Are you making the most of your RCGF and DPF?

Posted: 1st November 2013

Are you making the most of your RCGF and DPF?

Does your organisation have balances sitting in your Recycled Capital Grant Fund (RCGF) or Disposals Proceeds Fund (DPF)?

At Altair we have been considering the best way to use such balances in the current economic climate. With limited grant to support new homes, it is now more crucial than ever to ensure that these funds are correctly administered and that your Finance, Development and Asset Investment departments are all aware of these funds and their permitted uses.

The regulation of RCGF and DPF

The Recovery of Capital Grants and Recycled Capital Grant Fund General Determination 2012, issued by the HCA, sets out the current principles governing grant recovery following the sale of a property (or other “Relevant Event”). The Grant Recovery chapter within the HCA Affordable Housing Capital Funding Guide details the permitted uses of RCGF.

In general, the HCA (or GLA which has responsibility in London) expect RCGF to be used on the following priorities:

Provision of new dwellings for Affordable Rent – new build, purchase of existing satisfactory and rehabilitation;
Flexible tenure where it will prevent repossession and homelessness.

The DPF regulations were issued by the TSA in 2009, with responsibility now passed to the HCA. The DPF is an account for holding the net proceeds of a sale, not just the part of the proceeds that are grant (as for RCGF). The main objective of the DPF is to provide replacement properties for social or affordable rent at no greater subsidy cost than properties provided through the National Affordable Housing Programme. Unlike RCGF, the DPF can still be used to provide social rented properties, rather than affordable rent. It cannot be used for intermediate rent or LCHO.

Using RCGF and DPF Balances

Some ideas for using the funds from the RCGF and DPF are:

To support your bid for the 2015-18 Development programme (particularly RCGF) and hence reduce the grant required from HCA (or GLA)
To help fund Continuous Market Engagement Schemes (CME)
Flexible tenure to enable a shared owner experiencing severe financial difficulties to remain in their own home, where other options have been exhausted (use of RCGF)
On existing off-the-shelf purchases to address welfare reform issues. By purchasing smaller properties in areas where existing tenants are looking to downsize to avoid the bedroom tax, this would not only help these tenants but also free up a larger property for another tenant to address overcrowding
On void repairs to bring properties back into letting (use of DPF)
On extensions and loft conversions to address overcrowding (by using the Social HomeBuy proceeds within DPF).

It is clear that in the current climate of reduced grant, it is crucial that each RP has in place strong procedures to ensure that both RCGF and DPF are administered and used correctly. Altair can help carry out a review of your RCGF and DPF and ensure you achieve the most efficient use of these funds. Please contact: Susan Kane, Partner at Altair on 07870 685 891 or email:

Liz Anderson, Senior Consultant on 07833 469 476 or email:

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