Housing associations face eleventh-hour renegotiations over millions of pounds of photovoltaic panel ‘rent-a-roof’ deals, Inside Housing reported.
Under the terms of the deals PV providers offer landlords free PV in exchange for the feed-in tariff.
The news come after the Council of Mortgage Lenders set out the minimum requirements that social landlords should meet to obtain bank consent for the deals.
Social landlords have just five months left to complete their deals before the FIT – paid as an incentive to generators of renewable electricity – is significantly reduced by the government. Missing the deadline would render many agreements unviable.
Lawyers are warning that many agreements will need to be amended in the wake of the CML guidance which advises that most banks will require the power to terminate contracts with PV providers ‘without compensation and without liability for any costs of removal’ in the event of a default by an association. This right will arise if a bank cannot sell the properties as a result of the panels and/or the rent-a-roof contract.
Richard Brooks, partner at Anthony Collins Solicitors, which is acting on deals covering 160,000 properties, said: “Housing providers will be forced to insert terms reflecting the [CML] standards into deals with PV companies or try to negotiate with their lenders to derogate from the standards, causing delay everyone could well do without.”
A spokesperson for the National Housing Federation said: “Associations have offered various mitigation measures in the extremely unlikely event of default.
“The longer it takes for a reasonable solution to be accepted, the less likely it is that schemes which cut tenants’ fuel bills will appear before next year’s deadline.”
Despite many deals being agreed in principle, none have yet been completed because lenders’ consent has not been obtained. This is due to banks’ concerns that complicated rent-a-roof contracts could have a negative impact on the value of the properties held as security against loans.
PV panel deals have been invaluable to companies such as Mitie. The company announced it had secured 85% of its budgeted revenue for this financial year following a joint venture deal with Investec and Savills to install photovoltaic panels across social housing residences, generating £35m in turnover.
