Housing Association Guide Part 1 - Appendix 6Associations' Rules
Contents
1.01Restrictions 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.
1.02As Associations increasingly seek loan finance for their projects from private sector institutions, most will find:
a. 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
b. That their rules prohibit them from paying interest on any loan at a rate which exceeds that prescribed by Department of Finance and Personnel;
c. That their rules do not permit the giving of a floating charge over their assets.
1.03In order to facilitate such borrowing the Department has drawn up a model form of rule amendment, which Associations may choose to adopt.
2.01The model form (see Annex A) 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)
2.02The model form of borrowing powers is applicable to:
NFHA Model H. 11 1974 NI rules 18 and 45 (a)
2.03The 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.
2.04Associations 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.
3.01The requirement for the Department to forward the Association documents and cheque to the Registrar has now moved to the Association. The Department still requires the Association to send in a request for the rule change, details of what the change is and the proof that the Association’s board has approved the change. A cheque should no longer be sent to the Department. Once a decision is made and approved, a letter will be issued to the Association advising of the outcome. Please note that it is now the Association’s responsibility to forward all the required documents to the Registrar.
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