Could-modular-housing-be-the-future-of-property-development-in-the-UK

Could modular housing be the future of property development in the UK?

Benefits for all, now prefab building technology has advanced

With the UK experiencing a worsening housing crisis, modular homes are seen by many as the future. With faster delivery times than traditional bricks and mortar properties, these factory-built homes that are erected on-site could help the government deliver on its promise to build 200,000 new homes every year, rising to around 300,000 within a decade.

A new generation, a new style of prefab?

The idea of factory-built homes is not new, of course. They were first used to solve the housing crisis after the end of World War II. In around 10 years, 600,000 prefabricated homes were built to cope with the return of troops from abroad.

In the 1960s, as society changed, and people left their family homes at a younger age, demand for homes again exploded. In one year alone, 1968, the UK delivered 525,000 new homes. Many of these were prefabricated.

Today’s modern prefabs offer a range of benefits above their predecessors. These modular homes:

  • Are constructed using longer-lasting galvanised steel frames
  • Benefit from better insulation, giving greater energy efficiency and better soundproofing
  • Include services and kitchens – almost ‘plug and play’

Modular affordable options

One of the arguments against modular homes is that they are as expensive as traditionally built properties. However, some developers are building modular homes that allow the buyer to decide the level of fixtures and fittings. This allows the buyer to buy a ‘shell’, and finish the internal to their own likes and dislikes. This reduces the cost of their initial purchase and is an idea applauded by London Mayor Sadiq Khan, who has promised to build 90,000 affordable homes in double-quick time.

This versatility of home styling makes modular homes ideal for inner city living, where there is a diversity of residents – young professionals, families, and older downsizers – all searching for their perfect home.

The downsides of modular homes?

Modern technology has improved today’s modular homes by leaps and bounds when compared to those of the 1940s, 50s, and 60s. They can be built faster, with a higher quality, and produce less waste.

However, the overall cost of modular homes is not cheaper than traditional homes, and financing of developments can be difficult. Even so, large-scale investors like Legal & General are teaming up with developers and housing associations to invest in modular homes.

Investment funding is a godsend to many developers building modular. This means less of their own money must be put down upfront to order the properties.

The big benefit for property developers

The biggest benefit for property developers is the reduced delivery times. This means they can sell or rent quicker, thus achieving positive returns sooner. There is also a lower reliance on a scarce traditionally skilled labour force.

Faster, lighter, and more eco-friendly

The benefits of modular building rack up:

  • Development delivery times are greatly reduced with modular building methods – some homes have been made ready for buyers within six days after the site has been prepared
  • Using either timber or light steel panels, buildings are lighter, too
  • Deliveries of building materials are slashed, reducing traffic congestion and pollution
  • Modular building is leaner and greener

Such benefits make developing inner-city sites – where brownfield costs are sending developers skybound – a more viable proposition. Developers can more easily build upwards, and this will mean a more effective ROI on the cost of land.

Made to measure for the next generation of development

Some modular manufacturers are already examining modular building as a solution to the next phase of inner city development – building on existing roofs. The Mayor of London has proposed that two storeys can be added to buildings where the skyline would not be adversely affected.

A modular rooftop building of 1,200 square feet is estimated to cost around £200,000, and like other modular designs can be customised to the buyer’s/occupant’s wishes. Once in place, it can be sold or rented at market value – and in London, this could provide an exceptional route to help relieve the housing crisis in the capital while boosting developer profits. Such a solution, where so many benefits, must surely be applauded.

Call the Castlereach team on 0207 923 5680 and let us help you connect with the investors that can make a real difference to your sales – investors who applaud the advance of modular housing developments.

Live with passion

Brett Alegre-Wood

Brownfield-costs-are-sending-property-developers-sky-bound

Brownfield costs are sending property developers sky-bound

Could rooftop development be the key to wider margins for developers?

The cost of brownfield land is rising strongly across the UK. This is adding to the cost of developing new build. However, the government has relaxed restrictions on building new homes on top of existing buildings. This could create opportunities for development in prime city locations. According to one source, there is potential for 180,000 new homes to be built on London’s rooftops alone.

In this article, we examine what this combination of higher land prices and relaxed rooftop regulations means for property developers.

Brownfield land prices soar in most of the UK

While the value of English greenfield land increased by 1.4% in the last quarter of 2017, brownfield land piled on 4.9% – and 9% over the whole of 2017. The increase was especially strong in Birmingham, where there is high demand from both residential and commercial property developers. As High-Speed rail services edge nearer to their start date, Birmingham is becoming an attractive destination for businesses relocating from London in particular.

Where is brownfield land in most demand?

Developers are competing aggressively for land near transport hubs, and in locations where transport links make travel to nearby city centres and centres of employment easier. With demand for new homes propped up by low interest rates and government moves to help first-time buyers, it’s likely that brownfield land values will continue to increase through 2018.

Is the government being realistic in targeting reduced development times?

Other moves by the government may cause developers to reconsider plans to buy brownfield land. Housing Secretary Sajid Javid has hinted that the government is preparing to take a tougher stance to ensure property developers speed up delivery of new homes. Measures may include compulsory purchase orders and planning permissions that last only two years.

Developers are suffering from a shortage of skilled labour. This could play a big part in the decision-making process when considering brownfield land packages. If the purchase is accompanied by restrictive building times, then developers could turn their backs on brownfield land. The result could be a reduction in the number of new homes built, with government policies working against its aim of building at least 200,000 new homes each year.

At present, the purchasing of brownfield land has not slowed, but the industry will be watching closely to see how this situation progresses in response to any new government measures.

If you can’t build sideways, build up

The government is to change planning policies to make it easier for homeowners to build upwards, providing such building does not destroy the surrounding skyline. The concept is to help relieve the pressure on open spaces. Under the new guidelines, two storeys could be added to existing residential, office, and retail buildings.

Sajid Javid said, “The answer to building new homes isn’t always an empty plot, or developing on a derelict site. We need to be more creative and make more effective use of the space we already have available. That’s why we are looking to strengthen planning rules to encourage developers to be more innovative and look at opportunities to build upwards where possible when delivering the homes that the country needs.”

Room at the top for hundreds of thousands of new homes

Apex Airspace, a specialist in building on top of existing buildings, has estimated that 180,000 new homes could be provided in London by building on top of existing properties. The most cost-effective way of developing such opportunities may be to build modular properties off-site and then hoist them into place. This will not only keep costs to a minimum but with many such new homes being able to be put in place within a day, disruption to daily life around these new build properties would also be minimised.

Property investors from around the world will be keen to see how these plans develop and to take advantage of investment opportunities as they come along. The demand for inner city living from renters in the UK is a major reason why property investors are keen to buy in these locations. Any policy and regulation change that makes it easier to buy such property will be welcomed.

Call the Castlereach team on 0207 923 5680 and let us help you connect with the investors that can make a real difference to your sales.

Live with passion

Brett Alegre-Wood

What-UK-property-developers-need-to-know-about-GDPR

What UK property developers need to know about GDPR

Nine steps to prepare for the data protection shake-up in 2018

Brexit will change many things, but one thing it won’t change is the much tougher data protection regulations that come into force on 25th May 2018. These new rules will affect all businesses in the UK, whether they trade in Europe or with European consumers, or not.

Here we look at the five things all UK property developers need to know about the General Data Protection Regulation (GDPR), and how to be prepared for when it comes into effect.

What is the GDPR?

GDPR is the regulation that will now dictate how personal data must be handled. It is likely to impact all businesses, public bodies, and individuals in Europe. It could also lead the way for data protection standards across the globe.

Consumers will have the right to access the data that you hold on them. They can request you change it or delete it. The GDPR is going to change the way you communicate with your customers, how you collect their data, how you keep it, and how you use it.

The five things you need to know about GDPR

1.    If you don’t comply, you better be ready for a hefty fine

If you don’t comply with the regulations, you could be fined up to £20 million, or 4% of your turnover (whichever is higher). It’s a sanction that you’ll want to avoid.

2.    Consumers will be able to sue you more easily

It’s going to be a lot easier for individuals to sue you where they believe their privacy has been invaded. Some experts are predicting an explosion on civil lawsuits against organisations.

3.    If you breach the regulations, you will have to say so

No more trying to keep data breaches quiet. If a breach occurs, you will have to tell the Information Commissioner’s Office (ICO) within 72 hours. And if the breach could cause harm to an individual (for example, potential identity theft), you will have to tell them, too.

4.    You must be ready to handle consumer requests

You will have to tell consumers about GDPR and what it means to them in clear language. You will need to tell them about their rights to access the data you hold about them. You will need to have procedures in place to do all this.

5.    You must have a reason for collecting data

You will also need to have a legal reason for collecting and using personal data, and when it is used, it must comply with this reason. Consumers must have given you consent to use their data in such a way. For example, if a consumer has given you permission to mail them about upcoming off-plan properties, you can’t contact them about mortgage deals.

How do you prepare for the GDPR?

Here are nine steps to ensure you are fully prepared for the GDPR:

  1. Make sure you know what GDPR is, and how it impacts you.
  2. Make an inventory of all the personal data you currently hold, why you hold it, and if it is still needed.
  3. Review your privacy notices and update them. Let staff know about the GDPR and its implications. Update privacy rights for individual consumers and service users.
  4. Plan how you will handle access requests.
  5. Review your procedures regarding consent, legal reasons for data collection, and use. Ensure they meet with the restrictions under the GDPR, and update systems to obtain and record consent to be GDPR compliant.
  6. Ensure that you make data privacy a key factor in all future work.
  7. Ensure you have systems, processes, and procedures in place to handle mandatory reporting of data breaches.
  8. Confirm if you need a data protection officer, and ensure that if you do, you appoint someone with the relevant knowledge, support, and authority to do the job.
  9. If you process data across borders, make sure you know which authority you should report to (in the UK, it is the ICO).

Here at Castlereach, we can provide access to a huge bank of property investors around the world. They are lining up to invest in off-plan property opportunities in the UK. And our systems are already GDPR compliant. Call the Castlereach team on 0207 923 5680 and let us help you connect with the investors that can make a real difference to your sales.

Live with passion

Brett Alegre-Wood

Could-co-living-be-the-solution-to-UK-homes-affordability-issues

Could co-living be the solution to UK homes affordability issues?

Communal developments are the homes that property investors want

It’s well documented that affordability issues are embedded in the UK’s housing crisis. People can’t afford to buy where they want to live. Affording rent is getting tougher, too. These issues are no more evident than in London. Happily, Mayor Sadiq Khan has come up with a plan to solve London’s homes affordability issues. He’s raised the target for new home delivery from 42,000 to 66,000. His London Plan will most surely be great news for property developers and people looking for homes.

Unfortunately, as those in the property development industry could have told Mayor Khan, finding land to build on and getting the necessary permissions to do so is rarely easy – even with planning requirements being eased.

We think that there’s a far simpler solution to the question of affordability in the UK property market, and it’s one that the market would welcome: property developers should build more co-living units.

The target is ambitious, but the how is undefined

The 66,000 homes target is ambitious. If it is delivered, it may influence the housing market in London. But it’s the detail that is disturbing for many. Mayor Khan wants 35% of properties on new developments to be affordable housing, and where the development is built by a strategic partner, this requirement rises to 60%.

The London Plan also emphasizes on smaller sites, delivered by a broader range of developers. What doesn’t the London Plan do is encourage co-living developments – surely a strategy that can be executed to provide the volume of affordable homes that Mayor Khan wants to see?

Co-living is a lifestyle choice for many

Once upon a time, people wanted their separate space. They wanted a home they could call their own. The reward of living in a capitalist country and working long hard hours. Like the saying says, “A man’s home is his castle”. But times are changing. A man’s castle doesn’t necessarily mean an individual home today.

Increasingly, people are willing to share amenities. Why? Because their lifestyle dictates that there isn’t a need for kitchens and lounges. In particular, young professionals and first-time renters – the hardest hit by affordability issues – are happy to rent co-living apartments, preferring to spend their money on their lifestyle rather than an empty space in an apartment in which they only spend a few hours each day.

What do people really want from a home?

People want some basics from a home. These basics include a private bedroom, bathroom, and cooking facilities. A space to put their treasured belongings, and a table at which to eat and work. Beyond this, people are far more willing to share areas such as television and games rooms, laundry facilities, and full-size kitchens. There’s a communal feeling about such homes that people desire, too.

In addition to these amenities, if co-living also means on-site gyms, public spaces and roof gardens, and 24-hour security, all the better. Smaller-style studio apartments that deliver this type of living are housed in hostel-type properties. Residents also have a further benefit: all costs are included in the rental price.

The son of a friend of mine has recently moved to such a property in London. To live in a traditional apartment in the same area, he would probably have to pay what he does just on the rent. On top of this, he would have council tax, utility bills, broadband costs, and so on to pay. And a daily gym session would probably cost him another £100 per month. This is a perfect example of how co-living apartment blocks can deliver the affordable homes that Sadiq Khan demands, and which the UK needs.

The advantage to developing co-living

Co-living quarters offer developers the opportunity to utilise space more effectively, delivering more homes. Different types of units exist side by side – single rooms, studio apartments, and larger two-bedroom mini-apartments. This mix of property type caters to a wider community, from student to young couples and small families.

It means people can afford to live near to where they work, in modern, secure, and functional homes. And because co-living spaces make it affordable to live near to work, commuting is reduced – pollution will fall.

First-time renters might further benefit from apartments that are furnished – another cost saving.

Additionally, people are becoming more mobile, as employers require workers to locate to different offices. Co-living apartments in hostel blocks are leased on very short-term agreements, aiding flexibility of relocation.

As you can see, there are advantages for developers, residents, and the environment.

Is co-living the answer to urban population density?

The UK is undergoing a major shift in living patterns. Homeownership is decreasing, while the private rented sector is growing rapidly. This isn’t simply due to affordability, but to lifestyle choices and the desire of millennials to retain mobility.

Cities the length and breadth of the UK are experiencing an explosion in inner city and city centre populations. Co-living, offering privacy when desired and the sharing of common areas, could be the solution to the affordability issue that the politicians cannot solve.

We’ve got investors lining up to invest in co-living properties. Call the Castlereach team on 0207 923 5680 and let us help you connect with them.

Live with passion

Brett Alegre-Wood

4-themes-that-could-affect-property-developers-through-2018

4 themes that could affect property developers through 2018

The factors that could affect property development plans

When developing business plans, property development can be one of the most difficult industries to manage. There is a host of internal factors that affect business, and then there are numerous external factors. Even the weather can play havoc with the best-laid plans. Now that 2018 is underway, we thought we’d outline the themes that could affect property developers for the rest of the year.

1.    Inflation and interest rates

There’s going to be a lot of discussion about inflation and interest rates this year.

The fall in the exchange rate prompted by the vote to leave the EU is still filtering through in the form of higher inflation. Wage increases are not keeping pace with higher prices, and that’s putting a squeeze on people’s finances and the ability to buy property. As the year progresses, however, forecasts are for inflationary pressures to recede.

There will be pressure on the Bank of England to raise rates again to fight rising inflation. Back in December 2017, Bank of England Governor Mark Carney was forced to write a letter to the Chancellor of the Exchequer to explain why inflation was more than 1% above the target rate of 2%. However, while there is pressure to raise interest rates, it’s unlikely that the Bank of England will do so aggressively when the economy is not as strong as hoped.

In any case, it’s likely that competition in the mortgage market will keep mortgage rates low.

Overall, then, with inflation likely to recede later in the year and mortgage rates likely to remain low, this combination should be neutral for property developers in the short term, and more positive in the longer term. On a far brighter note, the low level of the pound means that UK property offers exceptional value for overseas investors, and foreign investment flows could increase as the Brexit negotiations progress.

2.    There could be more new homes on the market, but overall supply could remain unchanged

The government wants housebuilders to build more new homes. In 2016/17, housebuilders completed 184,000 new builds. It should increase further in 2018, as moves to make planning permission easier and smoother start to have an effect.

However, according to the latest RICS survey, there are fewer newly registered homes for sale with estate agents than a year ago. In fact, this number has now fallen for almost two years. However, as the year progresses, RICS expects supply to increase.

In the early part of 2018, fewer homes for sale with estate agents should be good news for property developers. As we move through the year, and the squeeze between wages and inflation eases, it may be that demand picks up, and the extra supply on the market is more easily absorbed.

3.    Landlord demand may decrease, while first-time buyer interest increases

The Council of Mortgage Lenders expects demand from landlords to slow in 2018. It expects landlord purchases to fall to 80,000 this year, as investors are put off by higher property taxes. However, the removal of stamp duty for most first-time buyers could increase activity from this sector, making up for the fall in landlord purchases.

4.    Development will continue to move upward

City centre and inner-city properties are likely to remain in demand, with investors and homebuyers equally keen in the market. But with land at a premium, developers will continue to look skyward and build taller towers. The skyline of the UK’s major cities is therefore likely to get taller, as developers build for all target buyers on land in scarce supply.

What do you think will be the major challenges for property developers in 2018? Call the Castlereach team on 0207 923 5680 and let us know. Together, let’s make property investment in the UK a better proposition for all.

Live with passion

Brett Alegre-Wood

Smart-things-property-developers-are-doing-to-sell-more-homes-in-2018

Smart things property developers are doing to sell more homes in 2018

Five smart things to include in new build homes

People want to feel safe, secure, and in control of their home. It is easier today than it has ever been, and go-to property developers are thinking ‘smart’ to sell more homes. Today’s tech-savvy renter or owner wants to connect to their home. The Internet of Things (IoT) and smart home technology make this connectivity a reality. Millennials are happier to spend more to rent or buy a property that benefits from being ‘smart’.

This article examines the top smart technologies sought by today’s homebuyers, renters, and property investors. Combining these into property design could help property developers sell more homes at higher prices.

1.    Smart heating

Energy consumption is one of the top concerns of the modern resident, and smart meters help to monitor and control energy use and utility bills. However, this is not enough today. Millennials want to be connected to their thermostats, with smart appliances learning the resident’s preferences over time.

Smart thermostats should improve the living experience and reduce energy costs, and that’s a powerful message when selling a property.

2.    Smart leak detection

Homes are full of pipes and moving water and gas. Developers are used to providing safety equipment such as fire alarms and smoke detectors, but should they go further and provide a complete leak detection package?

Smart leak detection systems monitor plumbing. They ensure that any leak is detected automatically, and an alarm raised immediately. People who are out of the house can disconnect the water supply, a remedial action that could save hundreds or even thousands of pounds in water costs.

Additionally, moisture build-up can be prevented, and mould and mildew problems eliminated.

3.    Smart kitchen solutions

Anything that makes the kitchen a more streamlined experience should help sell homes. What might the smart kitchen include? Here are a few ideas:

  • Smart fridges that allow the resident to display their calendar, play their favourite music, and monitor use of groceries, ordering foodstuffs automatically.
  • Smart waste bins with barcode swipes. The barcode of a package is swiped on its way into the bin, and the item is automatically added to the shopping list on the resident’s shopping list app.
  • Smart coffee machines, allowing the resident to connect as they approach home, so a freshly brewed coffee is waiting when they arrive.
  • Smart kitchen memos, enabling family members to leave messages for each other while connected remotely.
  • And, of course, Wi-Fi-connected cookers and ovens that allow the resident to heat up pre-prepared meals so that they are piping hot when needed.

4.    Smart doors and gates

Doors and gates that can be controlled remotely offer many advantages. When locked, gates offer extra security, but a locked gate also means that deliveries cannot be made, or house sitters cannot gain access. Being able to control gates and garage doors remotely mean never missing a delivery again.

5.    Smart home security

Today’s renters and homeowners are acutely security minded. Burglar alarms are a good deterrent, but only 40% of homes in the UK have them. And a third of these are never set when the resident leaves home. Wi-Fi-controlled security devices, which allow constant monitoring of the home, are a definite selling feature. Options that appeal to buyers and renters include:

  • Video doorbells
  • CCTV cameras around the home
  • Connected alarm systems with remote operation
  • Smart door locks, remotely controlled
  • Security lighting with motion detectors

In 2018, the trend for new homes to be built ‘smart’ is likely to gather pace. It should be easier for developers to sell homes that offer the above benefits to buyers, and property investors should find they can command premium rents when letting homes with these advantages built in. As the population of property buyers becomes increasingly tech-savvy, developers who sell these needs could see their sales numbers beat market averages.

To make sure your development sells, and sells well, call the Castlereach team on 0207 923 5680. Our partnership will help get your new build and off-plan development sales to where you need them to be, whatever the market conditions and whatever the politicians do.

Live with passion

Brett Alegre-Wood

What-the-new-leasehold-proposals-could-mean-for-property-developers-in-the-UK

What the new leasehold proposals could mean for property developers in the UK

Government plans lack clarity and could destroy purpose

Just before Christmas, the government said it would push forward with a reform of ‘unfair leasehold practices’. Following the announcement, the share prices of several property developers dropped on the London Stock Exchange. In this article, we examine the nuts and bolts of the government’s proposals.

New leases are now banned

With few exceptions, new leases of homes are no longer permitted. It means that:

  • Developers can no longer sell new build homes under leasehold agreements
  • Existing freehold houses cannot be sold under leasehold terms

However, if a developer is building on land that is subject to a lease, then leasehold houses can be built and sold. It might offer a way for developers to use third-party ownership to secure leasehold terms, while ultimately controlling the freehold. To ensure this doesn’t happen, the proposal will not apply where the lease is created after 21st December 2017.

How might shared ownership schemes be affected?

Shared ownership schemes have been one of the cornerstones of the government’s impetus to promote affordable home building in the UK. These pretty much rely on leasehold agreements in one form or another. Unfortunately, the government’s announcement didn’t include details about how these will be handled in the future.

For now, then, until there is more clarification in the proposals, it appears that shared ownership sales may become incompatible with the new system. It could make it more difficult for first-time buyers to get a foot on the property ladder.

Communal space under threat?

Another area where the government doesn’t appear to have thought through the proposals meaningfully is that of communal space. The government and local authorities have long since advocated for communal spaces – common areas such as gardens, bike sheds, cycle paths, green spaces, and so on.

These must be paid for. Not simply the space itself, but the maintenance and repair of that space. Ground rents and leasehold income has provided the funds to do so. With leasehold now gone, developers will be left wondering how maintenance bills will be funded. It could be that community groups or local authorities must dig deeper into their pockets to do so. It could mean that council tax rates rise higher and faster than previously, affecting all homeowners and renters.

Again, there’s work to do to overcome this hurdle.

Ground rents slashed to zero

Where new residential leases are allowed, ground rent must be set at a peppercorn rate – essentially zero. Again, this takes us back to shared ownership schemes. The government said that it would make sure that this proposal doesn’t affect such schemes. We can only take this as meaning there is going to be some complicated formula to work out what can be charged on shared ownership schemes.

The exemption proves the rule

All these new proposals to ban leases and make ground rents zero apply to new leaseholds, but not to existing leaseholds. Here, the government wants developers to extend existing compensation schemes, and provide better details about rights of redress to homeowners.

Part of these rights will include the right to buy their freehold or extend their lease under existing terms. It may include the right of first refusal, should a developer wish to sell on the leased land. This is likely to make it more difficult for developers to sell large parcels of such land, as each separate homeowner, or part-owner will have to be consulted first on an individual basis.

Freehold owners to be given more rights

People who currently own freehold properties, or will be buying freehold in the future, will see their rights about service charges brought into line with the rights of current leaseholders. What this means is that freeholders who pay a charge for services provided (for the maintenance of communal areas, for example) will be able to challenge the amount of charge levied.

What does it all mean for developers?

Existing leaseholders are likely to feel let down by these proposals, which do little to protect them from increased leasehold payments. Future homebuyers may welcome the proposals. But for developers, the picture is unclear.

Many of the above proposals are fuzzy at best, and ill-considered at worst. There will be a period of consultation to discuss many of the issues and so final legislation is likely to be somewhat different to the proposals put forward.

It’s too difficult to predict exactly how new home building and house purchase numbers will be affected, but lenders may become increasingly reluctant to extend financing on a product that may have significant ground rent attached.

On top of this, developers may need to go back to the drawing board and reconsider how their current and future developments are structured. Especially where those developments include substantially shared spaces.

The government keep saying they want to see homebuilding increase in the UK. Unfortunately, every policy they introduce seems designed to make it less profitable to build.

These proposals, clearly intended to remove or curtail massive jumps in leasehold terms and ground rents, might reduce the number of new homes built. And that could put more upward pressure on home prices, as developers seek to recoup costs quicker at the same time they are forced to restrict supply because of the lack of clarity surrounding these new leasehold laws.

How can developers beat the leasehold trap?

To make sure your development sells, and sells well, call the Castlereach team on 0207 923 5680. Our partnership will help get your new build and off-plan development sales to where you need them to be, whatever the market conditions and whatever the politicians do.

Live with passion

Brett Alegre-Wood

Sadiq-Khans-London-Plan-mean-for-property-developers

What could Sadiq Khan’s London Plan mean for property developers?

Have the goalposts for property development in the capital moved?

Sadiq Khan’s latest London Plan puts the spotlight firmly on new housing supply. It raises the target for new London homes from 42,000 to 66,000. More than half of these must be affordable homes. The plan creates a reliance on developers to build these affordable homes, but it could be that Mayor Khan’s plans are already unravelling. He has flexed his muscles in Barnet to put a stop to regeneration plans. Meanwhile, London Assembly Member Andrew Boff has called Sadiq Khan’s plans a “backwards approach” to the housing crisis.

Yes, London needs more affordable housing

A few would argue that London needs more affordable housing. But Mayor Khan’s target of 66,000 new homes, 43,000 of which should be affordable, looks like a giant leap. Especially as only 29,000 per year are currently being delivered in the capital.

The London Plan should make it easier for London’s borough councils to grant planning permissions. For example, a high-density housing cannot be used as a reason to deny planning permission. However, Mayor Khan can only intervene where certain conditions are met. One of these is that the scheme should have more than 150 housing units. And the plan’s regulations covering strategic industrial land (SIL) may already have cost London more than 10,000 new homes.

SIL regulations – what do they mean in London?

SIL could be a valuable source of space for new homes, but not with the new regulations contained in Sadiq Khan’s London Plan. It states that development proposals for uses in SIL other than industrial, storage, services, flexible premises for SMEs, and workplace creches and cafes, should be refused.

In other words, SIL cannot be used for residential building. The only way permission for residential can be granted is where the local authority will replace with like-for-like alternatives. It means that underused SIL is being lost to residential development purposes.

SIL regulations hit West London

According to London Assembly Member Andrew Boff, hundreds of hectares of vacant and underused SIL will be lost to developers. London’s boroughs would like to use this land to provide housing, but cannot do so because they don’t have the land to replace with like-for-like underused SIL!

Mr Boff conducted research and found that as many as 27,000 new homes could be developed on SIL in London’s 13 designated housing zones. Around 10,000 of these could be supported by SIL in West London boroughs, but these sites can’t be freed up for developers.

Sadiq Khan plays his power card

When the draft plan was launched, London’s Deputy Mayor Jules Pipe said it would not stifle development. He also stated that it would not undermine the viability of schemes. But, Sadiq Khan has recently refused planning permission for estate regeneration at Grahame Park in Colindale. His reason? It would mean knocking down 692 socially rented homes and replacing them with 435.

Barnet Council had approved plans in November. Now the housing association at the heart of the project must work with City Hall planners to redesign the scheme. Mayor Khan said of the project:

“This is a classic example of how not to do estate regeneration. I fully support improving social housing on this estate and across the capital, but this scheme falls far short of what I expect of London boroughs.

“As I have made clear in my new London Plan, estate regeneration projects must replace homes which are based on social rent levels on a like-for-like basis.”

The scheme as planned would mean knocking down the estate and replacing it with 1,084 homes. 60% of these would have been affordable, though not all these would have been for social renting. The affordable housing plans included social, affordable, and London living rents, and shared ownership properties. Only 431 of the new homes built would be offered for private sale.

What does all this mean for property developers in London?

Sadiq Khan’s London Plan is commendable in many ways. There is a need for greater numbers of affordable homes in London. But these homes may be best provided on largescale, underused sites. The rules on SIL are likely to hamper this ability.

Further, Kahn’s ability to meddle in local planning issues on larger-scale projects, such as in Barnet, could make developers think twice about undertaking such schemes. The sale of properties to the private sector isn’t simply profiteering – it is essential to support the development of lower-margin social and affordable housing.

As Andrew Boff summed up:

“Sadiq Khan’s London Plan has made it easier for someone to build a small block of flats in their back garden, but made it more difficult to build on a large area of wasteland”

It could be that we see more smaller-scale developments in London. Those in which the mayor can have no say. These are likely to include a very low percentage of social housing. In other words, Sadiq Khan’s London Plan may work against its intended purpose. Only time will tell, of course.

Whatever size of your development in London, as a property developer in the capital you can benefit from our access to natural buyers and an incredible investor database. Call the Castlereach team on 0207 923 5680. Our partnership will help get your new build and off-plan development sales to where you need them to be, whatever the market conditions, and whatever the politicians do.

Live with passion

Brett Alegre-Wood

Autumn-Budget-2017-What-does-it-mean-for-property-developers

Autumn Budget 2017 – What does it mean for property developers?

The UK property market news that affects property developers large and small

The Chancellor of the Exchequer Philip Hammond was more animated than I can remember seeing him previously. He even told some amusing jokes, before and during his Autumn Budget speech. Jovial references to the Prime Minister and cough sweets, driverless cars and Jeremy Clarkson being snubbed by Hammond and May. Who’d have thought? But, of course, it’s not Hammond’s standing as a stand-up comic that had us transfixed on the delivery of the Budget. Substance, not style, is what we wanted. Did we get it?

In this article, I summarise the main Budget measures that might concern property developers.

What did Hammond promise to deliver?

Philip Hammond stated that this Budget would be the ‘Housing Budget’. A Budget to deliver the environment that would solve the UK’s housing crisis. It would produce the means to build hundreds of thousands more new homes, fund the infrastructure needed to support the new homes and their residents, and release land necessary to achieve the vision. He would tackle land banking, and provide impetus to the first-time buyer market.

What did Hammond deliver?

The Chancellor made all the announcements that we’re becoming used to – an increase in the personal income tax allowance, diesel and petrol duties frozen, etc, etc. – but it was his measures on the housing market that we were waiting for. Here’s what he gave us:

  • £44 billion to help build 300,000 homes per year by the mid-2020s
  • £8 billion of financial guarantees to support private housebuilding
  • £2.7 billion extra into the infrastructure fund
  • £1.7 billion for transforming cities
  • £1.1 billion for urban regeneration
  • £630 million in a small sites fund
  • £34 million to train construction workers
  • £28 million for housing schemes in the West Midlands, Manchester, and Liverpool, aimed at eliminating rough sleeping by 2027

He also:

  • Committed to five new garden towns
  • Said that 1 million new homes would be built in the Cambridge/Milton Keynes/Oxford corridor by 2050
  • Announced a review had been set up to examine how planning permissions can be accelerated, specifically looking at land banking, with potential penalties including compulsory purchase of development land

But, admirable as all these measures are, the headline-grabbing announcement was the one designed to help first-time buyers.

Stamp duty scrapped for most first-time buyers

With immediate effect, first-time buyers paying £300,000 or less will no longer pay stamp duty. Those buying a first home in London for between £300,000 and £500,000 would only pay stamp duty on the amount above £300,000.

What does this all mean for property developers?

First, let’s look at that stamp duty announcement. While made to help first-time buyers, the actual effect could be muted. Where supply is already constricted, if extra demand comes in because first-time buyers are now more able to buy, property prices could push upwards. It will reduce the positive impact of the first-time buyer stamp duty exemption, while merely increasing house price inflation in the lower price band.

The money that has been committed to supporting infrastructure and regeneration is certainly welcome, and, with more powers of spending devolved, should help to free up urban land and enable development where people want to live. However, the actual impact will depend upon how local authorities interpret government policy: saying planning permission will be accelerated and making it happen are two different things.

It would have been good to see stamp duties reduced on more expensive properties, and the surcharge on additional properties is still a dampener on investment activity. However, the Chancellor could have been much harsher on foreign investors: the major announcement in this direction was the 100% council tax premium on empty properties.

The ambition to build more properties has been slowed down, and the £34 million investment for training new construction workers is most certainly welcome when so many developers are worried about losing access to EU labour when the UK leaves the EU. It could give developers the breathing space and resource needed to achieve building targets.

Building in cities, creating new garden towns and preserving the green belt should be applauded. The extra financial support is certainly welcome. However, the key to how successful these policies will be will be determined by the detail. How will the urban land be unlocked for development? One solution that is not being discussed enough if should we be building more purpose-built retirement developments. The UK population is getting older. By providing more suitable, quality homes for the silver-haired generation, and encouraging them to downsize, perhaps more homes for families could be released more quickly?

In summary

In brief, this is a Budget that addresses some concerns but doesn’t go the full nine yards. But, as always, government finances and the political climate didn’t allow a more radical Budget. So, a foundation has been laid. We must wait and see how it pans out.

To benefit from access to natural buyers and an incredible investor database, call the Castlereach team on + 44 207 923 5680. Our partnership will help get your new build and off-plan development sales to where you need them to be, whatever the market conditions and whatever the politicians do.

Live with passion

Brett Alegre-Wood

Marketing-your-off-plan-development-in-a-crowded-market

Marketing your off-plan development in a crowded market

Four steps we take to promote your property through the sales funnel

The market for selling off-plan property has become a little more stressed lately. Take Brexit as an example. It’s weighing on people’s minds. The media is not doing the market any favours, either. Every good news story (and there are a lot of them) is introduced with the prefix ‘despite Brexit’. It makes many homebuyers and investors hesitant to buy property because they perceive that we’re all waiting for the economy to implode because of Brexit.

Further, in some areas, especially those that are being regenerated, so-called market experts have started talking about a glut of new properties, as the number of transactions in the property market slows down.

Despite all this, we aren’t experiencing a big slowdown in interest from our investors. Why? Because just like we did through the Global Financial Crisis, when we market your property development we do so to make it stand out from the crowd.

Here are four things that we do to stay at the forefront of investors’ minds, remind them of the long-term benefits of investing in the UK property market, and promote your property to interested investors.

1.    Identify the appeal of a development to identify off-plan investors

How can you develop a marketing plan if you don’t know who the potential residents will be? When we examine new developments for their potential to sell, uppermost in our considerations is who will want to live there. We want to know who the development is aimed at. It means understanding the location, and its appeal to residents.

We gain a deep understanding of the fabric of the local economy and community. Will it appeal to young families, empty nesters, or single professionals, for example? Is it in a bustling area with an eclectic nightlife, or does the location offer benefits to those seeking a rural, more gentle way of life?

It’s not enough to say a property or development is an ideal investment; we must show why it is so. Our investor clients are long-term investors. They want to know that there will be demand for rentals as well as from homebuyers. When we know who the target residents are, we can show investors that demand. Most importantly, we can market your development to the right investors in our database.

2.    Support investment decisions with regular property investment content

Property investors want to feel loved. They want to know that their property investment company cares about them. And we do. So, we provide a wealth of online content to investors. Content that educates informs, and builds relationships. From videos to blogs to eBooks, our material is continuous and consistent.

We publish content that takes an investor (and potential investors) on a journey from considering investment in the UK, to deciding to invest in a specific location. Throughout this journey, we are gathering information about these investors and website visitors. The last piece of the puzzle, of course, is to market directly and selectively to the most interested investors – those who have travelled all the way through our sales funnel.

We’ve found that our blog content for investors (see the Gladfish Academy) is one of our most powerful marketing tools. We publish five blogs every week, and the Gladfish blog is ranked in the top ten of the best real estate investment blogs on the planet.

3.    Highlight what makes your development different

At the stage of direct marketing, we expand our message by highlighting why an area is so good for investment, to why your development is the prime property in its location.

We figured out a long time ago that to sell best, a development needs to offer something that makes it stand out from the crowd. We explain to investors the main selling points and features of your development. For example a sustainable community; features such as 24/7 concierge or residents’ gyms; proximity to transport hubs; or within catchment areas of great schools. We then link these features to the properties for sale and the target residents. It helps make your development stand out as a great investment proposition.

4.    Reiterate the financial benefits of investing in your development

Now that we’ve taken investors from concept to reality, we show them how the numbers could stack up. They’ve already become excited by the prospect of capital growth and rental income, but we find that when they see this potential in black and white, it cements their interest.

We provide a two-year cash flow projection and cover different scenarios within those projections – rising interest rates, void periods, and so on. The investor now has a deep realisation that we have taken the investment view, by helping them answer the investor’s golden question, “How much return could I make by investing in this property?”

Property investors are no different from other investors. They want to know why they should invest, where they should invest, how they should invest, and what their investment is likely to return. In a crowded and uncertain market, our approach stands out from the crowd. It’s this approach that helped us to continue to sell and grow our business through the worst of the GFC, and its why our investors aren’t concerned by Brexit, Trump, or any other banana skin that the politicians throw at the market.

You don’t have to suffer from media-induced apathy in the property market. Call the Castlereach team on 0207 923 5680. Our partnership will help get your new build and off-plan development sales to where you need them to be, whatever the market conditions.

Live with passion

Brett Alegre-Wood