Sympathetic Renovation of Period Buildings

The term ‘period’ when applied to property generally means a building constructed prior to WW2. After the war and into the 1950s and 60s, the British government entered into a wide scale programme of house and property building. This was in someway a means of replacing the houses lost through bombing in the war, but also because with the introduction of the welfare state times were changing rapidly. The days of houses providing accommodation for several generations of a family were swiftly departing. The scenario we are familiar with today where only 1 or 2 generations occupy a home (known as the ‘nuclear’ family) had arrived.

 It is fair to say that the houses built after the war are generally regarded as less visually appealing than period homes. However this gets in the way of the fact that post-war houses generally offer superior thermal efficiency, space and internal natural light over period homes. Therefore there should not be any snobbery involved in assuming period properties are better than more modern homes.

 That said, many purchasers (myself and my wife included) are enticed by the romanticism of a period property. Our current house was constructed in the Georgian Regency era and it’s from this experience I write this post.

 The construction of a period house can be substantially different from a modern house. To begin with, the plot often provides no parking area (for obvious reasons). Previous owners might have changed the plot layout (perhaps by adding a driveway or moving a wall etc) to provide parking and if so, this can increase the market value of the property. Be warned however that period properties often have listed status or are in Conservation Areas. Planning permission will almost always be needed to make this alteration. If the property is being purchased with the benefit of an added parking provision, your Solicitor should confirm that planning consent is in place for it.

 Period buildings often did not have damp proof courses. This depended on the size and location of the property and the specific era it was constructed in. However as a guide, it was unusual for houses built in the Victorian era in rows of terraces to have had a means of damp proofing incorporated. On the other hand larger houses (maybe constructed earlier in the Georgian era) might have had a slate damp proof course fitted in the construction. Of course it is possible to retrospectively install a damp proof course to any property but it is quite a time-consuming task and the question should b asked “if it’s lasted well enough for x hundred years, why change it now?”.

 One of the most critical points of period brickwork is understanding how it is different to modern bricks and mortar. If the 2 different approaches are mixed, significant brickwork damage can result. Portland cement forms the base of modern mortar used in property construction. This was only invented and came into widespread use in the nineteenth century. Naturally adoption of it was not uniform and within any era from the early 1800s to the early 1900s it is not possible to say conclusively whether a property was constructed with it without an inspection. Prior to the adoption of Portland cement, lime cement was the norm. This behaves in a different way by allowing the clay bricks to expand and contract naturally as a result of weather conditions and temperature. The clay bricks of the period were fairly brittle and porous but the lime mortar offered flexibility and the ability to absorb small movements within the brickwork. Adequate ventilation of this system was vital because as the bricks were porous, they had to be allowed to dry out naturally otherwise they would begin to deteriorate and break down. No cavity was provided and the walls were typically constructed as a double skin. Therefore if a period building is constructed using this method, the internal surface should be coated in a lime based plaster or paint finish to prevent dampness being ‘held in’. Lime mortar and plaster can be identified by the feel; it is much more pliable than modern cement and can even break off reasonably easily in your hands.

 It is a very common situation where a lime mortar and clay brick wall has been re-grouted using Portland cement mortar. The old clay bricks cannot expand and contract as they were designed to do and the face of the brick begins to separate from the rest. Water enters, freezes during low temperatures and pushes the face of the brick off the rest of the brick (known as ‘spalling’). This leaves the less-durable remainder of the brick exposed and a similar action continues to occur over time leading to the eventual collapse of the brick. If this has occurred over time on an extended stretch of brickwork, it can be time consuming to repair.

 Internal period brickwork that has not been allowed to breathe becomes quite ‘powdery’ and loses its structure. It can be difficult to establish enough support when attempting to fit rawlplugs/screws for internal fittings. The ideal remedy for this is to remove and replace however this would add substantially to project time and cost. If the area is not too large, a less expensive remedy might be to apply another coat of lime plaster which should stop the problem worsening.

Benham Valence © Copyright Pam Brophy and licensed for reuse under this Creative Commons Licence

It is common for internal beams and joists to ‘sag’ over time. This in itself doesn’t usually create problems, but it’s definitely worth mentioning that they can be weakened and will not offer the same level of floor support as modern beams. If there are any concerns prior to purchase, it might be worth having a timber infestation/rot specialist inspect the woodwork and provide a report.

 As mentioned above, ventilation is vital in a period property. It is common for mildew to develop in the corners of rooms that have not been adequately ventilated. That said, it’s easy enough to remove with modern cleaning products. The expense however might manifest itself in mouldy curtains or carpets that constantly smell of ‘damp’.

 Sash windows are a common source of expense when renovating a period property. If they are intact and in good condition prior to property purchase, they should be maintained by regular painting. Again, it’s common for black marks to appear on the inside of sash windows in unventilated rooms. This is mildew and can begin to rot the wood if not cleaned off regularly.

 When looking at the roof, don’t forget to inspect the lead flashings if possible too. As they tend to be hidden from view from the ground, it is easy to overlook them. Leaks can result in brick/woodwork degradation and/or internal leaks if not rectified reasonably swiftly. Many potential purchasers simply look at the general condition of the roof for lifted tiles/slates etc.

 One last point to mention is blocked gutters. I have seen many, many buildings suffer substantial structural damage because of blocked gutters. This is no exaggeration as it is common for vegetation to grow in the sludge build-up and break apart brickwork with its roots when left unchecked. The upside to checking and cleaning gutters is that this can be a very easy way of eliminating and preventing significant internal problems.

 It is tempting to believe that property designers and builders of several hundred years ago were not as ‘enlightened’ as we are today. I feel this would be an unfair assumption. What our ancestors lacked in technology, they more than adequately made up for in innovation. Provided some basic rules are followed (as above), a period property can still offer a warm, comfortable and durable place to live.

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Selling your Home in 1,2,3

With the general election looming everyone is talking about housing, first time buyers, downsizers, investors and house builders.

According to fewer properties have been put up for sale in 2015 than this time a year ago with the average house priced at a whopping £286,133.

Prices in London have seen the steepest increase with up to 50% added to their value compared to back in 2010 when the last election took place.

So with house prices rising and less people buying how do you sell your home? Here are some top tips for selling your home with the aim of making its full value shine through.

  1. Consider going it alone

On a home worth £250k you are likely to pay 1.5% in estate agent fees along with VAT. For that £4,500 you are likely to get an online posting on the agency website, a listing on property search directories like Rightmove and a property information document. For just £495 you can get the same level of service but far more control using an online agent like

For Sale

Image from

Tepilo is the work of Sarah Beeney, well known TV personality and property expert. The idea is that you upload your own photos, description, set your own price point and the property is listed on all the directories. You are not left in the dark either, there are online guides to valuation, providing documentation, how to write your property specification, and how to take the best images.

One massive benefit is being able to monitor views and responses. It is worth seeing how your home compares to others on the site, perhaps look at how many views convert to actual home visits and so on. If you have the time and the creative flair you will truly enjoy selling your home online, by yourself.

  1. Weigh up the value of each improvement

With the increase in housing values some buyers will want to see more for their money. If you feel tempted to add some improvements to your home follow some simple rules.

A study by Nationwide Building Society produced an easy calculation to help sellers see how much value can be added to their home via improvements. They found that adding an extra useable bedroom (one that can fit a double bed and storage) adds approx. 15% to the value of your home, adding an extra bathroom adds an estimated 7% to the value of your home, extending your living space by perhaps adding a conservatory, a single story extension or converting your garage adds approx. 7% to the value of your home. If your property does not have parking and you convert our garden or front of house area to a driveway this can add 15% to the value of your home when in London and 10% elsewhere in the UK. The moral is, to weigh up the value of your home, the % increase the improvement would add and against how much it would cost to do. Small investments like a driveway at £2-5k can yield a £37k increase in value to a home worth £250k.

  1. Consider your target audience

 Remember to treat your home like a product. It needs a target market and strong benefits or features that will be attractive to this audience.

Do not allow personal preferences to cloud your judgement or hinder how you portray your home. A good example is when rooms are used for other purposes or converted. If a home is advertised as a 4 bed then make sure each of the four rooms is decorated as a bedroom. If one of the rooms is a junk room or perhaps a study the viewer will not visualise it as an extra room and cannot see its value.

The same applies to garages. A survey by Nationwide found that home buyers wanted a garage more than an extra ground floor room or extension of space. The garage is seen not just for a car but mainly as a storage space. If you use clever storage solutions like Garage Storage Solutions you can maximise the space and show its purpose and its value.

Garage Storage

Image from

If you do want to add extra space make sure it is useable 365 days of the year. Some conservatries are only useable in the summer months and not treated as a permanent useable room. If your conservatory is the same consider means of insulation or ventilation to make the area a permanent extension of the home.

Try and make an environment that the buyer can aspire to. Ever looked at a show home and wished you could move straight in? Get your favourite coffee machine out, your nice crockery and clear the clutter. Make your home look desirable with fixtures and fittings.

These easy steps are all things you can do yourself with little to no cost. Good Luck!

Written by Peter Boyce at Bedroom Storage Maker.

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Camden Unlocked

This article was written by Ahmed Alansari, Property Consultant at Morgan Pryce.  It is a promotional piece on the unique phenomenon that is ‘Camden’. Camden 1

Camden, once a mecca for any 1990s indie kid, has done some growing up, but it has still remains a unique enclave in the capital. With its market-stall heritage.

 Camden was named after the first Earl Camden, Charles Pratt, who started the development of Camden Town in 1791, around what is now Camden High Street, but then was a coaching route to Hampstead and the north, surrounded by countryside. The canal was opened in 1820, but the eventual development of road transport in the fifties led to the canal falling out of use and industrial buildings into disrepair.

 In the early seventies, however, the buildings started to be rented out on short leases, as craft workshops, leading to the opening of a craft market on a cobbled courtyard nearby. Traditional crafts were offered alongside antiques, clothing, and eventually food stalls. By the mid-eighties, the area had become a major tourist attraction, with canal boat trips and people flooding to the markets – there were now three. In 1984 one stallholder began to sell a selection of colourful bags. That stall was to become the international fashion bag giant, Radley.

Camden 2Camden is arguably been the hub of the start-up business before the term ‘start-up’ was even coined. Many of the other areas in London that have, over the last few years, been preferred by start-ups and entrepreneurs have simply become unaffordable; (check out the Morgan Pryce Office Space calculator of idea of rental fees) ever bigger budgets are now needed to compete for the ‘best’ space, as rents have steadily increased over recent years because of lack of supply of original ‘creative’ space and a surge of demand. This means that places such as Shoreditch are now out of reach of the very people that brought the area into the creative-business limelight.

 With the influx of visitors and tourists, the local businesses began to meet the need for cafes and restaurants, with fewer shops for locals.

 And now? For innovative small businesses with unique character and, more importantly, a USP, Camden could be a great location to get things going. The history of the area, which has focused on community and collaboration in business (how else can a marketplace work?), has led to initiatives aimed at helping small businesses set up in Camden. Here are some examples:

 The Camden Collective

A ‘pioneering project putting Camden Town at the heart of the UK’s creative community’. It aims to take the obstacles out of the path of small businesses thus easing the challenges faced by many start-ups and drawing potential new ideas and companies to the area.

 The Camden Collective aims to create ‘hubs’ for co-working, allowing businesses and entrepreneurs a business- and creative-focused workplace without the expense and financial commitment – and risks – involved in formal property transactions. The hubs are deliberately chosen for flexibility, with movable internal structures to expand the reach to a variety of potential businesses. There is Wi-Fi, lockers, break-out areas, kitchen, and even a ping-pong table.

 Camden Collective also focuses on training, including Accelerator Courses (a three-week course for creative start-ups) and a Coding Academy (an eight-week web development course).

 Another focus of the Collective is to encourage pop-up shops into vacant units on the high street, encouraging footfall as well as variety in the retail environment – and providing a step-up to new retail businesses – a kind of post-recession market stall. The Collective takes on the space, refurbishes it in ‘blank canvas’ fashion, and then invites proposals from potential occupants. Spaces are available from as little as a couple of days to a couple of weeks, and partnering with another business is encouraged too.

Camden Means Business

This is part of the larger project, London Means Business, and organises networking and training opportunities and seminars, particularly for small businesses and self-employed/single-director businesses, which make up a significant 74% of SMEs.

Camden Town Unlimited (CTU)

The CTU was ‘appointed by the business community to improve Camden Town as a place to work, live and visit’. It represents the local businesses and has a wide remit, working with the local council, TfL, central government and private sector stakeholders. It strives to market Camden and its vibrant business district, both locally and internationally, and has been involved in projects just as a local loyalty card scheme and street regeneration. Among other SME-focused services, CTU provides free recycling to its business members, claiming to save them around £430 per business.

Camden council has initiated forward-thinking plans for its borough, including constructing a range of energy-efficient apartments at Maiden Lane Estate. The local authority’s Community Investment Project allows it to return the profits made from such developments into local neighbourhoods. This, together with other factors such as the council-run Camden Small Business Awards, and the council’s 2013 proposed focus on Camden Town as a ‘Growth Area’, mean that this could be the ideal time to focus on Camden as the location of your business.

 So, as Camden takes the stage, with its collaborative business cast, perhaps you might like to be on it…

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Pre-Let Agreements

Parker Building - Southwark

© Copyright Stephen Craven and licensed for reuse under a Creative Commons Licence.

A ‘Pre-Let’ agreement is a contract between 2 parties which provides legal assurance when a property is constructed with a specific occupier in mind.

 So if a prospective occupier (tenant) wishes to have a purpose built property constructed or has simplyexhausted all options in finding a suitable property already on the open market, a pre-let agreement can offer some benefits. This is a vital part of risk management of the construction, as if a contract were not in place the prospective tenant could theoretically ‘walk away’ when the building is near to completion (and the prospective landlord has spent several millions on construction). Therefore a pre-let agreement binds the landlord/developer to complete the construction to a certain design/specification and within a timescale and (b) the tenant to take a tenancy when the building is complete.

 Naturally, pre-let agreements are governed heavily by contract law. If the project is a large one, professionals will spend many weeks or months negotiating the precise terms of the agreement. There will almost certainly be clauses and concessions inserted to reduce risk to each party. These arrangements are quite common in commercial property but less so with residential.

 There are several benefits to each party in agreeing to a pre-let:

  1.  A tenant can often negotiate generous rent-free periods, discounted rent or other incentives.
  2. The tenant can specify a precise design and finish and incorporate specialist equipment (if necessary) rather than having to retro-fit it.
  3. The tenant will have the kudos of having a building constructed solely for it.
  4. The landlord will certainly be able to obtain a lower cost of funding for the project due to the reduced risk.
  5. The element of ‘speculative development’ is removed and if the property is constructed to a unique design with specialist equipment, it is likely the tenant will remain in occupation for a long time (probably measured in decades).
  6. In a rising market, it is likely the agreed rent (at the outset) will be significantly lower than market levels (known as ‘profit rent’ and of distinct benefit to a tenant).

 The disadvantages however are:

  1.  In a falling market, a rent figure agreed at the outset might be higher than market values.
  2. There is a large element of risk to the potential tenant in project over-run. The prospective occupier might be heavily dependent on a particular completion date to tie-in with a lease expiry on a current property.
  3. There is the risk of problems in agreed specification. The tenant might be unwilling to take the property on because of an error in specification.
  4. The tenant might end up with less flexibility in freeing-up unneeded space.
  5. The landlord might be faced with lower occupational rent, making the project less viable.

 It is also important for the incoming tenant to enter into a collateral agreement with the construction contractor. The principal (i.e. original) construction contract will be between the landlord/developer and the contractor. If the superior interest is sold upon completion to an investor, the occupier has no means of bringing legal action against the contractor for any defects in construction. A collateral agreement ‘adds’ the occupier into the principal contract and facilitates a method of redress between occupier and builder.

 The construction method should also be carefully considered:

  1.  Design and Build. The contractor will be issued with a specific set of requirements. The ‘package’ of building design and construction is then carried out according to that specification.
  2. Traditional method. The landlord will commission the design (no doubt with the tenant providing input) separately to the construction phase.
  3. Construction Management process. This employs a slightly different approach to the above in that the basic design will be built with additional aspects added in later as required.

 The different methods of construction will place the obligation for ‘correct’ specification on different parties.

 In consideration of a pre-let agreement, many scenarios have to be anticipated. It is extremely important that both parties protect their position by engineering in contractual terms that offer ‘breaks’ under certain circumstances. However both parties have to remain committed to honouring the agreement otherwise the benefits begin to disappear. Of course it’s impossible to predict the future and provision should be made to offer contingencies should (for example) either party go into liquidation.

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Brief on Stamp Duty Land Tax

*Disclaimer – Please Note:  I am NOT an expert in taxation and the information provided below should NOT be taken as definitive advice.  It is for guidance only.  All readers and propospective investors/developers are highly advised to seek professional advice in taxation matters.

Stamp Duty Land Tax (SDLT) was introduced in 2003; and although it is often still known as ‘Stamp Duty’, it is now different from it.

The original Stamp Duty was first introduced in 1694, and was a tax on documents (i.e. documents used in transactions).  Several years ago, Stamp Duty was referred to as a ‘voluntary tax’.  This is because there wasn’t much control over registration for it (it was meant to be compulsory).  Now however, there is no escaping it.

Stamp Duty (as opposed to SDLT) is payable at the point of purchase, on transactions that are evidenced in writing.  When the duty has been paid (this should be within 30 days to avoid penalties), the Stock Transfer Form (in the case of shares) is stamped.  HMRC delegates the determination of the Head Charge to the Stamp Office who states the amount of stamp duty that must be paid.  Stamp Duty Reserve Tax is payable on electronic transactions (such as some company share purchases).

The property equivalent to Stamp Duty is SDLT.  It is paid in the following circumstances:

  • At the point of purchase (on qualifying properties)
  • At the commencement of a long-leasehold occupation
  • At the commencement of commercial tenancy agreements, where the total rent payable before the tenant’s first opportunity to ‘break’ amounts to a sum that qualifies for SDLT.

Current SDLT rates are:

  • For properties up to £125,000, the rate is zero.  No SDLT is payable.
  • For properties from £125,000 to £250,000; the standard rate is 1% of the property value , and for first-time buyers, it is zero.
  • For properties from £250,000 to £500,000; the rates for standard and first-time buyers is 3% of the property value.
  • For properties from £500,000 to £1m, the rates are 4%.
  • For properties over £1m, the rate is 5%.

From late 2014, SDLT on residential property is tapered, like income tax.  This means that if the value is over any of the thresholds, the whole value is not taxed, just the amount that is over the threshold.

So, if a property is bought for £330,000; the amount of SDLT (at current rates) payable is £1,250.00 (1% of £125,000) plus £2,400 (3% of the remaining £80,000) = £3,650.

Prior to this change in the rules, there tended to be an accumulation of property values at just below the threshold values.  For example, there were many properties for sale at around £249,950 but not many at £255,000 (assuming these values are the sale prices).

It must be stressed, that SDLT is paid by the purchaser (although the Coalition Government is understood to be considering plans to transfer the SDLT liability to the vendor).  It must also be paid in a way that is completely separate from the mortgage.  I have heard of first time buyers enquiring whether they can include the SDLT charge in their borrowing from the mortgage company.  This is not permitted!

If a new leasehold property is occupied by a tenant, the rates are:

  • For tenancies that total less than £125,000 for the life of the lease, no SDLT is payable.
  • For tenancies that total more than £125,000 over the life of the lease, 1% of the value that exceeds £125,000 is payable (so if a tenancy will total £130,000 over the total lease term, £50 is payable (1% of £5,000)).

Clearly, the lease term and rent would have to be quite substantial to qualify for this.

On commercial property, slightly different rates apply.

For properties that are not newly built:

  • For purchase values up to £150,000; or annual rent is below £1,000, the rate is zero.
  • On purchase values up to £150,000; or annual rents above £1,000, the rate is 1%.
  • For purchase values between £150,000 and £250,000, the rate is 1%.
  • For purchase values between £250,000 and £500,000, the rate is 3%.
  • For purchase values above £500,000, the rate is 4%.

For commercial properties that are newly built:

  • For tenancies with a term-value of up to £150,000, the rate of SDLT is zero.
  • For tenancies with a term-value of more than £150,000, then 1% of the value that exceeds £150,000 is payable.

Because SDLT is payable on the transfer of an interest in property, liability can arise when a property is transferred into or out of a Partnership.  This is (as I understand it) one of the most challenging areas of property tax but I will attempt to expalin as well as I can…

  • The relationship between partners is important.  If 2 family members form a property investment company, no additional SDLT is due over the usual purchase liability.  So this means that provided SDLT was paid by the family members on acquiring the respective property interests, no additional SDLT should be due when the interests are transferred to the partnership.
  • If an unrelated partner joins (i.e. not a family member) any tranfer of a property interest into the property investment company will attract SDLT.
  • If the individual members of a property investment company decide to go their seperate ways and transfer the interests in properties between them, 2/3rds of each individual’s interest will be liable for SDLT.
  • If an individual purchases a share in a property investment company (for example 25%), then that person is liable for that proportion of the property interest (so 25% of the combined property interest for SDLT would be payable).

For further information on SDLT, a visit to the HMRC website is recommended –

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The Effect of Contamination on Development Land Value

Developing a property on contaminated land is not as ridiculous as it first seems.  Contaminated land is a massive problem for developers because:

  1. The sheer amount of contaminated sites across the UK.  There are an estimated 50,000 – 100,000 potentially contaminated sites in the UK which in total, which cover around 1% of the UK landmass.
  2. Very large companies and government agencies such as Shell, Esso, British Gas and the MoD regularly dispose of large amounts of land which will be regarded as contaminated.  In some circumstances, the very fact that certain activities have been carried out on a plot, automatically labels the area ‘contaminated’.
  3. The owner of an area of land where contamination is found to have originated from is often liable for the clean-up costs.
  4. Successive UK governments have encouraged development on brownfield sites in preference to greenfield.   This makes developers consider purchasing contaminated sites more readily.
  5. Contamination has a very large effect on property/land value.

But, to completely disregard contaminated land as ‘undevelopable’ would be to intentionally miss out on many opportunities.

Contaminated Land @ The Property Speculator

© Copyright Evelyn Simak and licensed for reuse under this Creative Commons Licence

The contamination will have the effect of reducing the value of the land or property because of:

  1. The original cause of the contamination.  I.e. what the substance was/is that resulted in the contamination.
  2. The general response to the scope of the contamination, both by the potential purchaser and the Local Authority.
  3. The amount of work required to establish the level of contamination and what has to be done to remedy it.
  4. The resulting effect on the eventual sale or letting value of the property.

Roughly, costs involved in a contaminated site can be categorised into Direct and Indirect.  Direct costs include the funding of remedial work, and penalties for not following exactly what the local council require and in the case of a commercial investment property, a void period – where the occupants must be moved out in order to carry out the work.  The indirect cost is tricky to quantify; it is associated with the effects and public perception of contamination.  A desirable area can quickly become not-so-desirable when the public discover that contamination has occurred.   This perception can be a very individual view among prospective purchasers or tenants.  This is known as Stigma.

The actual calculation involved in establishing a basic development value on a contaminated site is really not too different from a standard Residual Appraisal.  The formula for which is:

Value of land = GDV – (Build Costs + Required Profit)

To add the contamination component into the equation produces:

Value of Land = GDV – (Cost of Land Remediation + Build Costs + Required Profit)

However, this might serve to over simplify things a bit too much.  This does not take the element of Stigma into consideration.

Stigma, when used in the context of contaminated land can be defined as:

“the blighting effect on property value caused by perceived risk and uncertainty in the effectiveness of contamination remediation”.

To put it another way, it is the difference in value between a remediated contaminated site and a comparable “clean” site with no history of contamination.

These uncertainties are based on intangible factors such as:

  1. Scepticism over the effectiveness of land remediation.
  2. The risk of inadequacy of the remediation process.
  3. The risk of changes in legislation or remediation standards leading to further work.
  4. The difficulty in obtaining finance.
  5. A general fear of the unknown.

It might be argued that this general reluctance to use previously contaminated land is justified.  Many people believe the term ‘remediation’ is simply another term for clean-up.  It isn’t.  The term ‘remediation’ simply means that the level of contamination on the site has been reduced to a level below that specified by the Environmental Agency.  The term ‘Caveat Emptor’ (‘let the buyer beware) springs to mind here.

Clearly, because the influence of Stigma is difficult to quantify, it’s also difficult to measure.  What can be done, is analyse the behaviour of experts in this field:

During the summer of 1998, a four-page mail questionnaire was sent to a targeted, preselected group of 208 Property appraisers in the United States and Canada. The target group consisted of 192 appraisers in the United States and 16 in Canada.

Of the participants, nearly 60% (49) reduced rental income to account for on-site contamination. However, some comments indicated that a noticeable number of respondents found no impact on the rental income of contaminated properties that were used for commercial, retail, or industrial purposes. Several additional comments indicated that some respondents also used increased operating expenses when valuing a contaminated property.

While 73% of respondents reported that they occasionally made a separate deduction for stigma, only 26% indicate that they did so as often as 75% of the time. The uncertainties and risks associated with cash flows from a contaminated property are most frequently reflected in decreased estimates of value via sales comparison analysis (73%), followed by an increased capitalization rate (66%) or an increased yield, or discount, rate (61%).

All but one of the respondents said they would not ignore anticipated or forecast remediation costs in valuing contaminated properties. Some 60% indicated that they would deduct the present worth of total remediation costs estimated by environmental experts.

Although it seems to stand to reason that properties built on previously contaminated land are negatively affected, the degree of this effect is not necessarily substantial.  In the last decade or two, technology and methods have improved a great deal to make remediation techniques much more effective. I have personally dealt with previously contaminated land where a client intended to build a new, high-profile office block.  The value of the site was scarcely different to a comparable site with no history of contamination.

To quote a case study, results from a study of the market sales data of post-remediated vacant residential land along the Swan River, in Perth, Western Australia, from 1992-1998 can be looked at. The intention of the study was to establish the amount of “stigma” arising from a site’s contamination history.  The effects of this were measured on residential property values of remediated property. The results showed that while a site’s contamination history impacts negatively on property prices, the price decreases were offset by the positive influence on price from additional amenities provided in the area where the case study was carried out.

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The Growth in Investment of Online Estate Agencies

Over the past few months the world of estate agents has seen a rise in the investments being made in online estate agencies.  With some big names entering the arena, we wonder if we will see a long-term change in the industry…

We only have to go back to December 2013 to see the first significant investment made in an online estate agency when James Caan of Dragon’s Den fame made an investment in one of the country’s biggest online agents, Emoov.  As well as his money, Caan also became the face of the company.

Prior to Caan’s investment, Sarah Beeny of a similar celebrity status announced the online expansion of her sales portal, Tepilo.

On top of both of those, and more recently, the online market saw the biggest name enter the fray.  Sir Stelios Haji-Ioannou of Easyjet fame announced that he will be joining the competition with his own online estate agency, Easyproperty.

Recent reports also suggest that two more online agents are set to make waves in the digital market places.  Both EstatesDirect and PurpleBricks have received significant backing from investors.

DatingDirect, who sold out to for £30m in 2007 are putting money into EstatesDirect, whilst famous High Street store Poundland are investing in PurpleBricks.

Perhaps now is the time to sit up and begin to take notice of where the world of estate agents is heading.

So are these online estate agents, with their big financial and business backings going to change the face of the industry forever?

At the recent My Home Move Brick + Click event in Solihull, an interesting panel debate between three well-known estate agents took place.

Jon Cooke from YourMove, in favour of traditional estate agents argued that they would not be affected by their online counter parts, saying they still offered better value for money despite charging “extortionate” agency fees when negotiating a sale.

Miles Shipside from RightMove showed results of a survey from their large database of users that revealed some interesting data.

According to Miles, these are the top decisions that influenced a seller’s decision:

  1. Agent’s reputation
  2. Quality of response to my enquiries
  3. Presence of property portals
  4. Low fees
  5. Recommendations (friends + family)

With ‘low fees’ ranking as the fourth most important factor, notably behind an agent’s reputation, online estate agencies will have their work cut out for them.

Adam Day from one of the first online estate agents; Hatched; was keen to defend and promote technology that gives his company, and companies like his, an advantage over traditional agents who aren’t taking the digital world as seriously.

Mr Day was quoted as saying:

We know how traditional estate agents work and have adapted their systems with technology to give the customer a better experience.

The co-founder of Hatched was also confident that more people will move towards the online sphere when selling their property with the perceived value of the seller working in their favour and traditional estate agents’ dismissiveness of the digital world.

So will the more established brands like Hatched, HouseNetwork or HouseSimple prevail in the long run?  Or will they lose a significant part of the market share with heavy investment from the competition?

Financial backing certainly has its advantages, but it is by no means a guarantee for success.  When it comes to choosing an estate agency, we have previously mentioned the agent’s reputation.  On top of this, an agent’s experience and knowledge will also plays a vital role.  Three things money cannot buy.

For an example of this we should go back to 2008 when WOWProperty became the very first online estate agency to receive significant investment.  They have over £1.75m in their kitty, but little more than a year later the company had all but disappeared.

WOWProperty attempted to build history from thin air whilst consumers opted for more established businesses; those that had invested time forging bonds of trusts with their clients.

The modern era of online estate agents has been quietly building for a number of years now and the recent investment suggests it’s almost certainly going to grow.

Barrie Smith attended the MyHomeMove Conference in 2014. An expert in making offline businesses successful in the online space, he was intrigued by the huge investments in online estate agencies, and the current debate around the merits of the online vs offline property sales business models.

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Is the tide turning for London’s Eastern Fringe?

After ‘location, location, location’ the phrase ‘the ripple effect’ is probably one of the most heard when it comes to making that crucial decision, where you should base yourself. And this decision is no less important for the commercial occupier than it is for the residential purchaser.

In London, however, it’s complicated. Given London’s sprawling nature and its ‘city-of-villages’ structure, those ripples overlap; some are stronger, some weaker. Tenants may want to be a stone’s throw from a transport hub or a buzzing street, but wherever that stone lands, its ripples will be felt further out. Not all tenants are brave enough to see where this takes them, but given the rise of rent in the capital and the scarcity of office space, it may be worth prospective tenants looking where others have not yet discovered.

So, where might this be?

The cheapest area is the Eastern Fringe side of the city as well as the area from the east of the City towards the Docklands. At the moment, at the highest end of the market in the eastern fringe, tenants can expect to pay around £25 per square foot – a fraction of the sums in other, more popular, areas of the London.

The reason behind the cheaper rent is simply because there is currently more supply than demand. The problem with the supply is that the quality isn’t great (yet). The problem with the demand is that there isn’t much (yet). The fact is, at present, many of the buildings are tired and not what tenants want in terms of facilities, appearance, or fit-for-purpose-ness, hence the lack of demand.

While the transport links are there, and will continue to improve with Crossrail in 2018, the area isn’t necessarily where clients want to find themselves. Of course, some tenants may be able to work around this, particularly if all their business is conducted online, for example, where meeting face-to-face with clients is a rarity.

Alternatively, the fast-rising number of serviced office buildings that offer meeting spaces in the more popular districts of London means that the one-off hire of a meeting room could be a solution for a business owner who doesn’t want their clients to see their cheap but not-so-cheerful premises.

The lack of demand at present may be a result of caution on the part of the tenant winning out over the need to save money on rent. Businesses considering a move to this area may face challenges in recruiting or retaining staff, as the amenities and social spaces are in short supply compared to other areas of the city.

The Above Factors Will Start Fading in Significance

Many of the buildings are undergoing development as landlords see the potential to attract more and better-quality tenants, resulting in improved longer-term rents. Aldgate will be the location of a new development, another step towards an improvement in the area, one that began with targeted regeneration plans in 2007. Goodman’s Fields, the site of an RBS cheque-clearing centre, will be a mixed-use seven-acre development of offices, apartments, retail and restaurants, the first phase of which is due to be completed next year.

Prospective tenants may need to be canny in assessing the best time to jump into the Eastern Fringe and beyond. Too soon, or to the wrong kind of property, and business may be affected: too late and rents might already have started to increase. Some tenants may in fact be ‘pushed’ rather than ‘pulled’ to this area when their leases elsewhere – originally negotiated in cheaper times – come up for renewal or review and the resulting rent increases, meaning that staying put is not an affordable option.

 The rise of other, formerly neglected, districts can offer much to the Eastern Fringe area in terms of inspiration and what can be achieved. Redevelopments and refurbishments have, over the last few years become more imaginative, to reflect the needs and wants of the TMT (technology, media, telecoms) sector and those who work within it. Old buildings are not necessarily seen as restrictive and untouchable, but quirky.

Refurbishments can also incorporate the technological installations that businesses of all sizes require now as standard, although such retro-fitting does not come without challenges – or cost. In addition, without a guaranteed tenant lined up, a landlord may be reluctant to invest this much. There is an element of risk that will need to be assessed and taken by both landlords and tenants before great changes in the scene here are achieved. In contrast, the new developments planned for these areas will offer the blank-canvas option for tenants who want to be based somewhere clean, new and bright – and reasonable.

Serviced Offices: The Way Forward

Serviced offices may be key to increasing the profile of this area and reducing vacancy rates. This sector has seen a meteoric rise not only in London but also across the UK and globally. The flexibility of these furnished, staffed, plugged-in and dressed-up office spaces is what attracts tenant businesses of all shapes and sizes, from the one-man start-up to the multinational. Tenants can try out a few square feet of space, a building, or a location and if it doesn’t work out they can move out just as easily as they moved in.

The lack of long-term commitment needed when signing up to a serviced office means less financial risk for many tenants. Since these buildings by their nature house a number of different tenants, there is also a ready-made commercial community available, which may not be the case if one’s office is sandwiched between a takeaway and newsagents for the next five years. Also, because rent prices in the Eastern Fringe are the lowest in the capital, the serviced office model should be able to offer excellent value for money, as well as sweeteners such as rent-free periods, to tenants who are prepared to take the plunge and start creating their own ripples.

Eugene O’Sullivan, is Director at Morgan Pryce – experts in London office search, negotiation and project management and act exclusively for tenants. For commercial property and offices to rent in Mayfair, Soho, Southwark and beyond, talk to Eugene today.

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10 Common Planning Permission Pitfalls and how to avoid them

Much of what people know about planning permission comes from the media such as the programme Grand Designs, the experience of friends and family, or from objecting or would-be-objecting to a neighbour’s plans.

Of the process – and the cost – many actually know very little, and the wealth of information available on the internet can be a little daunting. It’s hard to know where to start, let alone where you’ll end up and what you’ll go through to get there.

Businesses have more to consider than residential owners, when what you do in a building is as monitored as the physical changes you make.

Without specialist knowledge and with an excess of enthusiasm, it’s easy to make mistakes in the planning process.

Here we introduce some of the common pitfalls when dealing with planning permissions.

1. Do you need planning permission?

First of all, consider whether you actually need planning permission at all. Most areas (conservation areas excluded) benefit from a ‘Permitted Development Order’ (PDO), which means that changes of a certain size or height, or distance from neighbours, do not require planning permission. The rules can be found on the planning portal website but it’s important to look at them carefully and perhaps consult a professional.

If a property has already been extended this might prevent further changes under a PDO. Recent legislation also means that in many areas properties used as offices can be converted to residential under a PDO – although discussion with the council may still be required.

2. Avoid the DIY trap

Do-it-yourself has its place, but the rule to remember is to stay within your skillset. Often it amounts to a false economy to have a go yourself. Consider a tiled wall that slopes, or a door that won’t close. This is no less true when applying for planning permission, which involves certain stipulations, as well as local considerations, technical requirements and possibly specialist knowledge.

‘Having a go’ at the application may be cheaper in the short term, but it may result in a failed application, or with conditions attached that compromise your plans. There are professionals who can assist, for example:


These will not only maximise the potential use of space but will be working with planning considerations in mind.


As above, but they will also be able to draw up the necessary plans, especially where the works involve structural changes.

Planning consultant.

A planning consultant, particularly a local one, will be familiar with the developments that have been granted permission in the vicinity – and more importantly, the ones that haven’t. They will also be able to help you address areas of your application that might elicit objections from the council, local bodies such as Highways, or neighbours, in order to resolve any issues before they are raised. Planning consultants can also be useful if you have to appeal a decision.

In fact, if you use the above services, you probably don’t need to worry about most of these points.

3. Can you really afford the investment?

There is no point in successfully obtaining planning permission for works that ultimately will prove too expensive to carry out properly. It’s difficult to budget for building works when you’re not an expert in that area.

One option is to obtain a builder’s estimate. It’s not a quote for works, but should give you an idea of how much is involved. Then add 20%. Contingency is always required for items not taken into account and latent problems that only become apparent when the diggers start digging. Also, of course, take into account any ancillary fees, such as professionals’ fees, consents planning and building regulation fees.

4. Adhere to the rules and instructions

Planning permission and the process of obtaining it has evolved over many years. Councils may have different considerations, requirements and restrictions, and a chat with one of the planning officers will always be useful. The forms accompanying the application will need to be filled in properly, accurately and comprehensively.

Every application, from a two-storey extension to a full housing development, will need:

• A location plan – obtainable from, for example, the Land Registry or from the deeds • The existing and proposed site layout • Existing floor plans and elevations and corresponding proposed ones • Proposed sections • External details such as doors, windows, drainage, roof tiles, render.

Faults and incomplete details may lead to a rejected or failed application, or extensive to-ing and fro-ing which is costly in terms of time and money.

5. Planning permission is not the only permission you need

It’s easy to get carried away with the project at hand, however, before planning permission is even applied for – and ideally before any money is spent on professionals – consider who else might need to give you permission for any works or change of use.

If your property is leasehold, it is likely that permission from a landlord or its agent is required. This is easily forgotten in the case of a long-term leasehold house, for example, where the landlord is largely absent other than an annual collection of nominal rent.

If there’s a clause in the lease that prevents alterations without permission, then consent should be sought. This can be an expensive business as landlords will be aware of the importance of the project and may wish to capitalise on your desperation.

If you go ahead anyway without consent, not only will this cause problems when you come to sell the property, but retrospective permission can be much more expensive to obtain from a landlord than permission in advance – because the landlord knows you need it.

Make sure you check the deeds, even if your property is freehold there may be restrictions (restrictive covenants) in the deeds preventing certain changes to the property. This ranges from properties 200 years old to new build properties.

If you’re unsure about any restrictions that might be present concerning your property, arrange to visit your solicitor who will be able to advise you. Often a quick scan of the deeds is all that will be required.

6. Change of use is no exception

It may be tempting where businesses are concerned, particularly small ones, to not allow planning permission to stand in the way of the perfect space, particularly if it feels the changes and/or occupation of the property are likely to be overlooked. It also may be tempting to persuade oneself that one’s business has not changed the nature of one’s home, for example, when in fact the child-minding business has become more like a nursery.

Care needs to be taken and complicated rules taken into account when dealing with use classes. A café owner may find that they have to grill all their meat and roast all their vegetables for their sandwich fillings off the premises (i.e. at home) because the use class of their leased premises does not allow food to be cooked on-site. The last thing a business needs is a visit from the planning enforcement officer and a breach of the terms of the lease. No premises means no business.

7. Don’t change your mind

Once the planning application has been submitted, it can be difficult to make changes, and even harder once it’s been approved. Anything other than minor changes might require a whole new application. So make sure you check and double check before submitting, not after.

8. You can’t get away with not having planning permission

While there is legislation in place that, in certain circumstances, mean action cannot be taken for works carried out over a number of years ago, this is not the situation you want to find yourself in. There is no guarantee your works will fall into this category, and there are stories of planning enforcement to be found in the media or on the grapevine, from dormer windows having to be removed to whole properties having to be demolished. And while you may live or work happily in a property without planning permission in place, the last thing you want when you move on – whether selling the property or at the end of a lease – are questions being asked and delays being caused – or even claims of damages by a landlord – arising from lack of appropriate consent. Solicitors (especially the other party’s solicitors) can be hard to satisfy when it comes to dotting the I’s and crossing the T’s.

Indemnity insurance is possible, but makes some owners and lawyers uncomfortable, while retrospective planning permission is far from guaranteed – and can invalidate or prevent the obtaining of indemnity insurance.

9. Don’t forget building regulations

The flip side of the planning permission coin is building regulations. It would be rare where planning permission is required not to also have to comply with building regulations. These deal largely with internal changes and energy efficient measures as well as gas and electrical works. These will also need to be signed off, often long after planning permission has been done and dusted.

It is vital not to forget the final signing-off for building regs purposes. It’s much harder to get retrospective building regulation approval, particularly where the site hasn’t been visited mid-job and where structural works such as RSJs need to be assessed.

10. Letting your permission lapse

Planning permission will last for a fixed number of years and can be passed on to future buyers. If you are planning on carrying out the works, don’t let the date pass you by. There is no guarantee that the permission will be re-granted or extended, particularly if legislative or policy changes have been introduced in the meantime, perhaps in relation to the ratio of residential property to business premises in a particular area, or where restrictions have been imposed on the number of houses of multiple occupation in ‘student’ areas.

Eugene O’Sullivan, is a commercial property expert and Director at Morgan Pryce – London office search, negotiation and project management agents who act exclusively for tenants.

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Risk Management in Property Investment & Development

Let’s be clear on this, investing in or developing property represents an element of risk to a greater or lesser degree.

Most prospective property developers and investors realise this but some subsequently procrastinate over taking positive steps to progress their venture.  Perceived risk can include:

  1. Getting a property project only partially complete before running out of cash.
  2. Experiencing a problem during build of such scale that the contingency fund does not cover it.
  3. Finishing the build and not being able to sell or let the property in order to recoup costs.
  4. The property build/conversion will cost so much that the developer with experience substantial financial hardship in order to get it finished.

All these concerns can be effectively managed and guarded against prior to the start of the project.  This is where a particular approach is vital; these risks should not put anyone off engaging in a property development or investment project.

Vacant Development Property @ The Property Speculator

© Copyright Jeremy Bolwell and licensed for reuse under this Creative Commons Licence

Risk is the ‘price’ of the return from a venture.  It’s been said that ‘the higher the risk, the greater the reward’; however this seems (to me anyway) to be a contradiction in terms.  If risk is high, then there is no guarantee of reward at all.  People generally have very differing views on the amount of risk they are comfortable to adopt.  However, if a developer is looking to borrow in order to fund the purchase and renovation/conversion of a property, then the mortgage provider will be very keen to see the project organised as low a risk as possible.  This includes the developer putting around 50% (for first-time developers) of their own money into it.

So in conclusion, it’s important to minimise risk wherever possible.  And to be honest, property is one of the lower-risk methods of investment and capital building.  It’s not THE lowest, but there are far riskier investments available to those with the appetite.

To address the points above in turn:

1.   Running out of cash mid-project.

This element of risk is managed by careful planning of the project.  Many novice developers run low on cash, but it’s almost always because the budget has not been organised properly.  The principles of running a financially viable project are:

  • Purchasing the property at a good price.  It takes time to select the right property; it must fulfil many criteria – purchase price being one of the most important.  If you are purchasing at an auction and the bid goes above your maximum level, you MUST resist the temptation to continue bidding.  In my experience, if one opportunity has come along, then the chances are that another is not far behind.  Once in a lifetime chances are just not that common.  It’s far better to purchase a property at a good price and sell at an average one, rather than buying at an average price and hoping to sell at an exceptional one.
  • Agreeing a fixed-price contract with the builder.  This is insisted on in many cases when obtaining development finance.  It should be possible to agree stages of build with the contractor, where you pay a proportion at the end of a stage before moving on to the next.  The agreement is likely to specify what is not covered in a fixed-price agreement.  This might be substantial ground work or structural alterations.  This is all in the negotiation.
  • Sourcing materials shrewdly.  This might fall into the principle above, but if you intend to do it yourself, approach it as a business and not a personal ‘statement’.  Buying the property and approaching the building work with your head, not your heart helps so much in this.  Keep in your mind that the aim is to get the property let or sold and move on to the next.

2.   Blowing the contingency fund on an unforeseen problem.

A contingency fund is an excellent idea.  This is usually around 10% of the whole project budget.  A fund of this amount will actually be a condition of borrowing with many companies (you’ll have to produce proof of the amount in a bank account).

So if a whole project budget is £240,000 for example, a contingency of £24,000 should be available in addition.

If the principles above are followed, there really should not be any reason for unforeseen problems to require more than 10% of the budget to rectify.  Ground, structural and roof problems are usually the most expensive to sort out, but almost all of these can be taken into consideration if a good survey is carried out prior to purchase.  Excessive build/conversion costs are another one of the criteria that should be considered before purchasing the property.

In some cases, problems do arise that there really was no way of knowing about before the project is bought.  In this case, a degree of imagination is sometimes called for to resolve it without blowing that contingency fund.  The most expensive and challenging problems are things like disused wells or buried objects.  However these are rare.

3.   Not being able to sell or let the property at the end of the building phase.

This is a problem that has affected many aspiring property developers over the past 4 years.  As mortgage companies suddenly tightened their criteria for lending, the amount of buyers across the market as a whole reduced to such an extent that demand came to an abrupt halt.

This might be regarded as the greatest of all the risks involved in a property venture.  It is theoretically possible to have a property advertised for sale for an indefinite period of time; and this scares the life out of many prospective developers.

Property is widely regarded as being highly ‘illiquid’.  This means that the value cannot easily be released.  The opposite end of the scale is cash; this is obviously a ready source of capital that can be used easily.  Because of the nature of property’s lack of liquidity, it has certain characteristics such as a degree of stability of value (due to the fact that it is a tangible item, unlike for example – company shares).  Unfortunately because of this shortcoming, capital can be ‘wrapped up’ in a property with little way of extracting it.

The way this problem is managed, is again by proper financial management.  To reuse my quotation from above…. far better to purchase a property at a good price and sell at an average one, rather than buying at an average price and hoping to sell at an exceptional one. You must remember this!  In many cases, the reason why properties stay on the market for so long is because they are overpriced for resale.  Sticking to a rigid budget dramatically reduces this risk because there is less chance of financial overstretch.  You should certainly make sure that you have planned for the property to be complete yet vacant for around 6 months after the build.

4.   Experiencing financial hardship in order to complete the build.

Clearly, this is a variation on the perceived risks already mentioned.  Most successful private developers have sufficient ‘surplus’ income to cope with the increased monthly outlay to cover another mortgage.

Some amount of flexibility will be needed to cover unforeseen problems, but the contingency fund will be in place to cover them.

There are not really many valid reasons why novice developers should find themselves enduring financial hardship to get their project completed.

To conclude, sensible and realistic budgeting should go a very long way to managing the anticipated risks involved.  However as I’ve mentioned already, property development and investment is risky; if it wasn’t, there would be no money to be made in it.

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