14. Strategic Partnerships - Capital Funding Guide - Guidance

2.1.1 Each Grant Recipient is required to enter into a new supply contract with Homes England. Robust contract management is a key principle of the delivery model. This section summarises the contract management process Grant Recipients must follow with regard to their contract.

2.1 General

2.1.1 Each Grant Recipient is required to enter into a new supply contract with Homes England. Robust contract management is a key principle of the delivery model. This section summarises the contract management process Grant Recipients must follow with regard to their contract.

2.1.2 The Strategic Partnership Grant Agreement is a standard form contract for affordable housing supply to be delivered in addition to any existing contractual commitments. The Strategic Partnership Grant Agreement is in addition to, and will not replace, any existing contracts with Homes England.

2.2 Process

2.2.1 The Strategic Partnership Grant Agreement details both Homes England and the Grant Recipient’s obligations and rights. Each contract will include:-

  • Conditions of grant (including eligible Development Expenditure)
  • Total Allocated Grant Funding
  • The Housing Outputs to be delivered including the number to be made available at a Social Rent
  • Grant claim and payment procedures including the requirements that must be met before grant drawdown
  • Obligations to meet strategic priorities
  • Reporting obligations
  • Default and termination terms
  • Dispute resolution

2.2.2 The contract is valid for the duration of the grant allocation but will allow for variations to account for flexibilities in delivery, subject to the agreement of such a change by Homes England.

2.3 Contract Management

2.3.1 The housing delivery of the overall Strategic Partnership is monitored through the Strategic Framework Board (SFB) underpinned by a separate Strategic Framework Agreement (SFA) with Homes England. The SFA sets out the terms of reference and basis for the communication, provision of information and collaboration between the Grant Recipient and Homes England to deliver additional affordable housing.

2.3.2 The Programme Management Board (PMB) is responsible for the monitoring of the delivery of the grant funded affordable housing units in accordance with the Strategic Partnership Grant Agreement. Performance of grant funded affordable housing delivery will be reported to the SFB, and issues raised on an exceptional basis only. The PMB is the mechanism for reviewing progress in delivering the Housing Outputs in the Strategic Partnerships Grant Agreement and agreeing the quarterly grant claims.

2.3.3 The PMB will monitor the commitments made by the Strategic Partner in relation to Strategic Priorities which will be reported to each SFB.

2.3.4 The PMB will consider the financial reconciliation exercise in April each year to ensure that the grant paid against development expenditure remains in line with the current Development Delivery and Expenditure Plan (DDEP). Should the number of affordable units be reduced from previous forecasts, or the delivery profile have substantially changed, the Strategic Partner will be expected to in the first instance make appropriate adjustments to their delivery forecasts to remedy any gaps in delivery. Ultimately, accounting adjustments may need to be considered by PMB for Homes England’s consideration and approval

2.3.5 Where a Grant Recipient wishes to collaborate with another organisation to deliver the Housing Outputs in the Strategic Partnership Grant Agreement, it must request approval from Homes England prior to enabling any other organisation to deliver grant funded homes as a Delivery Partner.

2.3.6 Approval of a new Delivery Partner can be sought at any time during the Term of the Strategic Partnership Grant Agreement but must be obtained in advance of submitting a claim including any Active Sites or Development Expenditure incurred by that Delivery Partner. The Grant Recipient is responsible for undertaking due diligence to ensure any proposed Delivery Partners can meet the Delivery Partner obligations set out in the Strategic Partnerships Grant Agreement. In addition, the Grant Recipient will be required to enter into a separate legal agreement with its Delivery Partners, which is outside the contract with Homes England. It may also be possible for delivery partners to access grant through more than one Strategic Partnership where appropriate.

2.3.7 It is anticipated that the introduction of new Delivery Partners will lead to increased Housing Outputs for the Strategic Partnership, and any request for additional grant funding would be subject to resource. The Grant Recipient is responsible for all activity undertaken by a Delivery Partner through the Strategic Partnerships Grant Agreement, to the point that a Delivery Partner Deed is completed for each scheme at Practical Completion).

2.3.8 It is expected that the Grant Recipient will deliver all of its additional grant funded homes through the Strategic Partnership Grant Agreement, with the grant allocation available, rather than bidding through Continuous Market Engagement (CME). The exception is for schemes seeking funding under specialist programmes for which separate bidding arrangements are in place.

2.3.9 The Grant Recipient may continue to lead an existing consortium for administration purposes to support smaller providers but is not expected to deliver any schemes or draw down funding through that consortium.

2.3.10 The grant rate paid per home to Delivery Partners must be at the prescribed rate (i.e. based on tenure and location) within the Strategic Partnerships Grant Agreement.

2.3.11 Where a Grant Recipient or Delivery Partner will deliver their Housing Outputs through a Group Company (e.g. a subsidiary, sibling or holding company of the Grant Recipient or Delivery Partner, such as a DevCo), the following points are to be noted:

  • Any Development Expenditure incurred by organisations in Group structures, which are neither a Grant Recipient nor an approved Delivery Partner is ineligible and this Development Expenditure should not feature in any Grant claims, forecasts or monitoring returns
  • Group Companies can have an active role in the delivery of the Housing Outputs and the Strategic Partnership Grant Agreement does allow a Group Company of either the Grant Recipient or the Delivery Partners to hold the secure legal interest in an Active Site which will lead to the delivery of Housing Outputs
  • A Grant Recipient or Delivery Partner making a relevant payment to a Group Company (e.g. to their DevCo) to procure land or development services can be considered an eligible cost
  • Provided a Group Company is a not for profit Registered Provider, the Grant Recipient may propose the Group Company to become a Delivery Partner (subject to Homes England approval in line with the agreed process as set out at 2.3.6 above)
  • Any Group Company which will own and manage completed units must be approved as a Delivery Partner and complete the Delivery Partner Deed to confirm the grant in the units and secure the grant once the units have been completed

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