Affordable Housing Supply Programme: process and procedures MHDGN 2022/02
This Guidance Note supersedes MHDGN 2020/02 and is for local authorities and Registered Social Landlords. It details the process for planning the delivery of the majority of grant-funded homes through the Affordable Housing Supply Programme.
Programme planning
Local housing strategies
The planning and delivery of affordable housing is focussed on meeting local needs by supporting the ‘right homes in the right place’. Local authorities, as both the statutory housing and planning authority, are responsible for assessing housing requirements and for ensuring appropriate land in the right places to enable the delivery of housing. The ‘Local Housing Strategy’ sets out the authority’s strategic vision for housing, taking into account both national policy objectives and local priorities, based on housing need and demand evidence. As well as its strategic response to national outcomes and national housing priorities, the Local Housing Strategy sets out the approach to meeting other statutory housing responsibilities, including fuel poverty, house condition and homelessness amongst others. It also provides people with a vital opportunity to have their say and influence the future delivery of housing and housing related services in their communities.
The 2001 Housing (Scotland) Act places a statutory requirement on local authorities to prepare a Local Housing Strategy which encourages equal opportunities. In addition, the Equality Act 2010 and the Equality Act 2010 (Specific Duties) (Scotland) Regulations 2012, 2015 and 2016 introduce duties that public bodies are legally required to meet in the exercise of their functions. Local Housing Strategy guidance makes clear that local authorities should ensure that equality is central to all housing and housing services delivery and that the Local Housing Strategy should include a statement that reflects the local authority’s commitment to addressing inequalities in housing and should provide details on how this will be achieved. An Equality Impact Assessment must be carried out to inform each Local Housing Strategy, and local authorities are expected to demonstrate how findings from this have translated into priorities and outcomes in the Local Housing Strategy.
Strategic Housing Investment Plans
Strategic Housing Investment Plans are prepared by local authorities annually using the latest known Resource Planning Assumptions. They set out the key development priorities for affordable housing over a five year period in each local authority area and their preparation should be viewed as a corporate activity, with close working relationships being developed between housing, planning, social work and other departments.
Strategic Housing Investment Plans are directly informed by the relevant Local Housing Strategy priorities and are developed in consultation with key stakeholders (collaboration is also expected between local authorities, RSLs, communities, developers, the Scottish Government and other stakeholders). Each Strategic Housing Investment Plan is approved by local Elected Members and (a) reinforces the role of the local authority as the strategic housing authority (b) is expected to align with the priorities and outcomes set out in the Local Housing Strategy and (c) identifies the projects which will be included in Strategic Local Programme Agreements.
Strategic Local Programme Agreements
Non-TMDF authorities
Non-TMDF authorities should submit Strategic Housing Investment Plans to the Scottish Government through the HARP system. Once approved, these Plans will be used by the Scottish Government to create Strategic Local Programme Agreements for discussion with local delivery partners and for final agreement with individual local authorities[1]. When preparing Strategic Local Programme Agreements, the Scottish Government will ensure that the overall balance of the programme is in line with its national targets for affordable housing supply.
Strategic Local Programme Agreements will cover a three year period (year one agreed, and years two and three in draft) and will reflect existing carry-forward commitments, new planned projects, and additional capacity in the form of a pipeline of projects taken from the Strategic Housing Investment Plan. Once agreed, they can form the basis of individual RSL and local authority Programme Agreements (where these are requested by grant applicants).
Strategic Local Programme Agreements are therefore the primary working document informing the delivery of the Affordable Housing Supply Programme at the local level and include:
- details of each project’s proposed developer
- each project’s location, unit numbers and tenure
- each project’s approval, site start and completion dates
- each project’s indicative annual grant requirement, and
- the annual Resource Planning Assumption profile.
Responsibility for managing and monitoring these Strategic Local Programme Agreements rests with the Scottish Government and will involve regular joint programme meetings (or other locally agreed mechanisms) with all parties. As a minimum, these should happen at six monthly intervals. No projects will be added or removed from the Strategic Local Programme Agreement without prior discussion with the relevant local authority.
Strategic Local Programme Agreements will be reviewed and re-issued at least annually to enable the programme to roll forward and to maintain a minimum three-year programme planning horizon, based on the most up to date approved Strategic Housing Investment Plan.
The local authority approved Strategic Housing Investment Plan will normally be the route by which projects will be brought into the Strategic Local Programme Agreement. As part of the Strategic Housing Investment Plan sign-off process, local authority officials should therefore – where possible – obtain delegated authority to ensure that any project which falls out of the Strategic Local Programme Agreement can be replaced by another from within the Strategic Housing Investment Plan[2].
If slippage is unable to be taken up by other identified Strategic Housing Investment Plan priorities in a local authority area within a financial year, the Scottish Government reserves the right to reallocate resources to other affordable housing projects outside of that local authority area. The Scottish Government cannot guarantee that the local authority area’s allocation will be increased in future years to compensate.
More generally, local authorities are expected to overcommit resources in the Affordable Housing Supply Programme to ensure delivery should slippage occur. Wherever possible, a minimum slippage factor of 25% should be applied on an annual basis.
TMDF authorities
Based on their Local Government Settlement figures and agreed minimum forward planning assumptions, TMDF authorities will submit their Strategic Housing Investment Plans to the relevant Scottish Government area team through the HARP system.
TMDF authorities will prepare their three-year Strategic Local Programme Agreement proposals to reflect both existing carry-forward commitments into future years and other Strategic Housing Investment Plan projects. In preparing Strategic Local Programme Agreement proposals, there should be an opportunity for RSLs and other delivery partners to input to the process.
TMDF authorities should ensure, in discussion with the relevant Scottish Government area team, that the overall balance of the programme is in line with the Scottish Government’s national targets for affordable housing supply – the majority of funding for the Affordable Housing Supply Programme should be directed towards social rented housing.
Strategic Local Programme Agreements will include the details listed above, and should be discussed and agreed with the Scottish Government. These will then be used as a working document to (a) manage the local programme and (b) prepare Programme Agreements (where these are requested by grant applicants).
Responsibility for the on-going managing and monitoring of the Strategic Local Programme Agreement rests with the TMDF authority, with TMDF authorities being expected to overcommit resources to ensure delivery should slippage occur (wherever possible, a minimum slippage factor of 25% should be applied on an annual basis). TMDF authorities should however keep the Scottish Government regularly informed of progress against delivery of their Strategic Local Programme Agreement, or with any revisions to the Strategic Local Programme Agreement, with information being provided at key stages as required for Scottish Government corporate reporting and official statistics.
Programme agreements
The grant provider will aim to issue Programme Agreements to those local authorities and RSLs which request one by the end of May of each year. These will notify grant recipients of their annual grant planning targets over a three-year period. Programme Agreements will confirm – at the project level – the expected grant requirement, unit numbers and tenure mix, as well as approval, site start and completion dates.
Scottish Housing Regulator – thematic inquiry
Grant applicants should note that the Scottish Housing Regulator’s March 2017 publication Development of Affordable Housing in Scotland - a thematic inquiry shared positive practice for social landlords developing affordable homes. The Regulator’s report sets out 10 principles to help social landlords considering developing homes. Applying these principles will help landlords manage and mitigate risk, achieve value for money for tenants and meet Regulatory Standards. The 10 principles cover the importance of a landlord being clear about why it is developing homes in the first place and how this fits within its overall business strategy. The principles also cover risk, capacity, procurement and funding as well as governance.
[1] It is expected that local authorities will engage and consult with all delivery partners on Strategic Local Programme Agreement proposals and priorities.
[2] Any windfall projects which post-date the Strategic Housing Investment Plan submission should be assessed using the same methodology that was applied when prioritising projects for inclusion within the Strategic Housing Investment Plan.
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