New guidance issued to lenders will make rent-a-roof schemes much more complicated for landlords, warns Richard Brooks
Social landlords are piggy in the middle when negotiating rent-a-roof deals to install photovoltaic panels - stuck between their lender’s requirements and those of the panels’ financiers.
Many landlords have tendered or negotiated significant deals with PV providers to obtain electricity for tenants and a fee from the airspace above their roofs in exchange for the feed-in tariff, which the government pays for electricity produced by the PV.
These deals usually require landlords’ lenders to consent, on the basis that there is a disposal of land (the airspace) or alteration to the stock which forms part of the lender’s security.
The Council for Mortgage Lenders’ guidance, published last week, confirms that before giving consent, most lenders will want the right to end the PV deal and require the panels to be removed at no cost if the lender takes possession following a default under the landlord’s funding arrangements.
This is causing difficulties for funders of PV deals. Their income stream is at risk if landlords’ lenders can get out of the arrangements. The terms of deals already procured or negotiated will have to change - sometimes significantly.
This will require some hard work and sleepless nights if deals are to be completed in time to put up panels before April 2012 when the FIT reduces.
If the proposed PV scheme was drafted on the basis that it would be the subject of a European Union compliant tender process, any such changes to the terms where an award process has been completed are at risk of being unlawful ‘post-tender negotiations’, particularly if the provider tries to reduce its rent/licence fee offer; this should certainly be resisted.
Richard Brooks is a partner at Anthony Collins Solicitors LLP