Tag Archives for " property developers "

New build completions soar as UK is on target to reach a million by 2020

The construction industry defies Brexit bashers on all levels

In 2015, the government set a target of building one million new homes by 2020. For three years, it looked like this target would be missed by a mile. Adding to the pessimism, the June 2016 vote to leave the EU was forecast to squeeze the life out of the construction industry by sucking out EU-born workers. Just two years after the EU referendum and two years before the target deadline, the industry is reporting a complete turnaround.

This article highlights the good news recently delivered by the Ministry of Housing, Communities and Local Government, and the Home Builders Federation (HBF).

New home completions soar in the UK

Reporting on the numbers of new home completions are soaring. In the fourth quarter of 2017, they hit 42,860. That’s:

• 7% higher than the third quarter figure
• A whopping 17% higher than the same quarter of 2016

Over the year, new build completions were 163,250. That’s 16% more than were completed in 2016.

New build starts are rising, too

The Ministry of Housing, Communities and Local Government figures also give an insight into the future:

• New builds start in 2017 were 162,180
• New build starts in 2017 were 5% higher than in 2016
• Crucially, new build starts increased by 5% in the fourth quarter compared to the third quarter

Though still below the peak of new starts (in the March quarter of 2007), new build starts are now 141% above the trough in the first quarter of 2009. And all sectors improved their performance in the final quarter of 2017 compared to the previous quarter:

• Private enterprise new build starts increased by 8%
• Private enterprise new build completions increased by 7%
• Housing association new build starts were 2% higher
• Housing association new build completions were 2% higher

The UK is now on target to build a million new homes by 2020

In its most recent industry report, the HBF says that the industry it represents is now on target to build one million homes by 2020. This should help ease the housing crisis in the UK, especially as the report also highlights that:

• Supply is now up 74% in four years
• Quality of build continues to improve
• Private sector builders are providing 50% of all affordable housing delivered

The construction industry is employing tens of thousands of new recruits

Contrary to the views of many experts prior to and immediately post the EU Referendum, the construction industry does not appear to be suffering from a shortage of workers, a fall in demand, or a collapse in values. Indeed, the HBF report also details how the industry is recruiting tens of thousands of new employees, as it gears up to deliver 300,000 new build completions each year by the mid-2020s. Discussing the report, HBF Executive Chairman Stewart Baseley said:

“The Government has quite rightly recognised the social and political need for them to address the chronic housing shortage we face. Housebuilders have risen to the challenge and delivered huge increases in supply, whilst providing increasing contributions to local infrastructure, amenities and affordable housing.

“At the same time, the industry has invested hugely in training, recruitment, and land to ensure it is geared up to deliver Government promises. The industry has also reacted decisively to reverse the slight, but unacceptable falls in customer service and quality, something that takes a commitment from board level down.”

Wages are rising in construction

As more people are recruited into the construction industry, and property developers begin to work more closely with local authorities (who now have a remit to release land and speed up the planning process), the Office of National Statistics has reported that wages in the industry are rising faster than in any other sector of the UK economy.

Average weekly wages are now £606, up by 5.2% since the EU Referendum. Bricklayers at small developers now earn an average of £42,034 per year, and in London, this can rise to around £90,000 per year.

The challenge for property developers over the next few years could be the shifting from building new homes in high volumes to selling them. Castlereach is here to help you overcome the sales challenge. Call the Castlereach team on 0207 923 5680, and discover how we reach the property investors that will help your property sales numbers keep pace with your new build start and completion targets.

Live with passion

Brett Alegre-Wood

Why all UK property developers must watch Manchester

A council vs developer legal battle could challenge developers across the country

Property developers across the length and breadth of the country should be monitoring the developing affordable housing row in Manchester. It’s turning into a real fight between heavyweights.

In one corner are the property developers. In the other is the city’s Labour council. They’re squaring up for a fight, and the politicians have recently thrown a huge right hook. If it lands and turns out to be a knockout blow, the tactic could have ramifications for property development across the UK.

What is the argument?

There’s a housing crisis in the UK. Property prices and rents are rising, and for many, they are not affordable. The government is pushing property developers to build more new homes, with a target of 300,000 every year by the mid-2020s. The demand for housing has helped to push prices up (despite Brexit, which ‘experts’ said would crash prices by as much as 30%).

The government’s solution to the issue of affordability is to request that developers build a portion of every development as affordable housing, for both renters and homeowners.

In Manchester, developers say that the cost of development doesn’t allow them to build affordable housing. According to a report in The Guardian, “none of the 14,667 homes in big developments that have been granted planning permission in the last two years are set to be affordable”.

What is Manchester Council’s right hook aimed at property developers?

Manchester Council is trying to force property developers in the city to build affordable homes on their developments. The latest tactic, if successful, could be a hammer blow to the industry. The council (consisting of 95 Labour councillors and one Lib Dem) recently voted unanimously to demand more transparency from property developers. It wants developers to “make a fair contribution to affordable housing”.

What might transparency mean?

The council wants all property developers in the city to make their finances public. Crucially, this includes viability assessments. Can you imagine being forced to make such documentation public? It’s commercially sensitive. Publishing such information is tantamount to telling the world your business strategy and costing structure. I don’t know many businesses in any sector that would be prepared to make public this type of information ahead of execution.

Why are no affordable homes being built in Manchester?

Cost. It’s not viable to build affordable homes. Until now, Manchester’s council leadership has argued that it carries out a comprehensive examination of the viability assessments before giving the final rubber stamp to every development. With this vote, the backbenchers have now got their wish.

What are the next steps?

Here’s where it is going to get interesting. Manchester’s council leaders have already conceded that it may not be possible to force developers to publish such commercially sensitive documents. They have warned that it could result in a legal battle. If this is the case, development could slow while the two corners slug it out in the courts.

Unless a practical solution is found, and if Manchester’s council continues on the path towards full disclosure of all a property developer’s confidential strategic documents, it’s possible that Manchester’s affordability situation will worsen, not improve, as development is put on hold while legal battles are fought. This could harm property developers, the council, homebuyers, and renters in Manchester.

If this fight does go the whole 12 rounds, the outcome could have a big impact on property development in all of the UK’s towns and cities.

We’d love to hear how property developers think this could affect their business and development plans. If you are forced to make public your viability assessments, would you rethink your development strategy? Call the Castlereach team on 0207 923 5680, and together let’s give momentum to the views of the property development community.

Live with passion

Brett Alegre-Wood

The Spring Statement: little sparkle, but no cyanide for property developers

A little more meat on the bones of housebuilding in the UK

Philip Hammond’s Spring Statement held few surprises for property developers in the UK, but it did provide some points of interest nonetheless. Chief among these was the announcement of more money for affordable homes in London, and the release of the initial findings of the land banking review, led by Sir Oliver Letwin.

Hammond confirms 300,000 homes-per-year target

In last year’s Autumn Budget, Hammond announced a programme of investment totalling at least £44 billion over the next five years. The government’s announced goal was to increase the supply of new homes to 300,000 per year by the mid-2020s. In the Spring Statement, Hammond put a little more flesh on the bones and told us how the government are progressing towards this target. He confirmed that:

• 44 areas are bidding for a slice of the £4.1 billion Housing Infrastructure Fund
• The government is to double the size of the Housing Growth Partnership, to £220 million

More money for housing in London

Hammond also announced an extra £1.67 billion for London, targeting the building of 27,000 more affordable homes by 2022. That appears to be a fairly sizeable injection of money, and one that means the building of almost 100,000 new affordable homes will be underway in the capital by 2021.

In response, London’s mayor, Sadiq Khan, said, “The housing crisis is the capital’s biggest challenge and we are still not seeing the level of investment that we need if we want to tackle it head-on. We still need more and devolved investment, we need an overhaul of powers to assemble unused land for homes, and we need councils and City Hall to be freed to build many more affordable homes ourselves.”

Abolishing stamp duty for first-time buyers – creating a lopsided market?

The chancellor said that 60,000 first-time buyers had been helped by the abolition of stamp duty for first-time buyers announced in the Autumn Budget. That’s good news.

However, in response, some have argued that the middle classes and those further up the property ladder are now at a distinct disadvantage. As reported in PropertyWire, Shaun Church, director at mortgage broker Private Finance, noted:

“With no sign of stamp duty reform for those further up the ladder, the prohibitively high cost of moving is continuing to dampen activity at the upper end of the property market. While this might not seem like a problem for ordinary buyers, a healthy market requires plenty of movement at all rungs of the ladder. A blockage at the top will have a trickle-down effect, as those who want to upsize may struggle to find any properties available, which will, in turn, impact those further down the chain.”

Rory O’Neill, of Carter Jonas, echoed this sentiment:

“We continue to question where the support lies for second-steppers, many of whom are desperate to graduate out of their starter home and into a grown-up property. They constitute the increasingly squeezed middle class, and we hope that a proportion of the much-needed new homes that Hammond continues to pledge will be adequately sized and ring-fenced for these forgotten homeowners looking to secure enough space in which to bring up a family.”

The land banking review – initial findings

In the autumn, Sir Oliver Letwin was appointed to conduct an independent review of the issues surrounding housebuilding in the UK. His remit was to explore and explain “the significant gap between housing completions and the amount of land allocated or permission in areas of high housing demand, and make recommendations for closing it”.

Sir Letwin has sent a letter to the Chancellor and Secretary of State for Housing, Sajid Javid, detailing his initial findings concerning land banking. In the letter, Sir Letwin describes the reasons why the gap between housing completions and planning permissions exists. He notes these as “a web of commercial and industrial constraints” and highlights:

• limited availability of skilled labour;
• limited supplies of building materials;
• limited availability of capital;
• constrained logistics on the site;
• the slow speed of installations by utility companies;
• difficulties of land remediation; and
• provision of local transport infrastructure.

However, Letwin doesn’t think these are the primary constraints of building more new homes. He concedes that they all play a part in “the velocity of build-out” (how fast new homes can be built), but says that it is his belief that “The fundamental driver of build-out rates once detailed planning permission is granted for large sites appears to be the ‘absorption rate’ – the rate at which newly constructed homes can be sold into the local market without materially disturbing the market price.”

Initial responses to Letwin’s letter have been mixed.

It has been called both a “fumbling in the dark”, with Letwin ignoring (for the moment) “the contribution made to housing delivery by small and medium-sized housebuilders and the absorption rates of smaller sites” (Sarah Fitzpatrick, Berwin Leighton Paisner), and an approach that is “very well-reasoned” (Melanie Leech, BPF).

In conclusion, the Spring Statement delivered what we may have expected to deliver: little sparkle, but, thankfully, no cyanide for property developers.

We’d love to know what you think, too. Call the Castlereach team on 0207 923 5680, and together let’s give momentum to the views of the property development community.

Live with passion

Brett Alegre-Wood

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

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 25^th 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

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

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

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 21^st 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

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

Telford Homes – Making London accessible for investors

A local property developer offering exceptional quality and value

Telford Homes is a dream property developer for those investors buying in London. Delivering around 500 to 600 new homes each year, many for the investment market, it concentrates on building high-quality, affordable properties in non-prime locations. It has a defined strategy, ambitious expansion plans, and a large development pipeline.

Telford Homes develops sites and builds homes to stand the test of time, supporting its ambition of creating places for future generations.

The London property developer

Telford is a property developer born and bred in London. The three directors who founded the company in 2000 have an enviable history of successful housebuilding behind them. For Telford, its success is not only about the product it produces, but about the people who deliver it. The company now directly employs around 250 people, each with a genuine passion for the business of building sustainable homes.

It started by concentrating its efforts in East London, but in the last, two to three years has expanded south and west.

Building local in London

Telford’s business model is very easy to understand:

• It acquires land in parts of London that are evolving. Specifically, it seeks up-and-coming locations, which benefit from regeneration, great transport links, and good town centres. Places such as Camden and Islington.
• It then uses its local knowledge to work with planners and provide imaginative development concepts.
• The next stage is the design of sites and homes. The company excels here, its efforts helped by the architectural backgrounds of many of its employees and its enthusiasm to work with local communities, engaging and communicating with local people to discover what makes an area ‘tick’.
• The construction process begins, with in-house expertise focused on delivering more reasonably priced homes that still benefit from the high-quality build and finish standards set by larger developers.

It’s unsurprising that two-thirds of Telford’s properties are snapped up by investors, with the remainder built for owner-occupiers and tenants.

Creating value for property buyers

Telford has an ambitious expansion plan which will see it double its output from the current level of around 500 to 600 homes per year. Already it has a pipeline of 4,000 new homes and adds value to each project it undertakes by:

• Buying land in the right location
• Accepting planning risk
• Controlling the whole development process
• Selling off-plan to reduce risk
• Driving capital returns through an expanding build-to-rent strategy, and working with institutional investors
• Delivering excellent customer service

This last point is key. It currently has a 99% customer recommendation rate. It achieves this not simply through the quality of the homes it builds and communities it develops, but by providing for easy and regular communications with its customers and investors around the world. It creates places to live which live up to the expectations of investors and homeowners, offering a product and service with exceptional value for money.

Current Telford development projects

Telford is developing several sites in London, with much more planned. These offer investors exciting opportunities to purchase property in some of London’s most sought-after up-and-coming locations. Here are two such developments, worthy examples of Telford’s offering:

City North, London N4

The City North development is found at the centre of vibrant North London. It’s an award-winning development on the edge of Finsbury Park, benefitting from fantastic transport links that make the commute to the City or West End just 15 minutes. This mixed-use space provides for incredible lifestyle – close to work, with exceptional local amenities, including great schools and 110 acres of parkland to enjoy.

Here, Telford is building a number of apartments that benefit from specifications expected of far more expensive properties in prime central London locations. These include:

• 24-hour concierge service
• The Pavilion landscaped roof garden
• Private residents’ roof terrace on 10^th floor of The Linear building
• Private residents’ Wi-Fi Lounge
• High-gloss white, handleless fitted Kitchen units from London designer Urban Myth
• Fully integrated Bosch appliances: stainless steel oven, induction hob, extractor hood, dishwasher, fridge/freezer, microwave and washer/dryer
• Pure white Villeroy & Boch bathroom suites with chrome taps and mixers
• Bath with thermostatic shower mixer and glazed screen (where applicable)
• Kitchen, living room and hallway in engineered timber flooring
• Bedrooms carpeted in a warm, neutral colour tone
• Video entryphone system to all apartments
• Monitored CCTV system

Manhattan Plaza, London E14

Manhattan Plaza is perfect for city life. This location is in striking distance of Canary Wharf and the O2 Arena, and Telford are building an exclusive collection of one, two, and three-bedroom apartments, penthouses, and townhouses here. Stratford is only 10 minutes away.

Residents here benefit from stylish homes and exceptional specifications, which include:

• Concierge service
• Private residents’ gymnasium
• Two landscaped residents’ rooftop gardens
• Outside space to all apartments
• Basement car parking
• Video entryphone system to all apartments
• Looped CCTV system to communal areas
• All properties are finished with high-quality fixtures and white goods, including bespoke cabinetry, Smeg appliances, and stone worktops.

These two developments are only a couple of examples of Telford’s quality sites and properties available today, with many more in the pipeline.

Live with passion,

Brett Alegre-Wood