Thriving communities, affordable homes Custom Build Briefing UK Cohousing Network Land & Planning for Community Developers 10th July 2012 Andy Nelson

Thriving communities, affordable homes Custom Build  Housing Strategy for England, –Govt 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

Thriving communities, affordable homes Key documents  –Prospectus –Loan application form –Loan agreement heads of terms –HCA land –Note: HCA administers in England, GLA for London

Thriving communities, affordable homes Eligibility: key requirements  Must be a registered or incorporated body –E.g. company, charity, housing association  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

Thriving communities, affordable homes 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 and S278 agreements  Construction costs for the homes  Associated professional fees related to the project after planning permission has been granted

Thriving communities, affordable homes 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 (EU ref rate plus margin)  Loan always secured by charge on land  Interest rolled up and repayments due on each disposal –Serviced plot –Self-finish home –Commissioned home  HCA part-releases its charge on each disposal

Thriving communities, affordable homes  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 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

Thriving communities, affordable homes  Shortlisted sites will go through due diligence to: –Appraise the project financial position and test underlying assumptions –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, and interest –Set the interest rate  After due diligence projects recommended for Agency decision  HCA & borrower enter into agreement Due diligence

Thriving communities, affordable homes  HCA Land Development and Disposal Plan –Example sites Kingsweir and Torpoint, Bristol. Spencers Park, Hemel Hempstead Pleasley Colliery, Bolsover Upper Tuesley Milford, Surrey Wilson Road, Hanford, Stoke-on-Trent Chase Avenue, Walton Park, Milton Keynes Trevenson Park, Pool, Cornwall Land opportunities