Keighley Townscape Heritage Initiative financial guidance

The Townscape Heritage Initiative (THI) is a heritage improvement scheme designed to enhance North Street, Church Street, High Street, and parts of Bridge Street and Low Street. The vision is to reinstate historic shop fronts, improve buildings, bring vacant upper floor space into use and reinstate historic stone flags along the pavements of North Street.

With a high level of grant funding and some of their own investment, owners are encouraged to carry out work to their buildings. This will increase property values and provide an improved retail offer, as well as generating income from the rental of upper floor space. The grant does not cover routine maintenance.

There are three types of grant rate, which are explained below.

Repair works for buildings in use

This grant is for external repairs to buildings in use.

Grant rate:

70% of the eligible cost.

Reinstatement of architectural features

This grant is for external restoration to buildings in use

Grant rate:

75% of the eligible cost.

Repair and reinstatement grants are fixed rate grants that can be combined. For example, the roof and historic windows can be repaired with a 70% grant, and a historic shop front can be reinstated with a 75% grant on the same application.

Additional eligible costs

Alongside the repair and reinstatement works, other costs are eligible for a grant. Each additional cost will be given a grant between 70% and 75% depending on whether they relate to a repair or reinstatement. If they relate to both, the cost of works will be averaged out and a grant rate will be calculated. It will always be between 70% and 75%.

These costs include:

  • Professional fees (Architect, Structural Engineer, Surveyor, etc) 
  • Planning, Listed Building, Advertisement and Building Regulation Consent fees 
  • Building surveys relating to the grant work 
  • Preliminaries on the building work – these include contractors setting up the site before work starts, site security such as fencing, health and safety, scaffolding, Portaloos 
  • Contingency – a sum is included to cover unexpected expenditure during the building work 
  • VAT is eligible unless it can be recovered

Before the grant is approved and the grant contract is signed all initial costs are at the grant applicant’s risk. These pre-contract costs such as planning consents, surveys and architect fees must initially be paid for by the applicant. If they are eligible for grant funding and the work proceeds, a grant will be paid after the grant contract has been signed. If the work does not proceed, a grant will not be given for any of these costs. Any fees associated with the ongoing works will be paid in stages during the contract period.

Some work is not eligible for a repair or reinstatement grant, including most internal works. This is identified in Advice Note 2: Eligible Works. Ineligible work can still be carried out under the same building contract but will not be grant funded.

Clawback on fixed rate grants

For repair and reinstatement grants some grant may need to be repaid if the building is sold or otherwise disposed of within 10 years of the grant contract. The repayment is in proportion to any increase in the value of the property and is on a sliding scale over 10 years. Repayments are not required for grants of £20,000 or lower.

Where clawback is applied, the grant applicant needs to get the property valued by an independent professional Valuation Surveyor before work commences.

If the building is not sold or otherwise disposed of, no grant will need to be repaid.

A legal charge will be put on the property where the grant is over £20,000, to ensure that any grant is repaid. This security will be released after 10 years provided you have complied with the terms of the contract.

The grant applicant is strongly advised to take independent legal advice about legal charges.

The clawback formula is shown below:

Where:

  • G = the Grant 
  • C = the eligible cost of the Project excluding Value Added Tax (if any) you have recovered, 
  • OV = the open market value of your interest in the Property agreed with us at the start of the project, 
  • CV = the open market value of your interest in the Property on completion of the disposal, 
  • Y = the number of complete years from the date of this Agreement; and 
  • R = the amount we require to be repaid to us out of the proceeds of the disposal.

An example of this calculation is shown on the table below, using a project cost of £72,000 including VAT, a grant of £50,400, and an increase in value from £150,000to £170,000.

Any grant repayment is in proportion to the increase in the value of the property; if the property value does not increase following the works no repayment will be required.

Example clawback calculation for fixed rate grants

Grant (at 70%) including VAT

G

£50,400

£50,400

£50,400

£50,400

£50,400

£50,400

£50,400

£50,400

£50,400

£50,400

Project cost excluding VAT

 

£60,000

£60,000

£60,000

£60,000

£60,000

£60,000

£60,000

£60,000

£60,000

£60,000

Project cost including VAT

C

£72,000

£72,000

£72,000

£72,000

£72,000

£72,000

£72,000

£72,000

£72,000

£72,000

Open market value before

OV

£150,000

£150,000

£150,000

£150,000

£150,000

£150,000

£150,000

£150,000

£150,000

£150,000

Open market value after

CV

£170,000

£170,000

£170,000

£170,000

£170,000

£170,000

£170,000

£170,000

£170,000

£170,000

No of years from contract

Y

1

2

3

4

5

6

7

8

9

10

Repayment to HLF

R

£ 12,000

£ 11,200

£ 9,800

£ 8,400

£ 7,000

£ 5,600

£ 4,200

£ 2,800

£ 1,400

 
Breakdown of the calculations.

G / C

a

0.7

0.7

0.7

0.7

0.7

0.7

0.7

0.7

0.7

0.7

CV/OV

 

£20,000

£20,000

£20,000

£20,000

£20,000

£20,000

£20,000

£20,000

£20,000

£20,000

/10

b

£2,000

£2,000

£2,000

£2,000

£2,000

£2,000

£2,000

£2,000

£2,000

£2,000

a*b

c

£1,400

£1,400

£1,400

£1,400

£1,400

£1,400

£1,400

£1,400

£1,400

£1,400

10-Y

d

9

8

7

6

5

4

3

2

1

 

c*d

R

£ 12,600

£11,200

£9,800

£8,400

£7,000

£5,600

£4,200

£2,800

£1,400

 

Vacant floor space grants

Vacant floor space grants do not have a fixed rate; instead they are calculated for each building. Eligible works include internal and external repairs, restoration and refurbishment.

Grant rate

The grant is the difference between the cost of repair and conversion, and the value of the building when the work is complete. This difference is called the ‘Conservation Deficit’. Grants cannot contribute to the cost of fitting out space for a specific use (such as shop fitting) but they do include the refurbishment of the interior and exterior of the building.

To work out the conservation deficit, an independent qualified Valuation Surveyor approved by the THI Officer needs to work out both the existing value of the building and the projected value on completion of the works.

Eligible costs include the following:

  • Eligible development costs, including construction costs, preliminaries and contingencies 
  • Planning fees – Planning Consent, Listed Building Consent, Advertisement Consent and Building Regulations Consent 
  • Professional fees – for Architects, Surveyors and Structural Engineers 
  • VAT unless it is recoverable 
  • Letting or sales fees 
  • Loan financing fees (initial fee, not interest on the loan) 
  • Developer’s profit (for the private sector) or management fees (for the charitable sector). This is based on a percentage of the value of the building on completion of the work. Private owners and developers may include an allowance for a reasonable ‘developer profit’ on their own investment. Charitable developers may include a similar management fee.

An example calculation is shown below (for illustrative purposes only):

Item Cost VAT Total
Construction costs and preliminaries £100,000 £20,000 £120,000
Architects fees 10% of construction cost £1,000 £200 £1,200
Planning Consent £335 n/a £335
Advertisement Consent £95 £19 £114
Building Regulation Fees £500 £100 £600
Letting fees £500 £100 £600
Loan financing fees £500 £100 £600
Developers profit (% of final value) £19,500 £3,900 £23,400
Sub total £122,430 £24,419 £146,849

The conservation deficit calculation is then worked out from these costs, for example:

Current value of the building £100,000
Cost of the works (including fees, etc) £146,849
Sub total £246,849
Less the final value of the building £130,000
Potential grant £116,849

This example shows a grant of 80%of the cost of the work.

Clawback on vacant floor space grants

If the building is disposed of within two years of completion of the works, the grant applicant needs to recalculate the conservation deficit using the open market value of the property at the time of disposal.

If the building is retained, the grant applicant needs to recalculate the conservation deficit after two years from completion.

This must be based on a valuation calculated by a qualified independent Valuation Surveyor approved by us.

If the building has increased in value, some grant may need to be re-paid. Using the previous example:

Original value of the building £100,000
Cost of the works (including fees, etc) £146,849
Sub total £246,849
Less the actual value of the building after two years £140,000
Revised grant rate £106,849

Original grant rate (£116,849) – the revised grant rate (£106,849) = £10,000.
£10,000 will need to be re-paid after two years or at sale or disposal of the property, whichever is sooner.

If the property does not increase in value after this time no repayment will be required, or if the grant is capped below the potential grant less repayment will be required.

A legal charge will be put on the property where the grant is over £20,000 to ensure that any grant is repaid if the property is sold. This security will be released after 10 years provided you have complied with the terms of the contract.

The grant applicant is strongly advised to take independent legal advice about legal charges

General information on fixed rate and vacant floor space grants

Grant payments

All grant payments are made to grant applicants in arrears.

The grant applicant must have the financial resources to pay for the work before the grant can be claimed. If this is a problem it should be discussed with the THI Officer.

The professional advisor will inspect the work on site and issue an endorsed valuation certificate to the grant applicant, who will make all payments.

The grant applicant will need to provide the THI Officer with the valuation certificate and any relevant invoices endorsed by the professional advisor, along with evidence that all payments have been made to contractors, etc. This may be in the form of a bank statement.

Once these conditions have been met the THI Officer will arrange to make a grant payment to the grant applicant. They are either made at agreed stages during the project or on completion of the works, and they will take up to 10 days to process.

10% of the grant will be withheld until the THI Officer is satisfied that all works have been completed to the required standard, has received a copy of the practical completion certificate, and the contractor’s final account has been settled.

Payments can be made through BACS or as a single payment by cheque.

VAT

Some or all of the work may be VAT exempt or eligible for reduced VAT. This can apply to residential conversions, disabled adaptations and energy saving measures.

VAT Notices 708 and 431c apply. You should contact HM Revenue and Customs for details on exemptions and reductions, or obtain advice from a VAT Advisor.

Any VAT refund must be offset against your next grant payment. If you receive VAT refunds after completion, the grant percentage of the refund must be repaid to us.

Tenders and quotes for the work

You must obtain at least three tenders for the works if the total cost will exceed £10,000. The tenders should be accompanied by a tender summary. For works below £10,000 three quotes are required.

Grant offer

If the works are completed for less than the cost on which the grant offer was based, the grant will be reduced accordingly. The grant sum cannot be increased once it has been offered.

Repayments

You may also be required to repay the grant in other circumstances, for example if you go bankrupt or have acted fraudulently or negligently in applying for the grant or have breached the conditions in the grant contract.

Summary of Limits

Architects

An Architect is not required for grants below £32,800 (although it is recommended).
For grants between £32,800 and £100,000 an Architect is required.
For grants above £100,000 three Architect fee quotes are required.
Fees are only eligible for a grant where the Architect is a RIBA member and Surveyor is an RICS member, and they work on the entire project from design and tender to completion of the work.

Contractors

Three written quotations are required for work below £10,000 in value.
Four competitive tenders are required for work above £10,000 in value.

Clawback

Clawback, legal charges and valuations apply for ALL vacant floor space grants.

For repair and reinstatement grants, clawback, legal charge and valuation only apply for grants above £20,000.

Note regarding clawback:

  • there is no liability to repay anything on disposal of the property if it does not increase in value (unless grant conditions are breached). 
  • if there is an increase in value, it is shared between the HLF, Bradford Council and the owner in proportion to their investment.

For more information please contact us.

Contact details

Landscape, Design & Conservation Team
4th Floor Britannia House
Hall Ings
Bradford
BD1 1HX

Phone : 01274 434551
Email : conservation@bradford.gov.uk

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