Inside Housing quotes James Walton on the potential financing impact of delays at the Building Safety Regulator
Sector experts have warned that delays at the Building Safety Regulator (BSR) could lead to an uptick in financing costs, with borrowers paying higher interest rates for longer as they wait for projects to be signed off.
This is reportedly because long waiting times for completion certificates from the BSR may mean loans cannot be refinanced at lower rates once the riskier, more expensive development phase is over.
James Walton, Partner in our Banking & Finance team, comments on this issue for Inside Housing:
A key issue for lenders is how long it is going to take for the BSR to fully sign off a project following practical completion. Previously, once a building was practically complete, the building could more or less be occupied immediately. Now, a developer must wait for a completion certificate to be issued.
"[When it comes to the BSR intending to issue completion certificates within 12 weeks of a developer applying for one], in practice, this is already taking longer, largely due to a lack of capacity. This delay hugely impacts on the cost of funding, as the interest costs of the incumbent lender will be significantly more expensive than the interest costs of any new lender.
"[From a lender’s perspective, compliance is vital]. If the BSR hasn’t signed off a higher-risk building as being fully compliant with the relevant provisions of the Building Safety Act, it cannot be occupied. If it can’t be occupied, it can’t generate income and any exit for the incumbent lender will be impossible.
"We have been advising lenders on what changes they should be making to their loan documents, and the issues they should be thinking about.
Read the full article in Inside Housing here.
