Affordable Housing

Appendix G

Heads of Terms for Model Legal Agreements

Heads of Terms for Model Planning Obligations

Where it is agreed that affordable housing is to be provided under Local Plan Policy, planning obligations will be used to secure provision. Negotiations with developers will be based upon one of the Councils model legal agreements, the heads of terms of which are set out below. A combination of terms under each of the model agreements may be appropriate depending on the agreed form of affordable housing provision.

Heads of Terms for Model Legal Agreement 1:

Developer builds and transfers affordable housing units to Registered Social Landlord

Owner(s) and Developer(s) covenant with the Council:

• To identify land(s) within the development site for the provision of affordable housing (affordable housing land) of sufficient area(s) to permit the number of affordable housing units proposed by the Council and approved by the Owner(s) and Developer(s) to be constructed thereon (approval not to be unreasonably withheld or delayed). The location of the affordable housing land to be proposed by the Owner(s) and Developer(s) for approval by the Council. Such approval not to be unreasonably withheld or delayed.
• To construct within a specified time trigger (see para.6.4) affordable housing on the affordable housing land to the minimum standards specified in the latest version of the Housing Corporation publication Scheme Development Standards and NHBC cover or equivalent.
• Not to use the affordable housing for any purpose except the agreed affordable housing provision.
• To supply to the Council within a specified time trigger written evidence of a sale agreement made between the Owner(s) and the Developer(s) and a RSL (previously approved by the Council) for the transfer of the affordable housing land and the affordable housing constructed thereon.
• Not to construct on the development site more than a specified number of dwellings to be sold on the open market until the Owner(s) and the Developer(s) have transferred the affordable housing land (fully serviced and accessible by vehicles and pedestrians) together with the affordable housing constructed thereon to the RSL pursuant to the sale agreement. The Council may agree phased provision and transfer of the affordable housing on large scale development sites.
• To procure transfer of the affordable housing land (together with the affordable housing constructed thereon) to the RSL pursuant to the sale agreement at a discounted purchase price calculated using the prevailing Housing Corporation Total Cost Indicators and Grant Rates.
• To supply to the Council a certified copy of the Transfer made between the Owner(s) and the Developer(s) and the RSL.
• In the event of the Owner(s) and Developer(s) not entering into a sale agreement with an approved RSL, after using reasonable endeavours, to provide an alternative method of securing affordable housing (such method to be approved by the Council).
• S106 Agreement to incorporate (if appropriate) Mortgagee-in-possession clause.
• Provisions of Agreement relating to financial contributions e.g. commuted sums for education or community provision, shall not be binding on the affordable housing land once the affordable housing land has been transferred to the approved RSL.

Heads of Terms for Model Legal Agreement 2:

Developer transfers affordable housing land and enters a separate build contract with Registered Social Landlord ("Acquisition and works")

Owner(s) and Developer(s) covenant with the Council:

• To identify land(s) (affordable housing land) within the development site for the provision of [X] affordable housing units the location of which is to be proposed by the Owner(s) and Developer(s) for approval by the Council. Such approval not to be unreasonably withheld or delayed.
• Not to use the affordable housing land for any purpose except the agreed affordable housing provision.
• To supply to the Council within a specified time trigger written evidence of a sale agreement and a works contract made between the Owner(s) and the Developer(s) and a RSL (previously approved by the Council) for the transfer of the affordable housing land and the construction of the affordable housing thereon.
• Not to construct on the development site more than a specified number of dwellings to be sold on the open market until the Owner(s) and Developer(s) have transferred the affordable housing land (fully serviced and accessible by vehicles and pedestrians) together with the affordable housing constructed thereon to the RSL. The Council may agree phased provision and transfer of affordable housing on large scale development sites.
• To procure transfer of the affordable housing land to the RSL pursuant to the sale agreement at a discounted purchase price calculated using the Housing Corporation Total Cost Indicators and Grant Rates. The purchase price and works contract to include land costs, works costs, on-costs and a contingency sum.
• In the event of the Owner(s) and Developer(s) not entering into a sale agreement with an approved RSL, after using reasonable endeavours, to provide an alternative method of securing affordable housing (such method to be approved by the Council).
• S106 Agreement to incorporate (if appropriate) Mortgagee-in-possession clause.
• Provisions of the Agreement relating to financial contributions e.g. commuted sums for education or community provision, shall not be binding on the affordable housing land once the affordable housing land has been transferred to the approved RSL.

Heads of Terms for Model Legal Agreement 3:

Developer transfers serviced affordable housing land and funds to Registered Social Landlord

• To identify land(s) (affordable housing land) within the development site for the provision of affordable housing of sufficient area(s) to permit the number of affordable housing units proposed by the Council and approved by the Owner(s) and Developer(s) (approval not to be unreasonably withheld or delayed) to be constructed thereon. The location of such land(s) to be proposed by the Owner(s) and Developer(s) for approval by the Council.  Such approval not to be unreasonably withheld or delayed.
• To supply to the Council within a specified time trigger written evidence of a sale agreement made between the Owner(s) and the Developer(s) and a RSL (previously approved by the Council) for the transfer of the affordable housing land to the approved RSL at nil consideration.
• Not to construct on the development site more than a specified number of dwellings to be sold on the open market until the Owner(s) and the Developer(s) have transferred the affordable housing land (fully serviced and accessible by vehicles and pedestrians) to the RSL pursuant to the sale agreement. The Council may agree phased provision and transfer of affordable housing land on large scale development sites.
• To supply to the Council a certified copy of the Transfer made between the Owner(s) the Developer(s) and the RSL.
• To pay to the Council simultaneously with the transfer of the affordable housing land to the RSL a sum for the provision of affordable housing calculated using the Housing Corporation Total Cost Indicator and Grant Rates. The sum to be bonded if payment to be made after the commencement of development.
• In the event of the Owner(s) and Developer(s) not entering into a sale agreement with an approved RSL, after using reasonable endeavours, to provide an alternative method of securing affordable housing (such method to be approved by the Council).
• S106 Agreement to incorporate (if appropriate) Mortgagee-in-possession clause.
• Provisions of the Agreement relating to financial contributions e.g. commuted sums for education or community provision, will not be binding on the affordable housing land once the affordable housing land has been transferred to the approved RSL.

N.B.  Where a named RSL is party to a Section 106 agreement in any of the above cases, the RSL will covenant with the Council to enter into a nomination agreement and to agree rent levels and any other special provision in a form to be agreed by the RSL which does not impede or reduce the level of private funding.

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Heads of Terms for Model Legal Agreement 4:

Affordable Housing provided and managed by developer with no Registered Social Landlord involvement

Owner(s) and Developer(s) covenant with the Council:

• To identify land(s) (affordable housing land) within the development site for the provision of affordable housing of sufficient area(s) to permit the number of affordable housing units proposed by the Council and approved by the Owner(s) and Developer(s) (approval not to be unreasonably withheld or delayed) to be constructed thereon. The location of such land(s) to be proposed by the Owner(s) and Developer(s) for approval by the Council.  Such approval not to be unreasonably withheld or delayed.
• Not to construct on the development site more than a specified number of dwellings to be sold on the open market until the Owner(s) and the Developer(s) have constructed the required number of affordable housing units on the affordable housing land.
• Not to use the affordable housing land for any purpose except affordable housing.
• Not to permit or allow the affordable housing land (together with the affordable housing units constructed thereon) to be occupied by any person(s) except person(s) satisfying the agreed occupancy criteria. Within specified time trigger and prior to the occupation of any affordable housing unit to enter into nomination and management agreements and rent/purchase price agreement with the Council.

Heads of Terms for Model Legal Agreement 5:

Off-site financial contributions

Owner(s) and Developer(s) covenant with the Council:

• To pay to the Council within a specified time trigger a commuted sum for the provision of affordable housing. The sum to be calculated using the prevailing Housing Corporation Total Cost Indicators and Grant Rates.
• The commuted sum to be bonded if payment is to be made after the commencement of development. The bond document to be agreed with the council

The Council covenants with the Owner(s) and the Developer(s):

• To use the commuted sum received from the Owner(s) and Developer(s) for the provision of affordable housing within The City of Plymouth.
• If the commuted sum (or any part of it) has not been spent or committed for payment within a period of 5 years from the date of payment, to repay the part not spent or not committed for payment to the Owner(s) and the Developer(s) (together with interest accrued thereon at HSBC base rate from time to time in force from the date payment is received until repayment by the Council).

Heads of Terms for Model Legal Agreement 6:

Low cost market housing

Owner(s) and Developer(s) covenant with the Council:

• To construct within a specified time trigger on the development site in location(s) proposed by the Owner(s) and the Developer(s) and agreed by the Council an agreed number of affordable housing units, the unit size and type of housing to be approved by the Council.
• Not to dispose of the affordable housing units to any person(s) except person(s) approved by the Council (such approval not to be unreasonably withheld or delayed if such person(s) satisfy the criteria laid down in current housing allocations policy).
• To dispose of the affordable housing units at a consideration not exceeding XXXXXXX (to be defined within the S106 Agreement).
• Not to transfer any one of the affordable housing units to any person(s) unless that person(s) enters into a charge in favour of the Council to the effect that upon any subsequent disposal of the affordable housing unit that person(s) will pay to the Council upon completion of the sale a sum of money equal to the % discount received at the time of their purchase of the property as it relates to the open market value of the unit at the date of sale.

The Council covenants with the Owner(s) and the Developer(s):

• Not to use the sum received by it for any purpose except providing affordable housing within the City of Plymouth .

Heads of Terms for Model Legal Agreement 7

Mortgagee-in-possession clause

The affordable housing clauses within the agreement shall not apply to:

• Any mortgagee or chargee of the RSL holding a legal charge on the affordable housing land.
• Any Assured tenant, who has exercised their Right to Acquire and to the mortgagee of such tenant.
• Anyone who has acquired their property on shared ownership terms and their mortgagee.

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