14/Oct/2011

There have been some negative headlines in the housing press within recent weeks regarding the stance taken by a number of funders to the housing sector about solar PV rent-a-roof schemes.  Cobbetts’ experience over this time has been that funders have been prepared to agree to associations entering into rent-a-roof schemes.

The guidance issued by the Council of Mortgage Lenders within the last few days is welcome as it sets out the minimum requirements of funders where a borrowing association wishes to grant a lease, licence, concession (or an option to do so) of roof space for the installation of solar PV units on properties in England and Wales.  However, there are items which associations should be aware of – as these can either impact on their loan covenants or the time and costs involved in entering into the solar PV documentation with contractors.

The guidance will also apply to any unencumbered stock which is subsequently used as security and, we suspect, to solar thermal units under the Renewable Heat Incentive (where further announcements are due in the next few weeks).

For associations, clarity on the following points should be particularly welcome:

• The solar PV contractor should be responsible for insuring the installed equipment and cover any damage caused either to the affected property and/or injury to any person – to date many contractors have tried to pass this responsibility onto associations who in turn have then experienced difficulties obtaining insurance as they do not own the kit;
• Contractors to remain responsible for maintaining the kit;
• Associations to be able to remove and re-install the kit for the purposes of carrying out repairs or improvements to the roof and/or property – some contractors have imposed pretty tight time periods for completing this work and associations should consider whether the time frames are sufficient;
• There should be an ability to partially terminate the contract in the event of a tenant exercising their statutory right to buy, right to acquire or other contractual right of acquisition; and
• Contractor to be responsible for any VAT and/or other taxation.

Lenders have stipulated that as part of any approval process, they will require:

• An approved valuer’s report setting out the impact of the solar PV units on the value of their security. Lenders have stated that in light of the valuer’s report, they reserve their rights under the relevant loan documentation (including the right to require the position on asset cover to be reviewed);
• Copies of board approvals and copies of all necessary consents (for example, TSA consent, planning permission, building regulation consent, relevant title permissions etc.) or confirmation that there are suitable risk mitigants in place to ensure that the association is not assuming material liability in relation to such consents. Cobbetts can put you in touch with insurance brokers providing specialist insurance policies to cover risks in this sector.

If you have any queries, please contact:

 
Richard St. John Williams
0845 165 5526
richard.stjohnwilliams@cobbetts.com

Catherine Haslam
0845 165 5424
catherine.haslam@cobbetts.com

David Isaacson
0845 404 2230
david.isaacson@cobbetts.com

The content of this article is for information only and should not be relied upon as a substitute for legal advice.  Copyright 2011 Cobbetts - All rights reserved - October 2011