In 2020 the court rules were changed to require that all residential tenants must be given 14 days’ notice of an eviction. What happens though if the eviction is cancelled on the day?
The potential for Brexit with or without a deal causes uncertainty, and credit rating agencies do not like uncertainty.
According to Moody’s, the UK’s credit profile is vulnerable to a new government’s spending plans on top of the rising risk on a no-deal Brexit. Since housing association ratings are strongly linked to the sovereign rating, there is the potential risk that any downgrading of the sovereign rating could have a knock-on effect on the credit ratings of housing associations. Indeed, credit rating agency Standard & Poor’s (S&P) announced on 15 October that a “No-deal Brexit would spell ratings pressure for many UK housing associations.”.
A credit rating downgrade of a housing association could mean at least three issues:
- It may be an event of default in a funding agreement (if there is a default linked to ratings);
- It may affect the ability of the housing association in raising funds by way of private placement or public bond;
- It may affect the marketability of bonds and notes already issued.
If ratings fall into the lower investment grades or below, as outlined in the recent Sector Risk Profile issued by the Regulator of Social Housing, this could impact on funding costs as well as the pool of investors in social housing bonds/private placements.
Public Works Loan Board (PWLB)
On 9 October 2019, HM Treasury raised the interest rates that local authorities can borrow for capital investment from the PWLB. This lending is offered at a fixed margin above the Government’s cost of borrowing, as measured by gilt yields. The Treasury raised the margin over gilts by 100bps (one percentage point). While this directly affects local authorities, it could also impact housing associations in the following ways:
- If the housing association has an existing loan from a local authority (or is considering borrowing from a local authority) where the interest rate is based on a reference rate that is linked to PWLB, then this may mean the interest rate payable will increase.
- If the housing association is in (or is considering entering into) a property development joint venture, and the relevant local authority is investing money into the joint venture that originates from a loan from PWLB, then it will become more expensive for the local authority, which may affect the financial viability of the project.
With the potential for an economic downturn, a fall (or further fall) in the price of outright sale units and a slowdown in sales of outright sale units comes the risk that there is an impairment of the value of such development investments, including where the housing association has invested in outright sale development joint ventures. Not only can this impairment affect the profitability of the housing association, it can also adversely affect the ability of the housing association to comply with the financial covenants in its funding agreements. Housing associations should check their existing financial covenants to see if they exclude impairment charges. If the housing association is negotiating funding agreements, then they should look to exclude any impairment charges where possible.
For more information
We are delighted to announce that our private wealth law department has continued to maintain its Band 2 position in the latest edition of Chambers and Partners High Net Worth.
The new CHF is set to launch and open for applications with £4 million set to be allocated to community-led housing groups to support an increase the supply of affordable housing in England.
Charities, like other organisations, may be subject to or choose to voluntarily comply with the reporting requirements under the Modern Slavery Act 2015.
The draft regulations making it mandatory for anyone entering a registered care home in England to have been double vaccinated unless they are clinically exempt were made on 22 July 2021.
In the Transforming Public Procurement Green Paper, the Government signalled its desire to increase its control over procurements by all contracting authorities.
The monthly round-up from the Anthony Collins Solicitors charities team.
Legal updates as the UK enters into stage 4 of the roadmap and legal restrictions on face coverings and social distancing are lifted.
The first disability we are going to discuss is diabetes. We begin by discussing the different types of diabetes; their similarities and differences and how we live with the disability within our day.
Tim Coolican and Freya Cassia explore the legal and practical options available to providers if a disappointing result is received following an inspection.
To receive invitations to our events, as well as information and articles on legal issues and sector developments that are of interest to you, please sign up to Newsroom.