The London commercial property sector continues to boom as demand for office and retail continues to boom buoyed by foreign investment and shoppers. The vacancies rate for larger store in London is at its lowest level for many years. This has caused a return of high rental premiums that means increased returns for the capitals landlords. This comes at a time when commercial property investment is looking like a good hedge bet against the spectre of inflation. With every increasing volatility in the metals markets as investor’s battle between great earnings ratios and instability many are turning to commercial property as the next best tangible asset class. However the rest of the UK commercial property market does not seem to be enjoying such a boom market. Many commercial landlords and property agents are thinking more about rent free periods than they are about rental increases.
Dilapidation repairs to commercial buildings
April 6, 2012
Business owners are often faced with a need for a base to operate their businesses, a commercial business premises. This could be retail, industrial or office space the two main options to acquire a business premises if through purchase or lease. The majority of businesses chose to lease their business premises. So just like renting a private house you usual look round the local business premises agent’s usually commercial surveyors. The other option is to retain the services of a commercial surveyor to assist you in the acquisition of your new business premises. This of course comes with a cost in the form of professional fees, many elect to do it themselves to avoid these fees. The issue with this is that the surveyor that will assist in acquiring your premises will have expert knowledge in lease negotiations. If a business owner elects to negotiate his own lease or in some cases retains a lawyer to help him there is still a gap in the process. One of the biggest problems that affect business tenants is dilapidations. If you take on a least on a business premises you may find that under the terms of that lease you as the tenant have certain legal responsibilities. The two that often catch out the unsuspecting tenant are dilapidations and a responsibility to maintain statuary requirements. The responsibility to maintain statuary requirements sounds harmless enough but could like dilapidations land a business tenant with some costly bills from building or mechanical and electrical contractors. You may find you have signed a lease that requires you to alter the businesses premises to keep up with modern building regulations, fire regulations or the disabled access regulations. These requirements could land you with invoices for building works running into tens of thousands of pounds. Dilapidations can be equally onerous, if you move in and on week two find a leak on the roof. Your friendly building contractor informs you that the whole roof needs replacing you call the landlord and you may not like his response. He may inform you to check the terms of the lease and inform you that it is now your responsibility to pay for the twenty five thousand pounds that it will cost to replace the roof. You may also find that the landlord is within their rights to serve you with a notice for non compliance to the terms of the lease if you do not affect the repairs in a timely fashion. Ultimately this could result in the landlord taking legal steps to take back possession of the property and recover their costs for the repairs, lack of rent etc. So you can see it may be worth paying for professional fees to protect your position once you sign a lease. A good surveyor will be able to negotiate your lease perhaps even saving you money and protect you from these issues.
Commercial property agents face fines over energy performance certificates
April 3, 2012
It is estimated that well over half of commercial property agents are currently on the wrong side of EPC regulation. With the change in regulations on the 6th of April property agents will also be responsible for making sure that commercial properties have the correct energy performance certificate in place when marketing a commercial property. If they do not comply with this regulation they will be receiving a visit from the trading standards compliance team. These regulations originating from Brussels will add another regulatory burden to property agents many are already governed by various regulations and professional bodies. If their mortgage department are not keeping up with FSA compliance their surveyors are making sure they keep up to date with Royal institute of chartered surveyor’s guidance and now they will have further regulation and paper work to monitor and complete. This is good news for EPC providers and of course office suppliers who will have a good opportunity to sell more filling cabinets.
Solid results delivered by UK Commercial Property Trust
March 20, 2012
The Guernsey based commercial property giant has delivered impressive £53million pounds of profit for the 2011 period. They produced these figures party because of good acquisitions and an enviable void rate of 3.4 percent down from 3.6 percent in the previous year. They achieved this while only booking £5 million pound portfolio uplift. Their portfolio is valued at £1.052 billion increasing 9 percent on the previous year’s holdings, with a net asset per share value hovering over 77 pence per share. They are well liked in the industry because of their low borrowings and a strong war chest of a cash facility. The company has performed well in the various key performance indicators of this type of Property Company. With good acquisitions, a high rental collection, low voids and an impressive tenant base.
Close Brothers delivers strong profits with gains in the development funding sector
March 16, 2012
Close Brothers has not only delivered substantial profits it has also increased its loan book by an additional nine percent to 3.8 billion. They are well known by the property industry and commercial development loan brokers as the first port of call for speculative property development funding. They have also reported a substantial reduction on bad debts down to 1.7 percent of their loan book. This takes their bad debts very close to the ten year average of 1.6 percent. Their property division has increased their loan book by just short of 20 percent to over 650 million pounds. They have enjoyed a period of relatively low competition but as with all economics the laws of supply and demand always follow market conditions. So will we see 2012 as the start of other specialist lenders returning to fund speculative property development lending?
Property developers and regeneration consultants look beyond the banks for mezzanine funding
March 13, 2012
With record low levels of bank lending, the banks appetite for lending on commercial property and speculative development projects is heavily reduced. Many property developers and surveyors are looking to alternative sources of development funding, the banks are holding around £280 billion of loan notes secured by commercial property. This as a proportion of their balance sheet is leaving them looking to avoid any additional lending to this sector in an attempt to spread their risk. It seems the best way around these challenges is to use a percentage of traditional primary bank lending with lending vehicles like tax incremental funding, regional growth funds, and enterprise zones topped up with private investment and mezzanine funding. There is some frustration in the property industry that tax incremental funding (T.I.F) is being drawn into other related amendments to business rate schemes. As with all finance and business success it is the most innovative schemes that will deliver the best results for the community, developers and ultimately private investors.
Period property conversion and renovation specialists
March 10, 2012
Building work carried out badly to period property will not only devalue the property it can also potentially cause thousands of pounds of damage. The use of cement based renders, pointing and finishing, stop period properties from “breathing”, they were built with lime based mortar and need to be able to dry through render and mortar. So before you start work on a period property ask your contractor the right questions and ask to speak to some of their existing customers with similar properties. If you have a particularly historic property it would be worth contacting the conservation register to get some advice on suitable materials and best practice. The Society for the Protection of Ancient Buildings is another good resource for those that have the more specialist properties. So what is the most important thing to watch for when choosing your building contractor or building surveyor? Passion, you need someone who shares your passion for period property, this is the single most important aspect. A contractor or surveyor who genuinely enjoys their work is bound to make that extra effort, whether it is finishing lead detail or writing a preliminary document, JCT, schedule of works or dilapidation. The rest will follow, so ask them about their back ground, other projects and customers. Take time to understand their skills experience and love of period buildings.
Property sector committed to green goals despite economic down turn
March 6, 2012
The government is gearing up to make residential and commercial property that fails to meet rating F and G for energy efficiency unlettable. It is estimated just in the commercial property sector this will include 18 percent of the current commercial property stock. The government are looking at penalising the worst offending properties but are not looking to reward landlords that make the effort to hit the highest standards. Ultimately the next band up band E rated properties will be looking over their shoulders as ultimately if will probably be those that are next to suffer penalties. Those in the property industry are looking for clear direction and a road map to sustainability. With this in mind experienced property investors will be looking to buy newer of more efficient properties to protect their portfolios letability.
The tax payers “Bad bank”, shines as its loan book continues to perform
March 4, 2012
There was much speculation during the height of the credit crisis that the Northern Rock and Bradford & Bingleys loan books would collapse under a huge default from various property backed securities. In fact these two bad banks have produced a pre-tax profit of over 1 billion pounds. This shows their profits up a rather incredible 145% some have attributed this to their investment tactic of purchasing back residential mortgage back securities RMBS’s. These have been trading at depressed capital values as the banking world have been quick to get out of the sector and repair their balance sheets. These bad banks have repaid over 2billion back to their government investors. Interestingly the Bradford and Bingley have seen arrears on their loan note below the average of the council of mortgage lenders. There figures suggest that things in the business world have been improving since the arrears peak of April 2011.
Rural commercial property prices soar with increase demand
March 1, 2012
The demand for rural property has soared and continues to beat record levels according to a report from the Royal Institute of Chartered Surveyors. The average price of rural commercial land and dwelling including farms has seen stellar performance over 2011 with an acre of land rising by an incredible £6,514 in the second half of 2011 alone. The simple economics of supply and demand continues to push up land values. The predictions for this year are equally good as the supply of stock coming to market stays low, with prices rising at this speed many are hanging on for maximum sales prices. It has also been noted that demand for residential property in green belt areas remains high and competitive but these properties are less lightly to see such gains. They still compete with other residential property markets with are more constrained by the lack of suitable mortgage funding.
