Going it alone

The first ever direct grant agreement between the Homes and Communities Agency and a community land trust - the Holy Island of Lindisfarne community development trust - took place on 29 May.

Previously, grant funding for CLTs was only available if the CLT was a subsidiary or directly controlled entity of a social landlord.

On what basis did the HCA give direct grant funding to a CLT?

The HCA required the CLT to have an accredited social landlord to stand behind it. However, this was achieved by a performance guarantee rather than the CLT becoming a subsidiary of the social landlord. This is likely to be the favoured route for CLTs.

An arm’s-length management organisation or other council-owned subsidiary or joint venture vehicle may also qualify where it has accredited status with the HCA under the national affordable housing programme or its successor, or is registered as a not-for-profit registered provider.
The issue is whether the sponsoring body can step into the regulatory shoes required by the HCA, as part of the performance guarantee.

What procedure does the CLT follow in making its grant application?

The CLT has to follow the route announced by the HCA in its national affordable housing programme pre-prospectus and prospectus for non-registered providers.

What are the points to watch out for if you are a sponsoring social landlord?

The effect of HCA grant funding is to turn the sponsoring social landlord into the HCA’s lead regulator of the CLT. Although it may seem obvious, you need to be sure that the CLT meets the statutory definition in the Housing and Regeneration Act 2008.

This means asking the following questions:

• do you, as sponsoring body, have the legal power to give a performance guarantee?
• do lenders approve of the proposed shared ownership lease/declarations of trust?
• has the HCA approved the occupancy agreements?
• Aare you able to monitor the CLT’s compliance with the grant agreement’s milestones and other conditions, such as design specification?

Social landlords have to be prepared to give the HCA step-in rights in the management agreement between them and the CLT in the event of performance failure.

The housing management regulatory regime will apply to the housing management service for the completed housing stock.

A rent restructuring regime will apply to rents and service charges, while restrictions also apply to calculations for intermediate rents and shared ownership rents.

There can be disposals without HCA consent and nominations must meet HCA approval.

What makes a CLT and social landlord good partners?

Mutual trust and respect for each other’s role in delivering community-led housing is key. Those engaged in such a venture will need to be well-matched.

What do the grant conditions cover?

The grant conditions are still lengthy and cover issues such as the HCA’s requirement for a rent charge, in addition to various collateral warranties, land title matters, planning permission, design and the usual range of issues involved in a housing development.

Ian Moran is a partner at Cobbetts.
ian.moran@cobbetts.com

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