Out-Law News 1 min. read
22 Dec 2011, 2:58 pm
The Get Britain Building prospectus outlines three sources of funding, including a loan on commercial terms and two equity investment funds. All funding provided is repayable to the Government.
The fund was first announced in the Government’s recent Housing Strategy, released in November 2011, which is aimed at enabling work on stalled sites with planning permission, and to assist in unlocking up to 16,000 new homes by December 2014.
It is hoped the fund will help developers who cannot access development finance and allow them to share risk where the viability is marginal. All funding has been made available on the basis that it is recoverable, according to the Government.
The fund gives developers three options. A loan available on commercial rates that must be repaid when units are sold; equity investment where the HCA would invest alongside the developers' own equity investment and receipts would be share proportionately when any loans have been paid off, called Equity A; and an equity investment which would recover investment through a combination of Equity A and pre-arranged thresholds, called Equity B.
"I want to encourage as many developers with commercially viable schemes as possible to apply. I’m particularly keen that small and medium sized builders can ask for funds so I’ve made sure we’ve kept things simple," said Grant Shapps, Housing Minister.
The bids will be assessed on value for money and deliverability, according to Shapps, and there is a simplified ‘expressions of interest’ stage with an easy to use form, which it is hoped will make it easier for small and medium size builders to apply.
The Government has said that it may require local authorities to join the due diligence process and renegotiate onerous section 106 planning obligations to improve the viability of some schemes.
Developers who would like to apply for the scheme must submit an expression of interest by 30 January 2012. The proposals will then be assessed by the HCA and local authorities, who will announce contracts from May 2012 onwards, the HCA said. It is hoped that work could begin on sites across the country from June 2012.
“This is an exciting new programme, which will boost the house building industry, local economies and the supply of new homes for the areas that need them. I’m sure this opportunity will be of interest to all developers, but we have made the process is as simple as possible to make it easy for smaller developers to bid," said Pat Ritchie, chief executive of the HCA.
