Affordable Rent Seminar

2. Affordable Rent Seminar Proposals and Programme Management 9 December 2010

3. Contents Outline of model and drivers Working in a local context Provider offers Assessment and negotiations Contract and review

4. Principles New affordable rent homes funded from a combination of: provider’s resources Borrowing capacity from new affordable rent homes Capacity generated from conversion (to affordable rent and in some cases, disposal or conversion to shared ownership) HCA funding Other resources (provider’s own resources, RCGF (DPF), public land, s106 contributions) Conversion of existing homes to affordable rent agreed on “something for something” basis – ie linked to delivery of new supply Providers make offers for delivery - ie as a package – both new supply and other sources for generating capacity

5. Timing/Drivers Need to move quickly to implement new approach and test capacity (and appetite) for delivery Capacity generated from conversion – needs to start early in programme period Profile of available resource and delivery assumptions – need providers to commit to starts at an early stage HCA consider offers for 2011-15 SR period across all providers wishing to participate in the new model at same time (fork in road)

6. Providers work closely with local authorities in putting forward packages and developing proposals HCA will seek information on discussions with LA(s) (pre and post submission of proposals) HCA will work closely with LAs in investing in new supply – express LA consent will be sought (as proposals firm up). HCA will work with LAs on on-going basis (building on existing work and relationships) to accommodate LIP priorities, to act as enabler between LAs and providers receiving investment to allow LA priorities to be delivered Local Authorities will continue to play a key role on nominations – seek local agreement on achieving mixed income communities Balance between supply, capacity, allocations and access to nominations Premium on co-operation and trust: 3-way on-going dialogue and discussions – providers, local authorities, HCA as well as on-going discussions with housebuilders and developers to bring forward new supply, including affordable rent Working in a local context

7. Affordable Rent in London Close collaborative working with the GLA, HCA and DCLG on programme design Includes identification of key product issues – such as the impact of the ‘benefits’ cap Further discussion at HCA London Board in December

8. Affordable Rent in London London section of Affordable rent prospectus will set out Mayoral priorities Working closely with DCLG and GLA to devise when and how to divide resources between London and the rest of England Single negotiations with providers including London and rest of England – details to be worked through HCA London Board will take a view on proposals including consideration of overall funding and receipts position Affordable rent budget will pass to GLA when Localism Bill becomes law – April 2012

9. Packages Overall offer Indicative quantum of new supply How capacity generated Level of detail? Sufficient to verify offers are credible Sufficient to gauge broad impact across country Meeting identified local needs/priorities? Sufficient for broad comparative purposes/relative VFM Understand need for flexibility (eg volume and location of voids) Contract captures high level principles (and sensitivities?) Review (all aspects) on open book basis Adjust parameters, across the range of variables, based on progress

10. Provider offers - information New supply indicative numbers Estimated average costs Estimated investment Provider own capacity Rents and borrowing - new homes and conversions (no. and proportion) Rent policy (up to 80% of market rents) Disposals/conversion to shared ownership RCGF Existing resources

11. Provider offers - information Broad timing of delivery Indicative location (sub-regional geography) – new supply and conversions/disposals Outline of target mix Outline of tenure proposals (is LCHO proposed?) Offer on payment terms (payment by results) We anticipate firm(er) proposals in early years, indicative high level numbers in later years (flexibilities) Update on providers (boards) decisions to participate

12. Offer Supported housing Housing for older people Rural Empty homes Places of Change Gypsies and Travellers Mortgage Rescue

13. Offer (general aspects) Achieving procurement efficiencies Addressing under-occupation/mobility Skills and employment Working in consortia/bringing in smaller providers (not cutting off access to capacity) Increasing affordable home ownership sales to existing social tenants

14. Assessment/negotiation Single set of negotiations per provider How do offers meet identified needs? How do offers deliver local priorities? Is provider maximising capacity within proposals Volume and proportion of conversions Up to 80% and capacity generated How to ensure no leakage Efficiency Test realism of proposals Value for money (comparative) Costs and investment Payment profiling requirements Nil grant/s106 delivery Driving costs down/not competing for early delivery Assessment of capacity/impact on viability (regulator) National aggregation and moderation

15. Contracts and review Contract capture high level proposals (detail where known – eg early delivery/schemes) then open book over delivery period Regulator monitoring of application of consent to principle of conversions and disposals Quarterly review meetings Look back at actuals – open book (option to test individual schemes) Forward look at forthcoming delivery – meeting need, LA support Adjustment of parameters Volume/pace of conversions (and disposals) Adjust new outputs Adjust investment Balance of risk and reward (more variables) Regulator role in monitoring that conversions, disposals and rent levels are in line with consents and the tenancy standard – and to ensure that on-going viability of provider is maintained

16. Openness Publish information on initial proposals – then on-going delivery (supply, conversions and disposals) Publish maps of needs analysis, alongside delivery of outputs

17. Affordable rent – next steps Develop programme framework DCLG/HCA/TSA Stakeholder engagement Framework and information requirements – January Partner offers and negotiations – new year HCA investment teams engagement with local authorities First contracts - April