In UK property development finance, the Floating vs Fixed Charge Ratio compares the value of floating charges to fixed charges held over a borrower’s assets. Fixed charges secure specific, identifiable assets such as land or buildings, giving lenders strong control and priority in repayment. Floating charges cover assets that change regularly, such as stock or receivables, allowing more operational flexibility but lower security. This ratio helps lenders assess the overall security structure and rank of claims, impacting risk and enforcement options in financing property developments across the UK.
This sits beneath Security & Ranking, introducing a more specific variant of the measure without changing its core interpretation. It is commonly considered alongside Debenture Coverage Ratio, as both are closely related measures used to assess similar aspects of performance or risk. In funding terms, Floating vs Fixed Charge Ratio is most commonly encountered in connection with Pre-Planning Land Loan within the property development capital stack.
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