National Empty Homes Loans Scheme update

The National Empty Homes Loan scheme, funded as part of the Community Grants Programme and to be delivered via the charity Empty Homes, is expected to be launched soon.

Dave Stott, the scheme Manager, has been visiting local authorities to discuss how it will work and has kindly provided the following outline to help widen understanding of what is on offer.

National Empty Homes Loan Details

(Summary)

  • Maximum Term of Loan 5 years
  • Interest rates Fixed 5%
  • Repayable monthly by standing order
  • Maximum loan amount 15k
  • Loan is a subsequent (2nd) charge
  • Works to deliver a decent home
  • Loan is paid on completion of the loan application not the works
  • Property to be let at affordable rent (LHA in many areas)
  • Short Hold tenancy agreements accepted

Frequently asked Questions on Scheme Member Duties

A. Are there any capital costs for the scheme member in deploying the loan scheme?

There are no capital costs to members who have been invited to join the scheme.

B. Are there any requirements before the scheme member can signpost an applicant?

There are a number of checks and verifications that will be needed before the property and owner is referred into the scheme. These are listed below:

  • To ensure that the applicant is aware of the general terms of the loan this would include payment amounts and contract terms in respect of affordable rents etc.
  • A copy of the Land Registry search for the empty property
  • To verify the property had been empty for 6 months
  • To have seen the property and advise that generally the amount of loan would enable an amount of refurbishment works that would deliver a decent home
  • On completion to advise that the property has been completed as per the loan contract
  • To offer a new tenant from the General Housing waiting list if agreed
  • To ensure the tenant is either paying a rent within a choice based lettings rental scheme or paying an affordable rent and verify that point.

C. Do the scheme members need to produce a schedule of works?

No there is no requirement to have a schedule of works but you will need to advise that the amount of funding applied for will, in general terms, allow the property to be brought up to a decent home standard. Specific to some Authorities who have an accredited landlord scheme they may offer the applicant a free schedule of works that will cover the works however this is not a pre requirement and only the general assessment is required to process the application.

D. How will the scheme member make referrals into the National Loans Scheme?

The scheme member will refer the private applicant and the required information to the National Loans Manager using the set on-line proforma which will be provided as the scheme is launched.

E. Can a property be included in a voluntary leasing or choice based letting scheme?

Yes but not as a prerequisite of obtaining the loan

F. Can a property have more than one grant or loan product combined with the National Loans scheme?

Yes you can mix and match the fund. With the NEHLF being a subsequent charge the ability to combine with other incentives and offers is enhanced

G. Are there any contracts or targets to agree?

No there are no contracts to sign to be included in the scheme. There are no targets to attain but we would expect the scheme member to promote the loan and use the product freely when applicable

H. Will the Scheme Member have to deal with payments or loan contracts?

No that work will be undertaken by the national lender

I. Will the Scheme Member have to deal with defaulters?

Although you may be involved in the discussions on defaulters with the National Loan Manager, work around breaches of the loan contracts and general defaulters allied to breaches of the contracts will in the main be dealt with by the National Loan Manager and the National Lender.

J. Are there any administration costs or valuation fees for the applicant to pay?

No when the application is signposted into the Loans Manager via a scheme member there are no administration fees nor valuation fees. These are covered by Empty Homes. If the applicant is outside a scheme member and applies as an individual through the Building Society there are administration costs and valuation costs of circa £425

K. What other responsibilities will the national lender undertake?

The national lender will upon receiving the loan scheme application complete the following:

  • Contact the applicant verifying the application
  • Undertake a valuation
  • Verify the property ownership details
  • Verify the equity in the property
  • Verify the rental headroom in the property
  • Issue a loan offer letter and a loan contract
  • Arrange standing order payments
  • Make payment of the agreed loan

L. What are the final processes of the Loan?

The National Empty Homes Loan Manager will contact the Local Authority and confirm the amount of loan and the completion dates to enable the final checks to be undertaken within the Local Authorities responsibilities. In the situations when the loan application has been rejected or the loan offer not taken by the applicant the Local Authority will be notified again by the National Empty Homes Loan Manager with the reasons for the refusal.

If you have any questions or require any clarification please contact the National Empty Homes Loan Manager, David Stott

T: 020 7921 4450

david.stott@emptyhomes.com

The website page for the scheme is here.

You can also raise questions by leaving comments against this story (logged-in EHN members only)

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Comments

I attended the LGA Private Sector Housing Forum meeting in London on the 27th June and those attending raised a number of questions about the scheme.
Q1. Is the 15k per unit or per property?
Q2 Could you combine the loan with LA funding?
Q3 Can landlords access the loan fund directly?
Q4 Is there a  requirement for the property to be occupied on completion or during the lifetime of the loan?
I am sure there are some further questions that others have and I encourage EHN members to contribute these via comments to the story: that way people can see which questions have been asked already and avoid unnecessary duplication.  Then Dave can either answer them via further comments or we can produce a consolidated list.
 

Q5. What controls are there to prevent landlords letting their properties to "connected persons" eg relatives?  This has historically been built into local authority grant schemes at least.
Q6. I understand that the scheme is funded by CLG via Tribal out of the £100million empty homes funding that was announced back in November 2010 which was tied to "affordable housing".  That is reflected in various statements on the EH website eg rents at 80% of market rents and homes to be allocated to "people who need housing".  But there don't seem to be any mechanisms to ensure that those who move into the homes actually do need them - that would normally be the function of Choice-Based Letting Schemes.  Point E seems specifically intended to make that more dificult. Have I missed something?
Q7. Although Point E precludes the Scheme Member making CBL a prerequisite of the loan, presumably it could secure its interests by offering additional funding that via a side agreement would tie the owner to housing those in housing need eg via CBL. 

Q8.  Reading between the lines, it seems that nobody produces a schedule of works, but that the owner is contractually obliged to bring the home to some given standard (the Decent Homes standard?).  The local authority (Scheme Member) is required

"On completion to advise that the property has been completed as per the loan contract"

a) What level of detail will be in the loan contract about property standards?
b) Will the Scheme Member have sight of the draft loan contract before it is issued to the owner, perhaps with the possibility of suggesting the incorporation of specific requirements that might be relevant to the individual property?  Or, at the very least, could or should the Scheme Member inform the owner of what standards would need to be reached in order to comply with the specified standard,to avoid a situation where on completion the owner has not carried out some works that the Scheme Member considers essential but the owner does not?
Q9. Will the loan contract impose requirements to document some of the standards achieved and allow Scheme Members sight of the documents concerned on completion (eg NIC certificate or equivalent, SAP rating, Landlord's Gas Safety Certificate)?

Q10. What would be expected of the Scheme Member in circumstances where the loan requested seems to exceed the cost of works needed to bring the home to the required standard? Will the Scheme Member know what loan is intended to be for?