7. Financial and other Assistance

7.1  Grant Assistance

The detailed legislative provisions relating to Renovation Grants and Home Repair Assistance are repealed by the Order. The Council may still make grants available for housing renewal in certain circumstances where it is considered they represent the most appropriate form of assistance. This is most likely to be the case for minor items of work, where the cost of arranging loan finance cannot be justified or in cases where the financial circumstances of the applicant are such that any other form of financial assistance or loan finance would be inappropriate.

It the Council continues to offer grant assistance it will need to consider whether a means test of the applicant should be applied. This would normally be the case as owners, who can afford to do so, should be responsible for the maintenance of their own property.

The specific form of means test is for the Council to decide, however, the legislatively determined means test for mandatory Disabled Facilities Grant will continue and it is recommended that the test be mirrored for Major Works Grants, with an additional Mortgage/Rent premium to reflect the heavy burden of housing costs in this area.

The simpler 'pass-porting' (i.e. those people classed as vulnerable in 2.2) method linked to entitlement for Minor Works Grants is more appropriate if the Council decides to continue with this form of grant.

7.2  Mandatory Disabled Facilities Grants

Under the new legal framework this is the only remaining specific type of grant and it is mandatory. The Disabled Facilities Grant is administered under the detailed provision of the Housing Grants Construction and Regeneration Act 1996 and the grant limit of 25,000 per application is set by legislation. Whilst the grant is mandatory, the council must not approve an application unless the required works are necessary and appropriate, and it is considered reasonable and practicable to carry out the works. A referral from Social Services (Occupational Therapist) supporting the proposed works is a requirement.

The Council has to carry out a test of financial resources on the grant applicant to determine what financial contribution, if any, they have to make towards the required works. This is a test prescribed by legislation and the council has no control over it. The grant covers reasonable cost in excess of the applicant's contribution up to the maximum of £25,000.

It is apparent at the onset that some of the larger extensions that are necessary to build, will cost more than the maximum and will also add value to the property. It is therefore felt best to ensure before work begins that the customers have the ability to meet the extra foreseen cost themselves or through a variety of loan schemes the Shropshire Care and Repair Home Improvement Agency are exploring on our behalf, or through a council % equity share of the property. This will then enable more customers to access the Mandatory Disabled Facilities Grant budget.

Applicants and eligibility criteria for the mandatory Disabled Facilities grant will continue to be subject to the detailed provision contained within the Housing Grants Construction and Regeneration Act 1996.

Once completed, there is no requirement to repay the Mandatory Grant if the property is sold or the disabled person no longer resides there.

7.3  Discretionary Disabled Facilities Grant Qualifying Factors

The Council has the discretion to pay for a Disabled Facilities Grant for non-mandatory criteria but this does not attract the 60% rebate from Government.

1. Unforeseen works where extra works become apparent during execution of the Mandatory Grant which exceeds the maximum limit - Allow up to £2,000.
2. Where works recommended by an occupational therapist do not fall within the definition of works attracting a Mandatory Disabled Facilities Grant as set out in the Housing Grants Construction and Regeneration Act 1996 and associated circulars - Allow £2,000.
3. In the case of an application for a disabled facilities grant not being approved because in the Council's opinion although the works are necessary and appropriate, it is not reasonable and practicable to carry out works having regard to the age, character or condition of the dwelling

• removal expenses up to £2,000, subject to the Mandatory Disabled Facilities grant means test, be considered towards the cost of moving to more appropriate accommodation. Should the applicant be unable to raise the necessary capital to buy the "more appropriate" accommodation, the council will consider funding the shortfall via an equity % share scheme (see 8.14)

         iv  Once completed a Five year grant repayment
condition period will apply on the non-mandatory
element.

7.4  Major Works Grant

A major works grant will be available to help remedy defects within a dwelling which is:-

1. Unfit for human habitation as defined in section 604(1) of the 1985 Housing Act, and/or
2. Poses a major health and safety risk to the occupants
3. Is in substantial disrepair

Major Works Grant Qualifying Factors

1. Owner Occupiers
2. Leaseholders and tenants with repairing obligations in respect of their main residence.
3. The applicant must have owned and lived in the property for a minimum of 3 years prior to their application, unless
4. The works are necessary to render the property fit in association with a Disabled Facilities Grant, or
5. An application is received by a "new household", that is first time buyers, where neither partner has previously owned a property and the applicant has lived in the Borough for 3 years prior to the application and the property is in band A-C at the time of purchase.
6. The property must be at least 10 years old

Major Works Grants will be subject to a financial test of resources to determine what financial contribution if any, they have to make towards the required works. This test will be based upon the legislative test of resources for Disabled Facilities Grant with an additional mortgage/rent premium (MRP) set at level equal to the existing housing premium, should the applicant pay a market rent, or have a house mortgage.

The approval of Major Works Grant is subject to the schedule of works agreed by the Grants Section and the applicant providing evidence of their ability to finance works over and above the grant limit applicable, either by private means, special product loans or Shrewsbury and Atcham equity % share.

In the event that a waiting list for a Major Works grant is necessary, priority will be given to those applicants who are:

1. Elderley - (over 60)
2. Disabled
3. Low income families with children

The maximum Major works grant will be dependant on the relevant property Council Tax banding at the time of application

1. Property band A-C = £5,000.00
2. Property band D-F = £3,750.00
3. Property band G-H = £2,500.00

Home Security/Energy Efficiency

Once completed, a five year grant condition period will apply.

An additional £1,000.00 for Home Security and Energy Efficiency will be available for energy efficiency schemes not eligible through an Energy Advice Centre (0800 512 012) or costs are in excess of those schemes, and for home security measures. This grant will be linked to recipients of D.F.G. Major works or Minor Works to target resources and make use of the labour on site.

 

Energy Efficiency Measures

1. 250mm loft insulation
2. Cavity wall insulation where appropriate
3. Internal thermal drylining (non cavity wall)
4. Pipe and hot water tank lagging
5. Draught proofing

Home Security Measures

1. Ground floor door chains
2. Ground floor widow locks
3. Door viewers
4. Anti-tamper smoke detectors x 2 and CO² detectors x (10yr battery life) 7.5  Minor Works Grant

These relatively small grants are intended to assist older occupants who are in financial hardship, by funding minor repairs/improvements or alterations to their home, to enable greater independence, facilitate hospital discharge or stop further deterioration.

Minor Works Grant

Minor Works Grants will not be considered for

• kitchen/bathroom refurbishment (unless for safety reasons)

• repairs to porches, conservatories, sheds, boundary walls or fences

• routine replacement of doors/windows, unless in serious disrepair

• repair/improvement to caravans, mobile home or chalets on unlicensed sites or sites without permission for residential use

Qualifying Factors

• the owner, or one of owners, is at least 60 years old

• the owner who is over 60 has both owned, and lived in, the house for at least one year

• the owner who is over 60 receives Income Support, Council Tax Benefit (but not including the standard single occupier discount), Working Families Tax Credit or Disability Working Allowance, all of which are income-related benefits.

• As with all types of grant, demand exceeds available funding. As the name says, these Minor Repair Grant are only for essential repairs of a relatively minor nature and cost. They are not to carry out improvements or renovate a house that is in very poor condition.

• These are 100% grants up to a maximum of £2,500 and there are no conditions attached. There is no requirement to repay any of the grants if the property is sold or if the elderly owner moves out.

• After receiving assistance, an older person's home may develop further defects and a further grant may be appropriate to deal with that problem. Because of this there is no restriction of the number of grants that can be provided to the same owner or the same property. However, the total amount of grant aid provided must not exceed the £2,500 limit in any five-year period.

• As with Major Works Grants the recipient of a Minor Works Grant will be eligible for an additional £1,000 for Home Security and Energy efficiency measures where they are not eligible for national schemes through an Energy Efficiency Advice Centre, or where costs exceed those schemes.

 

7.6  House in Multiple Occupation Grant (HMO)

An HMO Grant is available towards works to improve the means of escape from fire and other fire precautions in houses in multiple occupation. After completion of the works the HMO concerned must be fit for human habitation and fit for the number of occupants.

An HMO Grant is available for work to provide adequate means of escape from fire and other fire precautions as part of the requirements under Section 352 of The Housing Act 1985 and the requirements of the HMO Fire Safety Order, and as part of an overall scheme of improvement work to comply with the Council's Minimum Standards for HMO's. The maximum grant is £2,000 or 50% of the approved cost of the work, whichever is the least.

On completion, a five-year grant condition period will apply.

7.7 Preliminary Charges

All Housing renewal grants allow for the inclusion of relevant professional charges and necessary fees, (subject to the grant maximum).

Agents fees will be restricted to 10% of the contract cost plus VAT if applicable.

7.8 Loan Assistance

The general power provided by the Order enables local authorities to consider offering financial assistance other than grants in a form, which may require the owner to make some financial contribution or repayment.

The important limitation imposed by the Order is that before making a loan or requiring repayment of a loan or grant, the authority must have regard to the person's ability to afford to make a contribution or repayment. If they are not in such a position then assistance by some other means, such as grant, is more appropriate.

 

7.9  Other Types of Financial assistance

There is a wide range of options available for the Council to consider.

The principal categories of loan products, which could be made available, are:

• Interest bearing repayment loans - conventional loans either secured or unsecured with interest charged either at the current market rate and repayable over a period of time or at a preferential interest rate.
• Interest only loans - conventional loans, usually secured against the value of an asset where the borrower only pays the interest charge on the amount borrowed. 
  
  Repayments may vary as interest rates go up or down.
  The capital is repaid usually on the sale of the asset.

• Zero interest or equity release loans - a conventional loan almost certainly registered as a charge against the value of the asset on which no interest is levied. The capital is repaid usually on the sale of the asset.

Equity release schemes may be the best method of assisting low-income homeowners if there is substantial equity value in their homes, even though they are in need of repair.

7.10  Providing Loan Finance with others

Working with lenders: The Council will explore working with commercial lenders to deliver loan products to homeowners who would not normally have access to such financial support.

Loan & Mortgage Indemnities: Under Article 3 of the Order, the Council may give assistance in the form of an indemnity to ensure that a person or body, lending for the purchase, construction or improvement of a home, will not be out of pocket if the borrower defaults on the loan. Such an indemnity (as with other forms of assistance given under the power) may be unconditional or subject to conditions. Mortgage indemnity agreements may also be made under section 442 of the Housing Act 1985, for the purchase, construction or improvement of a specified home, or the conversion of building into a home. It is not proposed that Shrewsbury and Atcham Borough Council adopt this form of assistance at the current time.

Working with special purpose vehicles: local authorities or a group of local authorities could establish or support a special body (a number of Community Development Financial Initiatives already exist) which are designed to administer not for profit schemes of financial assistance for housing renewal.

7.11  Packages of grant and other assistance

The Council may in some cases offer a combination of grant and other financial assistance with housing renewal. For example:

• A small grants subsidy to allow someone to access a loan or equity release.
• Offer equity release to help someone who is required to make a financial contribution under the test of resources for mandatory disabled facilities grant.

7.12  Key Issues on Loan Assistance

The Council does not have the capital, infrastructure or expertise to establish a home improvement loan service. It is unlikely that it would be able to offer loans at preferential rate to the high street lenders.

Many homeowners will be able to obtain a home improvement loan from their bank or mortgagor. Elderly person and those families on low income or with large mortgages, however, are unlikely to obtain such a loan, and it is these particular client groups that are most in need of assistance.

The Home Improvement Trust and ART Homes Ltd., are the only two companies in the country at the present time to specialise in loan packages for such groups.

The benefits of their loan packages are that:

• There is normally no foreclosure of the loan in the event of payment default.
• They will consider equity release schemes for elderly persons and low-income households providing there is sufficient equity in the property.

However, in order to operate a scheme, the Council would have to provide some revenue funding and a capital contribution to a revolving loan fund.

Shropshire Care and Repair (SCAR) has recently reviewed a number of providers to assess their suitability to offer the District/Borough Council's suitable options for Market Equity Release products.

The aim of the review was:

• To identify the County's options for managing Market Equity Release products
• To assess the possibility of adopting a Countywide Equity Release plan.
• To highlight the issues surrounding the introduction of Market Equity Release products to the vulnerable sector.

The conclusions of the review were that there does not currently appear to be one single product which meets the requirements of all local authorities and clients, however, as the market is expanding, further viable options will be investigated.

SCAR already provides a service by referring individual applicants for disabled facilities grant and non-grant aided works to financial institution for "top-up" loan assistance. As this work is likely to increase and in view of the need to further investigate and promote Market equity release products, the partner local authorities will fund a part-time post based centrally within SCAR. The aim of the post would be to have a central point of contact for equity release enquiries and to assist clients through the process. Initially the post would resolve the issue of each local authority having to individually join an equity release scheme with high funding costs. The post holder would also take on the pro-active role of promoting equity release.

7.13  Shrewsbury Equity Release Scheme

The Borough Council is very aware of the extreme, often contradictory, forces at work within the Housing Market. It is also aware that householders do have a responsibility in maintaining their main asset, and this may involve raising funds through equity release.

Shrewsbury and Atcham Borough are also aware of the scepticism and mistrust that can exist toward private lenders. The Borough Council therefore is developing a scheme whereby funds are raised against the equity in someone's property, with the Council owning an agreed % share to rest as a charge on the property.

This scheme will assist homeowners raise the necessary finance for many scenarios including;

1. Supplement the mandatory DFG when the costs of the adaptation exceeds the current maximum
2. Major renovation works, where the costs exceed any applicable grant available.
3. Enable landlords to renovate property or convert.

This is believed to be a unique scheme it reflects the many pressures and nuances of our local housing market and address the sensibilities of people's attitudes towards private companies. It also takes advantage of the Councils own position in having capital resources available to aid Housing and Community Regeneration and provide healthy living and independence.

How it Works

Major Work Application (Client on Income Support)

Value of House	£150,000.00
Cost of Renovation Works	£  30,000.00
Grant available (Band f)	£   3,750.00
Shortfall =	£   26,250.00

26,250 x 100 = 17.5%

150,000

Shrewsbury and Atcham Borough Council fund the additional £26,250 for a 17.5% stake.

Help someone move property if existing unsuitable for adaptation

Proposed new dwelling	£100,000.00
Maximum Client Contribution	£  80,000.00 (Sale of existing)
Shortfall = 20,000.00	£  20,000.00

20,000 x 100 = 20%

100,000

Shrewsbury and Atcham Borough Council would fund additional 20,000 for a 20% stake.

Shrewsbury Equity Release Scheme

1. Develop this scheme where works to be funded are linked to Major Works, or Disabled Facilities Grant criteria and agreed by Housing and Community section.
2. Free equity of at least 2 x the required amount must be available in the property.
3. Grant of £500.00 maximum be available for independent financial advice for people wishing to take up the scheme or other similar market scheme. 7.14  Other forms of assistance for housing renewal

Apart from grants and loans, the Council will explore and introduce other means of assistance for housing renewal, they might include:

• Provide labour (or the Council carrying out work directly);
• Referral to a home improvement agency for emergency repairs or a handy person/volunteering type scheme;
• Advice on carrying out repairs as part of a maintenance initiative with partner agencies;
• Provision of a list of accredited builders and agent offering a warranty service as part of the Government's Quality Mark scheme and willing to supervise and/or undertake work;

7.15 Shropshire Care and Repair

The Council contributes to the funding of Shropshire Care and Repair, a Home Improvement Agency which covers the 5 Districts in Shropshire. The Housing Manager is a member of the Steering Group. The Council will continue to support Shropshire Care and Repair by financial and other means in its provision of the full range of Home Improvement Agency Services, including financial advice on grants, loans and equity release, provision of services in relation to grant applications, advice and support to clients and development of other services to support the older, disabled and vulnerable members of the community.

7.16  Handyperson Scheme

Section 4 identifies a requirement for a handyperson scheme to assist with home maintenance and minor repairs for elderly people. Schemes in other parts of the country has proved extremely successful.

Shropshire Care and Repair is currently investigating provision of a handyperson scheme across the County together with all the Improvement Agency Partners. The aim is to carry out very minor works for vulnerable householders and it is hoped the scheme can be introduced during 2003/4.

7.17  Enforcement

The Council has a clear Enforcement Policy, which incorporates the principles of the Enforcement Concordat.

The Council will continue to consider the condition of private sector housing stock in accordance with current legislation. The Council will consider the most satisfactory course of action in respect of premises, which have been identified as unfit for human habitation in accordance with current advice and legislation.