Capital Terms and Conditions for Climate Action Fund

Capital terms and conditions of grant

(Updated December 2023)

“we” “us” and “our” means The National Lottery Community Fund and includes our employees and those acting for us.

“you” and “your” refer to the organisation receiving the Capital Grant.

“Asset Liability Period” has the meaning given in paragraph 11.

“Capital Grant” means the grant awarded to you by us for the Project as set out in the Grant Agreement.

“Grant Agreement” means the grant offer letter addressed to you and from us which you have signed and accepted and which incorporates these terms and conditions (with any special/additional conditions we have agreed).

“Project” has the meaning given to it in the Grant Agreement.

“Practical Completion” means the later of i) the date that a certificate of practical completion (or its equivalent) is issued for any building work or ii) the date the Property is ready for the use described in the Grant Agreement. If the Project involves more than one certificate of practical completion, it will be the date of the final certificate.

“Property” means the land and/or buildings/structures to be acquired and or developed as part of the Project.

1. If any part of the Capital Grant is to buy or build, refurbish, extend or alter a Property, these Capital terms and conditions of grant will apply to your Capital Grant in addition to all other conditions we have required of you.

2. Unless we have agreed to grant the Capital Grant for the purchase of the Property, you must own either the freehold or leasehold interest (subject to the lease meeting our leasehold criteria below) in the Property before we release more than 5% of the Capital Grant.

3. You understand and accept that we will require security over the Property to secure repayment of the Capital Grant in appropriate circumstances. Usually this will be:

3.1. a legal charge in our standard form; or

3.2. a deed of dedication in our standard form, to include: i) if the Property is registered, a restriction on title to be registered at the Land Registry, or ii) if the Property is unregistered, and we have agreed that we do not require the Property to be registered, a land charge at the Land Charges Department together with a caution against first registration at the Land Registry.

If we have asked for security, you understand that we will not pay more than a maximum of 5% of the Capital Grant until we have received satisfactory proof of ownership and the security documents completed to our satisfaction.

4. You confirm that you do not have any undisclosed loans secured against the Property and that you will not take out any loans secured against the Property unless you receive our agreement in writing first.

5. If any part of the Project is to acquire, refurbish or build upon Property (including any extension or alteration(s) to building(s)), you will send to us the following documents:

5.1. a surveyor’s report on the condition of the Property, its value and whether it is suitable for the Project;

5.2. confirmation by your solicitors that all necessary consents for the development and/or use of the Property for the purposes of the Project have been obtained and satisfactory evidence that all pre-commencement conditions (issued by the relevant Planning Authority) have been satisfied in full;

5.3. if the Capital Grant is £50,000 or over for a purchase or if it is £100,000 or over for a refurbishment or development, you will need to instruct solicitors to provide a satisfactory certificate of title (if requested) completed by your solicitors (in the form which we will supply);

5.4. if the Capital Grant is £100,000 or over, in addition to the certificate of title, we will require:

5.4.1. a deed of dedication in our standard form; and

5.4.2. a letter of undertaking in the form which we will supply from your solicitors including an obligation to register a restriction on title at the Land Registry where the Property is registered, or, if unregistered and we have agreed to proceed without the Property being registered, an obligation to lodge a land charge at the Land Charges Department and a caution against first registration at the Land Registry;

5.5. if the Capital Grant is £500,000 or over and you are not a statutory body (whose constitution prevents the giving of security), then we require:

5.5.1. a legal charge in our standard format; and

5.5.2. a letter of undertaking from your solicitors in the form which we will supply including an obligation to register the legal charge and restriction on title at the Land Registry where the Property is registered or, if unregistered and we have agreed to proceed without the Property being registered, an obligation to lodge a land charge at the Land Charges Department and a caution against first registration at the Land Registry and a legal charge at Companies House (if applicable); and

5.5.3. a legal opinion, completed by your solicitors in the form which we will supply, confirming that you have the legal powers necessary to sign the documents and that the obligations undertaken as part of the Capital Grant will constitute valid legal and binding obligations on you and are enforceable against you in accordance with your organisation’s constitution/governing documents.

6. If any part of the Project is to acquire, refurbish or build (including by way of extension or alteration(s)) upon leasehold Property, then you must provide a copy of the lease to us for approval and to confirm that it is suitable security for the Capital Grant. The following minimum term of years and provisions, which are not exhaustive, will be required from the date of Practical Completion:

6.1. For a Capital Grant of up to £100,000: a lease of at least 5 years without a break clause;

6.2. For a Capital Grant of £100,000 up to £500,000: a registered and assignable lease of at least 5 years without a break clause. Where the superior title is unregistered, the minimum term of lease must be 5 years following Practical Completion or 7 years from completion of the deed of dedication, whichever is the greater;

6.3. For a Capital Grant of £500,000 or more but less than £1 million: a registered and assignable lease of at least 10 years without a break clause;

6.4. For a Capital Grant of £1 million or more but less than £5 million: a registered and assignable lease of at least 15 years without a break clause;

6.5. For a Capital Grant of £5 million or more: a registered and assignable lease of at least 20 years without a break clause; and

Where the Capital Grant is £100,000 and above the lease of the Property must not be subject to forfeiture on insolvency provisions.

7. In addition to clauses 5 and 6, if all or part of your Capital Grant is to be used for any building work you understand and accept:

7.1. that we will keep 95% of the Capital Grant until you have provided in a form which is completed to our satisfaction:

7.1.1. evidence that you have received any necessary planning permission, listed building or conservation area consent and building regulations consent (or other applicable consents or regulations) required for the building work; and

7.1.2. evidence that a competitive tender process has been undertaken with a minimum of three estimates received from three independent builders to ensure value for money including for pre-tendered arrangements, evidence of the tender process identifying existing contractors and details of any mini-competition between pre-appointed building contractors and, in each case, evidence of a fair, transparent and documented process (compliant with any statutory requirements applicable to the building works).

7.2. that we will make payments in stages when you receive builders’ invoices or against interim certificates completed on the RIBA (Royal Institute of British Architects) form or other appropriate invoices and/or certification in terms first approved by us;

7.3. that we will keep 5% of the Capital Grant until we receive the certificate of Practical Completion and any other appropriate building completion documents that we have advised are necessary based on the size and nature of the Project. This might include: a copy of the building regulations completion certificate, confirmation that buildings insurance is in place, copies of planning condition discharge notices etc. When available and where appropriate, you will provide the making good defects certificate and guarantees; and

7.4. that if you want to make significant changes to the scope of the building works, you must get our permission in writing first.

8. In addition to clauses 5 and 6, if your Capital Grant is for £100,000 or more and to be used for any building work you understand and accept that:

8.1. we will keep 95% of the Capital Grant until you have provided in a satisfactory form:

8.1.1. a copy of the tender review report for pre-tendered arrangements, evidence that demonstrates that costs have been market tested to confirm value for money;

8.1.2. an up to date capital project cost summary, cash flow and programme;

8.1.3. evidence that you have secured any and all the required partnership funding for the Project; and
8.1.4. all the legal documents requested by us.
8.2. you must employ a lead building professional to manage the tender process and to certify that the building works have been properly carried out;

8.3. if structural work is necessary, you must employ a structural engineer;

8.4. you will use building professionals that are fully qualified members of an approved professional body with the necessary experience and expertise for the Project and have all necessary professional indemnity insurance cover with indemnity limits appropriate to the nature of the Project and approved by us; and

8.5. if building works come under the Construction (Design and Management) Regulations 2015 (as amended from time to time), you will confirm that you have appointed a principal designer and otherwise complied in full with the Regulations.

9. You understand that if you do not make payment claims for Capital Grant within three months of incurring the relevant capital expenditure, then we reserve the right to proportionally reduce your Capital Grant in line with the actual capital expenditure incurred in the claim period.

10. You will not sell, lease, let, sub-let or otherwise dispose of or change the use of the Property without first obtaining our written consent, which may contain conditions which you will have to meet. If you sell or otherwise dispose of the Property, or where the objectives of the Project are not achieved for the duration of the Asset Liability Period, you may have to repay us all or part of the Capital Grant you have received from us. The amount you repay will be in direct proportion to the share of the Project cost that came from us. If you sell the Property with our consent, it must be at full market value which you have demonstrated to our satisfaction.

11. We will continue to have an interest in the Property and you will supply information about and allow us to monitor and inspect the Property for the following periods commencing from and including the date of acceptance of the Grant Agreement:

11.1. for Capital Grants of up to £499,999, to and including the date which is 5 years after the date of Practical Completion;

11.2. for Capital Grants of £500,000 or more but less than £1 million, to and including the date which is 10 years after the date of Practical Completion;

11.3. for Capital Grants of between £1 million and £4,999,999, to and including the date which is 15 years after the date of Practical Completion;

11.4. for Capital Grants of £5 million or more, to and including the date which is 20 years after the date of Practical Completion,
defined as our “Asset Liability Period”.

PROVIDED THAT if all or any part of the Capital Grant has become repayable, or any other amount has become due from you to us, and the relevant amount has not been paid on the date when the Asset Liability Period would otherwise end in accordance with this clause 11, the Asset Liability Period shall continue until the date all amounts due to us have been paid in full.

12. During the carrying out of any building works you will procure that the building contractor(s) will at all times:

12.1. maintain an “all risks” insurance policy covering the usual risks in respect of the building works, their carrying out and all unfixed goods and materials in connection with the building works for, in every case, the full reinstatement or replacement costs;

12.2. if requested, supply evidence to us of the insurance policy;

12.3. if any of the building works or any materials or goods required for the works are destroyed or damaged, make a claim under the insurance policy and use any proceeds for rebuilding, reinstatement or replacement of the works; and

12.4. not do or permit anything which may render the insurance policy void or voidable.

13. You will pay and indemnify and keep us indemnified from and against all loss damage costs claims and any liability and expense in respect of any injury to or the death of any person damage to any property movable or immovable pollution or sign of likely pollution or disturbance or destruction of any rights easement or privilege or otherwise by reason of or arising out of the erection and completion of any building works or the condition existence or user of the works.

14. You will permit us to enter the Property to view the state and progress of the building works provided that we are accompanied by your representative or contractor. We shall not interfere with progress of the building works and we will make any communications and representations only to you and not direct to your contractor.

15. In exceptional circumstances, we may permit works to land which is owned by a third party or multiple third parties. If we approve this, you will enter into agreements with each land owner. Any third party land owner agreements must be provided to us for approval and must include the following:

15.1. Details of the parties;

15.2. Confirmation of how the Property is held (freehold or leasehold);

15.3. A description of the Property (including plans);

15.4. Covenants on the part of the land owner to maintain the Property and ensure continued use of it for the duration of the Asset Liability Period in accordance with the terms of the Capital Grant; and

15.5. A provision that any onward disposal of the Property should be subject to the third party land owner agreement.

All third party land owner agreements should be completed and in place before any funds are released for work on each plot of land owned by a third party. Where the land is held in multiple ownership, you must keep a clear record of all third party land owners and provide agreements for each plot where capital works will be carried out. In some circumstances, we may require that the third party land owner also enter into an agreement with us and you, in a form that we will provide.

16. If your Capital Grant is to fund the purchase or enhancement of vehicles or equipment, the following conditions will apply:

16.1. You must provide us with evidence that the vehicles or equipment are validly owned by you;

16.2. You must retain the vehicles or equipment for the duration of the Project and use them only for the Project;

16.3. You must not sell or dispose of the vehicles or equipment during that time without first obtaining our written consent and if required, you must pay us a share of the proceeds from any disposal; and

16.4. You must keep the vehicles or equipment safely, in good repair and condition and adequately insured for the duration of the Project.