Social Housing Charging Exercises – Be Prepared

With the growth of development activity, and related financing activity, by RSLs it pays to be one step ahead when it comes to future charging exercises. Commonly, however, it is the charging work that causes the most significant delay in financing transactions as RSLs struggle to locate missing documents and address unknown title and planning issues.

My experience is that charging exercises are most efficient for RSLs who create a title information pack (a TIP) for each estate/development they complete or acquire at the point of its development/acquisition and subsequently regularly update such TIPs This has the benefit of ensuring that all relevant information is sourced when fresh, rather than being re-constituted after the event, saving management time and cost. TIPs can be either hard copy or electronic. The key thing is for them to contain the relevant information required for the purpose of a charging exercise.

So, what should a TIP include? I would suggest the key ingredients should be:-

An index A list of the postal addresses in the estate/development. The Land Register title entries (or if the title is unregistered, copies of the relevant title deeds), together with a title plan. A copy of the report on title (or certificate of title) obtained by the RSL at the point of its acquisition/development of the relevant estate/development. It is essential in this regard when creating a TIP to know if the title to the estate/development is good and marketable. If the title report raises any' red flag' issues, such as defects in title or title conditions restricting use or sale of the relevant property for purposes other than social or affordable housing (which would inhibit the application of MV-ST valuation methodology) these should be flagged in the TIP and, where possible, actioned through obtaining a waiver of the relevant condition or otherwise. In practice resolving such issues during the course of a charging exercise is likely to be problematic and lengthy, potentially inhibiting the value for security purposes that can be allocated to the relevant stock. Copies of discharges of any historic existing standard securities to entities such as the Housing Corporation. If these are not held, then again there can be a substantial delay in securing them. Copies of any title indemnity policies to address title defects identified in the report on title for the relevant estate/development. The level of cover under such policies should be...