Wrkshp Sessin Stress-Free Securitisatin CHC s Resurces Cnference 2014-10 th July 2014 Metrple Htel, Llandrindd Wells, Pwys Presented by Sharn Kirkham Partner and Head f Securitisatin
THE DEVONSHIRES SECURITISATION TEAM Our team is made up f Partner and Head f Securitisatin, Sharn Kirkham, and a team f ver 20 ther securitisatin specialists, all f whm are highly experienced in charging prperties, cmprising ne ther Partner, six slicitrs, ne trainee slicitr, ne legal executive, ne trainee legal executive, ten paralegals and tw team administratrs.
TOPICS Stress Free Securitisatin Hw Develpment Teams can help speed up the charging prcess The charging prcess frm start t finish Issues which result in prperties being unacceptable as security Issues with mrtgagee exclusin clauses
STRESS-FREE SECURITISATION Ways in which the charging prcess can be made stress-free are: Hlding a Security Training Seminar which highlights the mst efficient and cst-effective ways f preparing yur prperties fr charging Ensuring that yur develpment fficers cllate the dcumentatin required fr charging prperties see DEV1 Frm in back f Step-by-Step Guide Getting yur unencumbered prperties ready fr charging in advance f requiring the funds Ensuring that mrtgagee exclusin clauses in dcuments such as Sectin 106 Agreements and Leases are adequate fr a mrtgagee t lend n an MVT basis s that the funding capacity f the Registered Prvider is maximised Fr mre details, please see ur Stress-Free Securitisatin Brchure
HOW DEVELOPMENT TEAMS CAN HELP SPEED UP THE CHARGING PROCESS By cllating and prviding a duly cmpleted DEV1 Frm with all attachments where pssible Imprtance f this is that it takes an incredibly lng time t btain items like planning permissins, Sectin 106 Agreements, Building Regulatins Cmpletin Certificates, cnfirmatin f cmpliance with cntaminatin cnditins in planning permissins and cnfirmatin f cmpliance with Sectin 106 Agreements frm Lcal Authrities and will speed up the prcess if these are prvided at the utset These shuld be items which develpment have in their pssessin frm when the prperties are acquired r develped This will result in a saving f unnecessary disbursements being incurred, eg, Cuncil and Land Registry fees fr cpy dcuments, premiums fr Indemnity Insurance Plicies already in frce
THE CHARGING PROCESS FROM START TO FINISH (1) Registered Prvider t prvide: list f prperties t be charged with Title Numbers details as t wh is hlding the title deeds cnfirmatin as t wh the prperties are t be charged t a cmpleted DEV1 Frm with attachments, if pssible, fr each scheme/street prperty Devnshires t prvide: Schedule f Statements fr the Registered Prvider t cnfirm crrect Details f the Cnditins Precedent set ut in the Lan Agreement which are required frm the Registered Prvider
Devnshires will then: THE CHARGING PROCESS FROM START TO FINISH (2) Identify the Titles and check all prperties are wned and nt already charged Obtain all dcuments referred t n the Titles Check fr any Title issues and reslve any which are identified Carry ut LLC1 Only Searches t identify planning histry Obtain all planning dcuments revealed by LLC1 Only Searches and any ther necessary cnfirmatins and dcuments either by checking the attachments t the DEV1 Frms r frm the relevant third parties Check fr any issues revealed by the planning and related dcuments and reslve any which are identified Agree sample full Lcal, Water, Envirnmental and Chancel Check Searches and any ther relevant Searches with the Lender s slicitrs and carry these ut when a Lender has been identified
The fllwing are required t enable the Certificate f Title t be finalised: Titles and all dcuments referred t n the Titles Search results Cpy planning permissins and sign ff f cntaminatin cnditins (and all ther cnditins if the prperties are t be charged t THFC) Cpy Sectin 106/52 Agreements and sign ff f all bligatins in these bth financial and nn-financial issues with phased develpments Cpy Building Regulatins Cmpletin Certificates if less than 10 years ld Evidence f NHBC r similar cver if less than 10 years ld Respnse t the Schedule f Statements frm the Registered Prvider THE CHARGING PROCESS FROM START TO FINISH (3) Any necessary third party cnsents, eg, Landlrd s cnsent, cnsents required by Restrictins n Title Any Indemnity Insurance required by the Lender
All ther Cnditins Precedent need t be cllated: THE CHARGING PROCESS FROM START TO FINISH (4) Specific Sectin 172 Cnsent r the General Cnsent frm the HCA Blck buildings insurance plicy dcumentatin Valuatin Fixed Charge and Letter f Nn-Cntraventin f Rules Bard Minutes authrising entry int f the Facility Agreement and executin f Fixed Charges Standard frms f tenancy agreement used at the prperties being charged Officer s Certificate prviding varius cnfirmatins such as the Registered Prvider having n flating charges and the rental infrmatin prvided t Valuers being crrect
Steps t be taken when Certificate f Title prepared and all Cnditins Precedent received: THE CHARGING PROCESS FROM START TO FINISH (5) Obtain apprval f draft Certificate f Title frm Lender s slicitrs and deal with any queries raised Obtain sign ff f the Certificate f Title frm the Valuers and the Registered Prvider Send all ther Cnditins Precedent t the Lender fr their apprval Carry ut pre-cmpletin Land Registry and Financial Cnduct Authrity Searches Obtain Letters f Nn-Crystallisatin in respect f any Flating Charges n the day f cmpletin Cmplete the Charge
Pst-cmpletin matters: THE CHARGING PROCESS FROM START TO FINISH (6) Devnshires will deal with registratin f the Charge at the Financial Cnduct Authrity and the Land Registry Devnshires will check the Title Infrmatin Dcuments when received back frm the Land Registry t make sure the Charge and all Ntes and Restrictins have been crrectly registered and send these either t ur Deeds Stre fr safekeeping r t the Lender s slicitrs, as required by the Lender
ISSUES WHICH CAN RESULT IN PROPERTIES BEING UNACCEPTABLE AS SECURITY (1) On a Leasehld Title, where the Lease granted has less than 60 years f its term left t run (and pssibly als between 60-90 years and 99 years if the prperties are being charged t THFC) On a Leasehld Title, where the Lease cntains a prvisin entitling the Landlrd t exercise frfeiture prceedings n the inslvency f the Tenant On a Freehld Title, where there is a rentcharge payable and the dcument cntaining the rentcharge des nt cntain a prvisin entitling the wner f the prperties t dispute the rentcharge demanded the dcument cntains a prvisin entitling the persn benefiting frm the rentcharge t exercise frfeiture prceedings n nn-payment f the rentcharge Where there is a Restrictin n the Title which requires the cnsent f a third party and the Restrictin des nt express the basis n which this is t be granted (an abslute Restrictin)
ISSUES WHICH CAN RESULT IN PROPERTIES BEING UNACCEPTABLE AS SECURITY (2) Where the planning permissin is persnal t the Registered Prvider (althugh prperties are acceptable where the planning permissin is expressed t be persnal t the Registered Prvider r any ther registered prvider, the value f these will just be restricted t EUV-SH) Where there is a planning permissin which cntains a cntaminatin cnditin and the Cuncil is unable t cnfirm that this has been cmplied with Where prperties are less than ten years ld and there is n evidence f NHBC r similar cver available but nte If the prperties are ver nine years ld, the Lender may take a view and accept the prperties especially if the prperties cncerned frm nly a small part f the prtfli f prperties being charged Indemnity insurance can be taken ut in respect f this but a full structural survey is usually required n every prperty and the premium is likely t be 5% f the value f the prperties s this is very expensive
ISSUES WHICH CAN RESULT IN PROPERTIES BEING UNACCEPTABLE AS SECURITY (3) On a phased develpment, where nt all f the phases f a site have been cmpleted and there is a Sectin 106 Agreement which cntains bligatins that are binding n the whle f the site and the Cuncil is unable t cnfirm full cmpliance with all f the bligatins in the Sectin 106 Agreement because nt all f the bligatins have been triggered and cmplied with On a phased develpment, where nt all f the phases f a site have been cmpleted and there is a planning permissin which cntains a cntaminatin cnditin which applies t the whle f the site and the Cuncil is unable t cnfirm that the cntaminatin cnditin has been cmplied with in respect f the whle f the develpment
ISSUES ON MORTGAGEE EXCLUSION CLAUSES It is imprtant t make sure that mrtgagee exclusin clauses in dcuments cntaining affrdable husing restrictins (whether these restrictins are in a Sectin 106 Agreement, a Transfer, a Lease r a Nminatins Agreement) are acceptable t mrtgagees and that they will lend n a Market Value Subject t Tenancies (MV-STT) basis and nt nly n an Existing Use Value fr Scial Husing (EUV-SH) basis We ffer a service f reviewing mrtgagee exclusin clauses in dcuments befre the dcuments are entered int t ensure that yu maximise yur funding capacity
Practical slutins t maximising the value f free security CHC Resurces Cnference 2014 Presented by Siân Evans Funding & Assets Manager
Cnsumptin f security The levels f free security have depleted significantly ver the past few years: Lng term finance nly available thrugh Bnds : security requirement 150% Mv stt rather than 120% Mv stt Lenders are stricter abut the prperty they accept as security Up until recently, a depressed prperty market thereby realising lwer prperty values N prvisin f value fr cmmercial prperty Less grant availability, leading t a greater call n private finance
Getting ur huse in rder Prperty is mre than just bricks and mrtar and getting a cmplete picture makes charging easier. We therefre set up a dedicated page n ur rent system. Benefits are: Ability t get a rugh idea f prperty prtfli values via indexatin at any time pssibility f releasing excess security charged against existing lans. All infrmatin held in ne place cmprehensive picture Recnciliatin f ur recrds t thse f Land Registry n prperties ff the radar
Getting ur huse in rder (2) Easy t identify unsecured prperty, and since linked t rent system, easy t pull ff infrmatin fr valuer. Prblem prperties such as shrt leases can be identified and actin can be taken in rder t ensure suitability fr the future.
N man is an island Building a clse relatinship with the develpment department is key. Wrking tgether makes charging easier and the likelihd f achieving the full value n 1 st try. Funding team attend the develpment team meetings Lgistics can help lcated in the same part f the ffice Cmmunicatin is embedded int daily wrking relatinship Targets needed t be achieved in rder t access mnies frm part f ur prcedures Ptential prblems can be irned ut frm the utset e.g ensuring a suitable term fr a lease upn purchase f land
Its gd t talk (1) Talking t a variety f parties des a wrld f gd, and can make life a lt easier. Lenders Incrprate ther questins int yur standard discussins, such as what slicitrs d yu use? what standard term d yu accept fr lease prperties? Get a feel fr the appetite twards prperty which cntains cmmercial elements Is there a willingness t revisit previusly charged prperty with restricted value in rder t btain a full value?
Valuers Its gd t talk (2) They can give a great insight int what will cause prperty t be earmarked as EUV sh rather than MV stt. Get a list f assumptins used by the valuer and assess against yur actual csts. If yur csts are less than that assumed, bring this t the attentin f the valuer. See if yu can btain a cmmn grund.
Its gd t talk (3) The Lcal Authrity Restrictins in planning permissins can have a huge impact n the value attributable t prperty as security e.g use f wrding t be used as affrdable husing r t be used fr ver 55. Discuss with a planning cnsultant Engage with slicitrs f Lender and Lcal Authrity Put tgether a case fr retrspective S106 Castal are in the prcess f negtiating a retrspective S106 which will release 1.8m in cash n 1 scheme alne.
Nthing ventured, nthing gained Every brick has t cunt!