What steps should be taken to prepare for charging?
1. Know your stock
Carry out initial due diligence (title and planning review), identify the units ready for charge and highlight any issues where further work is required. [we would recommend commissioning LLC1 searches on each scheme at the earliest possible opportunity to flush out any planning issues straight away].
2. Collate your documents
Create a charging file for each scheme [see below for summary of documents required] and obtain any missing documents and confirmations. With new and recent developments under 10 years old, this is particularly crucial. Your development team will play a pivotal role in helping you to achieve this.
3. Perfect your stock
Where issues have been identified under steps 1 and/or 2 above, consider whether these can be resolved prior to charging e.g. where a defective mortgagee exclusion clause in a S.106 Agreement is identified, can a deed of variation be negotiated to make the stock chargeable at MV-STT?
4. Get everyone on board
Speak to your teams (both internal and external) and ensure that everyone is aware of what you are trying to achieve and that their input will be required. Provide clear deadlines and guidance as to what is required and why it will be required.
What property documents will be required?
- Title registers and plans [Note that up to date title registers and plans will need to be obtained at the time of charging]
- Title documents
- 106 agreements and any deeds of variation (confirmations that all financial and non financial oblations have been fulfilled will need to be obtained)
- Copies of planning permissions
- Copies of any Nominations Agreements
- Copies of any indemnity policies
- Copies of any S.38 or S104 Agreements in respect of road and sewer adoption and as much information as possible regarding the status of any ongoing adoption (if not already complete)
Additional information if the property is less than 10 years old
- Planning permission condition discharges
- Evidence of NHBC or equivalent
- Information in respect of CIL (where applicable)
What other information will your teams need to provide at the time of charging?
- Details of retained equity percentage for shared ownership properties
- Information on any pending sales
- Information in relation to any solar panels
- Confirmation on whether there been any flooding, subsidence or other material environmental issues
- Information in relation to any litigation which affects the property
- Confirmations of whether there have been any notices received from a Local Authority such as notices in respect of HS2 or planning enforcement.
- The sum of the most recent rentcharge and service charge demands and evidence of payment
- Details of private drainage arrangements such as septic tanks or the existence of any SUDS.
- Sample tenancies
- Stock insurance policies
Please note the above lists are not exhaustive but are intended to be a guide of the key things required. Further information or documents may be required depending on the nature of your stock and the requirements of the funder in each transaction.
This may seem like a lot of work but when broken down into steps it does not have to be a stressful process. We can help you with every aspect and have developed bespoke trackers, charging questionnaires and checklists to make the process as streamlined and simple as possible.
We can assist in any of the above steps by offering training to your staff, carrying out due diligence projects to analyse your stock and resolve any issues prior to charging.