Compliance Audit Checklist Rent & Sale (2015-18; MHC3 ...



Contents TOC \o "1-1" \h \z \u Compliance Audit Checklist Rent & Sale (2015-18; MHC3 ‘Building the Pipeline’, Housing Zones – Affordable Housing Grant). PAGEREF _Toc519091010 \h 2Compliance Audit Checklist Rent & Sale (AHP 2016-21, Building Council Homes for Londoners) PAGEREF _Toc519091011 \h 11Compliance Audit Checklist Rent & Sale (2015-18; MHC3 ‘Building the Pipeline’).Compliance Audit Checklist Rent & Sale (2015-18; MHC3 ‘Building the Pipeline’; Housing Zones -Affordable Housing Grant Agreements) Version 9.0 (August 2020)For use by 'Independent Auditors' undertaking self-assessment compliance audits under a Grant Agreement. This checklist identifies specific checks to ensure that requirements and relevant funding conditions have been met according to the Grant Agreement and GLA Affordable Housing Capital Funding Guide (AHCFG).Audit yearDate of audit visit Lead provider name ?Lead provider code Developing provider name ?Developing provider code Scheme address & full postcode ?OPS scheme number?Start on site or interim payment date (Enter interim payment release date recorded in OPS. For nil grant schemes, enter OPS SOS milestone achievement date.)Practical completion payment date (Enter PC payment release date recorded in OPS. For nil grant schemes, enter OPS final cost submission date.)Tenure e.g. Sale, Rent etc.New build or rehabIndependent auditor's business nameFull contact details of person completing checklist?Detailed rules are in the GLA’s AHCFG which is at addressing the checks set out below, please answer either 'Yes' or 'No' as appropriate. Where checks are considered not to be applicable to the scheme, then a 'No' response should be inserted and justifying comments made. The ‘Comments’ box should also be used to highlight and where possible explain findings including deficiencies in supporting documentation.Item no.GeneralAdditional notes for AuditorsY/NComments1*Has a comprehensive scheme file containing all relevant documents as set out in the CFG been provided? * For 2020 Compliance Audit - please note due to unprecedented circumstances we understand that this information may not be readily available, but if it is accessible online then please make a note of this in the virtual auditPlease refer to CFG - Section 9 - Compliance Audit - 9.2 Audit Document File for full list of documents. Check for documentation omissions e.g. dated valuation, consultant’s appointment etc. NB -Attachments are required only to support specific audit findings or to evidence any mitigating circumstances. There is no requirement to upload complete scheme file as a matter of course. 2Where a scheme has been developed by a different RP from the one that will ultimately own and manage the scheme, is there a written agreement between the RPs on the terms of transfer?There should be a written agreement on the terms of transfer and all warranties should be assignable.Item no.TitleAdditional notes for AuditorsY/NComments3Was there a secure legal interest prior to the first grant claim?For nil grant schemes use the OPS SOS milestone achievement date.Check the OPS scheme address and, if present, the postcode and XY co-ordinates to ensure these tie up with the legal interest acquired.You may find this website useful .N.B. We have decommissioned IMS but providers should all have received a data extract featuring relevant details.Check exchange / completion dates of purchase contracts. Check for solicitor based evidence that completion has taken place at the agreed sum and confirmation is dated post completion. Are completion certificates or proof of ownership dated before first grant claim?If the site has been owned for several years and solicitor's correspondence is no longer available, specify in your report which other evidence of ownership you have seen.Restrictions: Check that any specified consents were obtained. Confirm that there were no covenants/restrictions likely to impede development or that there was relevant indemnity insurance in place.Secure Legal Interest means the grant recipient has in respect of the Site:(a) freehold title registered with title absolute;(b) leasehold title (where the lease has at least 60 years unexpired duration) registered with title absolute;(c) freehold title registered with possessory title or good leasehold title and in each case defective title indemnity insurance in favour of the grant recipient with a limit of indemnity to at least the Total Grant for that Site; or(d) a binding contract with the owner of the legal and beneficial interest in the Site (owning either a freehold interest or leasehold interest of at least sixty (60) years unexpired duration) to secure one of the interests in (a) to (c) and that, securing that interest is conditional only upon matters that are within the direct and unilateral control of the Grant recipient.Further guidance on property title can be found in AHCFG paragraphs 2.3.55 to 2.3.62.Building Licence/Agreement to Lease or Buy: Where providers wish to start building works on land that they do not yet own, they must demonstrate that they have a secure legal interest in the property for grant to be payable. See specific requirements in AHCFG 2.5.42.Check if contract requires restriction in favour of the GLA and if this was registered on the title document.4Is there a valid valuation report for the purchase of the site/property which meets requirements of the capital funding guide?If the scheme being audited is a works only scheme, answer 'No’ and add ‘Works only scheme’ in comments.Guidance on what the valuation report should include can be found in the AHCFG paragraph 7.2.Item no.Planning & other conditionsAdditional notes for AuditorsY/NComments5 Were all relevant planning conditions signed off by the Local Planning Authority prior to the final grant claim?For nil grant schemes use OPS SOS milestone achievement date or OPS Final Cost submission date.N.B. We have decommissioned IMS but providers should all have received a data extract featuring relevant details.Ensure that all necessary consents were obtained at the appropriate stage of the development (e.g. prior to commencement, prior to works above ground, prior to occupation, post occupation etc.). This can be evidenced by written confirmation from the Employer’s Agent.Note: Some conditions are not formally discharged by the Local Planning Authority (LPA) e.g. hours of operation of a retail unit in a mixed-use scheme.Providers may use the ‘deemed discharge’ route to confirm that planning conditions are no longer outstanding. To evidence this, there should be a copy of the notice to the LPA specifying the planning application and the planning condition to which it relates on file. The notice should specify the date on which the notice is to take effect. Deemed discharge of the condition will then take place on the date specified in the notice, providing that the LPA has not determined the application.6Where a scheme is identified in a London Housing Design Guide proforma as a 'Transitional scheme' was it submitted for planning consent prior to July 2011?Check for evidence on file (or on the local authority's website) that the scheme was submitted for planning consent on or before 1 July 2011.7Where required, were other specified consents obtained?Check whether other consents apply and if so whether they were obtained as required. Possible sources for evidence of include the following:Structural report.Site investigation.Solicitor’s report.Planning conditions related to contamination.The following are possible examples:Party wall awards.Listed building consent.Permission to demolish.Environment Agency consents.8Where there is documented evidence of factors that may adversely affect mortgageability, have relevant expert reports been obtained and where applicable has necessary warranty been documented? For example:Valuation report.Structural report.Site investigation report.Solicitor’s report.NHBC Buildmark certification or equivalent.If no, please explain the reasons, or write “There is no documented evidence of factors that may adversely affect mortgageability” as appropriate. Check filed documentation, noting which documents have been seen and their date. House builder warranties/CML cover notes must be available on completion. CFG – Procurement and Scheme Issues – 2.3 Recommended action might include specific additional works or arrangement of extra warranties. Item no.WorksAdditional notes for AuditorsY/NComments9Was the main contract signed and dated by both parties and contractual possession of the site passed to the builder prior to the start-on-site claim?For nil grant schemes use OPS SOS milestone achievement date.Check the date of site possession in the building contract against the date of the start-on-site claim was submitted in OPS.. N.B. We have decommissioned IMS but providers should all have received a data extract featuring relevant details.Further guidance on start-on-site claims can be found in AHCFG paragraphs 2.2.50 and 2.5.34 - 2.5.37. Note a 'letter of intent' is not acceptable.Where the main works contractor is also the site vendor, check the date of the agreement for sale / development agreement. Where the grant recipient’s direct labour is contracted, check date of internal purchase order and evidence of when the works started on site.10Was the relevant final cost claim documentation confirmed before the OPS final grant claim?For nil grant schemes use OPS Final Cost submission date.N.B. We have decommissioned IMS but providers should all have received a data extract featuring relevant details.Check the date the final payment was released in OPS was after bothThe date the Final Certificate was issued under the Building Regulations.andThe date the Practical Completion certificate was issued under the building contract. 11Were suitable warranties in place before date of final grant claim?For nil grant schemes, house builder warranties should be in place before the final cost submission in OPSN.B. We have decommissioned IMS but providers should all have received a data extract featuring relevant details.Check that there are house builder warranties suitable for mortgage purposes, together with accompanying 'cover note' as required by the Council of Mortgage Lenders (CML) initiative.12Does the main works contract require the London Living Wage be paid to those employed directly and indirectly under it?As a minimum, the GLA expects this to be demonstrated by either (a) or (b) below:All contractor / sub-contractor employees to be paid the London Living Wage (LLW). Where this is not evident in the main works contract, further evidence should be obtained from the grant recipient.All grant recipient development employees to be paid the LLW. Item no.Unit detailsAdditional notes for AuditorsY/NComments13Is there evidence that the London Housing Design Guide design standards form approved by the GLA at final cost stage matches the completed scheme?Check the ‘as built’ schedule and other scheme file evidence such as construction drawings. Items to check for each unit include:Gross internal floor area per unit (m2)Number of bedrooms per unit. Number of persons per unit (capacity, not no. of people housed)Floor to ceiling height.Area of private open space (includes size of balconies)Check for evidence that: sustainability assessments have been produced and implemented by a registered assessor at scheme completion stage;the scheme matches or exceeds sustainability level in the design standards form approved at completion stage;where relevant, Code for Sustainable Homes & Secured by Design certification is on file or, where final certification is yet to be received, evidence that this will be forthcoming, such as a letter of comfort from the Code Assessor.If the provider is unable to supply a design standards form, contact the GLA area manager for advice.For schemes of 40 units or less it is acceptable to check a minimum of 8 random units. For schemes of 40 units or more, it is acceptable to check a 20% random sample rather than check every unit. 14Does key data entered in OPS at final cost stage match the scheme file evidence? For schemes approved in the 2015-18 programme use the unit details in the last approved OPS offer profile for the scheme. N.B. We have decommissioned IMS but providers should all have received a data extract featuring relevant details. For all other schemes refer to the unit details task within the OPS final cost submission. For each unit type, check the following:Number of unitsNumber of persons per unit (capacity of the unit, not the number of people housed)Number of bedrooms per unitNumber of wheelchair units across the whole scheme)In Negotiated Grant Blockcheck the Total Development Costs match the file evidence.For schemes of 40 units or less it is acceptable to check a minimum of 8 random units. For schemes of 40 units or more, it is acceptable to check a 20% random sample rather than check every unit. 15Are OPS rent figures the same as the actual first letting rents charged? (this includes all rent: Affordable rent and net weekly rent for Legacy Shared Ownership )Check OPS rent figures against first letting rents in the tenancy agreements or in provider’s rents computer system. If these do not match, please set out clearly for each dwelling the rent and service charge entered in OPS and those in the tenancy agreement. Do not use ranges or averages. For SO rent, check net weekly rent charged on unsold equity is no higher to max 2.75% level – please note % of unsold equity might vary from information on OPS - check with the organisation on actual rent charged, % of unsold equity and market value and calculate as per below formula(% of unsold market equity*2.75% )/52.18)Please explain any apparent reason for the discrepancies; including the provider's explanation for any discrepancies. Be aware that OPS migrated rent figures for 2015-18 programme will include service charges in affordable rent category & the OPS rent year is 52.18 weeks. For schemes of 40 units or less it is acceptable to check a minimum of 8 random units. For schemes of 40 units or more, it is acceptable to check a 20% random sample rather than check every unit. N.B. We have decommissioned IMS but providers should all have received a data extract featuring relevant details. Item no.For Low Cost Home Ownership schemesAdditional notes for AuditorsY/NComments16Have the fundamental clauses as required by the Capital Funding Guide been included in shared ownership leases?Check the lease for required fundamental clauses of the model lease. Model leases for use by Registered Providers from April 2015 can be found at Section 11 of the Homes England Capital Funding Guide link: guidance on the fundamental shared ownership clauses can be found in the AHCFG paragraph 4.1.126.For schemes of 40 units or less it is acceptable to check a minimum of 8 random units. For schemes of 40 units or more, it is acceptable to check a 20% random sample rather than check every unit. 17Did the successful applicant(s) meet the eligibility and affordability criteria?Is there evidence that the provider completed all applicant eligibility checks including:maximum household income within the GLA threshold- see AHCFG paragraph 4.1.63. unable to purchase suitable property without assistance; andan affordability or financial assessment to determine that the applicant can afford and sustain mortgage costs and has been encouraged to purchase the maximum affordable share. This may include evidence of advice from professional mortgage advisors and/or lenders.Further guidance on eligibility checks for shared ownership applicants can be found in AHCFG paragraphs 4.1.62 – 4.1.96.For schemes of 40 units or less it is acceptable to check a minimum of 8 random units. For schemes of 40 units or more, it is acceptable to check a 20% random sample rather than check every unit. Independent Auditor Signature (person who completed this checklist)?Date?Independent Auditor in Charge (Authorised Signatory)?Date?Compliance Audit Checklist Rent & Sale 2016-21 Compliance Audit Checklist Rent & Sale 2016-21 Building Council Homes for Londoners Version 7.0 (August 2020)For use by 'Independent Auditors' undertaking self-assessment compliance audits under a Grant Agreement.This checklist identifies specific checks to ensure that requirements and relevant funding conditions have been met according to the Grant Agreement and GLA Affordable Housing Capital Funding Guide (AHCFG).Audit yearDate of audit visit Lead provider name ?Lead provider code Developing provider name Developing provider code Scheme address & full postcode ?OPS scheme number?OPS acquisition dateOPS start on site date OPS practical completion payment date Tenure e.g. Sale, Rent etc.New build or rehabIndependent auditor's business nameFull contact details of person completing checklist?Detailed rules are in the GLA’s AHCFG which is at addressing the checks set out below, please answer either 'Yes' or 'No' as appropriate. Where checks are considered not to be applicable to the scheme, then a 'No' response should be inserted and justifying comments made. The ‘Comments’ box should also be used to highlight and, where possible, explain findings including deficiencies in supporting documentation.Item no.GeneralAdditional notes for AuditorsY/NComments1* Has a comprehensive scheme file containing all relevant documents as set out in the CFG been provided? * For 2020 Compliance Audit - please note due to unprecedented circumstances we understand that this information may not be readily available, but if it is accessible online then please make a note of this in the virtual auditPlease refer to CFG - Section 9 - Compliance Audit - 9.2 Audit Document File for full list of documents. Check for documentation omissions e.g. dated valuation, consultant’s appointment etc. NB -Attachments are required only to support specific audit findings or to evidence any mitigating circumstances. There is no requirement to upload complete scheme file as a matter of course. 2Where a scheme has been developed by a different RP from the one that will ultimately own and manage the scheme, is there a written agreement between the RPs on the terms of transfer?There should be a written agreement on the terms of transfer and all warranties should be assignable.Item no.TitleAdditional notes for AuditorsY/NComments3Was there a secure legal interest prior to the first grant claim?Check the OPS project details screen for scheme address and, if present, the postcode and XY co-ordinates to ensure that these tie up with the legal interest acquired.You may find this website useful In the OPS milestones screen there is a grant % column for each milestone. The earliest date that has a percentage figure rather than ‘N/A’ is the date of the first grant claim.Check exchange / completion dates of purchase contracts. Check for solicitor-based evidence that completion has taken place at the agreed sum and confirmation is dated post completion. Are completion certificates or proof of ownership dated before first grant claim?If the site has been owned for several years and solicitor's correspondence is no longer available, specify in your report which other evidence of ownership you have seen.Restrictions: Check that any specified consents were obtained. Confirm that there were no covenants/restrictions likely to impede development or that there was relevant indemnity insurance in place.Secure Legal Interest means the grant recipient has in respect of the Site:(a) freehold title registered with title absolute;(b) leasehold title (where the lease has at least 60 years unexpired duration) registered with title absolute;(c) freehold title registered with possessory title or good leasehold title and in each case defective title indemnity insurance in favour of the grant recipient with a limit of indemnity to at least the Total Grant for that Site; or(d) a binding contract with the owner of the legal and beneficial interest in the Site (owning either a freehold interest or leasehold interest of at least sixty (60) years unexpired duration) to secure one of the interests in (a) to (c) and that, securing that interest is conditional only upon matters that are within the direct and unilateral control of the grant recipient.Further guidance on property title can be found in AHCFG paragraphs 2.3.55 to 2.3.62.Building Licence/Agreement to Lease or Buy: Where providers wish to start building works on land that they do not yet own, they must demonstrate that they have a secure legal interest in the property for grant to be payable. See specific requirements in AHCFG 2.5.42. Check if contract requires restriction in favour of the GLA and if this was registered on the title document.4Is there a valid valuation report for the purchase of the site/property which meets requirements of the capital funding guide?If the scheme being audited is a works only scheme, answer 'No’ and add ‘Works only scheme’ in comments.Guidance on what the valuation report should include can be found in the AHCFG paragraph 7.2.Item no.Planning & other conditionsAdditional notes for AuditorsY/NComments5 Were all relevant planning conditions signed off by the Local Planning Authority prior to the completion milestone date in the OPS milestones screen?Ensure that all necessary consents were obtained at the appropriate stage of the development (e.g. prior to commencement, prior to works above ground, prior to occupation, post occupation etc.). This can be evidenced by written confirmation from the Employer’s Agent.Note: Some conditions are not formally discharged by the Local Planning Authority (LPA) e.g. hours of operation of a retail unit in a mixed-use scheme.Providers may use the ‘deemed discharge’ route to confirm that planning conditions are no longer outstanding. To evidence this, there should be a copy of the notice to the LPA specifying the planning application and the planning condition to which it relates on file. The notice should specify the date on which the notice is to take effect. Deemed discharge of the condition will then take place on the date specified in the notice, providing that the LPA has not determined the application.6Where required, were other specified consents obtained?Check whether other consents apply and if so whether they were obtained as required. Possible sources for evidence of include the following:Structural report.Site investigation.Solicitor’s report.Planning conditions related to contamination.The following are possible examples:Party wall awards.Listed building consent.Permission to demolish.Environment Agency consents.7 Where there is documented evidence of factors that may adversely affect mortgageability, have relevant expert reports been obtained and where applicable has necessary warranty been documented? For example:Valuation report.Structural report.Site investigation report.Solicitor’s report.NHBC Buildmark certification or equivalent.If no, please explain the reasons, or write “There is no documented evidence of factors that may adversely affect mortgageability” as appropriate. Check filed documentation, noting which documents have been seen and their date. House builder warranties/CML cover notes must be available on completion. CFG – Procurement and Scheme Issues – 2.3Recommended action might include specific additional works or arrangement of extra warranties. Item no.WorksAdditional notes for AuditorsY/NComments8Was the main contract signed and dated by both parties and contractual possession of the site passed to the builder prior to start-on-site date in the OPS milestones screen?Further guidance on start-on-site claims can be found in AHCFG paragraphs 2.2.50 and 2.5.34 - 2.5.37. Note a 'letter of intent' is not acceptable.Where the main works contractor is also the site vendor, check the date of the agreement for sale / development agreement. Where the grant recipient’s direct labour is contracted, check date of internal purchase order and evidence of when the works started on site.9Was the relevant completion claim documentation confirmed before the completion date in the OPS milestones screen?Check that the OPS actual completion milestone date is after both(a) The date the Final Certificate was issued under the Building Regulations.and(b) The date the Practical Completion certificate was issued under the building contract. 10Were suitable warranties in place before date of final grant claim?Check that there are house builder warranties suitable for mortgage purposes, together with accompanying 'cover note' as required by the Council of Mortgage Lenders initiative.11Does the main works contract require the London Living Wage be paid to those employed directly and indirectly under it?As a minimum, the GLA expects this to be demonstrated by either (a) or (b) below:(a) All contractor / sub-contractor employees to be paid the London Living Rent (LLW). Where this is not evident in the main works contract, further evidence should be obtained from the grant recipient.(b) All grant recipient development employees to be paid the LLW. Item no.Unit detailsAdditional notes for AuditorsY/NComments12Is there evidence that the completed scheme matches design standards details submitted in OPS?For items where OPS says standards are met, check the ‘as built’ schedule & other scheme file evidence such as construction drawings. Items to check for each unit include:Comparison of gross internal floor area per unit (m2) with GLA minimum levels (see table 3.3 on page 5 of MALP housing standards).Is there at least 5 m2 of private outdoor space for each 1-2 person dwelling and is there an extra 1 m2 for each additional occupant?Are the minimum depth & width for all balconies & other private external space at least 1500 mm?Do at least 10% of units meet Building Regulation requirement M4(3) ‘wheelchair user dwellings’?Do the remainder meet Building Regulation requirement M4(2) ‘accessible & adaptable dwellings?Do at least two lifts serve all dwellings entered at the 7th floor (8th storey) or above?Are all 3 or more-bedroom homes dual aspect?Is there at least one cycle storage space per studio or one bedroom flat and are there at least two cycle spaces per dwelling for all other dwellings?Are there at least two short stay cycle spaces, plus an additional space per 40 units for projects which have more than 40 units?Is the floor to ceiling height at least 2.5m for at least 75% of the gross internal area?Number of bedrooms per unit. Number of persons per unit (capacity, not no. of people housed)For schemes of 40 units or less it is acceptable to check a minimum of 8 random units. For schemes of 40 units or more, it is acceptable to check a 20% random sample rather than check every unit. 13Does key data entered in OPS at final cost stage match the scheme file evidence?Check the following:Number of units in each tenureNumber of bedrooms per unitRent figures (LAR, Social rent, Other affordable rent, LLR) against first letting rents in the tenancy agreements or in provider’s rents computer system. If these do not match, please set out clearly for each dwelling the rent and service charge entered in OPS and those in the tenancy agreement. Do not use ranges or averages. For London Affordable Rent –is rent charged within published benchmark level: For London Living Rent - is rent charged within published benchmark level: (Ward is listed in Project block in OPS, if this is not listed check the ward with provider) For shared ownership homes – , - check service charges, -net weekly rent charged on unsold equity is no higher to max 2.75% level – please note rent level is not recorded on OPS - check with the organisation on actual rent charged, % of unsold equity and market value nd calculate as per below formula(% of unsold market equity*2.75% )/52.18)Total number of people that could be housed in the scheme as a whole (this is capacity, not actual number housed)Number of wheelchair unitsIn negotiated /Calculate/ Developer Led Grant Block check the Total Development Costs match the file evidence.For schemes of 40 units or less it is acceptable to check a minimum of 8 random units. For schemes of 40 units or more, it is acceptable to check a 20% random sample rather than check every unit. Item no.For Low Cost Home Ownership schemesAdditional notes for AuditorsY/NComments14Have the required fundamental clauses been included in shared ownership leases?Check the lease for required fundamental clauses of the model lease. Model leases for use by Registered Providers from April 2015 can be found at Section 11 of Homes England’s capital funding guide: guidance on the fundamental shared ownership clauses can be found at paragraph 4.1.126 of the GLA’s capital funding guide.For schemes of 40 units or less it is acceptable to check a minimum of 8 random units. For schemes of 40 units or more, it is acceptable to check a 20% random sample rather than check every unit. 15Did the successful applicant(s) meet the eligibility and affordability criteria?Is there evidence that the provider completed all applicant eligibility checks including:maximum household income within the GLA threshold- see AHCFG paragraph 4.1.63. unable to purchase suitable property without assistance; andan affordability or financial assessment to determine that the applicant can afford and sustain mortgage costs and has been encouraged to purchase the maximum affordable share. This may include evidence of advice from professional mortgage advisors and/or lenders.Further guidance on eligibility checks for shared ownership applicants can be found in AHCFG paragraphs 4.1.62 – 4.1.96.For schemes of 40 units or less it is acceptable to check a minimum of 8 random units. For schemes of 40 units or more, it is acceptable to check a 20% random sample rather than check every unit. Independent Auditor Signature (person who completed this checklist)?Date?Independent Auditor in Charge (Authorised Signatory)?Date? ................
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