28.6  Changes to Numbers of Dwellings By Tenure204

28.6.1  The Authority may at any time serve a CNDT Notice on the Contractor for any number of Dwellings.  The CNDT Notice shall specify:

(a)  each Dwelling that will be the subject of a CNDT;

(b)  the CNDT Date for each Dwelling specified in the CNDT Notice providing that any such date shall be not less than [10] Business Days and not more than [40] Business Days after the date of service of the CNDT Notice; and

(c)  those Dwellings which will become Leasehold Dwellings on the CNDT Date;

28.6.2  The Authority may at any time before the CNDT Date specified in a CNDT Notice in respect of a Dwelling vary such notice by removing that Dwelling from the notice or by delaying its CNDT Date;

28.6.3  The Authority may at any time before the date specified in a CNDT Notice withdraw that CNDT Notice in its entirety;

28.6.4  The Contractor shall (subject to any other provision of this Agreement) continue to provide the Works and the Services in accordance with this Agreement in respect of all Dwellings specified in a CNDT Notice up to but not including the CNDT Date;

28.6.5  The Contractor shall cease to provide the Works and the Services in relation to a particular Dwelling with effect from the beginning of the CNDT Date;

28.6.6  Not earlier than 20 Business Days prior to any anticipated CNDT Date, the Authority shall be entitled to carry out a survey (a CNDT Survey) of the Dwellings which are the subject of a CNDT, to assess whether at the relevant CNDT Date they will meet the Output Specification, provided that for the purpose the Authority shall disregard any defects that would be cured by any Planned Maintenance or Cyclical Maintenance and Renewal Works set out in the current Planned Maintenance Programme or Cyclical Maintenance and Replacement [Programme] [Plan] Works or as agreed by the Authority and Contractor which the Contractor had properly programmed to carry out after the CNDT Date (the CNDT Standard), unless they can be made good by repair;

28.6.7  The Authority shall notify the Contractor in writing a minimum of 5 Business Days prior to the date it wishes to carry out the CNDT Survey.  The Authority shall consider in good faith any reasonable request by the Contractor for the CNDT Survey to be carried out on a different date if such request is made at least 3 Business Days prior to the notified date and the Contractor (acting reasonably) is able to demonstrate that carrying out the CNDT Survey on the notified date would materially prejudice the Contractor's ability to provide the Services.

28.6.8  When carrying out the CNDT Survey, the Authority shall use reasonable endeavours to minimise any disruption caused to the provision of the Services by the Contractor.  The Contractor without being required to incur additional material expense shall afford the Authority, its servants and agents and authorised representatives free of charge any reasonable assistance required by the Authority in carrying out the CNDT Survey.  The cost of the CNDT Survey shall be borne by the Authority.

28.6.9  If the CNDT Survey shows that any Dwelling which is the subject of a CNDT does not meet the CNDT Standard or if at any date after the CNDT Survey and before the CNDT Date the relevant Dwelling does not meet the CNDT Standard, the Authority may:

either:

(a)  notify the Contractor of the rectification work which is required to bring the condition of the CNDT Dwellings to the CNDT Standard;

(b)  specify a reasonable period expiring on or before the CNDT Date of the relevant Dwelling within which the Contractor must carry out such work; and

(c)  recover the cost of the survey from the Contractor by means of a deduction from the next payment of the Unitary Charge; or

(d)  the Authority may at its absolute discretion require the Contractor to pay to the Authority within 10 Business Days of the relevant CNDT Date such amount as is agreed by the Parties or determined under the Dispute Resolution Procedure as being the reasonable cost of the rectification works specified in clause 28.6.9(a) (Changes to Numbers of Tenures by Dwellings) if they were to be carried out by a third party as soon as reasonably practicable after the relevant CNDT Date.

28.6.10  If so required by the Authority, the Contractor shall carry out the rectification work referred to in clause 28.6.9(a) (Changes to Numbers of Tenures by Dwellings) to the Authority's reasonable standard within the period specified in clause 28.6.9(b) and any costs the Contractor incurs in carrying out such rectification and/or maintenance work shall be at its expense.

28.6.11  If and to the extent that the Contractor fails to carry out the rectification work in accordance with clause 28.6.9(a) (Changes to Numbers of Tenures by Dwellings), the Authority shall be entitled to carry out such rectification work itself or procure such rectification work at the Contractor's expense and shall be entitled to deduct the cost of such rectification work from any payment due to the Contractor under this Agreement.

28.6.12  If there is not a reasonable period for carrying out the rectification work before the CNDT Date of the relevant Dwelling or the Contractor fails to complete such rectification work before the CNDT Date or if it is not practical for the Authority to procure the completion of such rectification work on or prior to the relevant CNDT Date, the Contractor shall pay to the Authority within 10 Business Days of the CNDT Date such amount as is agreed by the Parties or determined under the Dispute Resolution Procedure as being the reasonable cost of the rectification works specified in clause 28.6.9(a) (Changes to Numbers of Tenures by Dwellings) if they were to be carried out by a third party as soon as reasonably practicable after the relevant CNDT Date.  For the avoidance of doubt, the Contractor shall have no right under this Agreement to carry out any such rectification and/or maintenance work after the relevant CNDT Date.

28.6.13  Where a Rented Dwelling has become a Leasehold Dwelling the applicable [Standard Daily Rate] for Leasehold Dwellings calculated by reference to Part 1 of Schedule 4 (Payment Mechanism) will apply from the date upon which the Rented Dwelling became a Leasehold Dwelling and where the Dwelling is subject to a disposal of the freehold the applicable [Standard Daily Rate] for Rented Dwellings or the applicable [Standard Daily Rate] for Leasehold Dwellings as the case may be shall cease to apply from the date of completion of the freehold disposal.

28.6.14  On each CNDT Adjustment Date, the CNDT Compensation shall be calculated in respect of a Dwelling from the CNDT Date for that relevant Dwelling in accordance with the following sub-clauses:-

(a)  the CNDT Model shall be adjusted to reflect the actual rate of inflation (measured by reference to RPI) since the last [inflation adjustment date];

(b)  the Relevant Part of the Unitary Charge (as referred to in clause 28.6.14(c) (Changes to Numbers of Tenures by Dwellings) and clause 28.6.16(a) (Changes to Numbers of Tenures by Dwellings)) shall be:

(i)  where a Rented Dwelling has become a Leasehold Dwelling, the difference between the applicable [Full Services Dwelling Charge] for Rented Dwellings and the applicable [Full Services Dwelling Charge] for Leasehold Dwellings;

(ii)  where a Rented Dwelling is subject to a disposal of the freehold, the whole of the applicable [Full Services Dwelling Charge] for Rented Dwellings; and

(iii)  where a Leasehold Dwelling is subject to a disposal of the freehold, the whole of the applicable [Full Services Dwelling Charge] for Leasehold Dwellings;

(c)  on each CNDT Adjustment Date the CNDT Model shall be run to determine the following in relation to each Dwelling which has been the subject of CNDT to be calculated from the relevant CNDT Date for that Dwelling:-

(i)  the Relevant Part of the Unitary Charge shall be reduced to reflect the percentage savings in Variable Costs and Semi-Variable Costs only as shown in Table A in Schedule 15 (Changes to Numbers of Dwellings by Tenure);205

(ii)  when the relevant number of Dwellings which are subject of CNDT attains the number of [Total Rental to Leasehold] or [Total Leasehold to Freehold] as applicable in each of the Columns headed Step 1, to Step [   ] in Table B in Schedule 16 (Changes to Numbers of Dwellings by Tenure) the reduction in the Relevant Part of the Unitary Charge shall, in respect of Semi-Variable Costs, in respect of each "step", reflect the percentage of the savings shown in Table B and not Table A in Schedule 15 (Changes to Numbers of Dwellings by Tenure); and206

(iii)  the Relevant Part of the Unitary Charge shall be reduced to reflect 100% of the costs as contained in the Base Case of those component parts of the [Initial Refurbishment] Works which have not commenced on the CNDT Date;207

(d)  the amount of CNDT Compensation for a Dwelling which has been the subject of a CNDT shall be calculated from the relevant CNDT Date for that Dwelling as follows:

CNDT Compensation = RPUC - (VCS + SVCS + IWCS)

Where:

CNDT Compensation - is the amount of CNDT Compensation for a Dwelling;

RPUC - is the Relevant Part of the Unitary Charge defined in clause 28.6.14(b)

VCS - are the savings in Variable Costs calculated in accordance with clause 28.6.14(c)(i) (Changes to Numbers of Tenures by Dwellings)

SVCS - are the savings in Semi-Variable Costs calculated in accordance with clauses 28.6.14(c)(ii) and 28.6.14(c)(iii) (Changes to Numbers of Tenures by Dwellings)

IWCS - are the Savings in the costs of the [Initial Refurbishment] Works in accordance with clause 28.6.14(c)(iii) (Changes to Numbers of Tenures by Dwellings).

28.6.15  The reduction of the Unitary Charge and the payment of the CNDT Compensation shall commence from the month following the CNDT Adjustment Date.

28.6.16  On each CNDT Review Date, the CNDT Compensation shall be re-calculated in respect of a Dwelling for the month in which the CNDT Review Date occurs for that relevant Dwelling in accordance with the following sub-clauses:

(a)  on each CNDT Review Date, the CNDT Model shall be adjusted to reflect the actual rate of inflation (measured by reference to RPI) since the [last CNDT Review Date] shall be run to determine the following:

(i)  the Relevant Part of the Unitary Charge shall be rendered to reflect the percentage savings in Variable Costs and Semi-Variable Costs as shown in Table A in Schedule 15 (Changes to Number of Dwellings by Tenure);

(ii)  when the relevant number of Dwellings which are the subject of CNDT attains the number of [Total Rental to Leasehold] or [Total Leasehold to Freehold] as applicable in each of the columns headed Step 1, to Step [ ] in Table B in Schedule 15 (Changes to Number of Dwellings by Tenure) the reduction in the relevant part of the Unitary Charge shall, in respect of Semi-Variable Costs, in respect of each "step" reflect the percentage of the savings shown in Table B and not Table A in Schedule 15 (Changes to Number of Dwellings by Tenure).

(b)  the amount of CNDT Compensation for a Dwelling shall be re-calculated on the relevant CNDT Review Date for that Dwelling as follows:

CNDT Compensation = RPUC - (VCS + SVCS)

Where:

CNDT Compensation - is the amount of CNDT Compensation for a Dwelling

RPUC - is the Relevant Part of the Unitary Charge defined in clause 28.6.14(b) (Changes to Numbers of Tenures by Dwellings)

VCS - are the savings in Variable Costs calculated in accordance with clause 28.6.16 (Changes to Numbers of Tenures by Dwellings)

SVCS - are the savings in Semi-Variable Costs calculated in accordance with clauses 28.6.16 and 28.6.16 (Changes to Numbers of Tenures by Dwellings)

28.6.17  The adjustment to the amount of CNDT Compensation for a Dwelling shall commence from the month following the CNDT Review Date.

28.6.18  Any dispute relating to the amount of CNDT Compensation payable shall be resolved without prejudice to either party's rights in clause 60 (Dispute Resolution) in accordance with the relevant calculations set out in the Base Case.

__________________________________________________________________________________________

204 Relevant only to HRA projects.

205 Table A in Schedule 15 (Changes to Numbers of Tenures by Dwellings) should show which percentage of variable and semi-variable costs may be reduced on a dwelling charging tenure.  These percentages should be bid by the Contractor.

206 Table B should contain the "steps" or "bands" of dwellings changing tenure by reference to which semi‑variable costs will be reduced.

207 Taking out all refurbishment costs savings at once may give rise to a negative compensation amount on the first CNDT Adjustment Date.  Where this occurs Authorities may consider amortising the savings over the whole of the refurbishment period.