The Department provide associations model form of rule amendment if changes to borrowing limits are required.
This guidance applies only to those Housing Associations that are operating the HA Model H. 11 1974 NI Rules.
Introduction
Restrictions on exercise of certain powers of Registered Housing Associations, to amend or change the Association’s rules, are contained in Article 29 of the Housing (NI) Order 1992.
As Associations increasingly seek loan finance for their projects from private sector institutions, some may find:
- that the borrowing limit in their rules is not defined to accommodate borrowings where the amount outstanding increases over time, e.g., index linked or deferred interest borrowing; and
- that their rules prohibit them from paying interest on any loan at a rate which exceeds that prescribed by Department of Finance;
- that their rules do not permit the giving of a floating charge over their assets
In order to facilitate such borrowing the Department has drawn up a Model Form of rule amendment, which Associations may choose to adopt.
Download:
Model Form
The model form overcomes these disadvantages as follows:
(a) Index linked borrowing, etc - New rule 18(a) and (d)
(b) Interest rates - Amended rule 18 (b)
(c) Floating charges - Amended rule 45 (a)
The Registrar of Credit Unions for Northern Ireland has agreed the Model Form and, as such, amendments in this form can be swiftly and easily effected. However, whenever negotiating a borrowing, Associations are advised to check that the wording of the Model Form is acceptable to the lender. If it is not acceptable the Association will have to negotiate a new form of words with the lender, the Department and the Registrar of Credit Unions for Northern Ireland.
Associations are reminded of the need to operate within their borrowing limits and, therefore, to take the opportunity of any other amendment to their rules to increase this limit prudently, to a level adequate for their future needs. In particular, Associations borrowing on deferred interest, index linked or deep discounted terms, where the amount outstanding increases over time, will need to institute a procedure to review regularly the level of their undischarged borrowings.