Affordable Housing Supply Programme: process and procedures MHDGN 2022/02

Annex A: Projects requiring grant above benchmark

While grant providers and grant recipients will wish to maximise the value obtained through the Affordable Housing Supply Programme, this should not prevent higher cost projects from proceeding (including projects in regeneration areas, remote, rural and island areas, and those involving housing for people with particular needs).  Flexibility to award grant funding above benchmark therefore continues to apply to both RSL and local authority projects, as well as projects delivered by RSL subsidiaries and local authority arms-length external organisations.  

Applications requesting grant in excess of the applicable benchmark should be accompanied by a detailed narrative and supporting documentation explaining why additional grant is required and the nature of the higher costs.

The grant provider will take the final decision on whether higher grant requirements are acceptable and at what level, based on the evidence provided by the grant applicant.

This evidence may include:

• an analysis of project information, to include specific items with associated costs, as defined within the housing tender return – information contributing to the gross indicative cost will require to be detailed sufficiently to allow a full appraisal to be carried out by the grant provider (the grant provider may give consideration to the actual cost of delivering the additional quality features that are being phased into the Affordable Housing Supply Programme which are in excess of the specified allowable limitations (currently 25% for ad-hocs and 15% for design excess) where these are not otherwise reflected in the current gross indicative cost calculation)
• evidence showing the project’s cashflow
• evidence that the site valuation and acquisition price reflect identified remediation costs which are unavoidably high
• evidence of higher costs associated with particular needs housing
• evidence of higher costs stemming from particular planning requirements/ restrictions, and
• evidence of how rigorous the grant applicant has been in pursuing alternative options – such as developing a different site, negotiating a lower price for the development, or exploring other funding sources.

In addition, an RSL, an RSL subsidiary or a local authority arms-length external organisation should submit a letter from the relevant local authority expressing ‘in principle’ support for its project.[1]

There should be no presumption that above benchmark grant funding will be approved at the level applied for.  If higher than benchmark grant is approved it will be met from the appropriate local Resource Planning Assumption.