Tag Archive: investment
We sat down with Andrew Entwistle, Partner and Head of Valuations at George F. White, to discuss his approach to buying property and the advice that he would give to others in regards to restrictive covenants.
I frequently joke with a friend who happens to be hopeless with anything technical or mechanical on his attitude to paperwork and instructions. I maintain his first step, when buying anything new, is to immediately locate the instructions in the box and then throw them away. He then proceeds to try to get the item to work on pure luck and guesswork. He usually fails and then asks me for help.
I can relate this to my work. When giving advice to clients for the first time, I usually ask, where are your deeds? The reason I ask is because I typically find that most clients don’t know what is in their deeds. I am looking for restrictions in how their property can be used as the client usually has a proposal to consider, perhaps a sale, a new building or development project, or, is looking to raise some money. Restrictions can have a big impact on value; therefore, time after time such restrictions are forgotten about, or, in some cases simply not known about.
There are many different types of restrictions, claw backs, statutory/planning, and pre-emptions but for this article I will concentrate on restrictive covenants.
Restrictive covenants are, in simple terms, a promise not to do something on your land so as not to detrimentally affect land that was in the same ownership (retained land) from the person you acquired from. Such covenants are commonplace and it is rare to see the conveyance without them. Prior to the introduction of claw backs/overage they were used as a method of extracting extra value from land that had been previously sold on the basis the previous owner needed to give consent for a particular activity. For example, if there was a restrictive covenant that said land can only be used for agricultural purposes, only then consent would be needed before that land could be developed for housing. Such consent would normally only be granted in return for a high price.
At the start of the 19th century the government realised that national infrastructure was being inhibited by previous landowners demanding large ransom sums to release restrictive covenants in cases when development would have no detrimental effect on retained land. The Law of Property Act 1925 put in place a mechanism where restrictive covenants could be modified or removed with compensation being payable to the previous owner on the basis of their loss, not on the basis of the increase in value due to development. The Upper Tribunal (Lands Chamber) deals with these cases and a person affected by restrictive covenant can apply to have it modified or removed to allow their proposals to proceed. The practical issue is that with any litigation, such action can be costly and take a considerable amount of time. There are also important pre-requisites before making such an application such as obtaining planning consent for your proposals.
In some cases it is possible to insure relatively cheaply against any restrictive covenant issues, particularly if the covenants are old. However if you ‘break cover’ and contact the owner of the covenant, the insurance opportunity may be lost. If insurance is not possible then informed and intelligent negotiations at an early stage can protect you and save you being put into the position where you are held to ransom for a large payment in order to realise your development.
“Time spent in reconnaissance is seldom wasted” and I apologise for using this cliché yet again. Most restrictive covenants can be dealt with providing you are aware of them and have time to take the appropriate actions to reduce their cost implications.
To find out more, contact Andrew on 0797 751 8156 or email@example.com
The buy-to-let sector is a thriving industry. Becoming involved in the private rented sector is a serious business. Landlords need to ensure that they’re able to find and retain good quality tenants and handle maintenance and repairs issues efficiently. Choosing the right agent to guide, advise and support them in a way that helps them to best manage such situations, and create a profitable property portfolio, is therefore vital.
There are so many inadequate and, at best mediocre, agents out there. They’ll agree to market and manage properties on behalf of landlords but don’t provide the service behind this, which is the most important aspect. Agents will simply put a property on the market with no plan, or even discussion with the landlord, about how it would market better and, essentially, be leased much quicker at a rate the landlord desires. Questions every landlord should ask themselves include:
- Has your property been on the rental market for more than a few weeks?
- Has your agent discussed how your property could be more attractive to potential tenants?
- Have they had an honest discussion with you about the wear and tear of your investment and whether it’s time to make some improvements, so that it can be tenanted quicker and potentially let out at a higher rate?
- Are you an out of area landlord who has rarely or never seen your investment?
Honesty is the best policy
Being honest with landlords and upfront about the improvements they need to make in their properties, to secure tenants and a good return on investment, is something all agents need to do but many simply don’t. A rental property needs some TLC every now and then and we recommend a landlord budgets for allocating 10% of their annual rental income back into the property for its upkeep such as decorating, new flooring, and furnishings where required.
Unsatisfied landlords often get in touch with us to appraise their properties that have been on the market a while. When appraising them, we have discovered some very basic issues that can be fixed easily. For instance, some are dirty, or need painting, or are overpriced for the current market. I recall one visit to an apartment recently which had been on the market for three months with no interest from viewers.
Following our assessment of the property, we advised the landlord to complete a deep clean and carry out some minor decoration work, which all cost less than £200. Within two weeks, after we had put it back on the market, we secured tenants on a 12-month lease. This landlord lost over £2000 due to no occupancy, which could have been avoided if the right agent advice was given from the outset.
If an agent is not honest with you about current market trends, the condition of your property, or the correct rental amount, then they are costing you money in terms of a void period and the monthly outlay of Council Tax on your vacant property.
At George F. White, we are focused on providing a professional, friendly but ultimately honest service, ensuring landlords are given the best advice to let out their property, even if it involves spending some money upfront, so that their property stands out among the rest in a fast moving, highly competitive sector.
For an honest conversation about your property contact Leanne Emerson on 01833 690390 or email firstname.lastname@example.org
Louis Fell comments on the outcome of 2017 and discusses what 2018 has in store for the rural sector.
2017 has been a mixed year in the rural sector. We’ve seen prices generally slowly rising over the past 12 months, with most becoming higher than a year ago, but nothing that would allow significant spare funds for investment. The exchange rate has certainly helped with the BPS payments for this year, but not so on the machinery prices which continue to rise beyond all levels of affordability. Our new agricultural minister, whilst controversial, perhaps is providing some clearly guidance and steer on his perceived future for the industry; we’ve had a small victory for common sense on glyphosate use and I’m pleased to see European grant money coming forward, let’s get it used up and spent before the split from Europe.
I’ve been asked many times this year if land prices are going to come down; whilst many may like to preach the doom and gloom, we are not really seeing it. Yes, poorer land without amenity value is struggling, but in reality what we are ending up with is a market which pays a higher price for good quality, no black grass, well equipped and location driven farms and estates. This is demonstrating that investment and maintenance does relate back to capital value, rather than just short supply – pushing up prices irrespective of quality. Do I think that prices are going to slide? Not really – unless there is change in capital taxes or the housing market slows down. There is still a good deal of roll over money, inheritance tax and overseas investors seeking long term investments, either as tax savings or simply people looking to own a part of England and their own plot of land.
Development in Yorkshire is vibrant at present – we are seeing massive expansion in warehousing and commercial property, often outstripping residential values, particularly on the M62 corridor; perhaps the Northern Powerhouse will happen without interference from the south. Coupled to this is the growth in housing; although it is a shame that all schemes get dragged down a slow and laborious planning process, with everyone attempting to seek a reason not to do this.
I am very optimistic about the future and 2018, hoping that the wider public will take a more positive approach and create a more positive atmosphere relating to the current situations. There are some great farming/rural businesses in Yorkshire along with many opportunities for those seeking new incomes/businesses, however an open minded approach is needed for those that are look for the new techniques or ventures that seek to protect the business in the future. Rural businesses need to look at those sectors that are not heavily reliant on subsidies and are expanding on the back of quality production and processing; having different streams of income from different businesses which reduce a reliance on the brown envelope payment and we feel should be your focus (if not already) in 2018.
For more information regarding the rural sector, please contact Louis Fell on 01665 511995
From everyone at George F White, we wish everyone a prosperous 2018
Yesterday, Philip Hammond announced his second Budget as Chancellor. Our team share their opinions on announcements affecting their sectors.
Partner, Head of Planning and Development
As anticipated, there have been several significant measures affecting the development industry in yesterday’s budget, with a total of £44bn being allocated over the next 5 years with the intention of boosting housing delivery over 300,000 units per year. Measures include £8bn of financial guarantees to support house building and the private rented sector, alongside £1.1bn to unlock strategic sites and new settlements. On a smaller scale the measures also included a £630m pot for smaller sites, with a view to helping the delivery of 40,000 new homes.
Amongst the announcements was also a curious proposal of reviews into reasons behind delays for developments coming forward after grant of permission and a seemingly linked statement that land banked for “commercial reasons “could be compulsory purchased. Whilst a headline winning statement along similar lines of previous Labour suggestions, I suspect the reality is highly unlikely to have a real world impact. Anyone involved in the technicalities of planning, site appraisal and delivery as well as compulsory purchase has an idea as to how hard a test that would be to prove. Any compulsory purchase would be at market value, which also begs the question, who would fund it and what would happen once it has been compulsory purchased? Sell it to another house builder perhaps to put into their land bank? No doubt, more detail will emerge over the coming days and weeks.
Partner, Head of Commercial
Several positive initiatives have come from the Autumn Budget, especially for the commercial and construction sector. News that, from 1 April 2018, operators of illegal waste sites will become liable for Landfill Tax will see a sigh of relief from ‘formal’ operators, ensuring landfill is sent to their sites. The £44bn in overall government support to meet the target of 300,000 homes a year and the £400m to regenerate housing estates is great news for the construction industry considering the sheer amount of materials needed to fulfil the demand.
Looking into the Northern region in particular – we are to see £320m to clean up the former SSI steelworks at Redcar and kick start the 25 year development plan which will see the site transformed into a ‘hotbed’ of new industry. This is fantastic news for the region as it gives the prospect of 20,000 new jobs which is crucial for economic growth and development across the Tees Valley.
Head of Residential Agency
For first time buyers it takes so long to save for the deposit to secure a mortgage and added to that the additional funds required for stamp duty mean it is often a lengthy process before they can become homeowners. The announcement today that stamp duty is to be abolished for first-time buyers on homes up to £300,000, with immediate effect, will be a welcome change and we hope it will have a positive impact on the overall housing market.