The following Banking & Finance practice note Produced in partnership with Neil Waller of Trowers & Hamlins provides comprehensive and up to date legal information covering:
This Practice Note looks at the key legal terms which are characteristic of social housing finance transactions and which differentiate it from financing terms in any other sectors. It considers in particular typical financial covenants and other key sector specific provisions, including events of default, as well as provisions linked to the availability of long-term fixed rate interest options.
For more information on social housing finance transactions, see Practice Note: Social housing entities entering into finance transactions.
The key financial covenants in social housing finance are:
loan to value
net rental income cover from charged properties
This covenant typically features in all social housing finance transactions.
Nearly all social housing loans are secured by legal charges over social housing properties and as such a key financial covenant is the ratio of the value of these properties to the aggregate outstanding amount of the loan.
Interest cover covenants are found in all kinds of social housing finance transactions.
These are similar to interest cover covenants found in other sectors and compare the amount of earnings or surplus from operating activities to the aggregate amount of interest required to be paid in the same period.
These are typically a feature of loan agreements only. As ‘Registered Providers’ (RPs) of social housing do not have a share capital, there are a number of
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