Do you know your grant agreements?


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Social Housing Grant has been accessible to RPs in one form or another since the introduction of the Housing Act 1974 and the broad rules attached to such grant are well known to them. Where RPs are looking to develop with NHS grant, it is important to understand the key differences between the two.

Since the mid-70s, the provision of social housing grant has evolved and adapted to fit changing political and economic environments. Its purpose, however, has largely stayed true; to help increase the rate of delivery of affordable housing and encourage ongoing use of dwellings as affordable once built.

Social Housing Grant comes with its own set of rules governing payment, transfer and importantly, repayment. RPs will be aware that once grant has been provided for the delivery of an affordable unit, the grant amount is "tagged" to that unit until a recovery event occurs, triggering grant repayment or recycling.

The recovery of grant is usually documented contractually in the grant agreements issued by the grant giving agencies. Statute offers Homes England and the GLA legislative backing to their recovery powers, identifying through the Recovery Determinations the specific circumstances (known as "relevant events") in which grant recycling or repayment will be required. Statute also operates to protect grant "tagged" in dwellings when those homes transfer to a third party. The underlying purpose of each "relevant event" (which focuses on restricting disposals, usage and monitoring solvency) is to ensure that the grant to be used for the purposes for which it was given (e.g. the provision of social housing).

The determination does however allow units to be transferred between RPs (with the grant giver's consent), without triggering repayment, and in such cases the grant liability "skips" to the new landlord. If the RPs does intend to change the use, sell a property out of sector, or staircase beyond the initial tranche on a shared ownership lease, grant will need to be repaid. Where grant is within the hands of a for-profit RPs or a private developer, an uplift on that grant would also be due.

In our experience, this has given rise to issues when looking at different sources of grant funding, in particular NHS Capital Grants. There is renewed focus on these, with the NHS England Transforming Care programme still underway and with much still to deliver.

NHS England's National Housing Lead is setting up a series of clinics (the first ones running in the Midlands and East, with more to follow across the rest of the country) to discuss NHS England's Transforming Care capital funding for 2019-21. These events are intended to allow an opportunity for you to come along to talk about your ideas for developing community accommodation and support in your area. They are a chance for you to talk to your Transforming Care Housing Lead and Local Government Advisor about your planned project(s) and to gain information about how the capital programme works and how it may support your projects. Please let us know if you would like to be put in touch with the Transforming Care team.

We have written before about the availability of NHS capital money to grant assist supported living and other similar schemes. NHS England's "new" grant package has been up and running for about three years now but there are still difficulties, stemming in part from use of different language and in part from a failure to understand each other's drivers and priorities.

The critical test is that the use of NHS capital in this way must be more effective than spending the same money on NHS care. In practice, there are many excellent examples of better outcomes for individuals, as well as financial savings, from people moving to community settings rather than being inappropriately kept as inpatients and that is, of course, what the Transforming Care programme exists to deliver.

The application process kicks off with a PID (project initiation document) and follows NHS England's standard capital projects approvals process. It is vital, therefore, to make the case as to how the project will improve the outcome for the affected individuals, as well as looking at ongoing revenue costs and any revenue or capital released by the change in setting.

Sometimes the application may be for funds to improve an existing property – and those improvements might not lead to an increase in property value. That does not matter to the NHS; the key point is that the scheme cannot continue/ cannot accommodate new or continuing or additional residents without the outlay.

The biggest difference that RPs need to understand is that the NHS grant is an equity stake in the property (secured by a legal charge), meaning it shifts with the value of a property even if such value goes down, unlike housing grant which is fixed (excluding the addition of uplift) and does not require a charge over the property. When the scheme ceases to operate, a repayment of the proportion of the open market value of the property that is attributable to the expenditure of the NHS capital grant must be made. In order to simplify this, the new NHS capital grant agreement provides for the initial contributions of the parties to be set out as percentages and there is a mechanism to recognise any future housing providers improvements (as opposed to routine maintenance) by revising the percentages accordingly.

With a well thought out business case and a clear understanding of the NHS "red lines", it is possible to get swift agreement to grant funded schemes. Where there are misunderstandings of the parties' positions, however, matters can drag on until the scheme itself is in jeopardy.

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