Welcome to our detailed process behind constructing a social housing development. This journey, crucial for meeting the housing needs of communities, is governed by a series of well-defined steps and regulations to ensure fairness, efficiency, and value for money. These procedures form the backbone of a robust system designed to serve the public interest. At the heart of this process is a 4-stage approval system, each stage crucial in turning the vision of affordable, quality housing into a tangible reality.
Why build Social Housing?
In social housing projects, developers often encounter reduced risks due to agreements made with housing authorities or organisations to purchase units before the construction process begins. This pre-agreement to buy units offers several advantages that mitigate risks for developers:
- Assured Demand: By securing a commitment from housing authorities or approved housing bodies to purchase units upon completion, developers eliminate the uncertainty associated with selling units in the open market. This assured demand minimizes the risk of units remaining unsold, ensuring a guaranteed market for the developed properties.
- Financial Security: Having a guaranteed buyer for the units before construction commences provides developers with financial security. It reduces the financial risks associated with speculative building or relying solely on market demand. Developers can secure project financing or loans more easily with a confirmed buyer, potentially at favorable terms.
- Project Viability: A pre-agreement to purchase units enhances the overall viability of the project. Developers can confidently proceed with construction, knowing that the built units already have buyers, which minimizes the risk of over committing resources without the certainty of sales.
- Reduced Holding Costs: Developers can avoid excessive holding costs associated with completed but unsold units. Having a buyer lined up means they can minimize the time between construction completion and unit sale, reducing carrying costs like maintenance, taxes, and loan interest. its also going to save the developer in sales fees to an estate agent.
- Support for Future Projects: Successful completion of social housing projects with pre-agreed unit purchases can enhance developers’ credibility. This success can lead to further opportunities and collaborations with housing authorities or organisations for future projects.
Once you’ve decided on delivering a social housing development, you should start the process of attaining an agreement with an Approved Social Housing Body or Local Authority.
There are a few stages involved in reaching an agreement with the above mentioned bodies. The developer must tick all these boxes to get confirmation from to proceed. If you choose to progress with an approved housing body, they will first submit an Expression Of Interest form to the council which will confirm if there is a need/ requirement for the scheme in the given area.
1. The first step in any application is sending off some initial forms and declarations. These might cover applicant details, conflicts of interest, applicant statements, and any relevant conflicts of interest. This phase is about letting the Accredited Housing Association or Local Authority get to know you and your company to see if your objectives align.
2. The next part of the application usually focuses on meeting eligibility criteria. It’s mainly about meeting minimum requirements and showing that you’ve got the capacity to execute the contract. Each applicant needs a valid tax clearance certificate from the Irish Revenue Commissioners. If you’re a non-resident, you’ll need a statement from the Revenue Commissioners in Ireland confirming your tax suitability.
Applicants need to confirm that they and their building contractors have Employer’s Liability up to 13 million per year and Public Liability up to 6 million per year, as required. They also need to confirm that all their professional team members and sub-contractors have Professional Indemnity insurance. Having these insurances is a must for any social housing project.
Your application should also include a complete copy of the granted planning permission for the scheme. If you don’t have planning permission yet, you’ll need to explain the status of any planning application you’ve made or are planning to make.
Funders’ Requirements:
- Form of Collateral Warranty
- Form of Letter of Confirmation
- Form of Notice for Insurances
3. The third part of the application involves submitting your Housing Proposals, detailing how you plan to deliver the units:
This includes detailed project designs similar to the planning drawings. They should show the floor area in each unit, private open spaces, refuse collection and storage, services, and amenities within the scheme.
You’ll need to provide overall specifications for the social housing development, typically covering proposed architectural and technical specifications like the provisional BER and a list of finishes for the scheme.
Your application also needs a timeline showing how long it’ll take to develop the scheme. This should give general time frames and when you expect the scheme to be practically completed. The delivery date of the scheme becomes the completion date in any following building agreement.
You’ll also need a report detailing how close the Proposed Housing Scheme is to public amenities and facilities, covering things like public transport, road networks, schools, hospitals, supermarkets, playgrounds, and other facilities.
4. The final part of your submission involves the pricing plan, which includes the development cost and the breakdown of your payments if they’re in stages, usually paid monthly.
Negotiations are a big part of this phase. They can be tough because the Accredited Housing Association or Local Authority often have more experience and insight into this aspect, giving them an edge over less experienced applicants.
The price per unit is crucial here, as the Accredited Housing Association or Local Authority may not agree if it’s too high. At times they may seek to have there own independent valuation or have a value for money report conducted in order to ensure they are buying at a fair price.
Collateral Warranty To get into a contract for building a social housing development with an Accredited Housing Association or Local Authority, you’ll have to provide a collateral warranty for any work done during the development.
What’s a Collateral Warranty?
A Collateral Warranty is a contract where a consultant, building contractor, or sub-contractor promises the Accredited Housing Association or Local Authority that they’ve met their obligations under the building contract or sub-contract.
What’s the point of a Collateral Warranty?
The main thing about a Collateral Warranty is that it gives the Accredited Housing Association or Local Authority rights to enforce that original contract.
Key things to discuss in negotiation are:
- Pricing
- Delivery Dates
- Type of Funding (Forward Funding or Payment on Completion)
- Insurance duration and levels
- How long the Collateral Warranty lasts (usually 6 – 12 years)
- Step-in Rights allowing beneficiaries to take over the project if the employer goes bust
- Limits on how many times the Collateral Warranty can be assigned
Collateral Warranties should match the building agreement or professional appointment to avoid extra obligations. Contractors or consultants should go over Collateral Warranty terms and negotiate, especially with third-party funders. Employers should agree on Collateral Warranty forms early to avoid delays.
In conclusion, the path to creating a social housing development is a complex but can be both rewarding and profitable. It demands strict adherence to various criteria set forth by planning permissions, local authority development plans, design briefs, and government-issued housing guidelines. This meticulous process, while sometimes daunting, is essential in ensuring that social housing projects not only meet the highest standards of quality and sustainability but also serve the needs of the communities they are designed to support.
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