level, uprated annually, or at an otherwise agreed level, as appropriateand in line with legislation and Regulator guidance. Providers have the flexibilityto charge less than the benchmark. The benchmark rents do not include servicecharges, which may be charged in addition.11 For legal and regulatory purposes, the GLA views London Affordable Rent asAffordable Rent. Rents will have to be set in accordance with the Social HousingRegulator’s Affordable Rent guidance. The landlord of these homes must beregistered with the Social Housing Regulator.Sharing nominations for London Affordable Rent homes12 In order to increase pan-London mobility in the affordable sector, and ensurenew homes can meet a London-wide need, providers will be required to offer thenomination rights to 5 per cent of the new homes delivered on each site through theGLA’s Housing Moves scheme. On sites of 150 homes or more this will be increasedto 10 per cent of lettings.LONDON LIV ING R E NT13 The Mayor is introducing London Living Rent as an intermediate affordablehousing product with locally specified rents. When funded through this programme,London Living Rent is a Rent to Buy product with sub-market rents on time-limitedtenancies. This will help households on average income levels to save for a depositto buy their own home. Providers bidding for grant through this programme areencouraged to set out their commitment to delivering London Living Rent.Setting rents14 The GLA has calculated ward-specific rent levels for London Living Rent homesbased on one-third of median gross household income for the local borough. Thelevel is based on the borough median, but varies by up to 20 per cent in line withhouse prices for the ward. The levels have further variation based on the number ofbedrooms within the home, though the GLA anticipates that most homes will be 1or 2 bedroom properties, which are likely to better reflect the needs of householdslooking to access this product. London Living Rent levels will be published by theGLA annually.9HOMES FOR LONDONERS15 Providers will have the flexibility to let homes at lower rents if they wish. Rentsshould not be increased above the rate of CPI inflation and on re-let the rent shouldrevert to the applicable London Living Rent level. The GLA’s view is that the LondonLiving Rent is not affected by the annual one per cent rent reduction, in accordancewith the Social Housing Rents (Exceptions and Miscellaneous Provisions) Regulations20161. For the purposes of the funding agreement, London Living Rent will be definedas Rent to Buy grant funding within the Affordable Homes Programme 2016 – 21.The landlord of these homes must be registered with the Social Housing Regulator.Further information on how the London Living Rent will be set is available from theGLA’s website.Eligibility and priority16 Eligibility for London Living Rent is restricted to existing private and social renterswith a maximum household income of £60,000, without sufficient current savingsto purchase a home in the local area. Any update to this criteria will be providedthrough the GLA’s Annual Monitoring Reports. Where properties are oversubscribed,boroughs will be able to set additional priorities. All homes are expected to beadvertised on the GLA’s London-wide portal, which can be found here.Tenancy terms and route to home ownership17 Providers are expected to use London Living Rent to actively support tenants intohome ownership within ten years. This will include a requirement to assess the abilityand inclination of prospective tenants to save, and offering tenants the right to buytheir London Living Rent home on a shared ownership basis during their tenancy andwithin ten years. The grant rate offered in this programme assumes that if no tenanthas purchased the home within ten years then providers are expected to sell thehome on a shared ownership basis to another eligible household.18 Providers of London Living Rent will have flexibility to manage the tenancies inthe way they see fit, although the GLA would not expect tenants to be required tomove within the first three years.LONDON S HAR E D OWNE R S HIP19 London Shared Ownership homes allow a home buyer to purchase a share in anew home, and pay a regulated rent on the remaining, unsold share.20 London Shared Ownership purchasers should have household incomes that cansupport an initial purchase of between 25 per cent and 75 per cent of the value of aproperty, and usually a mortgage deposit of around 10 per cent of the share to be1. Limb (g), under definition of ‘intermediate rent accommodation enabling programme’, See here11purchased. Initial rents on the unsold equity of London Shared Ownership propertiescan be no more than 2.75 per cent of the value of the unsold equity at the point ofinitial sale, and all sales must use a form of lease containing the fundamental clausesset out in the GLA Capital Funding Guide.A charter for service charges21 A common complaint from shared owners is a lack of transparency over servicecharges, causing confusion and dissatisfaction for those affected. The Mayor wantsto work with the industry to improve satisfaction with shared ownership and isencouraging providers to commit to working together to standardise approachesto service charges and, where possible, reducing these charges for consumers.Providers of shared ownership are invited to work together to propose a charter onshared ownership service charges to the Mayor. It is hoped that this will addressconcerns and commit providers to meaningful positive action, which may beendorsed by the Mayor and become an important standard for consumer protection.This charter will be the key distinguishing feature for London Shared Ownership.Eligibility22 London Shared Ownership homes are available to Londoners who have amaximum household income of £90,000 in accordance with the London Plan(updated in the Annual Monitoring Report). Where boroughs specify lower localincome thresholds or other restrictions, providers should only apply theserestrictions for the first three months of marketing, after which the London Planmaximum household income should apply.Accessing London Shared Ownership homes23 All London Shared Ownership homes should be advertised on the GLA’s Londonwide portal, currently available here.Flexibility over London Shared Ownership and London Living Rent allocations24 Providers will have the flexibility to switch homes between London SharedOwnership and London Living Rent up to the point of sale or letting, in response toconsumer demand. All providers are expected to deliver a mixture of both tenuretypes.HOMES FOR LONDONERSS U PPOR TE D AND S PECIALI S E D HOU S ING25 Providers are encouraged to bring forward supported and specialised housingprojects for vulnerable Londoners. The Mayor has existing funding streams availablefor providers to utilise, and is keen to support the provision of supported andspecialised housing in the following areas:• Specialised housing for disabled or older Londoners;• Accommodation for those who are homeless, or at risk of being homeless;• Move-on accommodation;• Other forms of supported and specialised housing.Specialised housing for disabled adults and older Londoners26 Design is critical to the success of older person and disabled adultaccommodation, and providers should adhere to the design principles laid out in theHousing our Ageing Population: Panel for Innovation (HAPPI) reports.27 Proposals to deliver specialised housing for disabled adults and older Londonersshould follow the criteria set out in the Mayor’s Care and Support SpecialisedHousing Fund (MCSSHF) Phase One funding guidance, published in October 2012.MCSSHF Phase Two was published in March 2015, focusing on encouraging privatemarket solutions to older persons and disabled adult accommodation. The GLA isinterested in any proposals that meet this criterion, though affordable solutions willtake priority. Further information on MCSSH can be found here.Accommodation for those who are homeless, or at risk of being homeless28 Proposals to deliver accommodation for those who are homeless, or at risk ofbeing homeless, should follow the criteria set out in the Homelessness Change andPlatform for Life (HCPL) funding guidance, published in March 2015. This guidancesets out how the Mayor is looking to support the provision of hostel accommodationfor single people, including rough sleepers, as well as accommodation that helpsyounger adults at risk of homelessness, and who would struggle to sustain work orfurther education without access to settled accommodation. The latter programmehas a valuable role to play in preventing young people from becoming homeless.132. Housing First is an approach where rough sleepers with high support needs move from the streets into sustained independentaccommodation and receive intensive floating support.Move-on funding29 In recognition of the extreme pressures facing the capital, and the Mayor’scommitment to tackle homelessness and to develop better support for victimsof domestic abuse, London has up to £50m of capital funding available to delivermove-on accommodation. This funding will enable the development of propertiesspecifically earmarked for people who are moving on from either hostels or refugesbecause they no longer require the support services offered in those types ofaccommodation, and those leaving the streets who would benefit from a ‘HousingFirst’ approach2.30 The GLA will use these funds to support local authorities and housingassociations to purchase and repair existing market accommodation, to developnew build properties and, in exceptional circumstances, to lease and repair existingmarket accommodation for a minimum of five years. All referrals to units deliveredthrough this fund will be managed by the GLA on a pan-London basis.31 Grant will be awarded on a negotiated basis and detailed information forprospective bidders in relation to move-on funding is available here.Other forms of supported and specialised housing32 The GLA encourages bids for other forms of supported and specialised housingfor client groups not covered above, including gypsy and traveller accommodation,hostels for homeless people and refuges for those who have experienced domesticand sexual violence. There is particularly high demand for refuge spaces in Londonand new services should complement existing refuge provision.HOMES FOR LONDONERSDE S IG N33 The Mayor wants to deliver high-quality new homes; the required designstandards for new homes London are set out in the 2016 London Plan and theHousing Supplementary Planning Guidance (SPG) published in March 2016, and areupdated from time to time. Projects funded through this programme are expected tomeet the housing design and sustainability standards set out in the London Plan andrelevant SPGs, in common with all other new development in London.34 In the exceptional instances when projects do not comply with the London Plandesign standards, providers will be required to specify the areas of non-complianceat both start on site and practical completion stage. Providers should ensure that afull assessment of final performance against the GLA’s design standards is kept onfile for assessment at compliance audit stage.35 The GLA will review the extent to which design standards are being fully reflectedin projects funded through the programme.L ARG E R HOME S AND WHE E LCHAIR U NIT S36 Providers are expected to build homes that match local and pan-London needs,in terms of size and typology. The 2013 Strategic Housing Market Assessment(SHMA) estimated that currently 36 per cent of new homes are required to be threebedrooms or larger.37 In line with London Plan policy, 10 per cent of all units across a provider’sprogramme are expected to be wheelchair user dwellings, meeting BuildingRegulation requirement M4 (3). For funding purposes, providers are not required toprovide these units as fully adapted (wheelchair accessible) from the outset unlessthere is demonstrable local need3. If local boroughs are unable to nominate anyresidents who require an adapted property, providers should consider working withlocal and neighbouring boroughs to ascertain whether the property can be usedto meet demand elsewhere. The Mayor is considering whether, in instances wherethe local borough is unable to nominate to a property, nominations could be madethrough the Housing Moves scheme.3. Providers should refer to Approved Document M Access to and use of buildings Volume 1: Dwellings for more detail on therequirements of M4.15HOMES FOR LONDONERSAVAIL AB LE ROU TE S FOR AFFOR DAB LE HOU S ING FU NDING38 The GLA will fund affordable housing through three different routes:• The Approved Provider route, with a single set grant rate for London AffordableRent at or below the benchmarks, and a different set grant rate for both LondonLiving Rent and London Shared Ownership;• The Developer-led route, with a single set grant rate to increase the level ofaffordable homes provided on section 106 sites;• Negotiated grant rates mainly for supported and specialised housing, and forLondon Affordable Rent at levels above the benchmarks.39 The GLA does not expect to allocate its entire available grant in this programmethrough the initial bidding round. There will be further opportunities to bid on anongoing basis, once the initial allocations are made.40 Following the completion of a review of the Housing Zones investmentprogramme, the Mayor may consider moving funds into this programme, in order toincrease levels of affordable housing in existing, or additional, Housing Zones. Homeswhich are subject to direct funding from the GLA’s existing Housing Zone programmeare not eligible for further funding under this new programme.S E T G R ANT R ATE S41 Under the Homes for Londoners: Affordable Homes Programme 2016-21, theGLA will specify set grant rates per home, available for the new supply of affordablehomes. These grant rates are inclusive of Recycled Capital Grant Funding (RCGF) andDisposals Proceed Funding (DPF), and therefore the new funding paid by the GLA willbe correspondingly lower than the grant rates where RCGF/DPF is included.42 This approach gives partners certainty over the grant levels they can expectfrom the GLA for certain products, and allows them to plan accordingly. The biddingprocess and systems have also been streamlined for partners, reducing overheadsand administrative burdens, which will allow them greater freedom to optimise theuse of their own resources.PART 2:FUNDING17APPROVE D PROV IDE R ROU TE43 The Approved Provider route is open to all providers of affordable housing who:• Ensure that at least half of their London housing starts between April 2015 andMarch 2021 are affordable homes;• Deliver their programme on sites controlled by them or by joint-ventures inwhich they have at least a 50 per cent share; and• Intend to, either as themselves or as part of a consortium, own the completedaffordable homes.44 Two set grant rates are available under the Approved Provider route, which will beapplied to all affordable homes delivered by partner organisations under the Mayor’sHomes for Londoners: Affordable Homes Programme 2016-21. These set grant ratesare as follows:• London Affordable Rent – £60,000 (inclusive of RCGF/DPF) per home, when rentis set at or below the benchmark levels;• London Living Rent and London Shared Ownership – £28,000 (inclusive of RCGF)per home.45 Only benchmark London Affordable Rent, London Living Rent and London SharedOwnership products may be funded through the set grant rates in the ApprovedProvider route. Other genuinely affordable products may be brought into theprogramme on a nil-grant basis, through the Developer-led approach below, or atnegotiated grant levels. The GLA will simplify the logging of nil grant homes on oursystem and funding conditions. Compliance audit will not apply to nil grant homes.46 Funding for London Affordable Rent homes at rent levels other than thebenchmarks can be requested through the negotiated grant rates. This will only beapproved where the GLA is satisfied the homes will be genuinely affordable and grantrates will be expected to be significantly below the £60,000 per home set out above.Approved Provider route: Hypothetical examplePotters Fields HA is developing a programme of 1,000 homes, 500 of whichare affordable. The homes will be developed across 10 sites that it controls,one of which is a 50:50 joint venture with a private developer which delivers30 per cent affordable housing. As at least 50 per cent of the homes in PottersFields’ programme will be affordable, it may bid for grant through the ApprovedProvider route for funding on all 500 affordable units.HOMES FOR LONDONERSDE V E LOPE R- LE D ROU TE47 The Mayor wishes to see a clearer and more consistent approach to assessingthe viability of delivering affordable homes through the planning system. The Mayor’sDraft Affordable Housing and Viability Supplementary Planning Guidance 2016 setsout the approach to delivering affordable housing through the planning system.48 The Mayor is keen to provide a strong incentive to increase the level of affordablehousing beyond that which is viable with nil subsidy on developer-led sites. Oncethe minimum viable level of affordable housing is established by the Local PlanningAuthority, GLA grant at £28,000 per affordable home will be available through theDeveloper-led route to increase the level of affordable housing. Bids for this grant areinvited from providers that will own the completed affordable homes.49 In cases where this grant enables the level of affordable housing to be viablyincreased to 40 per cent or more, measured by habitable room, it can be applied toevery affordable home within the relevant planning application.50 In cases where developments could viably achieve 40 per cent or more affordablehousing without GLA grant, providers can use the grant-funding to increase thelevel of affordable provision to an even higher level. On all developments where GLAgrant is being utilised, the purchasing of affordable homes from a developer must becompliant with State Aid rules.51 This approach can be applied to any residential development across London,including those that are not referable to the Mayor. The tenure of the affordablehomes provided in schemes delivered through this approach should comply with thepolicy of the relevant Local Planning Authority.52 If, even with GLA grant, a development cannot viably achieve 40 per centaffordable housing, then GLA grant (at £28,000 per affordable home) may beapplied for in respect of every affordable home above the nil grant level identifiedby the viability assessment. In these cases, grant will only be available for these netadditional affordable homes and not for the total number.19NEGOTIATE D G R ANT R ATE S53 The GLA will fund a small number of projects at negotiated grant rates. The GLAwill take this approach when funding supported housing projects, which vary in costfar more than standard affordable housing projects.54 The GLA may choose to extend this approach to projects that fit its spatial andthematic priorities, but this will be solely at its discretion. It is expected that mosthomes developed through the Mayor’s Homes for Londoners: Affordable HomesProgramme 2016-21 will be funded through the Approved Provider and Developer-ledroutes.55 This funding route may also be used for London Affordable Rent homes at rentlevels above the benchmarks. This will only be approved where the GLA is satisfiedthe homes will be genuinely affordable and grant rates will be expected to besignificantly below the £60,000 per home set out above.Negotiated grant rates: Hypothetical exampleShad Support Services are developing a homeless hostel and decide to bid forfunding through the Negotiated route. The total costs of the 100 bed-spacefacility is £20m, of which £5m can be covered by borrowing against the rentalincome and £9m from Shad’s own resources and fund raising. Shad may bid tothe GLA for grant to cover this gap.Developer-led route: Hypothetical exampleTower Bridge Homes (a private developer) controls a site with planning approvalfor 100 homes, 35 of which are affordable. In working with Potters FieldsHA, they decide to offer an additional five affordable homes, taking the totalaffordable homes on site to 40. By reaching 40 per cent affordable housing onthe site, Potters Fields can claim funding through the Developer-led route for all40 homes.On another site controlled by Tower Bridge Homes there is planning approvalfor 100 homes, 35 of which are affordable. Working with Potters Fields HA, theydecide to offer an additional two affordable homes, meaning 37 per cent of thehomes on the site are affordable. Potters Fields can claim funding through theDeveloper-led route for the two additional homes.HOMES FOR LONDONERSInnovation Fund56 Expressions of interest are encouraged from providers who want to deliveraffordable housing using GLA investment in an innovative way. Proposals mustdeliver products that offer a similar level of affordability to consumers as the threetenure products set out in paragraphs six to 24. Interested providers must evidencethe following:• a previous track record of delivering homes at scale;• that land has been acquired or lined up to enable early delivery;• that the delivery model is capable of being scaled up to deliver significantnumbers of new homes;• that the delivery model will be compliant with State Aid rules;• the circumstances in which GLA grant would be repaid and when this isexpected to occur.57 Expressions of interest will be evaluated and, if of sufficient quality, furtherinformation will be sought to develop more detailed proposals.58 The GLA also offers funding which makes available very low cost investment ona loan basis to increase the volume and pace of housing delivery, with homes initiallylet on an intermediate rent basis. The term sheet for this funding stream is here.Strategic investment partnerships59 The Mayor is interested in working with a small number of major providers whowill be delivering at scale through the programme period and could be supported todo more by working at a more strategic level. These strategic partners may be able tobenefit from higher levels of investment than that which is available through the setgrant rate programme, but they would be expected to return some of that investmentback to the GLA in the form of overage, should their programmes outperformassumptions.60 Such strategic partners must be willing to commit to bringing forward at least600 affordable homes within a wider delivery programme consisting of at least 60per cent affordable housing. Partners interested in this approach should signal theirinterest at an early stage of the bidding process.21HOMES FOR LONDONERSINTRODUC ING G L A OPE N PROJ ECT SYS TE M61 Under the Mayor’s Homes for Londoners: Affordable Homes Programme 2016-21, providers will need to submit funding bids through the GLA’s new Open ProjectSystem (OPS), which is replacing the HCA’s Investment Management System (IMS)for new projects funded by the Mayor. Providers submitting funding bids under otherGLA programmes should continue to use IMS until informed otherwise by the GLA.62 Existing IMS providers will be invited to register on the new OPS system inDecember 2016, and new users wishing to register on OPS should complete aregistration form. This form will be available here, along with further informationabout OPS.63 OPS is a streamlined system which providers should find simple to navigate, butthe GLA will be offering some training and guidance to help providers submit theirbids.E LIG IB LE PROV IDE R S64 The Mayor welcomes bids from a range of organisations to deliver the affordablehomes that Londoners need.65 Only organisations who are intending, either independently or as part of aconsortium, to own the completed affordable homes are eligible to bid for grant.66 The landlord of all properties funded as London Affordable Rent and LondonLiving Rent must be registered with the Social Housing Regulator.Small housing associations67 The Mayor recognises the significant capacity of small housing associations,and strongly encourages them to bid for grant through this programme. The setgrant rates in the Approved Provider route should provide certainty and clarity forsmaller providers when appraising projects. There are excellent examples of existingconsortia of small housing associations developing at scale, and the GLA warmlywelcomes the formation of new consortium arrangements to benefit from economiesof scale and development experience. Smaller housing associations may also like totake advantage of development arrangements offered by larger providers.PART 3:B IDDING FOR FUNDING23London Boroughs68 Funding bids are also encouraged from London Boroughs. Boroughs should notethat properties they deliver for London Affordable Rent and London Living Rent maybe eligible for Right to Buy, where the local authority is the landlord. It is a Governmentrequirement that boroughs cannot currently use their Right to Buy re-provisionreceipts in conjunction with GLA grant. However, there should be many opportunitiesthrough this programme to work with the GLA to fund mixed-tenure projects.Build to Rent providers69 Build to Rent providers are expected to provide some units in their developmentsfor sub-market rents. Where these rents are set at the level of London Living Rent,Build to Rent providers who are retaining a legal interest in the homes will be able tosecure grant from the GLA to deliver the properties if the landlord of the propertiesis registered with the Social Housing Regulator. Such properties cannot be subjectto a mandatory right to shared ownership, and this should be made explicit to theprospective tenant before the commencement of the tenancy. Where Build toRent providers are also providing shared ownership themselves, or through groupcompanies, they will also be expected to actively provide advice and assistance totenants interested in accessing shared ownership homes.Community-led organisations70 Community-led housing is shaped and controlled by a group representingresidents or the wider community, with the aim of providing affordable homes fortheir community in perpetuity. The Mayor is keen to see more community-led housingprojects delivered in London, potentially through custom build.71 Organisations developing community-led housing projects are invited to makecontact for an informal conversation on how the Mayor can support their projects viacommunityledhousing@london.gov.uk.Investment Partner Status72 Providers must be qualified as a GLA Investment Partner before they can receivegrant, and providers who are not a GLA Investment Partner will need to submit anapplication for qualification. Further information about the GLA Investment Partnerqualification process can be found on the GLA’s website. Unregistered providerslooking to offer London Shared Ownership will be required to undertake further duediligence in addition to the Investment Partner qualification process.HOMES FOR LONDONERS25B IDDING MECHANI S M SBidding through the Approved Provider route73 Providers wishing to bid through the Approved Provider route must ensure thatat least half of their London housing starts between April 2015 and March 2021are affordable homes. This will be a contractual obligation and will be monitoredthroughout the duration of the programme. Providers who cannot achieve this willonly be eligible to bid through the developer-led route. If a provider fails to deliver 50per cent affordable housing, but has received funding through the Approved Providerroute, it will need to convert market homes into affordable housing to balance itswider programme, or repay the funding difference between the two funding routes.74 Providers can submit proposals for a combination of Named andIndicative projects.75 Proposals for Named projects must be for identified sites. These identifiedsites may not yet be owned by the provider but should have a clear timetable foracquisition and delivery. Providers will need to hold a secure legal interest in theproperty when claiming grant from the GLA.76 There is no requirement to submit Indicative proposals, but where providerschoose to do so they must identify numbers of homes to start in each financial year.Indicative allocations of grant will be available by year for London Living Rent and/orLondon Shared Ownership allocations but not for London Affordable Rent. Indicativeallocations will only be available during the initial bidding period. Funding for startsin the year 2020-21 will only be on the basis of Named projects in order to ensurecertainty of delivery. The GLA will withdraw any Indicative allocations that do notstart on site in their named year.77 Providers who are also delivering market sale homes may (as part of theirIndicative proposals) reserve grant for the potential conversion of market homes toaffordable housing in order to support the GLA’s policy of maximising the provisionof affordable homes for Londoners. However, grant may not be used to fund homeswhich will be sold or let at market rents.Bidding through the Developer-led route78 Providers wanting to increase the level of affordable housing on developer-ledprojects can access funding through this route. In addition, as per paragraph 74,providers whose London housing starts between April 2015 and March 2021 are notat least 50 per cent affordable can only bid through the Developer-led route.HOMES FOR LONDONERS79 Where a provider is leading the delivery of an ‘off-site provision’ project in lieuof affordable housing being provided on a developer-led site, this will be consideredto be a developer-led project. This type of project will only be eligible for GLA grantthrough the Developer-led route, and only when it is proposed to deliver moreaffordable homes than required under the section 106 agreement.80 When bidding, providers should make clear whether their project requires theDeveloper-led set grant rate to be applied on all homes in their project. This will onlybe the case when a provider is involved in a project that is delivering 40 per cent orhigher affordable housing, or, in the case of off-site provision, the off-site provisionrepresents 40 per cent of the total, including the main application site.Bidding for negotiated grant rates81 In addition to submitting a bid on OPS, providers bidding for supported orspecialised housing should speak to their relevant GLA contact about furtherinformation that may need to be provided to allow a full assessment to take place.Providers who plan to bid for negotiated grant funding for projects other thansupported and specialised housing should consult with their GLA contact in thefirst instance.82 When bidding for London Affordable Rent homes at levels above the benchmarksthe provider will be required to submit other evidence to satisfy theGLA that the homes are genuinely affordable to Londoners.U S E OF RCG F AND DPF83 The use of the term ‘grant’ in this funding guidance is inclusive of both RCGF and,for London Affordable Rent homes, DPF. Where RCGF or DPF has previously beenapplied to a project, bidders will need to identify how much when bidding.84 Providers should make full use of existing RCGF and DPF funds when submittingfunding bids under the new programme, and providers will be expected to drawdownagainst RCGF and DPF funds before requesting GLA grant. Where grant, RCGF andDPF have been allocated to a specific project, providers should use their RCGF andDPF allocation first. Any use of RCGF outside of this programme will also requireapproval by the GLA.G R ANT PAYME NT85 As an incentive for early delivery, if a project starts on site in the first year of theprogramme (2017-18), the GLA will pay 50 per cent of grant at land acquisition stageand the remaining 50 per cent of grant at start on site stage.2786 If a project starts on site in the second year of the programme, the GLA will pay50 per cent of grant at land acquisition stage and the remaining 50 per cent of grantwill be paid on completion.87 This early incentive payment is only applicable to projects that have notpreviously been allocated grant in another GLA funding programme. Where schemeshave been moved from another programme, and for projects that start on site in thethird year or beyond of the programme, 50 per cent of grant will be paid at start onsite and 50 per cent on completion.Table 2: Summary of GLA approach to payment of grant in 2016-21 programme88 In addition, the GLA may allow flexibility on the timing of payments to providerswhen it leads to the early development of affordable homes or the delivery of spatialor thematic priorities. This will need to be on the basis of a clear business case.89 Providers who are not regulated by the Social Housing Regulator will eitherreceive 100 per cent grant upon completion of their projects, or will have to providesatisfactory security to the GLA so as to safeguard public funding.L AND ACQU I S ITION90 Ensuring affordable housing providers have access to sufficient land in the rightplaces and at the right prices will be fundamental to the success of this programme.The GLA is keen to support partners by whatever means necessary to achieve this.In most cases partners are expected to be able to buy the land themselves, largelyusing their own resources, although the early and flexible tranche payments outlinedabove will assist some partners.91 Partners who may be able to benefit from GLA support in land acquisition areencouraged to discuss this with their relevant GLA contact at the earliest possibleopportunity. The GLA will also consider further strategic opportunities to increasethe land supply for affordable housing.Start on site year Payment at landacquisition stagePayment at starton site stagePayment atPracticalcompletion stage2017-18 50% 50%2018-19 50% 50%2019-20 50% 50%2020-21 50% 50%HOMES FOR LONDONERSADDITIONAL M AYOR AL PR IOR ITIE S92 Providers wishing to secure grant from this programme will need to commit tohelping the Mayor deliver a number of his priorities.London Living Wage93 The Mayor welcomes providers joining him in leading the way on tackling lowpay in the capital. Providers receiving grant from the GLA through this programmewill be expected to ensure that their employees are paid the London Living Wage,and should endeavour to ensure that consultants, contractors and sub-contractoremployees similarly meet this requirement. This will be a contractual obligation offunding.Estate regeneration94 The Mayor is developing a Good Practice Guide to Estate Regeneration, whichwill set out good practice in relation to landlord aims and approaches, consultationand engagement, and offers to tenants and leaseholders that the Mayor expectsto see in estate regeneration projects. Providers who bid for grant to deliver estateregeneration will need to contractually commit to these standards for their estateregeneration projects.Cycle safety95 The Mayor is committed to improving cycle safety across London. Recent datashows that heavy goods vehicles (HGVs) are disproportionately responsible forcyclist casualties in London. A significant number of HGVs in London are involved inthe construction trade, and those in the industry are in a powerful position to takeaction to reduce the risk on London’s roads for cyclists.96 The Mayor is introducing a new Direct Vision Standard which will rateconstruction and other HGVs based on the level of vision the driver has directly fromthe cab. TfL and the wider GLA group are leading by example and will adopt the newDirect Vision Standard in all future contracts from April 2017, to ensure that no truckswith poor direct vision are used in their future supply chains. Providers deliveringhomes through this programme are expected to introduce similar approaches withintheir own supply chains.29Supporting skills and apprenticeships97 The Farmer Review highlighted the need for more action to develop skills inthe construction industry. Construction has an ageing workforce, and strugglesto attract, develop and retain the people it needs. The provision of high-qualityapprenticeship programmes is essential for the industry, and the GLA expectsproviders to review the quality of the apprenticeships they offer in light of theReview.Modern Methods of Construction98 The Farmer Review also highlights the need to pre-manufacture more of ourhomes. Precision-manufacturing homes can offer an increased level of consistencyand quality control and additional benefits in terms of speed of delivery, costefficiencies and safety on site. Furthermore, an industry-wide move towards moreoff-site work could make a career in the construction sector more attractive to youngpeople. The GLA therefore expects to see an increasing number of bids that involvethe precision-manufacture of new and affordable homes.Delivering affordable homes on public land99 The Mayor is keen to maximise affordable housing on public land. Publicsector organisations, and providers bringing forward projects on public land, areencouraged to engage fully with the GLA at an early stage, in order to maximiseaffordable housing provision.B R ANDING100 In line with previous programmes, providers will be obliged to adhere to theMayor’s communications and branding requirements. These will include the needto display Mayor of London and/or Homes for Londoners hoardings as specifiedby the GLA and relevant Government branding on all development sites funded bythis programme.HOMES FOR LONDONERS31AS S E S S ME NT101 The GLA has introduced set grant rates to make the bidding and assessment offunding bids as simple as possible, giving providers certainty about grant availabilityand freeing up the resources of both the GLA and providers to focus on deliveringthe homes that Londoners need.102 By bidding for grant through this programme, all providers are confirming theirwillingness for all information to be shared with the relevant borough and the SocialHousing Regulator.AS S E S S ME NT OF B IDS FOR APPROV E D PROV IDE R AND DE VE LOPE R- LE DROU TE S103 The GLA will consider the following criteria when assessing funding bids underthe Approved Provider and Developer-led routes:• Deliverability;• London Borough feedback;• Regulator feedback.Deliverability104 Only bids for projects that start on site by 31 March 2021 will be consideredunder this programme and the GLA will assess the certainty of delivery within theforecast delivery timescale, taking into account the pre-development and planningstage achieved and land ownership status.105 Providers with existing allocations with the GLA are expected to prioritise thedelivery of these projects by the agreed delivery milestones, and the GLA will takeinto consideration a provider’s performance in adhering to these agreed milestoneswhen assessing funding bids under this programme.106 The GLA will look at the scale of a provider’s delivery output in previous fundingprogrammes when considering Indicative proposals.107 In considering bids for London Affordable Rent the GLA will bear in mind theneed to deliver 58,500 London Living Rent/London Shared Ownership homes.PART 4:AS SE S SME NTHOMES FOR LONDONERSLondon Borough feedback108 Local borough feedback will be sought on all funding bids submitted to the GLA.It is expected that providers will have consulted with London Boroughs extensivelyprior to submitting funding bids.109 Where a provider has bid through the Developer-led route, the local borough willbe asked to confirm whether the relevant project is delivering at least 40 per centaffordable housing and that the borough is content with the tenure of affordablehousing being delivered.Feedback from the Social Housing Regulator110 Information submitted at the bid stage by providers will be made available tothe Social Housing Regulator, who will advise on providers’ current compliancewith the Regulator’s Governance and Viability standard, and on the materiality ofbids compared with the information that the Regulator holds concerning providers’business plans and existing stock holdings.NEGOTIATE D G R ANT R ATE S111 Bids submitted for negotiated grant funding will be assessed using the samecriteria as bids through the Approved Provider and Developer-led routes. There willbe additional Value for Money and affordability assessments using the informationsubmitted by providers at bid stage.112 Bids for grant to deliver supported and specialised housing will undergo furtherassessment to ensure that full revenue funding is in place. Proposals that do notdemonstrate a fully-funded revenue requirement will not be funded by the GLA.CONTR ACT S AND PROG R AMME MANAG E ME NT113 Providers will need to enter into a standard form contract with the GLA to securegrant through this programme. Contracts may vary depending on the providerand products being funded, but will retain the key provisions of the standard formcontract. Template contracts will be published on the GLA’s website in due course.114 Completed contracts will include the agreed delivery milestones for the projectsthat GLA has committed to fund. The GLA will monitor providers’ performanceagainst these delivery milestones on an ongoing basis. The GLA will be flexible whenissues with project delivery are flagged at an early stage, but will reserve the rightto review a provider’s grant allocation where a provider cannot deliver a project orreplace it with an equivalent project.33HOMES FOR LONDONERSS TATE AID COMPLIANCE115 Whilst the GLA has designed this programme to be State Aid compliant,providers have a responsibility to ensure they are not over-compensated from thepoint of view of State Aid rules.116 The GLA has undertaken a detailed exercise to establish appropriateconstruction costs by the size, tenure and borough location. These costs will be setout on the GLA’s website by 20 December 2016.117 The GLA will require providers to make returns about the actual costs incurredfor both public accountability and State Aid compliance. The GLA is designing aprocess that will minimise costs to it and providers. This process will include thesubmission (and certification) of actual costs incurred, and a process to ensurea more detailed review of costs for each grant recipient at least once during theprogramme. More information will be supplied about the details of this process onceit has been finalised.118 Providers delivering a high proportion of projects that have historically receivedlow levels of funding, such as works-only projects, may be subject to additionalmonitoring. If any providers are found to have been over-compensated, they will berequired to repay any over-compensation to the GLA.COMPLI ANCE AU DIT119 All grant recipients will be subject to the GLA’s compliance audit process, whichensures that the GLA’s policies, funding conditions and procedures are followed.Projects not in receipt of GLA grant, inclusive of RCGF and DPF, will not be subject tocompliance audit.35TIME TAB LE120 Following the outcome of the assessment and negotiation process the Mayorwill make an announcement of successful bidders in May 2017. We expect to havecontracted with successful bidders by no later than 30 June 2017.QU E S TION S121 Any questions relating to this funding guidance should be submitted toaffordablehomes@london.gov.uk. A compilation of questions and clarifications willbe published on the GLA’s website and updated on a regular basis.Milestone DatePublication of funding guidance 29 November 2016OPS opens for bid submissions 31 January 2017OPS closes for bid submissions 13 April 2017Assessment April – May 2017Announcement of allocations May 2017Partners in contract 30 June 2017HOMES FOR LONDONERSANNE X AFUNDING AND E XPECTE D OUTPUT S Allocation statusMayor’s funding settlement over the period 2015-2021Funding allocation (£bn)£3.150* Allocated funding Affordable housing allocations made to date£0.579Affordable housing funding reallocated to HousingZones Programme (in addition to £200m Housing Zonesrecoverable investment)£0.400 Funding available under the Mayor’s Homes for Londoners 2016-21 programme Affordable Homes Programme£2.171 StatusLondon target for Starts on Site by 2021Starts on Site achieved since April 2015Starts90,0009,385 Projected Starts on Sites by March 2021 within existing funding allocations Affordable Homes Programme9,615Housing Zones Programme11,000 Targeted Starts on Site by March 2021 through currently unallocated funding Affordable Homes Programme60,000 Table 1: Funding available through this programme, split by allocation statusTable 2: Confirmed and projected Starts on Site by 2021* Total grant available will be supplemented by Recycled Capital Grant Funding (RCGF) and Disposal Proceeds Funding (DPF)37
