High interest rates led to a reduced immediate need for security across the sector in 2024 –a trend that we expect to be turned on its head in 2025. As new opportunities present themselves over the coming year, the focus for RPs should be on ensuring that they have access to “oven ready” security to support their funding needs.   

With valuations becoming increasingly key, and the competition for new funding expected to be fierce when the time comes, we are seeing the most organised RPs putting themselves into pole position to enter into funding arrangements, with appropriate security, at the drop of a hat. 

Looking forward, here is what we anticipate will be the key trends in 2025 for social housing security charging: 

Planning ahead  

With minds focused on interest rates and gilts, and trying to assess the best time to go out for funding, it can be easy to overlook ensuring your properties are ready to charge.   

We have seen several occasions where funding for properties was limited in value because insufficient time was allowed for the security arrangements.  We are therefore encouraged to see the shift towards “pre-charging” – i.e. getting your security ready so that it doesn’t hold up funding transactions later down the line.  This approach can slash timescales from circa 6 months to as little as 2-3 weeks, and helps maximise values for the reasons outlined below.   

How Capsticks can help 

Talk to us about your security needs and timescales, and we will be happy to provide an obligation-free quotation. For organisations without a Treasury team or where the Treasury team is already overstretched, you can find more information about our innovative partnership with Red Loft, which takes the burden of the charging exercise away from your staff here.   

Maximising values  

It is impossible to talk about security charging without looking at maximising values.  For many RPs, the “low hanging fruit” is already in charge, meaning that work may be required to ensure you get the most value. This is often in the form of updating s106 agreements, but can also take other forms, e.g. getting unregistered land registered at HM Land Registry.   

We have always advised RPs to look carefully at the valuation differential between EUV-SH and MV-STT, as the potential uplift does not always justify the cost of rectification work. This may change in 2025, however, as EUV-SH valuations are expected to be adversely impacted by lower inflation and continued pressure on operating costs, plus sustainability targets. If you need to charge EUV-SH stock, then we recommend looking carefully now at whether those values can be upgraded to MV-STT as EUV-SH values could reduce over the course of the year. 

How Capsticks can help 

Whether it is MMC, shared ownership, buildings needing EWS1 certification or other valuation considerations, we have seen it all before.  We provide practical advice on how to get your stock into charge at the highest values.   

Data 

The Regulator of Social Housing continues to emphasise the importance of data, particularly in the form of assets and liability registers.  We have been advising RPs on the format that those registers should take, for example, by undertaking a detailed review of the contents of the register to identify and report on ways to optimise the information contained within the register to comply with regulatory obligations, prepare for properties for charge and support informed operational decisions. For example, identifying stock that requires the most investment, or which is located outside of your core geography. 

Security charging exercises involve the collation of key data, which can be used to support internal registers.  We are working with a number of RPs on how they can access and utilise this data in the best possible way.   

How Capsticks can help 

At Capsticks, we offer advice on data collection and utilisation as standard as part of our security charging service.  This includes making data available to your organisation through our bespoke portals.  

Future-proofing your portfolio 

As the past few years have demonstrated, it is important to future-proof your security portfolio where possible, to protect against inadvertent breaches of funding covenants.  This is particularly the case as EUV-SH values could fall over the course of 2025.   

We have been working with RPs across the country to do exactly this, and the key areas of focus include: 

• Keeping your development team up to date with security requirements, so that charging packs are helpful and complete; 

• Working closely with planners to secure appropriate s106 obligations which will be acceptable to funders – and doing the same with local authorities in relation to nomination agreements; 

• Focus on sustainability targets and how to evidence improvements; 

• Identifying potential areas of concern, including MMC; high risk/relevant buildings etc.  

How Capsticks can help 

We provide practical training and support to ensure that your portfolio continues to offer maximum value in 2025 and in the years to come. If you have any questions, please contact Susie Rogers.