How you can make PFI eASy as 1-2-3

When Registered social landlords take out or renegotiate the terms of private finance, this can lead to a lot of work for landlords and their lawyers. Many RSLs will need to put up hundreds of homes in one go to be used as loan security.

A charging process such as this can be protracted and complicated, requiring a lot of preliminary organisation. These tips should make the process smoother and more efficient.

First, keep track of where your title deeds are stored. Although the 2002 Land Registration Act says land and charge certificates are no longer required in order to carry out any land dealings, ancillary deeds and documents may well contain relevant information about the property. If the properties are already charged, the lender may hold them. Alternatively, they may be held by solicitors you have used.

If the deeds are not retained by a lender, keep a note of whether the properties are charged and, if so, to whom. Keep all relevant information, including title numbers, on a database. Being unable to track down title deeds can greatly slow the charging process.

Be aware that the postal address of a property will not necessarily match the description of the property at the Land Registry. The land may have been bought before the current units were developed and the description may bear little relation to the name of the scheme as you now know it – what was formerly “Land to the north of South Street” may now be called “Beachview Road”.

Check that you have the property register description and use this when supplying lists of units to the valuers, and when applying for section 9 consent – the Housing Corporation’s consent for disposals.

Where possible, apply to the Land Registry to get the property description updated in advance of the charging.

RSLs often refer to their properties as units, whereas the Land Registry works on the basis of legal titles. Titles may comprise many units or just one: a block of them could be held under just one title; a house might be held under one title but, having been converted, contain three or four units; or one title may include three or four separate houses, each house containing a number of units.

Where there are many units in a title, you will have to charge all of them in order to charge the whole title.

It is possible to charge part of a title only. This will be most appropriate where the units being charged can be clearly defined, for example where one piece of land can be neatly carved out of the title. The Land Registry will then split the title automatically, and give the charged part a new title number. It is far more straightforward to charge the whole title.

If you can, charge schemes with a large number of units under one title, which have a high value. If there are fewer titles to investigate, the process should be quicker and more cost-effective.

Keep all relevant information on a database. Being unable to track down title deeds can greatly slow the charging process

Both freehold and leasehold titles can be charged. Sometimes an RSL will own, on a leasehold basis, a number of flats occupied by tenants.

The trouble with leasehold If the freehold is owned by a third party, for example the local authority, the RSL will only be able to charge its leasehold title.

The length of the term remaining on the lease can have an impact on the valuation. Leasehold properties can be more complex than freehold properties, taking longer to investigate, which can be more costly.

The RSL may own the freehold of a building, for example, with three flats. If it has let two of them on short tenancies and one under a long lease, the freehold is still charged. The long leases will simply be taken into account in the valuation.

If the properties you are charging have been charged previously, and the loan has been repaid, arrange for your solicitors to obtain an executed discharge form from the lender in good time before proceeding with using the properties as security for a new loan.

Unregistered titles take much longer to investigate than registered titles.

If you know that some of your properties are still unregistered, consider applying to the Land Registry for voluntary registration before you need to use them as security, particularly where speed is of the essence. This will involve additional registration fees but will also assist in making the charging process speedier.

If you are charging a new development, ensure all relevant documents are readily available, such as the National House Building Council certificate and building and planning consents.

To draw down an advance quickly, consider asking your solicitors initially to charge the more simple registered titles where few or no disclosures to the lender’s solicitors will be necessary.