SPEI Agreements for the Building Safety Fund: a short guide from Homes England

16 November 2021

Why are we being asked to sign this SPEI agreement?

If you are a registered provider that leases flats within a building requiring building safety funding in order to remediate cladding, you will be asked to sign a Services of Public Economic Interest (SPEI) agreement in order to obtain funding relating to your properties. Grant funding is paid in lieu of service charge payments for which you would otherwise be liable.

What is the SPEI Agreement?

Subsidy Control rules (previously state aid) put in place by the UK/EU Trade and Cooperation Agreement (TCA) from 1 January 2021 apply to the Building Safety Fund. Registered providers can receive this funding via the SPEI rules. That means that by signing this agreement you are confirming that the flats in this property are used for 'a task in the public interest' and as a result there is no cap on the amount of subsidy you are allowed to receive. Otherwise, your subsidy may be capped.

Why are we being provided with grant funding for this building?

Grant is provided on behalf of each of the leaseholders within the building to prevent the leaseholder from having to pay service charges. In practice, the funding is provided directly to the building owner to pay for the remediation but on your behalf as the fund beneficiary.

What does the terms of this agreement require us to do?

Registered providers should obtain their own legal advice on the terms and what it means. This guide sets out the main terms that registered providers have previously queried and what these are intended to do.

  • Continued use as social housing for 10 years: If the registered provider uses the flats for purposes other than that defined as a 'public economic interest' (i.e. they are not social housing any longer) then the registered provider may be required to pay back part of the funding it has been provided under this agreement. This is in order to comply with the Subsidy Control rules.
  • In practice, this means that if properties remain social housing there is no problem. If properties are sold and remain as social housing, there is also no problem as long as the new registered provider agrees to abide by the terms of the agreement.
  • Shared ownership is considered social housing for this purpose unless the property is 100% sold in which case the new owner would be liable for service charges. It is assumed that shared owners in this position are not using their flat for economic gain and therefore they are also entitled to unlimited subsidy.
  • If the registered provider sells the flats for use other than social housing, then the SPEI rules under which grant has been provided no longer apply and the registered provider may be liable. In effect this means potentially having to pay the service charge and therefore repay the grant.
  • Registered providers were concerned that this agreement restricts asset valuation, but the NHF has confirmed this is not the case and valuations should not be affected by this agreement.
  • The SPEI Agreement is linked to the grant funding agreement (GFA) for the building in question to which the registered provider is not a party. This is necessary because it is the grant funding agreement that bestows the grant for the building and without that the SPEI agreement cannot take effect.

Do we need to sign an SPEI agreement for every building?

No. Registered providers need only sign one SPEI Agreement to cover one or multiple buildings and buildings can be added to the agreement by signing an Addendum to the agreement.  The agreement is signed via DocuSign. The same agreement is used by both Homes England and the Greater London Authority (GLA) and is signed by these organisations and the registered provider.  The terms of the agreement are non-negotiable. 

What if we don’t sign the SPEI agreement?

If the registered provider does not sign the SPEI Agreement then they are liable to pay the service charge. Some registered providers may choose to do this, in that case please let Homes England or GLA know this.