The Government first announced plans for a shared ownership right to buy in October 2019. At the time the sector raised concerns about the impact the plans would have on housing associations ability to borrow. An election and a pandemic later the Government announced, during the CIH Housing Festival last week, the return of the right to shared ownership as part of its Affordable Homes Programme (AHP).
As the UK is slowly relaxing restrictions, it will no doubt be some time before business-as-usual whilst UK businesses adjust to a ‘new normal’ and the Government tries to balance relaxing restrictions too soon and causing lasting economic damage.
The UK Government has, in the last few weeks, introduced a multi-billion-pound package of measures, including certain financial support for businesses and institutions that experience issues with their cash flow as a result of the Covid-19 crisis. Various schemes have been introduced, including the Covid Corporate Financing Facility, Coronavirus Business Interruption Loan Scheme, Coronavirus Large Business Interruption Loan Scheme and the charities financial support package that could be pertinent to these sectors and which we explore below further.
Covid Corporate Financing Facility (CCFF)
This loan facility was introduced to support large institutions that make a material contribution to the UK economy. The Bank of England provides this funding to businesses and other entities by purchasing via a form of short-term debt instrument (with maturity between 1 week and 12 months) with fairly standardised terms. The CCFF is unsecured, but it is issued at a discount, with the incentive being the investors being paid an amount equal to the face value on maturity. The minimum amount purchased starts at £1,000,000, and since its introduction, the total amount of funding available through this scheme exceeded £5.5 billion.
It is worth considering this facility as an option when considering any short-term borrowing to cover short-term liquidity issues. If you operate in a regulated sector and are considering any of the above forms of finance, then you may also need to consider whether you have to discuss these cash-flow issues with the regulator. We have seen that some housing associations have been applying and qualifying for the scheme, although some have been rejected due to their V2 rating (which is the second-highest available grading for financial viability) so there continues to be some inconsistency in applying for this funding.
Coronavirus Business Interruption Loan Scheme (CBILS) and Coronavirus Large Business Interruption Loan Scheme (CLBILS)
Under these schemes, the UK Government will guarantee 80% of the outstanding balance of any loan facilities drawn down by the borrowers to encourage the banks and other funders to lend by mitigating the risk of repayment default and hence reducing lenders’ exposure. The UK Government are currently considering increasing this guarantee to 100% for small businesses, although this has not yet been implemented.
Both schemes are subject to certain eligibility conditions and target both smaller and larger businesses under which the lenders can provide loans of up to £5 million under CBILS and up to £50 million under CLBILS. The funding under these two schemes can be in the form of term loans, asset finance, overdrafts or invoice finance, and these loans remain a responsibility of the borrower.
It is, however, also worth noting that personal guarantees may be requested for loans exceeding £250,000 by the lenders in support of these two schemes, which may cause issues for many smaller borrowers. We encourage the business to speak to their lenders to explore any acceptable alternatives.
It is important to note that these two schemes are opened only to any viable businesses that meet the requirements for a commercial loan (including where relevant security is available or indeed where no security is available) due to the Covid-19 crisis. Businesses will need to be able to demonstrate the same.
Those organisations operating in low-risk, stable sectors (such as social housing or social care) are more likely to be able to unlock the funds available through these schemes, although they are less likely to need to call on the above facilities. There will, however, be some merit in exploring what is available to them under these schemes as part of their broader strategy for surviving the Covid-19 cash-flow crisis and we can guide you through these options further (as well as any alternatives).
Charities Financial Support Package
Last but not least, the additional £750 million package to help some struggling charities was also announced by the UK Government in April 2020. This should involve cash grants of up to £360 million to be provided by the government departments directly to charities, which are providing key services during the Covid-19 crisis. Up to £370 million cash grants have been made available to any smaller local charities, including those delivering food and essential medicines and providing financial advice.
The limitations on those who can benefit from this financial support mean that many other charities that may not be considered ‘key’ during the crisis will have very limited access to these cash grants or assistance other than saving costs via the job retention scheme. Our website is updated weekly with the most recent developments in this sector, including how charities are rising to the challenge and keeping connected.
There are numerous other forms of funding introduced by the UK Government with the above being just a snapshot as to what is available in the ever-changing financial market. If you wish to explore any of the above funding options or discuss any other options you may have as a result of your current funding, please contact Adriana Klincova, Emma Watt, Natalie Singh or Jon Coane.
We also recommend you engage with your lenders and financial advisers alongside exploring any online resources such as the British Business Bank website.
Two final pieces of the possession jigsaw have been published on 15 September 2020. Mr Justice Knowles’ working group on possession proceedings has issued its guidance on the “overall arrangements” for possession proceedings.
One change proposed by the Building Safety Bill is the introduction of a duty holder regime, which will see statutory responsibility for the safety of higher risk buildings placed on key individuals
Throughout this pandemic, the Competition and Markets Authority (CMA) has been publishing various “Statements on Coronavirus” (Statements) which provide guidance on consumer rights during this time.
A recent increase in COVID-19 cases in the UK means new measures are being put in place in an effort to reduce the risk of a second wave. Whilst the impact of COVID-19 continues to be felt, it is important to remain focused on the sector’s road to recovery.
Sometimes half an hour at a conference gives you the reality that has been staring you in the face all along. That was my experience watching “Change is on the Horizon”
Following our recent e-briefing on Possession Notices, Helen Tucker and Emilie Pownall from our housing litigation team discuss the impact of the changes on social landlords.
Not only has the possession stay been extended until 20 September, the notice periods to be given to tenants has been extended in certain circumstances with some important exceptions.
The Court has confirmed that a party cannot withhold its consent in order to re-write the original bargain.
Following the Grenfell Tower tragedy, building safety continues to be a key concern for social housing providers and their residents.
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