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Custom Build

Custom Build Briefing UK Cohousing Network Land & Planning for Community Developers 10th July 2012 Andy Nelson. Custom Build. Housing Strategy for England, Govt announced up to £30m of funding available to provide project finance to help unlock group custom build – or self-build – schemes

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Custom Build

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  1. Custom Build BriefingUK Cohousing NetworkLand & Planning for Community Developers10th July 2012 Andy Nelson

  2. Custom Build Housing Strategy for England, Govt announced up to £30m of funding available to provide project finance to help unlock group custom build – or self-build – schemes C£25m to be administered by HCA Two objectives: To stimulate the growth of the Custom Build Homes market by enabling more multi-unit custom build home projects and attract more commercial lenders and investors to this market To focus on multi-unit ‘group’ projects to demonstrate to commercial funders that the lending model is a viable and sustainable business which can be taken forward by industry, without public funding support

  3. Key documents http://www.homesandcommunities.co.uk/ourwork/custom-build Prospectus Loan application form Loan agreement heads of terms HCA land Note: HCA administers in England, GLA for London

  4. Eligibility: key requirements Must be a registered or incorporated body E.g. company, charity, housing association Minimum 5 homes Maximum loan £3m Maximum cost (average per home) £250,000 Maximum Custom Build loan 75% of cost Max loan (average per home) £187,500 Applicant must have minimum 25% funding Applicant must have at least outline planning consent to draw down

  5. Eligible costs Land acquisition costs Site preparation costs Construction of supporting infrastructure/utilities directly related to the construction of the homes S106 planning obligations, Community Infrastructure Levy charges and S278 agreements Construction costs for the homes Associated professional fees related to the project after planning permission has been granted

  6. Loan terms Project budget and cashflow agreed at start Borrower reports on progress Loan drawn down at agreed milestones E.g. site acquisition, commencement of site works, fit out etc. Interest rate (EU ref rate plus margin) Loan always secured by charge on land Interest rolled up and repayments due on each disposal Serviced plot Self-finish home Commissioned home HCA part-releases its charge on each disposal

  7. To shortlist: Must meet key requirements E.g ≥ 5 units , incorporated body etc. Must offer value for money Scheme size and mix Must offer good prospects of delivery Planning status and timing of completions Must have started on site and all loan drawn down by end March 2015 Evidence of commitment from purchasers/final plot owners Previous experience of delivery; Meeting local area planning design standards Extent to which the project promotes innovation Assessment criteria

  8. Shortlisted sites will go through due diligence to: Appraise the project financial position and test underlying assumptions Test that the builder is making contributions and has the funding available to do so Identify the minimum funding needed to progress the development Secure potential for recovery of funding through loan repayment, and interest Set the interest rate After due diligence projects recommended for Agency decision HCA & borrower enter into agreement Due diligence

  9. HCA Land Development and Disposal Plan Example sites Kingsweir and Torpoint, Bristol. Spencers Park, Hemel Hempstead Pleasley Colliery, Bolsover Upper Tuesley Milford, Surrey Wilson Road, Hanford, Stoke-on-Trent Chase Avenue, Walton Park, Milton Keynes Trevenson Park, Pool, Cornwall Land opportunities

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