Band 4 - Advance Land Purchase (ALP)

3.33  Prequalifications are the major scheme development milestones that an Association must comply with in order to meet the agreed timetable in the Social Housing Development Programme (SHDP) and the DSD’s project approval criteria.  Each step represents what must be achieved or obtained at a particular stage according to scheme type and when followed in conjunction with other Certifications, allows the Association to apply for project approval and the first Tranche payment of Grant at Acquisition stage.  Each milestone is an essential part of a project and uncertainty or failure in any of the ‘steps’ can delay or put at risk the project.  It is essential that the Association works with the NIHE (DPG), various stakeholders, its Solicitor and Consultants on all the Prequalifications.  Each step completed or still to be completed allows the progress of a scheme to be measured by the Association.  

The following pre-qualifications are tailored to apply to the ALP scheme submission only. The Development Milestones for Band 3 – Other Schemes should be followed for the subsequent full scheme submission.

Housing Need:

Housing need must be already identified and site/scheme included in the Social Housing Development Programme (SHDP). The Association will require a letter from the NIHE supporting the need.  The Association will of course have to write to the NIHE requesting support for the Association’s proposals, a copy of which shall be retained on file. The breakdown of property types on both letters must correspond.

Valuation:

This will require the valuation of the site prepared by an independent valuer engaged by the Association. The Association will of course have to fully brief the valuer on the site, site boundaries, development constraints etc.  For further guidance on Acquisition Issues & Valuations.

Land/Property:

Legal Aspects - All Schemes:
Associations must ensure that the normal pre-purchase legal and site/property checks have been carried out by the Association’s Solicitor and the land/property to be developed offers good title, is in the Association’s ownership and no restrictive covenants exist that which would impede the development of the land/property as proposed. Details of any restrictions, easements, covenants, pre-emption clauses or any provisions of the contract, draft lease or conveyance which might adversely affect the proposed scheme must be referred to the NIHE (DPG) for notification prior to the Association being committed to the acquisition of the property.

Leasehold - The interest to be acquired must be freehold or leasehold for a term of years certain.  Associations should always seek to acquire the vendor’s full interest in a site or property, rather than accepting a newly created lease or sub-lease.  In other words:

Where, however, an Association finds it impossible to negotiate a purchase on the above terms and judges that a HAG-subsidised scheme should still proceed on that site or property, the Association may acquire a newly created lease or sub-lease (depending on whether the vendor owns the freehold or leasehold interest, respectively). The terms of such a lease or sub-lease should be as long as possible and at least 35 years for Rehabilitation schemes and 65 years for New Build schemes at the date of start on site;

Auctions and Tenders - where the proposed purchase is via auction or tender, the NIHE (DPG) approval will take the form of a letter of approval, in principle only.  If the Association is successful at auction/tender, it must also confirm to the NIHE (DPG) forthwith so that a full Project Approval may be issued.  The Association must state on its Project Approval application the date by which a decision is required.  The NIHE (DPG) will normally need a minimum of 7 working days to consider the application for Project Approval.

Note:The Association must be aware that it is normally expected to execute the contract immediately following a successful bid at auction.  It must therefore obtain from its solicitors confirmation that the title offered is satisfactory and that the conditions of sale permit the proposed development.  It must also be satisfied that it can meet any conditions of the approval in principle.  The Association needs to be aware that it is working at risk without any formal commitment from the NIHE (DPG)

Code for Sustainable Homes:

Not applicable - see Site Appraisal guidance in the Design Standards Guide which refers to preparatory investigations.

Planning:

As a minimum, this will require liaison with Planning Service or an appropriate opinion from a Planning Consultant to ensure that the site is suitable for housing use and the proposals would be broadly acceptable.  At an early stage, it is unlikely that Planning Service would be prepared to provide written confirmation on the proposals, especially as some matters can only be resolved by an application for full planning permission.  In such cases the Association and its Consultants must ensure that after consultation:

Site Appraisal:

Site investigation, identification of potential constraints and assessment of estimated site development costs are the core elements in the site appraisal process. For more detailed guidance on Site Appraisal.

All New-build Schemes:
The Association must appoint Consultants to assess the suitability of the site for its intended purposes and to identify any problem areas that would affect the proposals and costs.  This will require assessing the site and proposed need in relation to:

In respect of the nature of the ground conditions, it may not be practical to confirm the nature of the conditions below the ground at an early stage, and reliance may have to be placed on information readily available on adjacent sites.

If the Association is not satisfied with the information obtained, it is advised to obtain a specialist report.

Areas that may need special investigation include:

Consultants:

The Association must appoint Consultants to assess the site constraints and to prepare - and cost - proposals for meeting the proposed need.  The Association must properly brief Consultants and proposals must be developed to at least RIBA ‘Plan of Work’- Feasibility Stage or equivalent.  The purpose of this is to provide the Association with an appraisal and recommendation in order that “the Association may determine the form in which the project is to proceed, ensuring that it is feasible, functionally, technically and financially.”  Realistic outturn cost estimates must be prepared for the proposals to allow completion of the Forms and TCI comparison – assuming for cost estimating purposes only that the Start on Site stage will directly follow the Acquisition of the site.  Where the scheme is expected to exceed TCI, the reasons for this must be identified and costed. Appointments must meet with the requirements of Procurement.

Economic Appraisal:

An Economic Appraisal must be prepared to take account of alternative sites and proposed solutions for the intended need. The EA should include any qualitative benefits the project may bring to sustaining local communities. Where the scheme exceeds TCI the reasons for this must be identified and arguments for the scheme representing Value for Money should be presented. Where costs are over TCI and exceed the (TCI) figure used for the Advance Acquisition of Land the Economic Appraisal must include an option to dispose of the site.