A floating charge is a flexible form of security that applies to a class of assets which may vary over time, such as cash, stock, or receivables. Common in UK property development finance, it allows developers to continue trading and dealing with those assets until the charge “crystallises” upon default, insolvency, or another trigger event. Once crystallised, the floating charge becomes fixed, giving the lender control over the assets. Floating charges are typically used alongside fixed charges within debentures to offer comprehensive lender protection.
In practice, a floating charge gives lenders additional protection over assets that support the wider development business but cannot easily be secured through a specific asset charge. This is particularly relevant where a developer holds fluctuating cash balances, rental income, trade receivables, or other working capital assets that change throughout the project lifecycle. As part of the broader Securities and Collateral framework, a floating charge is often combined with a Fixed Charge to create a more comprehensive security package, enabling lenders to secure both identifiable property interests and the changing assets that support ongoing business operations.
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