Governance Guide - Privately Financed Schemes

Associations must seek the Departmental approval before a charge is taken out in favour of a private lender, certain procedures and criteria should be followed.


The Department has a duty to supervise and monitor the affairs of Registered Housing Associations.  This includes all activities, not just those involving publicly funded schemes.

Article 13 of the Housing (Northern Ireland) Order 1992 requires all Registered Housing Associations to obtain Departmental consent before a charge is taken out in favour of a private lender.  Without this consent the transaction is void.  Article 13 consent is a discretionary power and is not an automatic process.

Associations should note that the Department requires adequate time to scrutinise applications.


Application to register a Statutory Charge:

Paragraphs (8) and (9) of Article 13 of the Housing (Northern Ireland) Order 1992 state:
 (8) An application for registration of the statutory condition attaching to land by virtue of this Article shall be made by the Department as soon as is reasonably practicable after the acquisition of the land.
 (9) For the purposes of paragraph (8), a registered housing association shall upon acquiring any land forthwith
    (a) Inform the Department of the acquisition, and
    (b) Provide such information with respect to the acquisition as the Department may require.

The Association should submit:

  • two copies of an Ordnance Survey map, scale 1:1250 or 1:2500 as available, outlining the property to be acquired in red ink to allow DSD to apply for a Statutory Charge in accordance with Article 13 of the Housing (Northern Ireland) Order 1992, Article 161 of the Housing (Northern Ireland) Order 1981 and paragraph 37 of Schedule 11 to the Land Registration Act (Northern Ireland) 1970
  • a copy of a letter from the Association’s Solicitor confirming that the land is now in the Association’s ownership, the date of completion and the consideration

Consent to Mortgage Stage

After the lending body has made a firm offer of advance, the mortgage agreement and a copy of the loan offer should be sent to the Department to enable formal consent to the charge to be given. The mortgage agreement should make provision for endorsement by the Department as follows:

“The Department for Communities hereby consents under Article 13 of the Housing (Northern Ireland) Order 1992 to the within mortgage.
A Senior Officer of the Department for Communities
Dated this         day of      20xx.”

For private financing taken out by Housing Associations through a trustee arrangement, the following recommended provision for endorsement by the Department should be included in the mortgage agreement (subject to specific conditions of contract);

“The Department for Communities hereby consents under Article 13 of the Housing (Northern Ireland) Order 1992 to the creation by <INSERT> Housing Association Limited (the Association) of mortgages and charges in the form annexed hereto relating to the properties listed in the Schedule hereto in favour of <INSERT> Company Limited, as Security Trustee, and in addition thereto all interests, costs and expenses.

In the event of any proposed assignment or transfer by the Security Trustee under this Mortgage and Charge to assign or transfer all or any part of its rights and or obligations under this deed the Department for Communities shall be notified not less than 60 days in advance and shall be informed of the identity of such proposed assignee or transferee and any such assignment or transfer shall be subject to the consent of the Department for Communities.

Further, in the event of any substitution of a lender or an additional lender being added to the Beneficiaries the identity of such lender shall be communicated to the Department and the inclusion of any such lender to the Beneficiaries shall be subject to the consent of the Department for Communities.

A Senior Officer of the Department for Communities
Dated this         day of      20xx.”
In order for the Department to be satisfied that the Association has fully considered the implications of a loan Associations should also submit, the information detailed in Housing Association Private Finance - Consent to Mortgage Charge.

Associations should be aware that the Department will be reviewing the documentation simply for the purpose of deciding whether to give Article 13 consent. The issue of Article 13 consent does not imply that the Department has endorsed or approved the documentation. The responsibility for assessing the risks associated with loans and development remains with the Association and more particularly the management committee. Private lenders will also need to make their own enquiries, and satisfy themselves that any risk is acceptable to them.

These procedures apply to privately financed schemes either where there is no grant aid or where the grant aid is provided by a public body other than the Department.  Schemes involving a combination of private finance and HAG, funded through NIHE (DPG), are dealt with in Scheme Approval.


Associations seeking private finance should know that the Department in considering applications for mortgage approval will normally apply the following criteria.


Associations should ensure that the schemes they are undertaking are:

  • within the permitted activities of a registered housing association as defined in Articles 3 and 15 of the Housing (Northern Ireland) Order 1992;
  • within their objects as set out in their rules;
  • within their borrowing limits

Financial viability

Associations should ensure that:

  • they will be able to repay mortgage loans and meet all costs of the scheme with no or minimal risk to publicly funded assets (by which is meant assets funded by Housing Association Grant or by any of those payments and loans listed in Schedule 2 to the Housing (Northern Ireland) Order 1992 under the heading “grant aided land”);
  • the scheme represents reasonable value for money;
  • adequate provision is made for repairs and improvements;
  • by undertaking a privately financed scheme they are not overstretching their reserves or risking financial instability

For more information on Financial Viability: Finance Guide

Capacity/ skills

Associations should ensure that:

  • they have the necessary skills/ specialist knowledge and resources required to develop a privately financed scheme;
  • they have the necessary resources to manage and/ or market the scheme and that there is sufficient demand to ensure a maximum voids level of less than 4%;
  • the needs of the people to be housed cannot be met adequately by private developers

For more information on: Void Management

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