For more than a decade we have worked with a number of our Registered Provider (RP) clients to successfully implement "Rolling Charging" strategies. Rolling Charging strategies deliver various benefits such as increased security levels by utilising less stock, reduced transactional costs and streamlined charging transactions. The recent public bond issue by Sovereign Network Group (SNG) has demonstrated the clear success of this strategy.
What is a Rolling Charging strategy? It is simply being prepared and having detailed advance knowledge of your housing stock to ensure that your properties are always ready to charge, ideally at their highest value. During a charging exercise, affordable housing properties tend to be valued either at a market value subject to tenancies (MV-STT) value or an existing use value (EUV). Time invested by RPs in advance of a charging exercise and our title, planning and search investigations can establish at the earliest stage what issues there may be that could affect value or even the chargeability of the properties. We can potentially resolve valuation issues ahead of time, so when the properties are eventually charged they are ready and the RP has certainty regarding the value they will achieve.
SNG have recently received raised £400 million to develop further new homes through its bond issue. The issuance was nearly four times oversubscribed. This is a clear indication of investor confidence which is partly attributable to the diligent preparation of SNG and the stock it put forward for charge. A significant proportion of the stock had been part of SNG's Rolling Charging strategy. We have worked with SNG for a number of years, assisting it to perfect its stock and thereby maximise values so that when the market conditions became sufficiently favourable SNG were ready to draw down funds. The transaction is the first public long-dated bond issued since November 2022, and demonstrates SNG's ability to capitalise on conditions and move quickly, a clear advantage of a Rolling Charging strategy. Market feedback also suggests that SNG's ability to charge on day one and its demonstrable knowledge of its properties, having perfected security ahead of time and achieved maximum value for a large proportion of the stock, added to investor confidence.
While the charging market has been quieter over the last calendar year we have assisted a number of clients with the development and implementation of Rolling Charging strategies. Utilising this period to effectively to "get their house in order" ensures clients are ideally positioned to capitalise on potential opportunities. We anticipate seeing the benefits of this advance preparation coming to fruition for many more of our RP clients as market activity increases in the coming months.
