Housing Infrastructure Fund Eligibility criteria
- That the project will deliver against stated strategic housing objectives in the Local Housing Strategy and Local Development Plan
- That it is capable of delivering completed housing in the five year period.
- The site is part of a local authority agreed planning framework supported by place making principles, capable of achieving consents and agreed obligations to allow housing to be completed by 31 March 2021
- That it is unable to progress without additional support
- That it is in the ownership of a willing developer or that the developer has an option to buy
- The applicant is either a Local authority or Registered social landlord
- Projects where the scale and nature of infrastructure works and costs would prevent it from being supported through the Affordable Housing Supply Programme (AHSP).
- The applicant is a non-public organisation
- The project is financially viable and capable of both supporting and repaying the loan.
- There is evidence of market / house builder interest for the proposed tenures.
- The applicant has been unable to access funding for infrastructure works from the market.
Considering proposals for HIF funding
Working with local authorities we want to identify a pipeline of potential sites capable of bringing forward housing the next five year period.
Developers / RSLs should therefore discuss prospective site(s) for loan or grant with the relevant local authority. Where the local authority identifies that the project meets the eligibility criteria it will prioritise the site for consideration to Scottish Government. The usual process for doing this would be through the SHIP.
Local authorities should ensure that the SHIP HIF Table is fully completed with all information requirements for all projects. Any projects listed which are not fully completed in terms of details of works, units, costs, timescales etc. will not be considered.
Local authorities can, however, notify Scottish Government of additional sites or priority change at any time. We would however expect such applications to be on an exceptional basis and where this occurs for the authority to provide a justification why the project(s) cannot wait for inclusion in the next SHIP accompanied by a revised SHIP HIF table
For both loan and grant projects, the Scottish Government will undertake an initial sift of SHIPs to identify those sites which are capable of delivering within the HIF timeframe.
As SHIPs will not generally provide sufficient detail to determine final support for a proposal, applicants for projects which pass the sift will be issued with an Expression of Interest form which Scottish Government will use to confirm final eligibility for funding. Where projects are confirmed as being eligible, applicants will be invited to make a full application for funding.
Following confirmation of final eligibility, successful applicants will be invited to proceed to tender stage and to submit a full AHSP value for money grant application to be appraised using standard AHSP procedures. A standard HIF Grant Offer will be used for all approvals. The target date for completing this process should be 6 weeks in line with AHSP guidance.
Following confirmation of final eligibility, successful applicants will be invited to make a full application for loan funding.
The public sector is required to undertake a rigorous process of due diligence and scrutiny of applications to ensure that value for money is obtained and that the risk to the Scottish Government in terms of the applicant's ability to repay the loan is acceptable. Given this, our loan process can take several months to complete. The pace and quality of applicants responses is therefore critical in driving the timescales associated with this process.
The main elements of this process are that:
- SG will collate initial information from applications and may request further information required (particularly in relation to development phasing and strategy, cash flows and funding profile etc.) to form an initial view on the project
- Once we have completed that initial information stage we will instruct our Property Advisers to undertake a market appraisal of the project looking at marketability, saleability, viability etc. and provide a report on this with recommendations within a 6 week period of our instruction.
- Our legal advisers will then look at the legal aspects of this in terms of loan securities, land titles, burdens etc. and other aspects and provide a report on this.
- Once the above stages are completed SG will take a view on whether we can support the project through loan funding and, if so, issue a loan offer.
Terms of the loan
Interest rates will be set using EU reference rates plus interest points to reflect assessed risk. Each scheme will therefore attract its own interest rate but based on current EU base rates (June 2017) an indicative figure of around 4.0% could be assumed. Interest repayments can be spread or rolled up to the end of the loan period dependent on the structure of development proposal and risk profile of the applicant. In the event of a default in any loan repayment, a penalty charge of 2% over the initial rate of lending will be applied to any sums outstanding.
The term of the loan will be agreed to meet the individual requirements of each project but would not normally extend beyond the sales period of the project and not normally longer than 25 years. Repayment will be agreed on a project basis based on repayment triggers such as house / land sales or rental income flow.
Claims will be made in accordance with an agreed drawdown and repayment schedule. Drawdown of the loan fund will be made in arrears on the submission of claims for payment for work done certified by a professionally qualified (RICS or equivalent) Quantity Surveyor.
To protect the public purse the Scottish Government will require to be appropriately secured. The nature of the security will depend on the credit worthiness of the applying organisation, security offered, along with other considerations such as the phasing of the development. Please note that the Scottish Government is unable to unable to confirm any form of agreement to providing any funding assistance until the due diligence process has been completed and a signed loan offer issued.
Telephone: 0300 244 4000
Housing and Social Justice Directorate