Today’s statistical analysis from the ONS makes interesting reading. There was somewhat of a furore about a year ago when the ONS published – for the first time having taken over the statistical responsibility from MHCLG – the 2016-based Household Projection figures. These updated figures were interpreted by many to mean that fewer homes needed to be built than was previously thought. In particular, those arguing for lower levels of housebuilding saw the numbers as justification to scale back housing plans.

However, this approach risked undermining the government’s pledge to prioritise housebuilding and the overall national target of 300,000 new homes built every year. As a result, Government quickly stated that when calculating housing need, the previous2014-based Household Projections should be used. The primacy of the 2014-based figures was re-confirmed inupdates to the Planning Practice Guidance earlier in the year.

Given that today’s analysis concludes that the difference between the 2014 and 2016 figures were as a result of methodological improvements informing the latter, the issue looks likely to be a continued bone of contention between Local Authorities, developers and the government. Notwithstanding this, at least for now the 2014-based figures look likely to be the first port of call for the majority of base-line housing need calculations.

As featured in Planning Resource.

There has been plenty of activity in the automotive sector across the UK in the last twelve months and Scotland is setting the pace. From business acquisitions to site relocations and new build projects, the dealership market is changing and growing.

In the used car market we have seen a second CarStore open by Peter Vardy (in Dundee) and a Motor Store, by Arnold Clark which has taken the place of a former supermarket in Aberdeen.

Arnold Clark expanded in Edinburgh and Paisley after acquiring Phoenix Car Company representing Hyundai, Kia, Mitsubishi and Suzuki in the area. Also in Edinburgh, Synter have constructed a brand new Porsche dealership at Newcraighall.

Eastern Western’s impact can be seen clearly in Dundee and Stirling in particular, with the acquisition of Barnetts Motor Group. This includes Volkswagen and Mazda franchises (Dundee), as well as the acquisition of the Honda franchise from the Phoenix Motor Group.

John Clark have also been active in both Dundee and Stirling. The acquisition of the Morrisons, Land Rover, 

Jaguar and Seat business in 2017 will be an asset to Stirling as they’ll no doubt develop a new ‘arch’ concept facility. In Dundee, they also take on the Volvo brand which we understand will be housed in the former BMW dealership once that has been successfully relocated to a purpose built facility.

This represents just some of the activity over the last couple of years but is representative of the consolidation in the sector. The drive from manufacturers for improved facilities has inevitably lead to the movement of franchises and some dealer groups disposing of their business.

We suspect that consolidation in the sector will continue over the next 12 months. Dealers will seek even greater efficiencies and the network concentration will remain in the core cities and towns, which will be supported by online sales and regional service centres.

Customers are traveling further to purchase cars and consequently demand in satellite towns is likely to decline from franchised retailers. However, this will create an opportunity for the used car market, as well as alternative uses, all of which will continue to drive value. For prime sites, these will become more critical for the franchises as they’ll continue to have a positive affect on land values. Rapleys have recently brought the former Volkswagen dealership in Dumfries to the market and it is already receiving good interest. The interest is not only from the automotive sector, but from other mainstream retailers and trade counter operators.

There continues to be speculation around the impact of online business on the traditional dealership model and clearly this is having a transformational impact on the broader retail economy. In our view however, we are still some way off from the bricks-and-mortar dealership being superseded altogether. Fundamentally customers still want the showroom experience and to kick a tyre or two before making a purchase.

If you require any advice on dealerships or any automotive services in Scotland and beyond, do not hesitate to get in touch with Peter in our Edinburgh Office.

Further details of our available properties are available here:
Motherwell – click here
Dumfries – click here

Rapleys’ Charities/Non-Profit team continue to be very active in the market and are delighted to share some of our available properties:

 

   

 

A full list is available here.

Apart from our usual consultancy of building and property matters, including landlord and tenant and building surveys, we are also currently engaged in a number of exciting development projects which can be found on the download link. For a no obligation initial meeting to discuss any of your property requirements contact Graham Smith or Adam Harvey

 

We are also delighted to be attending and sponsoring the networking reception again at this years Charity Property Conference. To find out more about this event and to secure your space please follow this link. We look forward to seeing you there!

 

 

Rapleys’ Automotive & Roadside team have been very active in East Anglia with support from the recently opened Cambridge office. In the attached newsletter are some examples of recent automotive instructions – you can also click here.

The team can advise on the full spectrum of property services on a confidential basis. For full details of all available properties click here.

 

Rapleys’ Automotive & Roadside team have been very active in East Anglia with support of service lines offered from the recently opened Cambridge office. In the attached are some examples of recent petrol filling station and roadside retail instructions. Click on the download button for full details.

For our full list of available properties click here. 

 

The last market update, in February 2018, was delivered as the potential takeover of MRH by MFG was announced. At the time we predicted corporate activity would remain high and as we reflect and look forward, that is certainly still a strong theme within the industry.

Since the takeover of MRH by MFG we have seen many changes. Petrogas’ takeover of Welcome Break (reflecting our prediction of the market looking at Motorway Service Areas); Harvest Energy purchasing HKS; Phillips 66 buying NJB group; and Cretas acquiring 6 sites from David Taylor Forecourts.

These changes have seen a number of oil companies joining the likes of Esso, BP and Shell in both offering supply agreements and retailing directly themselves.

Elsewhere, the independent operators (Indies) have continued their growth both in this country and abroad with acquisitions in the USA, Italy and Australia for Euro Garages. Other Indies have continued to look to acquire sites in the UK however, there remain relatively few opportunities on the open market – as has been the case for the last few years.

The corporate acquisition currently hitting the headlines, which potentially has the biggest effect on the market, of course is Sainsbury’s buying Asda, and it hasn’t even happened yet. The CMA has been investigating the potential issues of this deal and the initial report was fairly damning. The CMA predicted that the merger would lead to fuel price rises, which presumably reflects the different pricing policies that the two supermarkets currently run. That said, it does also suggest any site currently close to an Asda petrol station might be seeing better margins in the future, if the sale does take place.

The total number of operational sites has again been relatively stable with a net closure of only 12, after 70 new sites opened, or re-opened. We expect this trend to continue and indeed we recently let a site that had been closed for over 15 years! There have also been a number of sites that have been knocked down and rebuilt, refurbished or extended. We expect this process to continue as forecourts continue to modernise in line with customer expectations.

The last 12 months have also seen an increase in collaborative work with our Planning team on several sites. Looking at extending opening hours, which will only add to the potential for operators to improve trading.

Outside of corporate and property acquisitions, the market has seen a few other changes. In June there was a massive 6p jump in the price of a litre of unleaded – it is worth noting since then prices have stabilised.

Electric charging has continued to grow with Tesco tying up with VW and BP’s acquisition of Chargemaster. Whilst electric vehicles are still only a small part of the market we expect that this will continue to grow and petrol stations will look to incorporate those on sites where there is a market for charging.

Going forward, we expect 2019 to be more of the same; corporate acquisitions, demand for new to industry sites and potential for existing sites to improve with new options.

However any prediction of 2019 can not avoid the looming presence of Brexit. At the time of writing, nothing had been decided and we haven’t seen signs of any major effects on the petrol retailers. The effect on the economy as a whole is more likely to be an issue than to retailers themselves in the long term, but like everyone at present, it’s a wait and see situation.

If you are looking for further sites or currently have a site that you need advice on do not hesitate to get in touch.

As the Scottish Planning Bill continues to make its way slowly through the Parliament, further concerns are being raised at the cost of the amendments proposed at Stage 2.

MSPs on the local government committee had made 230 amendments to the bill adding in extra powers and responsibilities for planning authorities.

A new Financial Memorandum on the Bill has also been published and it highlights a few key figures which would result from these proposals:

  • Planning Authorities could see up-to an additional £75 million of costs for managing the system
  • Businesses/development community could see more than £400 million in additional costs

Since the turn of the new year, many of us involved in advising clients and working within the planning system, as well as economists and professional bodies have voiced concerns at the nature of this Bill and how it has been transformed from its original purpose. From our considerable experience of working across numerous Planning Authorities in Scotland, Rapleys agree that this additional financial burden will do nothing to help the already stretched planning services. How this helps make Scotland a competitive and attractive location is also questionable.

There has to be a realisation that if Scotland makes the planning system too difficult and burdensome for those seeking to invest here then that capital can go elsewhere.

Rapleys Scottish Planning Team has been and continues to monitor progress of the passage of this bill in order to be able to fully advise on its potential ramifications on our existing and future clients, and we would be interested to get the views of others on this crucially important stage.

Please contact James Reilly or Grant Allan to discuss the bill, or for any general planning requirements.

As part of a series of announcements last week, the Government surprised many by replacing its national planning policies with a revised National Planning Policy Framework (NPPF). However, now that the dust has settled it looks like two of the other announcements, changes in National Planning Practice Guidance and the Government’s first annual reporting on its Housing Delivery Test, are nevertheless as, if not more, relevant.

Another National Planning Policy Framework (NPPF)

The original NPPF was published in 2012, and it took six years to be replaced in July 2018. Less than 9 months later, this document has now been superseded. However, the changes in the document appear, at first glance, to be minor at best. The substance of the changes can be summarised as follows:

• As a result of a European Court of Justice (ECJ) ruling, a paragraph has been changed to make it clear that the presumption in favour of sustainable development does not apply where the proposal will have a “significant effect” on a habitats site, unless an assessment has concluded that the proposal will not adversely effect the integrity of that habitats site (paragraph 177).

• A footnote has been amended to state that “where local housing need is used as the basis for assessing whether a five year supply of specific deliverable sites exists, it should be calculated using the standard method set out in national planning guidance” (footnote 37).

• An amendment to the glossary to confirm that non-major sites with outline consent should be presumed deliverable, unless there is evidence that they are not, effectively flipping the presumption for this type of development (definition of “deliverable sites”).

• A further glossary amendment to clarify that alternative approaches to the standardised method of calculating housing yield should only be used in policy making and not, for example, housing land supply statements (definition of “local housing need”).

All in all, the changes to the NPPF can be boiled down to; one change in the main body of the document, one footnote change and two glossary amendments. As such, they represent a tightening up of the 2018 version rather than indicating any broader change in approach.

On the positive side, planners across England will be heaving a sigh of relief that they don’t have to memorise another raft of paragraph numbers. However, the publication of such a similar policy document, so soon after the last one, raises the question of whether we can expect new NPPFs to be published on a regular basis.

Practice Guidance changes relative to calculating housing need

In an attempt to simplify the system, last year the Government introduced a standard method of calculating housing need, based on household projections. However, this was somewhat undermined by the publication, last autumn, of new household projections based on 2016 data, which suggested, when applied to the standard methodology, a housing need that was far below the Government’s nationwide aspirations.

The Government has since made it clear that these projections should not be used, preferring the earlier, 2014 based data. Last week’s change to practice guidance represents a further cementing of this position. However, this is likely to prove temporary as the Government is reviewing its methodology and we can expect further announcements on this later in the year.

Housing Delivery Test (HDT) results

HDT was introduced by the Government in the 2018 NPPF as a way of measuring the actual delivery of additional dwellings in a local authority area against need. The results of these tests are of high importance to both local authorities and developers; substantial under-delivery against the test triggers the presumption in favour of sustainable development.

The results indicate that over a third were below the 100% pass rate and many were considerably lower. Of these, 87 of the worst performing local authorities will need to apply a 20% buffer when calculating housing need. In addition they, and a further 22 authorities, will need to produce “action plans” to remedy the situation.

The presumption in favour of sustainable development has not been triggered by any local authority yet, but this is because the threshold for substantial under-delivery is currently 25% of need. It will rise next year, and then again in 2020 to its final level of 75%. Around 20% of local authorities would currently fail against this yardstick.

Summary

The release of new national policies would normally be a major planning story, but in reality the changes are incremental and reflect government thinking that we were already aware of. The same is true of the changes to planning practice guidance.

In this context, the biggest takeaway of last week’s announcements is likely to prove the HDT results – these illustrate that housing delivery falls short (in some cases far short) of Government aspirations. Although this is hardly news in itself, local authorities will be under considerable (and growing) pressure to increase the numbers of new homes, particularly in the worst performing areas, with knock-on opportunities for developers and landowners.

If you would like to discuss how the planning system might add value to your property portfolio, please do not hesitate to get in touch.

Rapleys’ Retail & Leisure team are pleased to be reporting a number of significant deals, see the download. 

Speak to Richard Curry, Partner, Retail & Leisure Group, for more details on 07876 747146 or via email.

 

Following another exciting and active year Rapleys are delighted to see the range of clients and projects continue to grow across all property sectors nationally. It is encouraging that any doom and gloom in the media is not what we have been experiencing. Perhaps our clients are being a bit more cautious but if anything this gives us a greater opportunity to provide crucial and practical Neighbourly Matters advice to reduce levels of uncertainty for them and their investors.

From arenas to offices, hotels to fire stations, universities/student accommodation developments to strategic city centre reviews to car showrooms and high rise residential buildings; the cross section of work undertaken and our geographical spread has been wide. These projects all bring with them individual and exciting challenges, whether our client is the developer or neighbours to the development.

We’ve also had a busy year promoting the service having delivered over 50 seminars to developers, architects, solicitors and local authorities as well as speaking at industry conferences. In addition to several published articles on our specialism, we have also developed a dedicated website to collate all our Neighbourly Matters services together: www.rapleysrightstolight.com

In November we were thrilled to host our first client drinks reception in the new London office which helped demonstrate the new in-house Rights to Light and Daylight & Sunlight analysis we can run. Bringing this in-house has certainly been an aspiration fulfilled, ensuring we continue to be as responsive, competitive and agile as possible for our clients.

Peer recognition in the industry is always welcome and there were two notable achievements in the past twelve months. As you may be aware, the RICS has launched a new Rights to Light pathway to chartership status and our own Dan Tapscott was only too happy to accept the invitation to become an assessor to assist in bringing on those entering the profession. Similarly, Dan was approached to be on the panel of the Bristol Urban Design Forum to critique significant and substantial upcoming planning applications which is both rewarding and insightful.

Of course Dan would not have been able to take up such roles were it not for the wider Building Consultancy Group, especially Natasha Bray, who leads the service in our London office. Natasha has been with us just over a year and has been a fantastic addition to Rapleys. Input from the Building Surveyors has also been substantial and invaluable in the delivery of our Party Wall service.

Turning to this year, we are on an ambitious recruitment drive throughout our network of offices to keep our exemplary service deliverable. If you are or know someone who would be keen to join us, please get in contact. There are positions available across the sector so get in touch with Dan Tapscott for the Neighbourly Matters roles or Justin Tuckwell, Head of Building Consultancy Group, for the other surveyor roles.

 

Following a two year delay since the first draft of the Greater Manchester Spatial Framework (GMSF), the revised draft was finally approved by the Combined Authority on 7 January. Once adopted the GMSF will provide the strategic plan for the ten combined authority areas of Bolton, Bury, Manchester, Oldham, Rochdale, Salford, Stockport, Tameside, Trafford and Wigan.

If you have sites in any of these areas, now is the time to be considering promoting or protecting them through the planning system.

The revised draft follows Mayor Andy Burnham’s manifesto pledge of 2017 for a ‘radical rewrite’ to ensure no net Green Belt loss. In reality, this has been impossible to achieve, but the revised net loss of the Green Belt (at 2,419 hectares) has been reduced by around 50% with, instead, a clear focus on making the most of Greater Manchester’s brownfield sites.

Other notable changes include:

  • Prioritising redevelopment of town centres and other sustainable locations;
  • A revised minimum housing target of 201,000 net additional dwellings to be delivered over the period 2018-37 (an annual average of around 10,580) – a drop in average homes per year of about 7% compared to the 2016 draft;
  • Optimising densities in sustainable locations with a requirement of up to 200 homes per hectare in city centre locations, 120 homes per hectare in designated town centres and up to 70 homes per hectare in other town centres; and
  • A marginally greater increase in industrial and warehousing floorspace, of 4,220,000 sq m (compared to the 2016 target of around 4,000,000 sq m between 2015-2035).

Notwithstanding the overall reduction in the annual housing target, it will represent a challenge for some local authorities to deliver the number of homes now identified for their areas, with our assessment indicating that Stockport, Trafford and Oldham will be a key focus for new residential development in the context of existing delivery rates and 5YHLS. Depending on revised delivery test and 5YHLS figures, other authority areas may also need to find more sites for housing.

The current consultation and the updates to the 10 Local Plans that will follow therefore represent an important opportunity for businesses and landowners to promote sites and/or ensure that existing interests are protected. Rapleys can advise in this process so please do contact us for more information.

 

Two years after the original draft was torn up, the Greater Manchester Spatial Framework has now been rewritten. Whilst the rewrite represents a significant change in approach from the authorities, does it go far enough in aiding growth ambitions in the region?

On 21 January 2019 the rewrite of the Greater Manchester Spatial Framework will go out to consultation for an 8 week period. The document has been highly anticipated and when compared to the 2016 consultation document, it is refreshing to see the change in approach from the Greater Manchester authorities. The amount of Greenbelt to be released now stands at around 50% of the amount previously proposed and there is a renewed focus on meeting the need for new development through Brownfield sites.

Alongside the scaled back Greenbelt release, housing targets have also been decreased from 227,000 in 2016 to 201,000 in the current document. This 26,000 home decrease is likely to be viewed negatively by the development community and advocates of growth for the city region. It is considered that the scaled back Greenbelt release and the decrease in housing targets will be challenged by the development community through the consultation exercise and subsequent examination of the plan.

This plan has a greater focus on housing delivery via Brownfield sites and high density development in the most accessible locations. This in theory, represents the most sustainable approach to housing delivery, however actually delivering development on Brownfield sites is often more complex than it may initially appear.

To ensure these sites can practically meet the housing needs, contaminated land must be remediated, site constraints must be overcome and appropriate infrastructure provision will need to be in place. In many locations throughout Greater Manchester, the key to these sites coming forward will be the public and private sector working in partnership, as many sites will simply not stack up in viability terms at present for private sector developers alone. This approach has already been seen throughout Greater Manchester with many regionally important schemes being brought forward on this basis.

The shift towards an increased quantum of development in town and city centres within Greater Manchester, bringing more residents to these areas, can only be seen as a positive. The increased urban population will in turn, increase the amount of available expenditure and benefit the retail and leisure sector within these centres.

However, many town centres within the region simply have too much retail floorspace at present, which is no longer needed to serve their role and function. This surplus space should be consolidated through redevelopment or diversification. Secondary and tertiary centres also no longer need the wide range of retail representation they once had due to seismic change in shopping patterns currently being experienced.

Overall, the adoption of this plan is fundamental to ensuring the need for new development across Greater Manchester can be met. The delays in the plan coming forward to date have hindered the ability of investors to make decisions on development proposals in the region and hopefully, momentum is now behind the new plan which will get it over the line and provide certainty.

The plan will also provide the 10 Greater Manchester authorities with a basis on which to prepare their own Local Plans, which will work alongside the framework.

That said, political change and pressures still have the potential to de-rail the new plan’s progress. The key point of disruption in the Greater Manchester Spatial Framework’s progress was the appointment of Andy Burnham as Mayor, which led to the plan being rewritten. Therefore getting a final plan agreed and submitted for examination before the next mayoral election in 2020 is likely to be crucial.

The Greater Manchester Combined Authority has confirmed that the official consultation period on this plan will run from 21 January to 18 March 2019.

If you would like any further information or wish to discuss how Rapleys can assist in promoting development sites within Greater Manchester via the new spatial framework and forthcoming local authority development plans please get in touch.

 

As we soar into 2019, there is no slowing down across the business and the Building Consultancy Group, in particular, are delighted to announce exciting opportunities to join their team.

As the service experiences rapid expansion across the network of UK offices, there are several graduate surveyor positions available in Bristol, London, Manchester, Birmingham and Huntingdon. To add to this, Bristol also require a Neighbourly Matters assistant to join the team in carrying out essential work in this highly specialised area.

Collectively, the team cover the full spectrum of services from party wall advice, dilapidations, project work, building surveys and everything in between. The role will be fast paced and provide an excellent platform to harvest all the skills required to progress your career with us.

We recruit and retain knowledgeable and passionate professionals and provide a collaborative culture that enables individuals to thrive in our robust training and development programme. Through this system, Rapleys are proud to be recognised as an Investors in People awarded company, independently verifying our commitment to you.

For more details you can go directly to our jobs page and view the various positions or speak to Justin Tuckwell, Head of Building Consultancy Group, on the available opportunities.

Case Study 

Rapleys acquired a site, of circa 2.4 acres, for a new build dealership to be fully compliant to Ford’s corporate identity. The site includes a 6 car showroom, 10 bay workshop, parts store and a fully surfaced site for used car display and new car storage.The client needed the project delivered in 12 months due to relocation.

The client’s previous site was sold by their landlord and therefore they had to relocate relatively quickly. Rapleys were appointed to acquire the site, successfully finding somewhere suitable for redevelopment and terms were agreed on a subject to planning basis. Once planning was approved, Rapleys acted as Lead Consultant, procuring other consultants services, and Project Managing the delivery of the new dealership.

Successfully managed the project team, delivered the brief on time and on budget to the clients satisfaction.

In the Budget Statement on 22 November the Chancellor announced “Retail Relief” but there were no specific details of the type of property that would be included in the scheme.

The Ministry of Housing, Communities & Local Government has recently issued a retail discount – guidance note and it was thought to be important to make clients aware of the guidance note which can be accessed here.

The relief will apply to properties for the 2019/2020 & 2020/2021 rate years with a Rateable Value of less than £51,000 and which meet the following requirements as detailed in the guidance note:

We consider shops, restaurants, cafes and drinking establishments to mean:

1. Hereditaments that are being used for the sale of goods to visiting members of the public:

  • Shops (such as: florists, bakers, butchers, grocers, greengrocers, jewellers, stationers, off licences, chemists, newsagents, hardware stores, supermarkets, etc)
  • Charity shops
  • Opticians
  • Post offices
  • Furnishing shops/ display rooms (such as: carpet shops, double glazing, garage doors)
  • Car/ caravan show rooms
  • Second hand car lots
  • Markets
  • Petrol stations
  • Garden centres
  • Art galleries (where art is for sale/hire)

2. Hereditaments that are being used for the provision of the following services to visiting members of the public:

  • Hair and beauty services (such as: hair dressers, nail bars, beauty salons, tanning shops, etc)
  • Shoe repairs/ key cutting
  • Travel agents
  • Ticket offices e.g. for theatre
  • Dry cleaners
  • Launderettes
  • PC/ TV/ domestic appliance repair
  • Funeral directors
  • Photo processing
  • Tool hire
  • Car hire

3. Hereditaments that are being used for the sale of food and/or drink to visiting members of the public:

  • Restaurants
  • Takeaways
  • Sandwich shops
  • Coffee shops
  • Pubs
  • Bars

The guidance note also mentions that if a Rateable Value that was originally less than £51,000 is increased to that figure, or above, then the relief will stop from the date of increase.

The European Union State Aid De Minimis Regulations will apply so a business is only entitled to 200,000 Euros of State Aid in a three year period (the current financial year and the two previous financial years).

If the UK leaves the EU on 29th March then the guidance note mentions that the Government will transpose EU State Aid Rules into UK domestic legislation.

The list below sets out the types of uses that the Government does not consider to be retail use for the purpose of this relief.

Hereditaments that are being used for the provision of the following services to visiting members of the public:

  • Financial services (e.g. banks, building societies, cash points, bureaux de change, payday lenders, betting shops, pawn brokers)
  • Other services (e.g. estate agents, letting agents, employment agencies)
  • Medical services (e.g. vets, dentists, doctors, osteopaths, chiropractor
  • Professional services (e.g. solicitors, accountants, insurance agents/ financial advisers, tutors)
  • Post office sorting offices

Local authorities have to determine for themselves whether particular properties are broadly similar in nature to those above and, if so, to consider them not eligible for the relief under their local scheme.

For any help on your business rates please contact Alan Watson or Stacey Jolly.

 

Buoyed with revised forecasts from the OBR, the Chancellor certainly had more wiggle room on Budget day than many expected, but there are questions over how his despatch box announcements will impact the delivery of much needed new housing. In other news, the Government is gathering opinions on two key housing related initiatives.

The Budget

In advance of the Budget, planning matters were heavily trailed, particularly in terms of promoting housing and rejuvenating the high street. However, perhaps inevitably, firm announcements were arguably a little thin on the ground.

In terms of housing, an extension (albeit a temporary one) of Help to Buy and the roll-out of backdated stamp duty relief for first time buyers of shared ownership property will likely provide a welcome boost to the voting public seeking to get on the property ladder. The stimulus package to support smaller house builders as well as strategic partnerships with nine Housing Associations across England will also be welcomed.

However, beyond this, a major focus relative to housing was on the publishing of the full recommendations of the Letwin review. Critically, Letwin found no evidence to support the allegations of so-called ‘Land Banking’ levelled against many developers. The real reasons behind the gap between planning consent and housing delivery are, as many planners would attest, far more complex (so complex, in fact, that the Government’s response will not be published until February next year).

Letwin’s recommendations relate particularly to the largest development sites (i.e. those with more than 1,500 homes) and would potentially see planning rules requiring developers to offer a range of “housing products” (which already happens to a large extent) and allowance for a bigger role for councils. When responding to the report, the government will need to be wary of making a complex system more complicated for developers and stretched local authorities.

As for the high street, the new reduction in Business Rates for certain small businesses is a welcome move but, at the same time, those retailers who have had difficult times recently would not blame this factor alone – rates are an important, though singular, piece of this puzzle. In terms of planning, the chief response was the announcement of a consultation to further extend permitted development rights – further details below.

Consultation 1: “Supporting the high street and increasing the delivery of new homes”

Although this consultation takes in a number of matters, such as reforms to how local authorities can dispose of surplus land and compulsory purchase guidance for new town development corporations, the most eye-catching part of this consultation is proposed extensions to permitted development rights.

These include:

  • Greater flexibility relative to land use in the high street although the only new suggestion relevant to the delivery of housing is the suggested ability to change the use of takeaway premises to residential without planning permission, which will surely have, at best, a limited impact.
  • The ability to add floors to existing development (potentially up to five storeys) without the need for planning permission – although, reading between the lines, the tension between this initiative and how it would take local circumstances into consideration is exercising the Government.
  • The ability to demolish commercial buildings and redevelop sites as residential without planning permission – this would, potentially, be a major step, and if implemented is likely to be highly restricted/controlled.
  • Other matters, including increasing the scope of permitted development in terms of electric charging, and a proposal to make permanent some temporary measures, specifically the ability to change storage and distribution facilities to residential use and residential extensions.

All in all, the consultation suggests some fairly sweeping changes relative to the delivery of housing. However, in our view it falls short in terms of land use in the High Street – many were hoping for a further widening of permitted development relative to converting shops to residential. Comments on the proposal are sought before 14 January 2019.

Consultation 2: “Technical consultation to updates to national planning policy and guidance”

Announced the Friday before the Budget, the Government is also seeking views on matters relative to national planning policy. Given that the NPPF was only adopted in July, it might seem slightly counter-intuitive to be considering changes already, however as much as anything this consultation is about how local authorities should consider housing need through the planning policy process, in light of the household projections, based on 2016 data, released by the ONS in September.

As suggested by the title, the consultation is somewhat technical, but the broad background to this is the Government’s moves to standardise the calculation of housing need across England (Standard Objectively Assessed Need, or SOAN). Using the Government’s methodology, SOAN is calculated using household projections as a starting point. However, the latest household projections were seen as putting a spanner in the works, as in many places the resulting SOAN calculations resulted in a significant drop in numbers, in sum falling far short of the Government’s aspirations to deliver 300,000 new homes per year.

For those following this closely, the headlines are:

  • For the short term, 2014-based household projections should be used as the demographic baseline (not the aforementioned, and lower, 2016-based projections).
  • It is clarified that the 2016-based projections cannot be used as an ‘exceptional circumstance’ to justify a departure from the standard methodology.
  • In the long term the standard methodology will be reviewed to support the aspiration of delivering 300,000 dwellings a year.

Other matters included within the consultation include defining “deliverable” in terms of housing, and a suggestion that the assumption in favour of sustainable development should still apply for development requiring a Habitats Regulation Assessment, if there is no adverse effect. Comments are sought before 7 December 2018.

If you would like to respond to the consultations, or discuss the Government’s changes to the planning system further (and in particular explore how they could add value to your property portfolio), please get in touch.

Jason’s comments were cited further in CityAM 30 October 2018 – click here

The very public collapse of House of Fraser and Homebase highlights, once again, the need for retailers, shareholders and landlords to be realistic about the potential pitfalls and solutions created by property assets in an insolvency or distressed sale situation.

Mike Ashley offered £50m for HoF before administration, but once creditors rejected a Company Voluntary Arrangement (CVA) and it filed for administration, an insolvent HoF was worth £40m more to him and Ashley upped his bid to £90m. Why?

Insolvency versus CVA

The benefits to a purchaser of buying an insolvent company is the ability to jettison existing creditors, to negotiate with landlords to novate leases, renegotiate terms with suppliers, vacate properties and to avoid the costs of dilapidation charges to exit stores and of writing down stock. To Mike Ashley, £40m was the opportunity cost of obtaining all the same restructuring choices retailers are increasingly looking to achieve through a CVA – but with a completely free hand.

In contrast, and possibly even because of what unfolded at HoF, nearly 96% of Homebase’s creditors approved a CVA. These creditors will incur the costs of supporting the proposal but the potential upside to the company and ultimately to them, is a return to profitability and of course continued occupation of their asset.

Monthly rental payments, downsize options, rent concession periods and business rate reductions are all tools the Homebase CVA is seeking to implement. Currently 42 of its 241 stores will shut and head office jobs will go. The business plan to improve financial performance over the next three years across a significantly rationalised store portfolio will be the test of a successful CVA process and will be watched closely by the market.

Step change

CVAs, just like Administrations, are governed by the Insolvency Act 1986 but are more restrictive. Whilst there is a growing trend for retailers to seek the CVA route and categorise landlords into different pots as a means of restructuring, it is nothing new.

A decade ago, retailer The Works was under administration. The purchaser didn’t want all the stores so ahead of the sale, and to facilitate the deal being done, some stores were closed and some taken on a ‘licence to occupy’ for between a month and up to a year, allowing the purchaser to renegotiate lease terms, assess trading levels or trade out stock.

So, whilst not a new phenomenon, the pace and frequency of the CVA process is undoubtedly increasing.

Will retailers use insolvency/CVAs to ditch unprofitable stores?

A perfect storm is brewing; declining sales, increasing costs, rising business rates, Brexit-related currency fluctuations, the introduction of the national living wage and apprenticeship levy, and the rapid growth of online retailing. The result is many retail and restaurant businesses toying with CVA or even administration, as a ‘simple’ way to shed unprofitable stores.

Thankfully, there is nothing to suggest, yet, that operators are jumping the gun and using this tool to get their businesses into better shape. This may be because there is still a stigma that comes with pursuing this route and the increased corporate governance scrutiny means directors risk prosecution if their actions are seen to defraud creditors.

CVAs often allow a company to keep trading, which may prove a better outcome for creditors, long-term, than going into administration. For purchasers, buying out of administration allows an element of wiping the slate clean, enabling fresh negotiations on every element of the business, including property assets. As pressure on the high street continues to mount, it’s clear that flexibility and imagination are needed from both retailers and landlords to use property assets more creatively to prevent sizeable losses on both sides.

To learn more or discuss how Rapleys can assist contact Alfred Bartlett, Head of the Retail & Leisure Group or Russell Smith, Partner in Retail & Leisure Group. This article can also be viewed on the CoStar column

As part of emerging growth plans for the Oxford – Milton Keynes – Cambridge Arc, which includes the £215 million Growth Deal for Oxfordshire announced in late 2017, the Government has published a plan showing the broad alignment of the Oxford to Cambridge Expressway, a key component of its future growth strategy for the Arc.

The Oxford – Milton Keynes – Cambridge Arc is one of the most economically successful in the country and competes internationally for high-tech and science investment. Following a request from the Government, the National Infrastructure Commission investigated ways to maximise the potential of the area. The report subsequently published in November 2017, concluded that rates of house building in the area will need to double if the arc is to achieve its economic potential.

The absence of a direct dual carriageway link between Oxford and Cambridge had been recognised as a significant infrastructure barrier and constraint to growth. To address this, in November 2016, the Oxford to Cambridge Expressway Strategic Study Stage 3 Report (Highways England/Department of Transport) was published and identified three corridor options for further assessment:

  • Option A: a northern option, roughly following the existing A421 to the south of Bicester and via Buckingham to the east of Milton Keynes.
  • Option B: a central option, following the east-west rail corridor.
  • Option C: a southern option via Aylesbury, linking to the M1 south of Milton Keynes.

A decision on the preferred corridor option for the expressway has been eagerly awaited by the development industry. There are areas within this corridor and in close proximity to the expressway, that will in future become natural locations for strategic housing and employment growth that will be identified in future Local Plans. The announcement this week, that Option B is the preferred broad alignment will help to define the parameters of this critical growth axis and establish areas of search for long term strategic development opportunities.

Rapleys has significant experience in undertaking site searches and identifying long term strategic development opportunities. For further information please contact either Tony Clements or Dan Sharp.

All eyes are back on the Sainsbury’s–Asda deal after the Competition & Markets Authority (CMA) announced the start of its investigation. Should the deal progress, everyone will be closely watching what happens to the combined business’s property portfolios should the CMA force a sale of stores.

Digging below the surface, we might read this as being phase two of Sainsbury’s strategy of pushing into the discount market. Asda traditionally has a reputation for value and a core customer base which is, generally speaking, a different demographic from the average Sainsbury’s shopper. There are also geographical factors at play here, with Asda strong in the north and Sainsbury’s in the south.

In the case of retained stores, Sainsbury’s will be acquiring some significant issues. The extent to which the Asda stores holding company continues to operate and whether Sainsbury’s decides to, or is able to, guarantee the status of Asda stores may have a real impact on landlord relationships and negotiations in the future.

It is possible that we will see some sort of restructure, with retailers turning to mechanisms such as CVAs, even in businesses that are performing well, to force a conversation with landlords.

At the same time, it shouldn’t be forgotten that both Asda and Sainsbury’s sweet spot is in food retail, with many of the stores Sainsbury’s is acquiring are just too big for the market these days. The fact is that many food retailers are now facing the challenge of having significant surplus space because of historic expansion strategies – an issue Sainsbury’s itself sought to mitigate with the acquisition of Argos. Asda’s policy has generally been based on very large-volume stores and while it has a decent non-food range, the format on the whole is not optimised around the core food product.

Looking ahead, if the CMA forces a re-sale of stores, the irony is that the likely buyers are just those brands – Aldi and Lidl – that Sainsbury’s is looking to defend itself against.

Amazon ambitions

Debate will continue to swirl around Amazon’s bricks-and-mortar ambitions and they will likely be part of the equation, even if they’re not going to be a realistic suitor for true customer-facing stores.

What is perhaps more interesting is whether the CMA considers the likes of B&M and Home Bargains in its deliberations. In some of their larger stores, despite having a restriction of 30% food sales, they could be offering an equivalent sales area to the likes of Aldi and Lidl.

They would be more able to maximise the space on offer in any larger stores that the CMA forces the disposal of, and could arguably compete with the discounters, as well as Sainsbury’s and Asda, on both food and non-food.

Overall, in any enforced sale the most attractive sites will likely be any freehold stores in the Sainsbury’s/Asda portfolio, which may be sacrificed by Sainsbury’s/Asda in order to fulfill the merger requirements.

Another possibility in this scenario is that if no, or limited, prospective buyers for the largest sites can be found, the CMA may be forced to consider forcing a sale of Sainsbury’s smaller or convenience stores. These would arguably be much more attractive to potential buyers and any significant convenience portfolio reduction could be a real fly in the ointment for the merger.

For further discussion or information get in touch with Richard Curry, Partner in Rapleys Retail & Leisure Group. The full article can be viewed here in Property Week as well as The Grocer and European Supermarket Magazine.

We have restructured our retail and leisure business to operate as a single, dynamic and cohesive entity in the interests of more finely responding to the current challenges, and opportunities, facing today’s market place.

Previously, the partnership’s retail and leisure offer was split into Agency, Development and Lease Consultancy services operating from four of our six offices. Now, the function will combine these services into a single nationwide team as supplemented, where necessary, by the advice of our Investment, Asset Management, Town Planning and other related services. The new retail and leisure offer, with associated services, will be across the entirety of our office network.

The new Retail and Leisure Group focuses on all areas of the sector, including food and beverage, and offers its clients a comprehensive service from deal origination through acquisition, development management, lease consultancy and disposal/exit. As part of its remit the team is addressing an increasing demand to advise and devise strategies to let vacant space, or boost the appeal of new developments or existing schemes, in the face of an ever changing market as fuelled, at least in part, by online competition. Through the combination of our national skill base and regional expertise the new Group has already been successful in working with, amongst others, operators and landlords to either source the right floor space opportunities or attract an appropriate and robust tenant mix across a number of schemes.

The new Group is headed by Equity Partner, Alfred Bartlett, who commented that “This is a progressive move by the partnership and I am delighted to be heading this exciting group within the business: the co-ordination of which has already resulted in some significant wins for national retailers, lifestyle operators, investors, developer and others. The retail market is, clearly, providing opportunities from the widely reported challenges and we look forward to assisting our clients, in the future, in realising their goals and aspirations.”

Alfred is supported by fellow Equity Partner, Russell Smith, in managing the Group. Other partners include Tim Holt and Richard Curry. A number of new appointments throughout our office network have also been recently made within the Group, including Henry Lang in Bristol, Matthew Guest and Jonathan Jones in Birmingham, Thomas Ball in Manchester and Rebecca Hughes in Edinburgh. There will be more to come.

If you would like to know more about the group, or simply wish to discuss your future requirements, please do not hesitate to get in touch. We will be delighted to hear from you.

 

A Right to Light is an easement where apertures, such as windows and doors, can acquire or be granted rights that are protected by law. If additional massing is proposed close to any neighbouring apertures, it is very possible the light loss may be considered to be actionable.

Such actions range from simple conversations with the development site owner, to formal negotiations and can even go as far as needing the input of the courts. One of the more formal means by which to finalise any dispute over Legal Rights to Light is via the use of a Summary Judgement. This simply is a request to the court to decide on the issue without the need for a trial.

The recent case of Beaumont Business Centres Ltd v Florala Properties Ltd brings the use of Summary Judgements back to the forefront. In this case a Summary Judgement was sought by the property developer to finalise the dispute with the neighbour.

During this, the property developer made reference to a deed between the objecting party and their former and present Landlords. This stated that should light loss occur as a result of an increase in height of the development property, the former Landlord and objecting party (tenant) would have the right to negotiate a settlement.

The property developer felt that this clause highlighted that the intention of the objecting parties were to use this claim for monetary gain, rather than to protect their right. The seeking of monetary gain rather than preserving rights can threaten the ability to seek an injunction. As a result, the developer felt that an injunction was not the appropriate remedy in this case.

It was the courts decision that the clause did not remove the objector’s right to a full hearing on the matter of an injunction. It however, did not go on to pass comment on the likely outcome of such a trial. The courts interpretation of the deed in question was that its purpose was to make clear the beneficiaries of any negotiated settlement, rather than to only confer the ability to seek financial settlement.

Two distinct perspectives can be drawn from this case:

  1. For all property owners seeking to protect their rights against the impact of new developments, this is a win, with another case preserving the right to make a claim for an injunction; and
  2. Conversely, the property developer in this case is clearly knowledgeable enough to know the importance of the intention of the objectors claim. They took their time to understand and form an opinion on the objector’s deed, arguably using everything at their disposal to allow the development to go ahead. The area of Legal Rights to Light can easily be a minefield for less knowledgeable developers.

Clearly, the area of Rights to Light remains a challenging territory for development and growth, with the scope for a greater amount of cases to lift the veil on the multiple grey areas. With the subject of Rights to Light reform having been sidelined by the Government for the time being this case illustrates that each case is different and requires detailed, expert advice from the outset.

For further advice on Rights to Light or other Neighbourly Matters such as Daylight & Sunlight Amenity, Party Wall or Access Arrangements such as for crane oversail or scaffolding licences, Rapleys Neighbourly Matters team who operate throughout the UK will be well placed to assist. Contact either Natasha Bray or Dan Tapscott.

 

 

At the eleventh hour before Parliament broke for recess and amid a flurry of social media anticipation (“#freetheNPPF” trending heavily), the Government has finally released its new National Planning Policy Framework (NPPF), replacing the erstwhile version published in 2012.

The new NPPF represents the Government’s planning policies for England when local authorities are determining planning applications, albeit it will only come into force relative to local plan making for plans that are submitted for examination after 24 January 2019.

The document has been sold by the Government as a key tool in unlocking housebuilding, but in truth it is very tempting to see it as an update of its predecessor, rather than a root and branch reform. For example, the concept of the “presumption in favour of sustainable development” remains, and the policy framework relative to matters such as retail and the Green Belt remains largely unaltered.

Nevertheless, there are a number of important headlines, as well as concepts formalised, within the document. Some of the key points arising are as follows:

  • Standardised housing need – the Government’s standard methodology for calculating a local authority’s need for housing will come into force on an England-wide basis in January 2019. However, allowance is made for local plans not meeting all of its identified need for housing in “exceptional circumstances”, and one can anticipate a number of local authorities arguing that these arise in their areas.
  • Housing delivery test – every November, the Government will publish statistics of how many new homes are delivered in each local authority against the number of homes needed (see above). Where authorities score poorly in this will trigger the “presumption in favour of sustainable development” (as will a lack of five year housing land supply). Most developers will welcome this, but it can be anticipated that how this works in practice will be debated for some time to come.
  • Green Belt – although the basic principles of the Green Belt remain from the previous NPPF (which, in itself, broadly replicated its predecessor on the matter, PPG2), there are some differences. Potentially the most significant change is the inclusion of the redevelopment of brownfield sites that would “contribute to meeting an identified affordable housing need” and not cause “substantial harm” to the Green Belt as “appropriate development”.
  • Viability and affordable housingunlike the draft NPPF published earlier in the year, the final document explicitly confirms that developers will continue to be able to submit viability assessments on individual sites at the planning application stage. However, the onus is on the developer to make a site specific case. Local authorities are given discretion as to how much weight this should carry, and the price paid for a site cannot be used as a basis for benchmark land value. The Government published new guidance providing further details on this in parallel to releasing the NPPF – we will issue a more detailed newsletter on the key points arising shortly.
  • Design quality – the document places additional focus on design and indicates that the quality of development should not be “materially diminished between permission and completion” – however, few suggestions are presented as to how this should be implemented.
  • Residential density – the well-established principle of making the best use of land is strengthened, and the document states that local authorities should adopt minimum density standards in their areas, and take a flexible approach to matters of daylight and sunlight.

Looking at the bigger picture again, although the focus on dealing with England’s massive shortage of housing is laudable, there is a risk that other land uses are overlooked. Not least, the NPPF appears to have little new to say as to how the planning system can ensure employment-generating development (not least retail) can adapt to an ever-changing economy.

Largely, the NPPF should be seen as evolution of the existing planning system, and it is a positive step forward even if it is not a leap. However, if experience from the last NPPF is anything to go by, one can expect a flurry of appeals over the coming years as developers and local authorities put the document into practice.

For any future details on this Planning Policy please get in touch directly with Jason Lowes, Partner in Rapleys Town Planning department.

This week, the Scottish Government Reporters recommended that the next strategic development plan for South East Scotland, SESplan 2, fell far short in terms of housing targets and needed to be revised.

Planning authorities in South East Scotland have spent four years preparing a new plan and housing targets proved the main area of contention. Rapleys have always been of the opinion that the plan did not go far enough in tackling the widely acknowledged shortfall in housing within Edinburgh, the Lothians and Fife and the same conclusion has been reached by the Reporters.

Key findings include:

  • 94,416 new homes need to be built across South East Scotland by 2030 – an increase of over 30,000 on what was originally proposed.
  • To meet this target, more land (not limited to previously developed/brownfield land) will need to be allocated for home building.
  • Planning authorities must recognise and address the shortfalls in supply that commonly arise as plans age. If too few homes are built in the first few years, more will need to be built in the rest of the plan period.

Following this publication James Reilly (Planning Associate, Edinburgh) comments: “we are pleased to see the findings of the Scottish Government Reporters which paralleled our thoughts as SESplan progressed. Being based in the SESplan area, the Scottish Planning Team are acutely aware of the housing issues in the region and have long advocated for further housing allocations across the numerous local authority areas. We understand that our clients wish to deliver new housing and this is a very positive step in helping them deliver this. We will certainly be taking these comments on board and advising clients on how to take their sites forward”.

Please get in touch with the Rapleys Scotland team (James Reilly, Grant Allan, David Costello and Richard Huteson) if you require any advice on new or existing development sites; or arrange to come into the office for an initial discussion on development opportunities.

 

 

Within the Charities sector of Rapleys we have had a number of church buildings to sell recently. We have come to expect a strong response from a diverse range of faith groups when these redundant buildings are in a city. Lately, however, rural locations have proved to be equally stimulating in responses. This is some cheer when we are equally well aware of some churches that have been struggling to keep the doors open.

All around we see closures along the high street which have left empty retail buildings. Can we find a silver lining here? Usually a church does not want to relocate; location, location, location after all! However, by integrating our ecclesiastic specialists with other teams at Rapleys, between planning, retail agency and charities consultancy, we have a one-stop-shop formula that we are finding to be of great interest to clients.

This collective approach has resulted in a number of groups being introduced to empty retail units or warehouses. Out of town retail or commercial parks can be attractive where travel and parking can be easily provided, but the location remains close. In some cases we have considered shared occupation on different days of the week.

Rapleys are currently instrumental in working with a number of churches who have existing property suitable to facilitate the development of their site to gain new facilities. The sale of part of the site is the primary funder for a new church. Not everybody is so fortunate to have such circumstances however. Therefore, the acquisition of redundant buildings might be a worthwhile consideration as an opportunity, at a preferential price or at a reduced rental. In either case there is the likelihood of follow up with a change of planning use application and maybe a conversion to suit.

The creation of new space for church activity, possibly in support of the neighbourhood, demonstrates the integration of church life with that of its community. For example, we have recently agreed many tenancies for preschool companies.

Should anything in the above strike a chord and you would like to enquire further, please contact Graham Smith in the first instance for either an introduction to the charities consultancy or any other department at Rapleys.

Rapleys’ Automotive and Roadside team has strengthened its northern presence with 3 new additions to the team; Stuart Lobb, William Seddon and Peter Paphitis. They are all based in our new Manchester home at 55 Spring Gardens and will enable us to service an ever increasing workload across all property disciplines. Our specialist sector offering also extends to planning, rating, building consultancy and project management and investment. In this newsletter we highlight some of our recent successful transactions showing the range of work we undertake in the sector.

Click here for the full newsletter.

On 6 April 2018, updated planning regulations came into force which allow for larger scale residential development to take place through the conversion of agricultural buildings, without the need for planning permission.

The amendments to the Town and Country Planning (General Permitted Development) (England) (Amendment) Order 2018 (SI 2018 no. 343) extended the permitted development rights in relation to agricultural buildings.

Permitted development rights allow for certain types of development and changes of use to be carried out without the need to submit a planning application.

Previous permitted development rights

Under the previous regulations (2015), agricultural buildings could be converted to residential dwellings, via permitted development rights, as long as the conversion did not create more than 3no. dwellings and no single dwelling could have a maximum floor space above 450 sq.m.

Permitted development rights now

The new regulations (2018) increase the number of houses that can be created from the conversion of agricultural buildings without the need for planning permission. Agricultural buildings can now be converted to provide:

  • 5no. small scale dwellings with a max floor space of 100 sq m; or
  • 3no. larger dwellings with a max floor space of 465 sq m; or
  • 5no. dwellings comprising 3no. large dwellings (a max floor space of 465 sq m) and 2no. small dwellings with a max floorspace of 100 sq m

What does this mean for land owners & developers?

The Government anticipates that the new regulations will result in an increase in the number of new homes created through the conversion of agricultural buildings. It is hoped that this will positively contribute to the supply of homes to meet local needs and result in the delivery of new houses which safeguard the character of local areas.

The changes to the regulations allow land owners and developers greater flexibility when considering the conversion of agricultural buildings both in terms of the number of new houses which can be created and the size of the dwellings. This in turn, should create more opportunities for small scale residential development within rural areas.

Whilst a planning application to convert an agricultural building to residential use is not required if the proposal meets the criteria set out above, along with some more detailed criteria, it will still be necessary to apply for prior approval from the Local Planning Authority to confirm that specified elements of the development are acceptable.

If you require further information or advice on how you might benefit from the new regulations, please contact Neil.

Rapleys Rights to Light specialist, Dan Tapscott, examines whether a recent ruling in favour of Chelsea Football Club scores big or is an own goal for the property and construction industry.

Chelsea Football Club were granted planning permission by the London Borough of Hammersmith & Fulham for a £1bn redevelopment of their Stamford Bridge stadium. This will increase crowd capacity from 41,000 to 60,000, some 17,000 of which shall be hospitality seating. The increase in total crowd capacity will bring things in line with comparable venues in London, although the level of hospitality seating will be higher than elsewhere.

Chelsea claim that the development will “further enhance the economic, cultural and social services they provide”, including £6m worth of educational programmes, a £7m improvement to local infrastructure and an additional £16.3m spent on local businesses as 2.4 million people visit the area annually.

Infringement of Rights to Light

Meanwhile, the owners of a neighbouring property (situated the other side of the railway line, within the neighbouring Royal Borough of Kensington and Chelsea) sought an injunction for an infringement of their Rights to Light. The neighbours had been in residence for over 50 years and the development was deemed as having “an unacceptable and harmful impact” on the windows and rooms directly facing Stamford Bridge. The neighbour was therefore seeking a redesign of the scheme to ensure that the Rights to Light enjoyed by their property were not affected to an unreasonable degree.

Chelsea Football Club were resistant to altering their design and had offered £50,000 worth of legal advice and compensation reported to be in the region of a six-figure sum but could not reach an agreement with the neighbour.

David & Goliath?

Broadly speaking, the Courts have been relatively biased towards awarding injunctions where injuries occur in the case of residential properties compared with commercial properties, where it is generally perceived as being more amenable in reaching financial settlements, but there have been exceptions. Therefore, on the face of it, the neighbours appeared to have a very strong case given the degree of infringement, their early objection and the fact they had occupied the property for so long; suffering the injury or moving away did not appear to be a viable option. Certainly the situation had something of a ‘David and Goliath’ scenario about it.

“Appropriated for planning purposes”

Chelsea Football Club pitched to the Local Authority that they invoked Section 203 of the Housing and Planning Act 2016. This is a simple but powerful piece of legislation whereby, if the local authority have or take an interest in the property, then it can be “appropriated for planning purposes” to assist with enabling the development to proceed for the benefit of the wider community. This effectively means that the neighbour is no longer entitled to an injunction and the levels of compensation are capped. In recent years developers for several large high rise developments in central London have asked the local authority to step in to assist in this manner but we have experience of this approach being adopted across the UK.

In this instance, London Borough of Hammersmith & Fulham appropriated the development site thereby giving the greenlight, subject to planning (and budget) for the development to proceed without the risk of injunctions arising from Rights to Light infringements. Developer 1 – Neighbour nil.

The outcome of this decision has caused some debate due to the emotive nature of the facts surrounding this matter. The neighbour having been in occupation for so long vs the clout of this development with a multitude of resources behind it seems unequitable to many.

Could the development have been designed in such a way to respect the Rights to Light of its neighbours? Was the area truly in need of an additional influx of people to bring further economic benefit and to ‘regenerate’ one of the most affluent areas of the country?

Need for consultancy advice

In our opinion this was quite a gamble and illustrates the benefit of early engagement with a Neighbourly Matters consultant early on to consider areas of risk and assist the design team to work around them if possible. Envelope studies using 3D models and specialist software are useful tools in the process. If working around the ‘at risk’ properties is not possible then other options can be reviewed rather than waiting to see what happens post planning. If the Local Authority had chosen not to assist then the re-design and knock on effect to the programme and project budget would have been significant.

The overall conclusion is that each case differs and we are not dealing with a level playing field.

Rapleys Neighbourly Matters team operate nationally and as well as delivering Rights to Light advice, also advise on Daylight & Sunlight Amenity, Party Walls and Access Arrangements such as for crane oversail and scaffolding licences. We act on behalf of developers and neighbours to development.

We are now 12 months into the 2017 Rating List with the completely new Check, Challenge, Appeal system in place and the requirement to register and claim properties on the VOA web site.

In March and June 2017, I issued newsletters on these new processes and they are still very relevant. They can be viewed here: March & June.

Claiming properties and lodging Checks and Challenges are not easy and are much more time consuming than the old system.

An interesting statistic is that by 31 December 2017 only 12,840 ‘Checks’ had been made in England, when in the first 8 months following the commencement of the 2010 Rating List, something like 112,000 appeals had been lodged.

Chancellors Statement—March 2018

The Chancellor recently made announcements that will impact on Business Rates going forward.

‘Stairway tax’

This concerns the ‘Mazars’ Supreme Court decision, from March 2016, that resulted in thousands of rating assessments being split into separate rateable values where access is by communal lobbies, lift or stairways.

This decision is to be overturned by the Government and provided properties are contiguous or adjacent, and in one occupation, they can revert back to a single assessment and this will be allowed to go back into the 2010 Rating List.

The Communities Secretary introduced the legislation on 28 March.

‘Annual increase in the Rate in the Pound’

This has always been calculated using the Retail Price Index (RPI) figure for the September preceding the new rate year coming into force.

Going forward, this will be calculated using the Consumer Price Index (CPI) and will reduce the anticipated increase for 2018/19 and rate years going forward.

CPI—September 2017—2.8%

RPI—September 2017—3.9%

This has resulted in a downward revision in the rate in the pound as follows:

Small multiplierLarge multiplier
(RV over £51,000)
RPICPI (confirmed)RPICPI (confirmed)
England48.4p48.0p49.7p49.3p
Scotland48.4p48.0p51.0p50.6p
Wales51.8p51.4p51.8p51.4p

 

City of London — for properties within the City of London a supplement of 0.5p in the pound is payable.

Crossrail — for properties in London with RV over £70,000 an extra 2p in the pound is payable.

A 1.1% reduction in the increases may not be huge, but every little helps!

‘Next Revaluation’

The Chancellor also announced that the next Revaluation in England will not be 2022, five years after the commencement of the current 2017 Revaluation.

It will be brought forward a year to April 2021 and thereafter each Revaluation will be 3 yearly.

The Scottish Government has confirmed that their next Revaluation will remain in 2022 but going forward will adopt a three year cycle with Revaluations in 2025, 2028 and so on.

The hope is that it will help keep Rateable Values more in line with changes in rental values across the country as a whole, although there had been no announcement as to the Revaluation cycle in Wales as yet.

For any help with Business Rates please contact Alan Watson.

As an Investor in People (IIP) awarded company, Rapleys is committed to our staff and their development. We are pleased to announce that we have continued to grow our team in the last three months with 10 new professional appointments.

Our new team members will allow us to better service our clients and promote new service lines across our office network.

Please click through to the full newsletter to meet our new team members and those who have been awarded promo

Planning is back in the headlines as the government seeks views on England-wide changes to the planning system to solve the nation’s housing crisis. Specifically, the government has issued a re-draft National Planning Policy Framework (NPPF), as well as suggestions about how to amend the developer contributions regime.

Readers with long memories will recall that the current version of the NPPF was published in 2012 as part of the “bonfire of regulations” brought in by the coalition government. It introduced the “presumption in favour of sustainable development”, a concept that has been the subject of much debate since.

The current NPPF emerged against a background of alarming stories in the press suggesting it marked the end of the Green Belt (which, obviously, it didn’t). So far, the headlines on its replacement have been somewhat negative and largely government generated, suggesting that the two main (seemingly slightly contradictory) problems with the planning system are:

  • Some local authorities (“NIMBY authorities”) are preventing development and
  • Housebuilders not building enough houses.

However, in any event there is not a great deal in terms of answers to either in the consultation documents. As to the latter point, the government has announced that Oliver Letwin will be carrying out an independent review before any measures are decided upon.

The draft National Planning Policy Framework (NPPF)

The document runs to 70 pages which is slightly longer than its predecessor and at first glance much is familiar, for example the various aspects (formerly “roles”) of sustainable development (economic, social and environmental). The presumption in favour of sustainable development is also intact, albeit with a small but potentially important change (see below).

However, there are many changes (some hidden in the footnotes), and some headlines are highlighted here:

  • In terms of the presumption in favour of sustainable development and the “tilted balance” to be applied, the draft refers to policies which are the “most important for determining the application” being out of date and a related footnote clarifies that other Local Plan policies cannot be applied under the aegis of the NPPF policies. If the NPPF is adopted as drafted, the implications of this seemingly minor change will be the subject of considerable debate at appeal and potentially in the High Court.
  • The draft reflects the nationwide method of calculating housing need currently being promoted by the government, albeit leaving other methods open in “exceptional circumstances”. Another important change is formalising the principle that, in preparing local plans, under certain circumstances local authorities do not have to meet all their housing need.
  • Joining the benchmark of the five year housing land supply in expressly triggering the presumption in favour of sustainable development is a “Housing Delivery Test”, a benchmark of actual housing delivery against need.
  • In terms of “encouraging” developers to bring forward consented schemes earlier, the draft makes allowance for local authorities to prescribe shorter time periods for implementing development than the current standard three years.
  • The draft allows for the redevelopment of brownfield sites in the Green Belt that has a greater impact than existing development, if it contributes to meeting local affordable housing need and the harm is not “substantial”. This marks, potentially, one of the largest changes to national Green Belt policies for many years.
  • In terms of planning obligations, the focus is on bringing viability forward as much as possible to the local policy process and for local plans to set percentages of affordable housing and define other obligations. However, there is still allowance for viability to be taken into account at planning application stage – more details below.

In summary, the draft looks more like an incremental change than a “root and branch” review, albeit some of the changes could have significant implications for development if adopted, as ever time will tell.

Consultation on planning obligations

The Government clearly has planning obligations in its sights and beyond the front-loading principle described in the draft NPPF, a number of potential changes to the current system have been proposed, not least:

  • Reintroducing “pooling” of s.106 contributions, under certain circumstances
  • Ensuring that the viability process is undertaken on an open book basis in all cases
  • The ability to link Community Infrastructure Levy (CIL) rates to the existing use of land (at present it only relates to the proposed use of the land)
  • Bringing indexing closer to inflation
  • Introducing another acronym, a Strategic Infrastructure Tariff (SIT) is proposed, which would effectively be a CIL regime across local authority borders.

Some of these changes will be unpopular with developers, in particular the reintroduction of contribution pooling, an erstwhile feature of the town planning system that CIL was supposed to replace.

However, there may be potential benefits derived from the front-loading process when developers are bidding for sites (particularly those that have been allocated), as it might provide greater transparency relative to the local authority’s position on planning obligations at the outset.

Comments on the drafts can be made until 10 May 2018. If you would like to discuss the documents and their potential implications on your business, or would like us to help getting your views across to the Government, please contact one of our nationwide team.

The 2017 food retail market was characterised by the ever decreasing results and an allied lack of expansion amongst the traditional big grocers, possibly with the exception of Co-Op. Then on the other hand, there is the seemingly non-ending expansion for the budget chains Aldi and Lidl.

Market share

Early signs in the First Quarter indicate a steadying of market share:

05.11.17 03.12.1728.01.18
Tesco28.0%28.2%27.8%
Sainsbury’s16.2%16.3%16.2%
Asda15.3%15.0%15.4%
Morrisons10.4%10.6%10.7%
Aldi6.7%6.9%6.9%
Co-Op6.1%6.0%5.8%
Waitrose5.3%5.0%5.2%
Lidl5.1%5.1%5.0%

Christmas 2017 gave stores a welcome festive boost, with sales up according to Kantar’s statistics. This was possibly driven more by seasonal and ‘one off’ offers rather than on underlying improvements in core sales.

A convenient truth

The move to acquire wholesale businesses, the Co-op/Nisa deal along with Tesco merging with Booker, opens up new opportunities for the convenience market to provide wider product ranges and mitigate the threat posed by the discounters and reach new markets.

Tesco have made noises heralding a different strategy for dealing with this new dynamic, announcing their own ‘plan’ for a range of discount stores. The example of Sainsbury’s Netto venture provides a stark warning however. To ensure a discounter programme gets off the ground, there is a requirement for a critical mass of stores to build profile and brand loyalty. It is worth bearing in mind that Lidl opened its first UK store in 1994, with market penetration only really mushrooming in the last 10 years or so and possibly assisted by economic conditions.

Simultaneously, the top end of the market is also under pressure. Waitrose are re-evaluating their optimum store size to better align their bricks-and-mortar footprint with the reality of trading conditions. Booths being put up for sale also confirms that the premium end is under intense pressure and that a critical mass of stores is necessary to defend against it.

Right sizing

As so-called ‘right sizing’ continues across the board there is still a legacy of sites where retailers are seeking to extract themselves from commitments, with it becoming clear that there was a degree of overstretching in the hypermarket boom years. An obvious source of new sites has been connected sites where the ‘hypermarket’ model is no longer required. Alternative uses, such as residential or a discount food/discount store mix have been sought, yet these sites could easily and equably be occupied by the Big Four. At the same time, the challenging retail environment has seen several businesses fall into real financial distress, most recently Toys R’Us. These company’s portfolios are potential investment opportunities for food retailers.

eCommerce calling

Everyone in the market continues to wait for Amazon to make a move. Clearly, the eCommerce giant is watching developments too and sizing up the opportunities. There doesn’t appear to be an active requirement for supermarket sites as yet, but that may change as Amazon gets its ducks in a row. It is likely that when a move is made, it will be a wedge-type manoeuvre in a key market, perhaps using its logistical might and growing network of urban satellite delivery systems, to establish a ready-meals service for example. Or, alternatively, we may see an acquisitive move for a business such as Iceland, which, despite the growth of Ocado, probably has the most efficient delivery network.

For more details, comments or advice do not hesitate to get in touch with Richard Curry, Partner in the Retail & Leisure Group.

 

Rapleys’ Automotive and Roadside team are active throughout the UK but with the opening of our Birmingham office in May 2016, our presence and activity has further strengthened in the West Midlands. We highlight here some of our recent successful transactions showing the range of work we undertake in the sector. 

Experience includes site acquisitions, project management, lease renewal, planning services and much more. We pride ourselves on providing an unmatched continuity of service and high level of expertise and knowledge to all, from an independent car dealer to a nationally represented client.

 

As we come to the end of the financial year 2017/2018 and look forward to the next, we reflect on the progress and strength of the industry. Requirements for petrol stations did not see a great decline and top dealers are still making significant deals.

The year did record a slight drop in petrol filling station numbers. This was however marginal, at just 52 fewer sites, down to 8,407 (source: Experian Catalist Market Summary Report Nov 2017). We expect a number of these are small local unbranded sites and we do continue to see a steady flow of closed down sites also re-opening. Rapleys has transactions in solicitor’s hands for a number of sites to reopen, including a site that has been closed for almost 15 years! We expect to see more new to industry sites developed and existing stock redeveloped.

Demand for sites across the board remains strong and the lack of available stock is continuing to keep both freehold and leasehold prices high. As margins remain strong this is likely to continue. If the backlash against diesel continues there could be some change in the nature of fuel demand but we have yet to see this have a significant effect.

Top 50 Dealers

In terms of the major news, we have continued to see the top dealer groups expand and at present MRH, Motor Fuels, Euro Garages, Rontec, Co-Op and Petrogas operate approximately 20% of all Petrol Stations in the country. Their numbers have been boosted by corporate takeovers of a number of the smaller groups within the Top 50. Examples include, MFG acquired Golden Cross in January, MRH acquisition of Chartman in September and Applegreen acquiring 7 sites from Carsley Group. At current rates there may not be enough groups to form a top 50!

However, in terms of numbers, Euro Garages have acquired the most by going global. Having started from a single site in Bury in 2001 they have now expanded into Europe to become the largest retail customer of Esso. They are looking further afield with the recently announced $2.15 bn deal to acquire 762 sites in the US from The Kroger Co. which suggests that the two questions are:

a) where are they going to acquire next?
b) if they are looking at the US will they have to change their name!

The last 12 months have also seen the supermarkets revisiting tying up with existing fuel operators, and again this has been met with mixed success. Recently we have seen MRH tie up with Co-op, Euro Garages with Sainsburys and Morrisons with Rontec, however of these only the latter is still on-going after a trial period. This would appear to be due to operational issues rather than a bad idea and we expect further tie ups are likely to be trialled in the future.

We have also seen the return of demand for Motorway Service Areas. There have been relatively few new developments in recent years with the new services on the M5 at Gloucester being the only notable exception. However, we are now seeing announcements and planning applications on a number of new locations throughout the UK. Applegreen are possibly the most active as they look to replicate their success in Ireland.

Ahead to 2018/19

Looking forward, the recently announced deal merging MFG and MRH could lead to a new level of super group with almost 1,000 sites. It’s too early to confirm the fallout of this deal but we could see its ripples felt for a long time.

We predict that the market will continue as the last 12 months with demand for sites to continue, corporate activity to be high and more sites to open. The last few years have seen changes and growth and we expect this to continue through 2018 and into 2019.

For further details on currently available sites please go to our properties page or speak to Mark Frostick or Stuart Lobb.

 

With Q1 2018 drawing in, Rapleys’ Investment team are pleased to be reporting a number of significant investment transactions. Whilst all sectors show growth and strength, it is the automotive investments that have risen to prominence for Rapleys.

Download the newsletter to view some of the deals secured and ongoing work in this area.

The Minimum Energy Efficiency Standards (MEES) regulations come into force in two months’ time. From 1 April 2018, commercial properties must have a minimum Energy Performance Certificate (EPC) rating of ‘E’ or above in order to be let. The MEES regulations will apply to the renewal of existing leases and may also have an impact upon future lease events, such as rent reviews and break options occurring after 1 April 2018.

The changes in MEES regulations are likely to affect property owners and existing tenants throughout the UK. So, to minimise the impact, forthcoming lease event dates for any sub-standard property should be identified quickly.

Firstly, landlords would be well advised to ensure that lease renewals for properties with an ‘F’ or ‘G’ rating are completed before the MEES regulations become mandatory on 1 April 2018.

Landlords should also ensure that new leases restrict a tenant from obtaining a new EPC, other than for when one is actually required i.e. in connection with an assignment or the grant of a subletting. This is because a new ‘F’ or ‘G’ rated EPC obtained by the tenant may place an obligation upon the landlord to carry out improvement works in order to bring a sub-standard property up to the minimum ‘E’ rating. Equally, landlords should ensure that sufficient rights are reserved in new leases to enable them to enter the premises in order to carry out any works that may be required.

Where existing leases contain breaks which may be effective after 1 April 2018, we would advise landlords to establish that the EPC rating of the property is ‘E’ or above. Again, if this was found to be sub-standard it would place an obligation on the landlord to carry out improvements to enable the property to be re-let. Tenants will no doubt appreciate that this situation could also assist them during negotiations with the landlord over whether or not to exercise a break.

For ‘F’ or ‘G’ rated properties that are subject to rent reviews occurring after 1 April 2018, whilst a letting might not be possible in the real world without energy efficiency improvements being carried out, a number of questions may arise in the hypothetical world of the rent review:

  • Where the lease provides an assumption that the tenant has complied with its covenants and/or statutory obligations, this would effectively result in an assumed increase in the EPC rating to ‘E’. In this case, the landlord of a sub-standard property may seek to achieve a higher rent than that which might ordinarily be possible.
  • A tenant may argue that the rental value should be reduced because the landlord will not, in reality, be able to let a sub-standard property.
  • Where the cost of energy efficiency improvements carried out by the landlord is recoverable through a service charge, the tenant may seek to adjust their rental bid to reflect this situation.

It is therefore essential for both property owners and tenants alike to consider the impact the MEES regulations will have on future lease events.

Rapleys can help with this and if you require any further information, please contact Tim Holt.

 

We are continuing our expansion in the Midlands with the latest appointment of a new partner, Tony Clements, to establish and lead the town planning team in our Birmingham office.

Tony Clements joins from GL Hearn where he spent the last three years leading the regional planning teams. Tony’s appointment means Rapleys now offers dedicated retail & leisure, development, building consultancy and planning services to the Midlands area. The Birmingham office was opened in 2016 and is quickly expanding to reach the ambition of covering the full range of services for developer, investor, landlord and occupier clients.

Tony has over twenty years’ experience as a professional planner and is an experienced expert witness. He has advised a wide range of private and public sector clients across a variety of sectors and has acted on a number of high-profile planning projects.

Tony has a strong track-record promoting large scale residential developments for many of the UK’s largest home builders.

Tony states: “I am excited to be joining the planning team at Rapleys at a time when there are significant opportunities to build on and expand our offer to clients in terms of technical capabilities, sector expertise and geographical coverage. I’m very much looking forward to carrying through the planning process a range of residential and mixed-use development projects that I have been working on across the midlands and nationally.

Delivering a client focused service has always been at the heart of my approach to planning consultancy and I am delighted to join a progressive and expanding team within a highly respected, independent property consultancy.”

Robert Clarke, Senior Partner at Rapleys, states: “I am pleased to welcome Tony to the partnership. He brings a wealth of experience in managing and promoting residential and commercial schemes through the planning system. He will, undoubtedly, foster and contribute to our ever expanding national planning business with a focus on the midlands market.”

 

As Rapleys’ Neighbourly Matters service enters its second year, Dan Tapscott reflects on progress and growth. Based on the variety and exciting work undertaken over the last year, along with the key appointment of specialist Natasha Bray, 2018 is already shaping up well.

This niche service was established to compliment Rapleys’ existing services and to provide a dedicated offering to clients throughout the office network. The breadth of instructions over the first year of trading has certainly achieved what we set out to do and the future is looking bright. Here are just a few notable commissions that spring to mind:

  • Party Wall advice on listed properties, new builds, subterranean basements and even an arena!
  • Numerous Rights to Light analyses including a city centre redevelopment scheme with over 30 neighbouring properties
  • Giving strategic Neighbourly Advice to student accommodation companies (notably a single scheme with 5,000 bedrooms planned)
  • Providing Expert Witness work on a Daylight & Sunlight Planning appeal for the redevelopment of a Victorian prison into residential accommodation
  • Investigating a boundary dispute project for one of our national roadside clients
  • Providing Neighbourly Relations services, liaising with neighbouring occupiers on residential and retail schemes
  • Entering into negotiations on a Rights to Light matter surrounding a Grade 1 Listed 18th Century retail property
  • Appraising proposals for multi-storey developments, university lecture theatres, even a fire station!
  • The negotiation of Access Licences for scaffolding and crane oversail to a busy, multi-occupied retail arcade
  • Represented various nationwide retail clients throughout the Party Wall process during neighbouring development work

Along with publishing various articles and providing circa 30 seminars to clients, colleagues, consultants and developers, we have also recruited Natasha Bray (a Rights to Light and Daylight & Sunlight specialist in our London office) – it has been a busy and productive year.

As 2018 gets underway, appointments have already been confirmed amongst others, for a Party Wall job involving the SS Great Britain dock and surrounding area and a Rights to Light analysis on a 25 storey tower block. The ability to liaise with in-house colleagues from planners to agents, valuers to other niche specialists, in my opinion, really gives a great added value service for our clients.

We have ambitious plans for expansion with our ultimate goal of having Neighbourly Matters specialists in every office, giving Rapleys the greatest national coverage for this service. I am very optimistic for achieving this sooner rather than later and from the feedback received, so are our clients.

For any further help on or advice on Neighbourly Matters do not hesitate to get in touch with Dan Tapscott or Natasha Bray.

 

A common project objective is completing construction work as quickly as possible, but it is key to choose an appropriate form of construction that optimises time on site without compromising the quality of the design or the end product. Modular construction is the quickest means of delivering a new building and, with the latest technical innovations, is also capable of delivering high quality.

Modular construction, which involves buildings being constructed off site with pre-fabricated components, became popular after the Second World War when there was huge demand for new buildings – particularly dwellings – to replace bomb damaged structures.

While modular and pre-fabricated construction successfully satisfied the requirement for buildings to be completed quickly, a common perception was that the quality of finish, aesthetic appearance and durability were not so readily achieved. This point of view continued during the following decades with people typically associating modular construction with poor quality buildings such as cold, damp and draughty temporary classrooms.

However, over recent years technical innovation and advancements in design and production techniques have meant that modular buildings can now be bigger, more flexible and achieve higher aesthetic and quality standards. This has resulted in a resurgence in both popularity and acceptance.

A high profile recent example of the speed with which modular buildings can be completed is the temporary school, known as KAA2, which was required to accommodate 960 pupils following the Grenfell Tower fire. The new school, constructed of 210 modular units, was completed by modular experts, Portakabin, just 13 weeks after project inception.

While speed of construction on site remains the main advantage of modular buildings over more traditional forms of construction, the other benefits typically include:

  • More programme certainty with construction being less susceptible to adverse weather conditions
  • Improved quality control achieved through standardisation, repetition and fabrication processes being undertaken in a factory controlled environment
  • Reduced cost through supply chain management, economies of scale and reduction of waste
  • Brand consistency – particularly appealing for occupiers with a corporate identity eg. restaurant and retail chains
  • Improved sustainability and environmental credentials resulting from reduced resource inputs and less waste material – the charity WRAP (Waste & Resources Action Programme) has reported that off-site fabrication can reduce waste on site by up to 90% when compared to traditional construction
  • Provide suitable temporary accommodation on sites where major refurbishment or redevelopment is to take place on owner occupied buildings

While modular construction does provide clear benefits, there are also downsides that need to be fully considered and mitigated:

  • Rigorous pre-planning is required to ensure that a coordinated and integrated fabrication and construction sequence is agreed at the earliest opportunity.
  • Before fabrication commences, the design should be checked to ensure compliance with the brief. Design changes during fabrication, or worse still on-site, will be increasingly costly.
  • A lack of coordination during the design and installation stages will lead to delays and cost increases that will negate the benefits of implementing a modular approach.

There are also other ways this construction method can be utilised if full modularity is not appropriate or viable. Elements of prefabrication, such as bathroom and kitchen pods, can be incorporated into more traditional building designs to derive some of the pros without the cons.

We regularly help clients find the best form of construction for their projects and project manage the instruction through to completion. If you would like any help or advice on your next construction project, please contact Alastair Bliss.

 

This year, the Mayor of London formalised the Homes for Londoners Supplementary Planning Guidance (SPG) which aims to make more homes affordable to Londoners on low and middle incomes with a long term strategic target for half of all new homes built to be genuinely affordable.

The SPG provides a key first step towards delivering more affordable homes through the planning system and provides guidance on delivering existing London plan policy.

The guidance sets out the mayor’s approach to “call ins”, where insufficient affordable housing has been provided or there has been insufficient scrutiny of viability information. The Mayor’s approach to transparency of affordable housing viability information is also detailed and it is explained how grant funding is going to be used to increase the level of affordable housing.

Threshold approach

The SPG details the ‘Threshold’ approach which will be employed by Local Authorities evaluating viability. The approach is divided into two pathways, the Fast Track Route and the Viability Tested Route.

The Fast Track Route applies to schemes proposing to deliver at least 35% affordable housing on-site which will not be required to provide a viability assessment and will be subject to early stage review only.

The more onerous Viability Tested Route applies to schemes proposing to provide less than 35% affordable housing on-site which will be required to submit a Full Viability Assessment and will be subject to both an early stage and late stage review. The SPG confirms that review mechanisms will be stronger and more consistent, and the guidance supports the use of Existing Use Value Plus as a benchmark land value.

Requirements for developers

The SPG clearly sets out the affordable housing requirements that developers should expect to deliver on potential development sites and it is hoped that developers will bid for land and development sites with these new policy considerations in mind. The Mayor has already demonstrated that the Greater London Authority will adopt a tough approach on new developments that do not adhere to the new planning policy as demonstrated by the rejection of the new development plans for the former Scotland Yard Site due to unacceptable levels of affordable housing.

Delivering affordable housing

Developers must, therefore, expect to deliver affordable housing on new build residential developments where it is viable and it is here that Rapleys can add value for developers. Rapleys provides guidance and advice throughout viability and 106 agreement negotiations, and assists with placing affordable tenure units with Registered Providers (RPs) or commuting off site payments.

With vast experience dealing with RPs across the UK, we can advise on their expectations, act as liaison, assist with contract negotiations and draft heads of terms, ensuring that developers secure the best possible deal on the best terms when delivering their units.

For further information and advice, please contact Nick Fell.

The Chancellor presented the Autumn Budget earlier today with some announcements impacting the property and development markets. Rapleys wraps up the key points below.

 

Planning

In the run-up to the budget, increasing house building was extensively promoted by the Government, and it has set itself the very ambitious task of increasing housing delivery to levels not seen since the 1970s. In the event, much of the focus was on a promise of £15bn of support for house building across a number of measures including loans to SMEs, loans and grants to local authorities and financial guarantees to support private sector house building.

However, proposals for reform to the planning system were somewhat thin on the ground, and prefaced by a commitment to “strongly protect” the Green Belt, focusing on development in city centres and around transport hubs (fundamental planning principles for decades). The proposals themselves were restricted largely to the announcement of a number of consultations, including:

  • De-allocating land where “there is no prospect of a planning application being made”
  • Imposing minimum densities in city centres and around transport hubs
  • A consultation on reform to the developer contributions towards affordable housing and local infrastructure (ie CIL and s.106 agreements).

Also announced was an independent review, to be chaired by Oliver Letwin MP, into whether developers are holding back sites with planning permission for commercial purposes (a.k.a. land banking).

In fairness to the Chancellor, he started the part of his speech dedicated to housing echoing Sajid Javid’s comments earlier in the year that there was no “magic bullet” to solve the housing crisis. Even so, in terms of the planning system, as Mr Hammond closes his red box there seems to be little in the way of any new ammunition on offer. As ever though, time will tell, and we will be keeping a close eye on the Government’s initiatives as they develop to ascertain whether they evolve into anything more concrete.

Jason Lowes | 07899963524

 

Housing

According to the Chancellor, the biggest challenge  facing  the current housing market is the lack of supply. Simply, not enough homes have been built in recent times which has exacerbated affordability especially for first time buyers.

The Chancellor has pledged £44 billion to support the housing market and increase supply over the next five years, including a further £2.7bn for the Housing Infrastructure Fund and £8bn to support private house builders and the PRS sector. In order to alleviate the affordability issue, there will be an increase of £125m over the next two years for targeted affordability funding, which will aim to support those in rented homes. It was also confirmed that further details will be provided by the Communities Secretary in due course regarding plans to assist affordable renters in areas with high demand.

The Chancellor concluded with the headline announcement that stamp duty will be abolished for four out of five first time buyers. It had been expected that the tax would be targeted in the autumn statement and it is hoped that this change will remove a barrier for those aspiring to join the property ladder.

Nick Fell | 07964 558697

 

Business Rates

Business Rates will be impacted in four key ways following the Chancellor’s speech:

  • We will see the rate in the pound increase from 46.6p for 2017/2018 to 47.9p for 2018/2019, rather than the anticipated 48.4p. This is only a 1% reduction and so whilst not huge, it will prove beneficial to all rate payers.
  • The Chancellor will change the law to affect the Supreme Court decision that brought in the “staircase tax” which will provide some relief to affected ratepayers. This Court decision meant that thousands of rating single assessments were split into individual assessments for every separate floor a ratepayer occupies with every car parking space being separated out as well. It often resulted in increased rate bills but also a lot of administrative issues.
    Until the actual amendment to the legislation is published we don’t know exactly what is going to happen here but the implication from the speech is that ratepayers can chose to stay with separate assessments, which might happen in some cases, for instance where the split has brought the individual assessments below RV£51,000 and so they don’t have to pay the 1.3p in the pound Small Business Rate Supplement. This will no doubt take some time to sort as it requires a change in the law to overturn the Supreme Court Decision.
  • From 1st April 2017, Public Houses with an RV below £100,000 received a £1,000 reduction in their rate bills but this was only for a single year. This has now been extended to March 2019 which brings it in line, time wise, with the newspaper relief.
  • The Chancellor also announced that revaluations will run every three years after the current 2017 list expires in 2022. This means the next one after that will be in 2025 and the hope is that changes in levels of value will be dealt with quicker than in the current 5 year pattern.

Alan Watson | 07917 352428

 

Business Space

The continued focus of the Autumn Budget on the development of housing indicates that the trend of existing office and industrial floorspace and land supply being lost to residential use is set to continue. The consequence will be growth in office and industrial land prices and a strong growth in rents. Businesses looking to grow and expand will also find it more difficult to source new land and premises. This will be particularly evident in London and the South East where there is the greatest political will and push to provide more housing – almost inevitably on brown-field land that has mostly been in employment use.

Colin Steele | 07860 749034

 

Automotive & Roadside

The announced £400m charging infrastructure fund is likely to boost the number of electric vehicle charging points in the UK which will be welcomed as the electric vehicle market gathers pace towards the conversion of all new cars to electric in 2040.

A pledge for further research is also promising for the sector as it may help to reduce charging times, one of the main issues facing forecourts and the take-up of electric vehicles at this point.

Mark Frostick | 07785 522958

 

Retail

With wages falling in real terms, the average household will see little respite from the Budget despite the living wage hourly rate being increased. Inflation has risen from 0.5% in June 2016 to 3% in October. Wage growth has failed to keep pace despite current low unemployment. We believe there will be continued growth in the discount retail sector, both food & non food, for new outlets as a result with demand being fuelled by families looking to drive better value from their weekly income.

Given the rise in the closure of Public Houses, the smaller independent pubs will have some on-going relief in the rates benefit (as mentioned in our Business Rates summary), for those with a rateable value up to £100,000, the discount will be extended until March 2019.

Russell Smith | 07990 550460

Please contact a member of the team if you would like more information on the Autumn Budget and the impact it may have on your property or portfolio.

 

We will soon be 12 months from perhaps the most radical impact on real estate leases and property leasing strategy in over 60 years. January 1st 2019 finally sees the introduction of the International Accounting Standards Board’s (IASB) IFRS16, and preparation will be important.

IFRS16 will bring all leases (as Lessee – Lessor accounting is largely unchanged) on to corporate balance sheets and thereby radically change the reported financial shape of many corporates, whilst introducing ramifications that no company should ignore.

Now is the time to engage with your accountants/auditors to review preparations for this wholesale change in the reporting of lease liabilities – and liaise with your real estate advisers to ensure you are armed with the data and specialist property knowledge that you will inevitably need to have to hand.

What are the changes?

After years of consultation, the IASB have finally implemented their proposals to secure greater transparency for companies’ leasing commitments in company reports and accounts, which will become effective January 1st 2019.

All lease commitments, which include those for cars, photocopiers, even jumbo jets and power plants, will henceforth be treated as a form of financing (and therefore debt) and will come on to balance sheets. Previously, real estate leases have predominantly been treated as ‘operating leases’ and their impact has been expressed only ‘in year’ as a rent expense in the P&L.

Every lease held by a company (with minor exclusions) will need to be appraised and will enter the balance sheet during 2019:

  1. as a liability, effectively a sum equivalent to the capitalisation of the rent liabilities for the unexpired term (at a company’s marginal cost of borrowing) and,
  2. as a ‘right of use asset’, initially a similar value.

The changes will see a significant expansion of a company’s balance sheet, but most significantly a potentially dramatic increase in debt, with a knock on effect for gearing and other ratios.

For companies with multiple leases, such as retailers and pub operators, this could have a significant impact on performance measures, share valuation, loan covenants, executive reward schemes, etc. Further impact arises from the way that the two sides of the asset and liability are ‘unwound’ over time, which impacts operating profits in the early periods, but enhances EBITDA. (Your accountants should offer advice on this matter).

So what does this mean for your portfolio?

We expect that the impact for real estate decision-makers will be far reaching:

Firstly, it will be critical to ensure capture of essential data regarding leasing commitments, which will now be required by auditors. The rent component of a contract will need to be separated from any ‘service’ elements (relatively easy for a traditional lease with rent and a service charge, but more difficult for inclusive leases).

Secondly, sound decisions will need to be made to justify treatment of lease breaks, options, rent reviews, indexed and turnover rents, when the ‘value’ of each lease is initially assessed. Reassessment later, because for example a break option is not, as initially anticipated, then exercised, could be at a cost.

Thirdly, in our view, the unforeseen consequences will need to be considered carefully. Some of these will relate to wider (non-property) impacts, such as breach of loan covenants, re-pegging of executive reward schemes, etc, but there will be a knock-on for real estate.

Possible consequences which need to be considered:

  • Will it drive more shorter term leases, to keep balance sheets in check?
  • Will it see a reduction in companies’ leased footprint overall, as more radical steps are taken to manage the balance sheet impact? (The serviced office providers and co-working operators are certainly banking on this.)
  • Will it further the pain for physical retailers when compared with their ‘virtual’ online competitors?
  • Will it drive more freehold ownership? If a company is to inflate the balance sheet anyway then why not own a real capital asset?
  • Will it drive different decisions in relation to future growth and the exercise of renewals and breaks, because accounting implications will now be added to existing operational considerations? (Some argue that greater cross-functional input from businesses will drive better decision making).
  • For international operators, might it push global locational decisions towards countries with favourable environments, that for example allow deductions of interest payments against profits?
  • Will past sale and leaseback decisions need to be reassessed, and existing leases renegotiated to lessen their accounting impact?
  • Will negotiating strength at a break or expiry be impacted because a counter-party can identify your intentions from your company’s report and accounts?

This will be a voyage to a new world for all.

Just as the introduction of tenants’ security of tenure (England & Wales) changed the relationship between landlord and tenant in 1954, so these changes will transform the way that lessees view and manage their leases in the future.

Rapleys is supporting our clients in undertaking thorough reviews of leased portfolios, to capture all relevant data and to drive early decisions around their initial and longer term accounting treatment.

We are experts in the proposed changes, having been involved in consultations at each step of the emerging standards since 2010.

Please call us if there is any aspect of these changes where you believe our knowledge and expertise may be valuable to you and your business.

 

The fuel forecourt market has seen major changes in recent years. Roadside development has increased with more innovative and customer focused sites being built and there is now high demand for land adjoining main roads – from which landowners could capitalise.

The oil companies have generally been retreating from direct retailing, deciding instead to supply to independent (indie) operators trading under the traditional fuel banners. Some of the largest indie groups are backed by significant international private equity money and are driving up values. They are looking for new-to-industry sites in prominent locations of 0.25 acres upwards. Demand is for both freehold and leasehold options and values often outstrip existing use value significantly.

There is a strong demand for sites across the whole country, along both existing and newly planned main arterial roads.

Innovative market

To drive profit and value from the sites, innovation has been key. Partnering between fuel operators and well known retailers is now evident across the UK with the likes of Subway, Costa, Greggs, and Starbucks regularly appearing within the wider forecourt developments. Likewise, the indies are also tying up with supermarkets including Morrisons and the various Co-Op groups.

Demand for sites

With new road building and town expansions taking place nationally, there has never been a better time for land owners to take advantage of the insatiable demand from fuel operators. Where gaps in the national forecourt network exist, land values for roadside development have never been higher.

Future opportunities

Having been involved in the development of forecourt sites through planning, agency, project management and investment disposal, we have been able to take part in the market changes as they have progressed and recognise the exciting opportunities which lie ahead. With a sound knowledge of this market, we are best placed to help evaluate site suitability and its potential.

If you know of any suitable sites or would like more information, please contact Philip Blackford.

As an Investor in People (IIP) awarded company, Rapleys is committed to our staff and their development. We are pleased to announce that we have continued to grow our team in the last three months with 14 new appointments and have also awarded promotions across a range of our teams.

Our new team members will allow us to better service our clients and our promotions recognise those existing staff members who are already making a difference within our company.

Please click through to the full newsletter to meet our new team members and those who have been awarded promotions.

 

 

With the continued demand for dessert parlours and the increase in the number of both brands and franchisees, this food and beverage (F&B) offer looks set to replicate the spectacular rise of the coffee shop culture in the UK.

Like coffee shops, dessert parlours were relatively unknown on the UK high street and leisure scene as recently as 7 years ago, but we have witnessed them becoming more and more sought after and a regular in the F&B line up on retail and leisure schemes that we are bringing to the market, both in town and out-of-town.

Interestingly, apart from the US giants, Dunkin Donuts and Krispy Kreme – both of whom have only relatively recently themselves re-entered the UK market – the current demand for sites is largely being driven by independent operators and shows little sign of being a mere fad.

Independent operators

Data released by The Local Data Company (LDC) and British Independent Retailers Association (BIRA) shows that independents opened more shops in the first half 2017 than in the same period last year, whilst national chains continued to fall. Café style operations, such as dessert parlours, is one of the key growth areas and this looks set to continue as independent operators, such as Patisserie Valerie – the original cake and dessert retailer with over 100 outlets – continues its organic growth and franchised operators such as Creams – who lead the franchised sector with over 50 outlets – look to roll the concept out nationally from London and the South East.

Hot on their heels are brands such as Kaspas, Treatz and Heavenly Desserts, as well as a number of newer and smaller operations, all of whom already have double digit outlets in multiple locations with a variety of trading formats – operating on high streets, in shopping centres and on out-of-town retail and leisure schemes. These operators have all evolved to take advantage of the culture developing among young people, students and families of going out in the evenings for a dessert. Just like the quick service restaurant franchisees, the fortunes of these operators also look set to soar and accordingly add incremental value to the property assets they occupy.

If the coffee shop experience is anything to go by, watch out for the rise of dessert parlours!

We expect demand to continue to increase along with the profile of dessert parlours in retail and leisure schemes alongside the more established usual suspects – and there is a long list of operators they like to sit next to! Not only should the line up and marketing of schemes be geared to accommodating this use, but consideration should also be given to the design of centres to welcome these operators as part of the leisure mix.

Rapleys is able to advise on the development/redevelopment of schemes to appeal to this wider market, as well as identify the appropriate operators to create a vibrant retail & leisure destination. For more information, please contact Alfred Bartlett.

 

Demand for care homes throughout the UK remains very strong despite the fragmented nature of the market. The majority of development activity is in the ‘for profit’ sector and is aimed at private customers in the more affluent parts of the country.

Demand for additional care home beds is predicted to rise steadily over the next decade with some experts suggesting a requirement of close to 7000 new places per annum, reflecting the UK’s ageing population.

With this underlying and consistent demand it is unsurprising that care home investors and developers are actively seeking new sites in good regional locations across the country.

Operators typically offer a range of care options for customers. These include; nursing care, dementia care, residential care, day care and personal care. The main differences between these types of care home is the level and quality of care provided, although some of the larger homes will provide a range of care solutions under one roof. The basic principle being that the higher the level of care required the higher the annual cost.

Care home development

The majority of new care home developments have a capacity of between 60 and 100 beds with associated car parking. In planning terms it is a C2 use classification and in general terms it can be regarded as a ‘soft’ planning use owing to the low traffic generation and the general nature of the use itself. Care homes are also employment generating (unlike standard housing) and this can assist with change of use arguments on former employment sites. Typically, the more intensive the care provided the higher the employment generated.

The high consumer demand and current under-supply has resulted in an increasing number of developers seeking new opportunities for care home development, which in turn has led to an increase in prices being paid for new opportunities. The requirements are typically 1-3 acres in area and can be located on the edge of town centres or suburban locations in areas with strong financial demographics.

Prominence is not essential but sites with good frontage to main roads and close to local amenities are highly desirable. Some examples of suitable properties include former car dealerships, large pubs, and industrial premises.

Rapleys has been successful in identifying and acquiring a number of sites on behalf of care home developers and we urgently seek additional development opportunities. If you have any surplus land/sites that would be suitable for a care home please contact Alun Jones.

As some readers may be aware, the Government is midway through another consultation on proposed changes to the planning system, following the publication of the White Paper, “Fixing Our Broken Housing Market”, in March this year. In that White Paper, the Prime Minister said that Britain’s “broken” housing market is one of the greatest barriers to progress today.

The current consultation relates to England only and covers a range of issues, but most relevant to the reader is likely to be the Government’s proposals to introduce a standard method of measuring local housing need.

LOCAL HOUSING NEED

At present, the calculation of local housing need across England is carried out inconsistently, often resulting in protracted debate and delays to the local plan process. To streamline this, the Government is proposing a uniform approach that all local authorities should follow if they submit their local plans to the Secretary of State after 31 March 2018. This approach will also be the basis for the calculation of the five year housing land supply.

The new approach can be summarised thus:

  • The starting point remains projections of future household growth in each local authority area;
  • This is then “adjusted” to reflect average house prices in the local authority area, which essentially increases identified housing need in areas with higher house prices;
  • However, any increase is then capped to prevent need rising more than 40% above:
    – the annual housing need figure in an “up to date” local plan, or
    – where the most recent local plan is not “up to date”, projected household growth or the latest local plan housing requirement figure (whichever is higher).

Although any attempts to simplify the emerging policy process will be welcomed by many in the industry, the introduction of a cap seems to undermine the process to some degree. Further, the focus in adjusting need upwards in areas with high property values could see significant increases of identified need in parts of London, the South-East and affluent areas elsewhere in England, with decreases in areas that might be argued as needing housing growth and investment the most.

PREMATURITY OF PLANNING APPLICATIONS

Almost hidden away towards the back of the consultation, there is an indication that the Government also intends to strengthen the ability of local authorities to refuse planning permission during the local plan making process. At present, in areas where local authorities struggle to adopt local plans, planning applications that are promoted in parallel to the emerging local plan process are often the only significant contributors to housing supply – this could potentially close that off.

t is unclear what the Government seeks to achieve with such measures and indeed, what they would mean in the context of the presumption in favour of sustainable development and the ‘tilted balance’. If the Government’s attempts to streamline the planning policy process work, any measures of this type would be unnecessary. If they do not work, this would effectively hand local authorities an extra tool to refuse development, which would in all likelihood exacerbate housing shortages – the opposite of what the Government seems to want. Although this initiative is announced in the context of a consultation, interestingly no views are invited at this stage on this particular point.

The consultation expires on 9 November. If you would like to discuss the consultation further or have any views you would like us to put to Government on your behalf (even on points where views haven’t been invited) please do not hesitate to contact Jason Lowes.

The Minimum Energy Efficiency Standards (MEES) regulations are due in six months time and are expected to have a significant impact for landlords and occupiers on private rented property in England and Wales.
From April 2018, the regulations will require all new lettings (including sub-lettings) to meet the minimum standard EPC rating of ‘E’.

The MEES regulations are likely to have the greatest impact on landlords of property, but occupiers will be affected too. These risks may impact lease event negotiations, investor/occupier demand, valuations and debt provision.

From 1st April 2018, the regulations will apply to the granting of a new lease and the renewal of existing leases. Landlords will be required to ensure compliance before the lease is granted.

From 1st April 2023, the regulations will apply to ALL privately rented property in scope of the regulations, including where a lease is already in place and a property is occupied.

Properties that do not require an EPC under current regulations will not be required to meet MEES (for example stand alone buildings less than 50m²). Moreover, MEES does not apply to short lettings (6 months or less) and lettings over 99 years or more.

MEES has a great potential to negatively impact property values as a consequence of:

  • Reduced ability to attract and retain occupiers
  • Reduced rental income
  • Increased voids
  • Additional capital required to bring the property up to standard.

Can you rely on your existing EPC?

A significant number of EPC’s were produced in 2008/9. Up until recently the requirements around the production of EPC’s was fairly loose, with a number of default values or assumptions being made. The quality of these early EPC’s is questionable. If you are reliant on an EPC produced between 2008 and 2015, then the risk of an inaccurate EPC is greater. The EPC could be poorly prepared which means the property falls foul of the MEES regulations unnecessarily.

Rapleys can help manage your MEES risk by:

  • Undertaking a risk assessment of your property or portfolio
  • Accurately assessing the current EPC rating of your property or portfolio
  • Providing strategic advice of how to meet the minimum required EPC rating
  • Aligning risk assessment with life cycle building data to enable informed strategy decisions
  • Providing advice on how MEES impact your dilapidations liability and claims.

For any further help on your EPC risk assessment, please contact us,

 

Rapleys is pleased to announce the following appointments who have joined our team in the last three months:

 

Balvinder Sagoo – BSc (Hons) MRICS
Partner
Building Consultancy
Balvinder joins Rapleys to establish and lead the building consultancy team in Birmingham. Balvinder brings 17 years experience in the commercial sector acting for investors, landlords and occupiers across all sectors.
07920 016838 | balvinder.sagoo@rapleys.com

 

Stuart Lobb –  BSc (Hons) MRICS
Associate
Automotive & Roadside
Joining Rapleys’ automotive & roadside team in our Manchester office, Stuart brings 15 years of experience across agency, development and valuation.
07831 099095 | stuart.lobb@rapleys.com

 

Maria Dychala – BA (Hons) MA
Planner
Town Planning
Maria has previously worked for a private planning and development consultancy and joins Rapleys with a wealth of experience in projects across England, Scotland and Wales.
07867 537091 | maria.dychala@rapleys.com

 

Clement Lam – MSc
Senior Surveyor
Corporate & Investor Management
Clement joins with almost 20 years experience in residential, commercial and asset management whilst in Hong Kong and New Zealand.
07917 536613 | clement.lam@rapleys.com

 

Tom Cherry – BSc (Hons) MRICS
Senior Surveyor
Building Consultancy
Joins our London team with 9 years experience.
073929 088129 | tom.cherry@rapleys.com

 

Taya Cotterill – MPLAN MRTPI
Senior Planner
Town Planning
Joins in Bristol after previously specialising in residential.
07917 567263 | taya.cotterill@rapleys.com

 

Will Primrose – BSc (Hons) MRICS
Senior Surveyor
Retail & Leisure
Joins the London team with extensive experience in the area.
07879 417824 | will.primrose@rapleys.com

 

William Seddon – BSc (Hons) MRICS
Surveyor
Automotive & Roadside
Transferring from Rapleys’ retail group to automotive & roadside.
07786 264490 | william.seddon@rapleys.com

 

Courtney Rodda
Credit Controller
Corporate & Investor Management
Joins as a credit controller based in our Huntingdon office.
01480 371428 | courtney.rodda@rapleys.com

 

Grant Allan – MA (Hons) MSc
Planner
Town Planning
Joins the Edinburgh planning team working across various sectors.
07920 061235 | grant.allan@rapleys.com

Vacant property (and vacant land) is once again on the increase due to the slow down in the economy and the uncertainty Brexit has brought to the UK property market.

Whilst statistics might still point to relatively low current vacancy rates, we have seen a recent notable increase in vacant properties across all sectors.

It is therefore timely to take stock and ensure you are prepared and that properties are in the best possible state of readiness for sale or letting, anticipating more turbulent times ahead.

Vacated properties can have significant financial and risk management implications. From a financial point of view, accounting provisions under the new UK GAAP (Section 21, FRS 102) make the treatment of contingent liabilities for leaseholds more onerous and the Occupiers Liability Act 1957 (As amended) and other legislation places various obligations on owners of property.

Running costs

Fixed costs – Planning ahead is key in mitigating losses and a strategy to reduce these costs is needed. This may include income from temporary lettings to contribute towards the upkeep.

Utilities – Maintaining services in a vacant property can be costly and an early assessment to identify which utilities can be terminated and those services that it is necessary to maintain is important in managing running costs.

Impact on asset value

If the asset is not secured immediately (and monitored regularly) there is a good chance that the building may be systematically damaged, affecting asset value. Theft of copper and lead, as well as squatting and general vandalism such as graffiti can significantly impact asset value and prejudice insurance policies.

Increased costs of managing vacant properties

Property managers and owners can often be distracted from their core duties when managing vacant property. Vacant property management often involves issues which need to be acted upon immediately, which invariably means prioritising vacant property management over core activities (or employing extra EM/ FM resource to manage vacant assets).

Risk Management

Health and safety is a major concern for organisations holding vacant property as they need to ensure that the property is not only secure but safe. It is imperative that a Health & Safety Assessment is undertaken on any vacant property and land as soon as possible and any works identified as necessary should be instigated promptly. We have the experience to ensure that a cost effective, fit-for-purpose strategy is implemented for each and every vacant asset.

Rapleys can assist by providing a one stop solution for managing all aspects of your vacant property. Our Account Managers co-ordinate various services, act as a single point of contact and carry out financial and risk assessments so your team can focus on their core jobs.

 

 

The new arrangements for questioning Rateable Values under the ‘Check, Challenge & Appeal’ system only apply to properties in England, but will require ratepayers to get involved in a considerable amount of administration where they have a large number of English properties.

For how to register, see below:

STAGE ONE

  • Firstly, a business will have to register through the Government Gateway website: www.gateway.gov.uk
  • The business may already be registered and have an account but will need to obtain an Assistant or Administrator User ID and password.
  • If not already on the system, then register the business and move on to obtaining the Assistant or Administrator User ID and password.

STAGE TWO

  • This involves using the Valuation Office Agency (VOA) website: www.gov.uk/correct-your-business-rates
  • On the VOA website, at the bottom of the first page where it says “Before you start”, click “SIGN IN”.
  • Enter your Government Gateway User ID and password from Stage One.
  • Complete the identity verification process for which you need to provide your NI Number, date of birth and details from one of the following:
    – A payslip
    – Your UK Passport number
    – A P60
  • Register your business
  • Manage Properties – This has to be done individually, property by property, and you will need to have a PDF of the current rate bill for every English property available, but then carry on as follows:
    – Click ‘Claim Property’
    – Search for the property using the Advanced Search – for our rating clients we are able to supply a spreadsheet which, once under ‘Claim Property’, you can click the link which will take you straight to the relevant hereditament
    – When you have identified it, click ‘Claim this property’ at the bottom of the page
    – Complete the details on the next screen detailing whether you are the owner or occupier and click ‘Add property’
    – Upload a copy of your rates bill – Under ‘Manage Properties’ click ‘Appoint agent’
    – Enter your agent’s code.
    Where Rapleys is instructed to act on your behalf, enter Rapleys’ Agent Code which is 39059
    – Click ‘Yes’ and ‘Yes’

• Until the registration process is complete, agents cannot get involved with their clients’ properties.

For any help on registering your business, please contact Stacey Jolly – stacey.jolly@rapleys.com | 07714 133953 – or Alan Watson.

 

The long awaited changes to the Environmental Impact Assessment Regulations come into force today. Rapleys reviews the key revisions proposed and what they mean for the development industry.

Following the EU Council’s decision in 2014 to amend the 26 year old Environmental Impact Assessment (EIA) Directive, the Government undertook a consultation between December 2016 and February 2017 seeking views on the proposed changes to the Regulations.

The main purpose behind the changes is to improve the consistency and quality of the process and resultant Environmental Statements across the EU. Whilst the general process as we know it will not change, it will be more front loaded, potentially reducing the need for full EIA.

The key changes can be summarised as follows:

1. A new definition of the EIA process which could feed into project programmes for planning applications.

2. An enhancement of the screening process, which is now mandatory, with an emphasis on aspects of the environment to be significantly affected by development and the inclusion of mitigation measures at the screening stage. In reality, this has the potential to become a mini EIA, extending this particular obligation rather than streamlining it; however, it might also now improve the quality of the screening process which thus far, has been somewhat inconsistent within the UK planning system.

3. An opportunity for Local Planning Authorities to extend the 21 day mandatory deadline for Screening Opinions to 90 days, or an alternative period to be agreed in writing between both parties.

4. Inclusion of new or enhanced topic areas within Scoping Opinions including the replacement of flora/fauna with ‘biodiversity’, climate change, land, cultural heritage and consideration of major accidents and/or disasters (where necessary). Health impact assessments are also likely to be included within Scoping Opinions under ‘population and human health’.

5. The EIA must adhere to the received Scoping Opinion, where Scoping is undertaken. If the final EIA does not follow the Scoping Opinion it would not be compliant with the Directive. This could lead to applicants revising Scoping Opinions to ensure they take account of subsequent changes, plus an increased risk of legal challenge where Scoping Opinions are not revised to reflect the EIA proposal.

6. The introduction of monitoring measures for significant adverse effects – this may ultimately prove useful in determining the efficiency of the EIA process, however, this could also lead to more detailed conditions on decision notices and obligations within s106 Agreements. This could, in turn, add more risk and burden to developers with a need to ensure conditions comply with the tests in national policy and that monitoring is proportionate to the development proposed.

7. The use of competent experts to prepare the EIA submission for the developer and to examine it for the Local Planning Authority – although there is no actual definition or explanation as to what constitutes an ‘expert’. Responsibility will be placed on the developer to employ competent experts and justify this in documentation alongside the Environmental Statement, whilst the consenting authority must ensure that sufficient expertise is available to review the documentation.

For any help with EIA process, from inception to delivery, please contact Sarah Smith, sarah.r.smith@rapleys.com.

The cost of construction is often the largest single component of a property development expenditure budget and accurate cost planning is an essential aspect of assessing a project’s financial viability.

Construction schemes are often complex affairs that require rigorous project management and clarity of approach to control costs, design development, contractor procurement and execution on site.

Besides assessing the financial implications of a developing design, a key aspect of cost planning is forecasting the impact of inflation on construction prices. Forecasting market trends can be difficult at the best of times but the current political situation with an impending General Election and uncertainty over Brexit presents further challenges.

Imports

The majority of construction components and materials used in the UK are imported. According to the Department for Business, Energy & Industrial Strategy 61.6% of building components imported into the UK come from the EU. Consequently, a weakened Pound will result in currency induced cost increases. The same data reported that the construction material price index increased by 5.8% in the year to January 2017. However for some commodities such as slate, timber and steel, the increases are much greater.

Labour

Similarly, the UK construction sector also relies heavily on labour imported from the EU. RICS has recently warned that a hard Brexit and potential restrictions on labour movement would result in the industry losing more than 175,000 EU workers. Any skills drought combined with industry wage agreements would result in significant labour cost increases and even jeopardise the delivery of future projects.

Going forward

These cost increase factors could be countered to an extent by shrinkage in investor confidence and a subsequent fall in demand. Furthermore, contractor supply and capacity would increase as current projects are completed.

A cooling of the market would lead to contractors becoming increasingly anxious to secure their orders for 2018 and beyond. This could force them to reduce their margins and result in the balance of power shifting in favour of clients.

So while there is continued concern that the full ramifications of Brexit will not be fully understood for sometime, more competitive pricing in the next few years could present clients with clear opportunities to reduce their capital expenditure and procure construction projects more cheaply.

For more information on this or any other project management issues please contact Alastair Bliss.

 

 

The recent announcement that PSA Group, who own Peugeot and Citroen, will buy Vauxhall and Opel from their parent company General Motors for £1.9 bn will see the creation of the second largest car manufacturer in Europe (behind Volkswagen Group).

Vauxhall have 333 dealerships in the UK* along with major production plants at Ellsmere Port and Luton. The chairman of PSA, Carlos Tavares, has already suggested savings will be made of £1.47 billion per annum by 2026.

However going forward what could the effects be on the property market?

Dealerships

We are unlikely to see the wholesale closure of dealerships across the UK. In recent years there has been a trend for manufacturers to split their brands in terms of properties, whether this is separate sections of the same building or indeed totally separate buildings. There could be some scope for Vauxhall dealerships to incorporate the other brands into their sites, especially where they have previously had other GM brands such as Saab or Chevrolet. Given Vauxhall had just over 10% of the UK car market in 2015**, it’s unlikely that the brand will disappear and there is the potential for new investment and growth.

However it is unlikely we will see any major moves in the dealership market in the short to medium term.

Non-retail premises

Where we expect there could be change is in the non-retail properties. Citroen recently sold their HQ in Slough and relocated to Coventry to share premises with Peugeot. We could foresee a similar situation with Vauxhall relocating some functions from its spiritual home in Luton.

The topic of Luton is probably the biggest question mark. With the new owners looking at costs and the general consensus that the enlarged group now has too many manufacturing facilities, this could be where the major effect on property will be felt. If one of the UK plants was to close, it is not only the plant itself which would be affected but all of the supporting infrastructure, from the manufacturers of parts to the workers in the nearby sandwich shop.  However the effects of a hard or soft Brexit are likely to have an impact on the final decision on any plant’s future.

Property Investment

Property investment could benefit from the takeover as the growth in the size of the company could lead to further investments, possibly the redevelopment of old sites for new state of the art facilities or even a relocation of all brands in a town to a single larger bespoke site. If the new owners can return Vauxhall (Opel) to profit, making their existing properties a more attractive investment, we could see the hardening of yields.

From a landlords perspective, the vast majority of Vauxhall dealerships have been run by national franchise dealer groups on a leasehold basis. Any landlords who own one of these investments, with a short or medium term lease in place to a franchise group on a Vauxhall site, should consider the chance of the enlarged PSA group rationalising their portfolio. In this case, Rapleys’ Automotive & Roadside team are on hand to discuss a range of likely options for your asset.

For any further information, please contact Mark Frostick.

 

*Source: Vauxhall.co.uk
**Source: Car Magazine

 

Change has been the only constant in the planning system for many years, and obtaining up to date and commercially focused consultancy advice is key to making the most out of your property assets.

In 2016, Rapleys’ Town Planning team advised a wide range of clients, to this end, including:

  • Housebuilders
  • Strategic Land Companies
  • Investments Funds
  • Institutions
  • Landowners
  • Local Authorities
  • Commercial and Mixed Use Developers
  • Construction Contractors
  • Retailers
  • Roadside Operators
  • Leisure Providers

Our instructions from these clients involved cases throughout England, Scotland and Wales.

The services we provided included:

  • Preparation and submission of planning related applications and appeals
  • Planning feasibility and audits
  • Assessments of residential and employment land availability/supply
  • Retail and leisure capacity and impact assessments
  • Development Plan monitoring and representations
  • Expert evidence/witness
  • Masterplanning

A year of success

We have substantial expertise and ability in providing clients with robust advice to deliver positive outcomes across the UK wide planning system.

To use the example of permissions, our team pursued over 300 planning applications, to decision, for development proposals, advertisements and other matters. Of these submissions, 93% (285) were negotiated at application stage. In other words, they were granted consent without recourse to appeal. However, where appeals did prove necessary, the majority of the cases were allowed (won).

Robert Clarke, Senior Partner and Head of Town Planning, comments ‘These results underscore our proven track record in the delivery of results through the planning system. We pride ourselves on offering commercially driven and cost effective advice to the benefit of our clients’ balance sheets and development timelines’.

If you could benefit from such advice we would be pleased to hear from you, and bring our experience to the table in order to realise your aspirations and add value to your business.

For more information please contact one of our regional contacts.

London – Jason Lowes 07899 963524 jason.lowes@rapleys.com

Bristol Sarah Smith 07787 527109 sarah.r.smith@rapleys.com

Manchester – Neil Jones 07774 652426 neil.jones@rapleys.com

Edinburgh – Neil Gray 07467 955228 neil.gray@rapleys.com

 

 

 

SUPREME COURT DECISION: NEWBIGIN (VALUATION OFFICER)   – V –   S J & J MONK

Rapleys welcomes the recent Supreme Court Decision on a rating case which should beneficially affect anyone considering substantial construction or redevelopment works by drastically reducing their rate bill.

The property concerned in this case was the first floor of a three storey office building known as Avalon House, St Catherine’s Court, Sunderland Enterprise Park.

With effect from 6th January 2012, the first floor was stripped back to a shell with the removal of all internal elements except for the enclosure for the lift and staircase. The stripping out included the cooling system, internal and external plant, lighting and power installations, the fire alarm system, suspended ceiling, all sanitary fittings and drainage connections, timber joists and modular raised flooring, existing masonry walls and metal stud partitioning.

The Valuation Tribunal and the Court of Appeal made a judgement supporting the Valuation Officer’s view that the property should still be assessed as an office. However, the Upper Tribunal (Lands Chamber) decision supported the ratepayer’s view that the property should be valued at nominal Rateable Value of £1 and this was agreed to be correct by a unanimous Supreme Court Decision.

The effect of the judgement should be that ratepayers do not need to pay Business Rates where the property is subject to significant building works.

The Supreme Court stated that the Valuation Officer must assess objectively whether a property is undergoing reconstruction and therefore incapable of beneficial occupation, rather than simply being in a state of disrepair.

The Court mentioned that a building under redevelopment, like a building under construction, is incapable of beneficial occupation and, therefore, should only have a nominal assessment of RV£1.

The Valuation Officer’s approach to this type of issue has stifled development, was grossly unfair and has restricted re-development works and investment in property redevelopment.

This significant decision should ensure developers do not have to pay Business Rates where a property is subject to extensive works, and will only help to encourage more investment in redevelopments.

The full judgment of the Court is the only authoritative document, and judgments are public documents available at: supremecourt.uk/decided-cases.

For any help with your business rates, please contact Alan Watson.

Proposed developments can cause uncertainty, even hostility, amongst neighbours, be it residents or businesses. If information is scarce, people often assume the worst. Dan Tapscott, who heads up Rapleys’ Neighbourly Matters service, has many years experience acting on behalf of both developers and neighbours, often dealing with complex and sensitive negotiations. This helps facilitate communication, avoid costly delays and even maximise development potential on sites.

Here are Dan Tapscott’s top ‘neighbourly’ tips when undertaking a construction project:

1. Know your neighbours

During planning, objectors will identify themselves; don’t ignore them and hope they’ll go away – the chances are they won’t. Understand why they are objecting and address their concerns. Using a neighbourly matters consultant can bring both expertise and impartiality when dealing with emotive situations.

2. Be neighbourly

First impressions matter. Take people’s concerns seriously and see if steps can be taken to alleviate them; painting a fence, trimming a hedge or adding some ‘business as usual’ signage can go a long way. A professional, such as a party wall surveyor, is well placed to listen and relay concerns back to a developer accordingly.

3. Know your legal obligations

Issues around access, proximity to boundaries and permissions to erect scaffolding, hoardings or oversailing cranes commonly crop up. Ignoring the law around these could lead to a costly injunction and time critical delays to a development. Employing an access arrangements adviser with knowledge of the relevant legislation can avoid these pitfalls.

4. Watch out for spurious claims of damage

There will always be those who will ‘have a go’ to see what they can get out of a developer. Keeping a photographic record of condition from the outset can allay fears on both sides and provide valuable information in the event of a dispute arising. Using an independent professional to undertake this work builds reassurance and trust

5. Avoid conflicts before putting a spade in the ground

A well thought out design can go a long way in tackling potential issues before they arise and therefore can greatly help in keeping neighbours ‘on side’. For example, using a 3D digital model of the development during the design phase can produce a ‘design envelope’ which takes into consideration aspects such as rights to light and daylight & sunlight, thereby reducing the risk of these issues occurring at a later stage.

In summary, think ahead and be considerate and proactive but, if you miss any of these steps, Rapleys are here to help.

For more information on Rights to Light, Daylight & Sunlight Amenity, Party Wall and Access Arrangements please contact neighbourly matters expert Dan Tapscott.

 

According to Kantar, the figures for the period 09/10/2016 –29/01/2017 showed that the food sector held up well over the Christmas trading period. Fears that a repeat of previous years’ food shopping patterns proved unfounded for the majority.

Market Share

The market share figures from 9 October 2016 to 29 January 2017 has adjusted to:

09/10/201629/01/2016
Tesco28.20%28.10%
Sainsbury’s16.00%16.50%
Asda15.60%15.60%
Morrisons10.40%10.90%
Co-op 6.50%6.00%
Aldi6.20%6.20%
Waitrose5.40%5.30%
Lidl4.60%4.50%

 

The “Pre-Christmas large shop” returned and was followed by a slow down over the remaining period with customers using top up shops as the preferred pattern of food shopping.

Morrisons reported their best results in 7 years, like for like sales up 2.9%. J Sainsbury up 0.1%, reported that the integration of Argos has been boosting sales especially in toys and electrical goods. Aldi up 11.8% and Lidl up 7.5%, both outperformed everyone else in the sector. Waitrose was up 2.8% over the same period with Booths up 2.6% and M&S Food sales up 0.6%. The biggest loser was Asda, down 2.4% on like for like sales.

Convenience

In the convenience store sector, Co-op (sales up 3.5%) announced the increase in its portfolio of a further 100 stores for the last year, promising another 100 stores for this coming year. This may prove to be a difficult task as last year’s acquisition programme was made easier by the acquisition of some of the My Local and Budgens trading stores which gave them an immediate hit, accounting for 20 of the 100. They have a rollout programme through the New River Retail pub estate, which will account for some, however with the renewed interest in acquisitions by the regional Co-ops, Costcutter, Spar and Tesco which is back opening its Express format, this may prove to be an ambitious target.

Online

Online shopping still proved to be an increasing area of sales as a percentage of the whole, however the feeling remains that there needs to be a change in costs in order to establish the sustainability of this service as a viable sale point for the future.

Ocado recently announced an increase in pre tax profits of 21.8% for its November year end. This was tempered by concern over the effect of Amazon’s introduction in the market. Amazon recently announced they are to increase the amount of space they wish to take in and around the Greater London area in order to service their food delivery offer.

Tesco/Booker

Perhaps the biggest announcement so far in 2017 was the merger of Tesco with Booker which, despite being subject to CMA approval, is generally being welcomed by the respective retailers and individual traders in the Booker family of Londis, Budgens and Premier Food. Nevertheless, there will be major concerns amongst other operators such as Costcutter, Spar and Nisa which will no doubt be objecting to the added possible influences of Tesco in their traditional smaller store sector. Other mergers or alliances might be considered in this sector if this was to be given the go ahead. The other interesting point to note from this would be the access that Tesco will be getting to the catering market which has a higher margin, i.e Booker currently supplies to operations such as Wagamama. It is noticeable within the industry that foodstores and supermarkets, most notably Waitrose, are incorporating catering units within stores such as sushi bars and pizzeria counters in order to increase their margins and sales.

Key point to note

Aldi has overtaken the Co-operative as Britain’s fifth biggest supermarket

If you have any questions about the above, please contact Richard Curry – richard.curry@rapleys.com.

 

Drive-thrus started life in the USA in the 1940s, but they still feel like a relatively new concept in the UK.

However, the rising demand for and value of prime roadside sites suggests that the format is now well established here.

Most often associated with fast food chains – McDonalds opened its first drive-thru in 1975, the year after it opened its first “In-line” restaurant in the UK – it’s the coffee chains that have been leading the charge in recent years. Starbucks is understood to be close to having 200 drive-thrus in the UK. Costa currently has around 40, but has ambitions to triple that.

Established grab-and-go players such as McDonalds, KFC and Burger King now vie for sites – and customers – not just with coffee houses, but a wide range of new entrants to the quick service restaurant sector such as the Canadian coffee and doughnut chain, Tim Hortons, who provide an all day food and coffee offer that sits alongside both the coffee and fast food operations.

Global brands such as Taco Bell and Krispy Kreme have also bought in to the roadside/drive-thru concept.

New industries

There is even interest from outside the food and drink sector from the likes of financial services firm Metro Bank, which opened its first drive-thru in Slough in 2013, allowing customers to drive up to the bank and carry out transactions without leaving their vehicles.

Whether the idea will catch on with other banks – or even dry cleaners (Johnsons have dipped a toe in the market) and other businesses – remains to be seen, but what is clear is that the increasing number of businesses eyeing the drive-thru arena will affect the market as the supply of prime sites on busy road networks shrinks.

The change in demand

Historically, operators have favoured footprints of 1,800-2,500 sq. ft. All the drive-thru operators of course provide a sit-in option, which at the larger end of the requirement scale mean that site requirements can be as much as half an acre when you take into account drive-thru lanes and parking.

The lack of site options means operators are being forced to adapt their requirements – by squeezing on to smaller sites or buildings over two storeys.

Traditionally, coffee outlets have tended to prefer sites which are inbound to cities, so people can grab a drink and a snack on the way to work, while food outlets prefer an outbound site so that people can grab a ‘take out’ on their way home. Again, this model is already being compromised by space constraints.

The best sites provide a high volume of traffic flow, prominent positioning and good access points. There may also be additional sales drivers nearby – such as office and business parks, leisure centres, trade parks or hotels.

Generally, demand is such that the best sites may be attracting rental income in excess of £30 per square foot, which can make the market very attractive for landowners.

Drive-thrus will also look different in the future, as clever design is used to compensate for the pressure on space, but their continued success is assured: time pressures and the need for convenient solutions will continue to drive demand.

Rapleys provides comprehensive advice on drive-thrus and the wider retail and leisure market. For more information please contact Alfred Bartlett. 

 

Heavily trailed in the media for almost a week, the government’s long-awaited Housing White Paper was published for consultation yesterday. The government hopes that it will fix a “broken” housing market, seen as one of the greatest barriers to progress in Britain today.

In advance of the Paper’s release, much commentary was made about the continued shift away from the Conservative’s long-standing focus on mass home ownership, and towards recognition of renting as a genuine alternative to buying a house. The mandatory requirement for Starter Homes is not mentioned, and instead there is a policy expectation that housing sites deliver a minimum of 10% affordable home ownership and rented tenures. As predicted, it is proposed that powers relating to Starter Homes have been devolved to local authorities. Given the opposition by many local authorities to the Starter Home initiative, it will be interesting to see how many are actually delivered into the market. There is also now a wage cap for those seeking Starter Homes.

However, many of the other themes are somewhat familiar, with the White Paper seemingly aimed at reforming the current system, rather than overturning it – not least:

  • High density development on brownfield locations in close proximity to transport hubs, and on surplus public sector land.
  • Despite much media coverage, the Green Belt is to be maintained and protected except in “exceptional circumstances”
  • Local plan making is to be tightened up but still used as a tool for enabling development. It should be based on meeting identified housing need, albeit potentially against a single, nationally recognised methodology.

Much of the news lies in the “sticks and carrots” that the White Paper contains in its detail, aimed at both developers and local authorities, including:

  • Consideration of the expansion of existing local authority powers to force developers to complete development, and the reduction of the time period to implement consent from 3 to 2 years.
  • Whether local authorities should be able to take into account a developer’s track record when considering proposals.
  • Raising planning application fees by 20% in June, with further rises possible and the potential for fees for planning appeals.
  • Government intervention where local authorities are unwilling or unable to adopt local plan policies in a timely manner and in circumstances where the NPPF presumption in favour of sustainable development would be automatic if housing delivery falls below prescribed levels.

As the Minister for Housing himself tweeted, there is no silver bullet within the paper but in general terms it seeks to encourage developers to build, and local authorities to let them (and seemingly, in some circumstances, make them!). However, some of the measures being suggested against developers seem a little unrealistic, not least those relating to the completion of development. All in all, the White Paper has set itself a huge task, and many will question whether the measures set out within it are sufficient to do the job.

The Government is welcoming comments until 2 May 2017. If you wish to discuss the contents of the White Paper more, or would like us to help you get your views across, please contact one of our nationwide team.

 

Rapleys is pleased to share some of our most recent agency transactions in our latest newsletter.

We are also happy to share some of our currently available properties. A full list of our properties can be found in the property section of our website. Please get in touch if you require more information on any of our available properties.

To view our latest newsletter in full, please click here.

 

On the 10th January, the Scottish Government published a consultation paper in relation to the changes proposed to the Scottish planning system. This is the anticipated ‘White Paper’ often talked about. The findings of this consultation will help the Scottish Government in bringing forward their new Planning Bill in late 2017 or early 2018.

The aim of these proposals is to increase the effectiveness of the planning system by speeding up applications and lowering determination times. It takes the form of 20 proposals for improving the planning system. These in turn are divided into four areas of proposed change.

  • Making plans for the future
  • People make the system work
  • Building more homes and delivering infrastructure
  • Stronger leadership and smarter resourcing

What does this mean for Rapleys’ clients in Scotland?

With a fast growing Scottish population and a lack of desirable sites in cities such as Edinburgh or Glasgow, the focus of the Planning Review is heavily weighted towards delivering residential development. Proposals such as the introduction of regional housing targets set within the National Planning Framework and the introduction of ‘locality plans’ has been raised. The proposal to remove the production of the Main Issues Report stage from Development Planning and improved community planning linkage should lead to a shorter plan preparation stage. We have concerns that the ‘local place plans’ could be seen as duplicating Local Development Plans themselves which might actually have the opposite effect on intentions.

Of further interest to our residential clients is an increased responsibility on local authorities to increase the supply of development ready land and the introduction of a National Infrastructure Agency with statutory powers which could bring a new method by which stakeholders could be brought together. We would question how this is going to be resourced.

The ramifications for commercial and retail development are particularly interesting to Rapleys due to our wide ranging experience in this area across Scotland. Of particular interest is the proposed ‘simplified planning zones’ in town centres and regeneration areas which could speed up key commercial applications such as shops, restaurants or bars.

What happens next?

  • Consultation is open until 4th April 2017 – we will be listening to clients to put forward their views
  • Responses will be published by end of July – there are already initial reactions from the RTPI, RICS and Scottish Property Federation
  • The consultation will help production of a Planning Bill in late 2017/early 2018

Rapleys are experienced in all aspects of residential, commercial, retail and rural diversification and are available to advise our clients as to the implications of the proposals and can assist with making representations to the consultation.

 

The total number of parking spaces in the UK is estimated at between 8 million and 11.3 million and we consider that the car park sector is a property asset class worthy of close attention. According to the British Parking Association, the c.2,250 public parking facilities operated by local authorities throughout the country generate an estimated turnover of £1.5 billion.

Rapleys are experts within the car park sector and bring specialist knowledge to each opportunity. We have successfully completed a full range of instructions from rent reviews to acquisitions, compulsory purchase and investment brokerage for a large range of clients, a selection of which are shown below.

To read the full newsletter please click here.

 

Rapleys is pleased to announce our new service offering Neighbourly Matters after the appointment of leading specialist, Dan Tapscott.

Dan will lead a newly established national team focusing on all Neighbourly Matters issues including rights to light, party walls, daylight & sunlight amenity and access arrangements. Dan will support developers in maximising the development potential on their sites from inception to completion. He will also be representing neighbours to construction projects to protect and preserve their assets.

Increased development activity which can be seen in all regions and cities means that Neighbourly Matters issues are becoming more prevalent, both for those planning and developing their property portfolios and for those on the other side of the fence. Seeking the advice of a Neighbourly Matters expert early on can help to reduce the delays, costs and disputes further down the line.

Currently based in the Bristol office, Dan is looking to expand his team quickly to ensure full coverage across the UK. The team is already growing, with Jo Colebrook joining the Bristol Building Consultancy team in January.

With Dan’s appointment, Rapleys can now offer the full scope of Building Consultancy services to clients.

Dan states “I am genuinely excited to be joining Rapleys. Their multi-disciplinary services compliment my skillset in the field of Neighbourly Matters perfectly.

Having gained experience on notable schemes over the past 10 years in the South West, I am looking forward to replicating this throughout the Rapleys office network and establishing our team as the go to provider of Neighbourly Matters consultancy services UK wide.”

For more information on any Neighbourly Matters services or for advice in this area, please contact Dan Tapscott.

 

The new Mayor of London has issued his draft ‘Homes for Londoners: Affordable Housing & Viability SPG 2016’ for public consultation. It is the first formal guidance document issued by the new Mayor since his election earlier this year, and represents the first steps towards a new London Plan (which he hopes to have adopted by 2019).

It does not go as far as his manifesto pledges for all new schemes to provide 50% affordable housing, although this figure is retained as a city-wide target. Beyond this, the details of the SPG do not come as a surprise and follow on from the aspirations of the London Borough Development Viability Protocol published earlier this year.

The SPG focuses on affordable housing and viability and includes four distinct parts: background and approach; the threshold approach to viability appraisals; detailed guidance on viability assessments; and a specific approach to Build to Rent schemes. Whilst it is currently just in draft and, even if it is adopted, it cannot introduce new policy, it nevertheless provides relatively detailed guidance for Local Authorities in decision making.
Given that more than half of London boroughs are Labour controlled, one can expect many of them to start referring to it in pre- and post-application discussions in short order. Further, for schemes that are referable to the Mayor, it provides a clear indication of the Greater London Authority’s attitude to any affordable housing offer.

The overarching ambition is to boost the overall supply of new homes by making the planning system clearer, quicker and more consistent, and speed up the process for schemes that deliver higher levels of affordable housing. It outlines a carrot and stick approach in that it will aim to reward those developers who deliver 35% affordable housing or more but makes the viability process and subsequent review mechanisms more onerous for those schemes that propose less than 35%.

The Mayor’s view is that the national Vacant Building Credit (VBC) policy should not apply within London – not surprising, under the circumstances, but it will be interesting to see how this pans out given the Government’s ongoing commitment to VBC.

There is a clear drive for all Financial Viability Assessments (FVA) to be made available to the public. Applicants will have the opportunity to argue that limited elements should be kept undisclosed, but the clear onus is on the applicant to make this case.

The Mayor’s preference for using “Existing Use Value Plus” as the comparable Benchmark Land Value when assessing the viability of a proposed scheme is explicit in the SPG. The premium above Existing Use Value will be considered on a site-by-site basis.

The SPG provides specific guidance on Build to Rent developments, recognising that they differ to the traditional Build for Sale model. There is guidance on the requirements for covenant and clawback arrangements if units are sold out of the Build to Rent sector. It also sets out an alternative pathway which applicants can choose to follow that promotes London Living Rents (or similar discounted Market Rent).

Comments on the draft SPG need to be with the Mayor by 28 February. If you would like to discuss the impact of the draft SPG on your proposals, or would like our help in getting your views across in representations, please contact Nick Fell, Partner and Head of Affordable Housing & Viability, nick.fell@rapleys.com or Jason Lowes, Partner in the Planning Team, jason.lowes@rapleys.com.

The Chancellor presented the Autumn Statement on  Wednesday 23 November with some announcements impacting the property and development markets. Rapleys wraps up the key points below.

Planning
Despite including housing in one of the four key areas to be targeted by the £23bn of spending generated from the NPIF to 2021/22, the Statement failed to deliver a silver bullet for housing delivery. We will await the much anticipated Housing White Paper to deliver the detail.

The focus on investment in traditional and technological infrastructure is, however, welcomed. It is often these areas which act as ‘pinch points’ in themselves for both economic and residential development capacity. The commitment of £2.3bn investment in infrastructure to unlock potential for 100,00 new homes in areas of high demand, can only be welcomed as a fiscal aid to support viability. However, it’s questionable whether the proposed £23,000 per plot is an efficient approach.

Similarly, the support to increase affordable housing delivery is much needed but there was an absence of detail in how this will represent an effective approach in light of the 1m home target over the parliament, which is well short of its objective.

Of potential significance is the commitment to relax restrictions on government grants to allow providers to deliver a wider range of housing, which could translate into a stimulus in starter home delivery and Private Rented Sector accommodation.

However, it is the commitment to the balance of budget and investment, with focus on new infrastructure delivery to provide an environment to support economic and residential growth which will be the headline of the statement for the development industry, alongside the requirement for Local Councils to make tough decisions on the location of development.
Ben Read | 07747 757639

 

Housing
The Chancellor’s announcements in relation to the housing market appear to be shifting away from the previous Chancellor’s almost entire focus on home ownership, to a more balanced housing market. The RICS have reacted positively to the announcements on increased investment for affordable housing, particularly for affordable rent.

Alongside the £2.3bn to be spent on infrastructure, the government also committed to an additional £1.4bn to be spent on affordable housing, which is in addition to the £4.7bn that was previously announced. The money will help fund an additional 40,000affordable homes. The Government has also lifted the restrictions limiting the funding to homeownership products. This is a clear indication of a shift back towards a more balanced housing market to take into account the decline in home ownership and increasing importance of good quality rental stock.
Nick Fell | 07964 558697

 

Business Rates
For business rates, there were limited announcements from the Chancellor. The most revealing announcement was confirmation that rates bills will go up by a maximum of 43% year on year in 2017/18, and a further 32% the year after for those RVs over £100,000. These were pitched as a saving from 45% and 50% respectively, but these were figures out to consultation only and still represent increases more than 20 times the current rate of inflation—once again leaving businesses short changed.

He confirmed a previously announced scheme offering rate relief to the hard pressed Oil and Gas exploration sector, and a doubling of Rural Rate Relief to 100% from 50%. The announcement that new fibre optic broadband infrastructure will benefit from 100% relief for 5 years will benefit BT Openreach significantly, but very few others.
Alan Watson | 07917 352428

 

Business Space
The continued focus of the Autumn Statement on the development of housing indicates that the trend of existing office and industrial floorspace and land supply being lost to residential use is set to continue. The consequence will be growth in office and industrial land prices and a strong growth in rents.
Colin Steele | 07860 749034

 

Scotland
The key impact to the Scottish market will come via the City Deal funding announcement which will bring economic growth and development to infrastructure and strategic projects. A City Deal agreement for Edinburgh is confirmed, proposals from Perth and Dundee are being considered and talks will begin shortly on Stirling.

The Chancellor stating that every city in Scotland will be on course for a City Deal gives local areas greater powers and freedoms to help support economic growth, create jobs or invest in local projects.
Neil Gray | 07467 955228

 

Property Management
The Chancellor stated that insurance premium tax (standard rate) will increase from 10% to 12% which will see this type of tax doubling within 2 years. This will lead to additional expenditure on buildings insurance and we expect those with large property portfolios to be significantly hit.

The announced increase in the national living wage to £7.50 from April 2017 will also cause an impact to property management costs as it is highly likely that we will see contractors (receptionist, security, landscaping providers etc) passing this cost onto their customers meaning landlords and tenants should prepare themselves for increased service charge budgets and expenditure.

However, the Carbon Price Support will be capped to 2020 which should reduce the increase seen on energy bills for end consumers, helping reduce the expenditure seen on utilities.
Mark Coles | 07785 522956

Please contact a member of the team if you would like more information on the Autumn Statement and the impact it may have on your property or portfolio.

Brexit: an event that, at the time, felt a little as if the world was about to end. We are nearly 5 months on from 25 June 2016 and whilst turmoil in foreign exchange continues with the pound predicted by some to reach parity with the Euro over the next few months, the FTSE has reached a record high.

However, so far there appears to have been little effect in the automotive sector with both corporate and property deals continuing with some high profile (and costly) examples including:

  • Kia opening Europe’s largest dealership in Brentford
  • Dick Lovett opening a 25 car Aston Martin showroom in Bristol
  • Peter Vardy opening a new Jaguar Land Rover dealership in Aberdeen
  • Arnold Clark opening the UK’s largest Hyundai dealership in Glasgow

Of course these deals will have been planned and financed well in advance of the Brexit date but during the preceding period of uncertainty, the strength of the UK economy appears to have vindicated those approving these high profile deals. Indeed further significant developments are continuing to be announced post-Brexit including:

  • JCT obtaining planning consent for a new Mercedes-Benz dealership in Harrogate
  • Swansway announcing plans for a new Jaguar dealership in Crewe
  • Arnold Clark planning a new Motorstore in Nottingham
  • Inchcape announcing plans for a new Audi dealership in Bolton

Furthermore, since our last automotive update, the sector has seen the largest corporate acquisition for 10 years with Marshall Motor Holdings acquiring Ridgeway for £106.9m to become the 7th largest group in the UK; an acquisition where Rapleys was appointed to advise on the property elements of the acquisition.  There have also been a number of others, both pre and post Brexit, including:

  • Lookers acquire Drayton Group for £55.4m (July)
  • Lookers acquire Knights Group for £27.2m (August)
  • Jardine Motors acquire Colliers Motor Group (June)
  • Vertu acquires Gordon Lamb for £18.7m (June)

It remains to be seen what impact Brexit will have as Article 50 has yet to be exercised and, given recent court rulings, there is uncertainty as to whether the Government can make this decision without the support of Parliament. Many groups are yet to report their half year results although market sentiment has, so far, generally been positive. It seems as if most in the sector remain confident about the state of the UK economy and that confidence has translated into investment in the sector at a time when the temptation might have been to “sit tight”. It is, however, widely anticipated that Article 50 will be exercised in the first half of 2017 and, if this is the case, we will be in for another round of uncertainty next year.

 

 

Rapleys has arrived in Birmingham! In May, Rapleys opened its  sixth office, moving into Birmingham for the first time following the acquisition of Bartlett Property. Led by Alfred Bartlett, the team is growing and will become a significant player in the West Midlands property market over the coming years, offering the full range of Rapleys’ services.

It is a home coming as well as being business as usual for Alfred Bartlett. He first joined Rapleys 25 years ago and left to work in Birmingham. Now back together, Rapleys’ Birmingham office under the leadership of Bartlett, continues to advise on retail and leisure developments across the region. Bartlett’s team in Birmingham has been strengthened with the recent addition of Matt Greenaway as Senior Associate from Bilfinger GVA and Charlie Steele, Surveyor from Steeles Estate Agents.

Matt and Charlie, along with Alfred, will focus on sourcing and bringing both city centre and out of town retail, supermarket, restaurant and mixed use schemes forward and have hit the ground running with some notable instructions including:

  • Advising on two mixed retail student accommodation developments in Edgbaston
  • A retail development for Co-op, close to the city centre
  • A new mixed use development with Marks & Spencer and further retail in Moseley
  • Redevelopment and letting of an existing retail park in Brierley Hill

The team is actively on the lookout for development opportunities for occupiers and developer clients and is also instructed on a number of retail, leisure and development site disposals.

Rapleys is looking to expand its Birmingham office to provide a full service offering including planning, building surveying and project management, office and industrial agency, investment consultancy and rating.

For the time being the Rapleys team is focused on establishing the office as a hub of excellence for Birmingham’s flourishing city centre developments, to provide both developers and occupiers with expert advice to take advantage of the opportunities available during this renaissance that Birmingham is currently experiencing.

Please contact Alfred Bartlett alfred.bartlett@rapleys.com or Matt Greenaway matt.greenaway@rapleys.com for further information or details on how we may assist you with any retail, leisure or roadside opportunities.

 

 

 

The food store sector continues to be a difficult and highly competitive industry with fierce competition for the best locations and diminishing or no interest for lesser sites that previously would have been considered.

From the period April 2016 to October 2016, according to Kantar, the division of the spoils has swung significantly to the discounters Lidl and Aldi, from the big four, and continues to do so. We must now consider that there is the big six.

Market Share

According the Kantar World Panel for the six months ending the 9 October 2016, market share has adjusted to:

Tesco28.0%Down 0.2%
Sainsbury’s16.5%Down  0.5%
Asda16.0%Down 0.4%
Morrisons10.6%Down 0.2%
Co-op6.2%Up 0.3%
Aldi6.0%Up 0.2%
Waitrose5.2%Up 0.2%
Lidl4.4%Up 0.2%

 

Supermarkets

For large format food stores, priority has been to consolidate and reorganise existing estates and trading operations. Asda, Sainsbury’s, Tesco and WM Morrison have all been looking to offload areas of surplus car parking, for example. Land bank sales, contraction of larger stores, straightforward disposals, or in the case of Sainsbury’s, the cessation of Netto, are being prioritised rather than taking on new trading space.

Discounters have not only contributed to this situation but have also benefited as a result,

being able to acquire the offloaded space or sites that have been made available.

Conversely, the premium brand large format operators have been active, although not immune to the price war and discounters.

Rapleys have recently advised Booker Retail on the disposal of two of its trading stores to Waitrose for its 7,000 sq.ft sales area ‘convenience’ format store. In addition, they have been committing to a pipeline of larger stores currently under construction. Recently however, it has been announced that 6/7 of these larger store commitments have either been shelved or withdrawn.

M&S has acquired a number of sites for future development in a variety of locations and developments for their Simply Food format and continue to expand their representation in PFS sites.

Convenience

Convenience store activity has also suffered, principally due to competitive pricing and tightening margins. The result has been the loss of My Local (following on from M Local) and Budgens being acquired by a wholesaler (Booker) to become its high end brand fascia.

Rapleys advised My Local Convenience Group, owned by Greybull Capital, in the sale of more than 40 stores prior to the retailer going into administration. Sizeable packages of stores were sold to Southern Co-Operative, The Co-Operative Group, Midco, Central England Co-Operative and AF Blakemore (Spar).

The Co-Operative Group also acquired 14 trading company owned Budgens stores following Bookers takeover of Musgrave Retail Partners.

Nevertheless, the convenience store market remains active albeit selective. All operators are having to reassess sites on almost a monthly basis due to the high level of competition and pressure on margins.

Similarly to the supermarkets, the convenience operators are refining optimum store size based on range, location and format. We have recently seen the Co-Operative Group not only disposing of their larger stores to Hilco and other traders, but also disposing of all their smaller sites (approximately 220) to McColl’s. The current policy being to operate from an estate of stores of approximately 4,500 sq ft GIA.

Acquisition policy appears to be heavily weighted towards the acquisition of existing trading stores as these not only offer an immediate contribution to EBITDA but also enables the store to ‘mature’ sooner.

‘Virgin’ sites are now heavily scrutinised due to higher thresholds needing to be reached—the result of tighter margins. Accordingly, currently Tesco and Sainsbury’s have almost no requirements at all.

Rapleys Comment:

It’s not all gloom though, there are signs of recovery at both Morrisons and Tesco’s larger formats, the discounters remain highly acquisitive and M&S is making positive approaches on a number of new developments. In the convenience sector, The Co-op, Blakemore, McColl’s and other independents remain particularly expansive. There are rumours that Tesco Express and Sainsbury’s Local are now looking to re-enter the market.

Despite Ocado having been in the online and home delivery market for some time and the announcement that Amazon is to join in, the jury is still out as to whether this sector will deliver!

If you have any questions about the above, please contact Richard Curry richard.curry@rapleys.com.

 

 

 

 

Central government recently published the Neighbourhood Planning Bill (The Bill) and a public consultation document entitled “Improving the use of planning conditions.”

A principal aim of the government is to speed up housing delivery. The imposition of a large number of pre-commencement conditions on planning permissions serves to slow delivery following the grant of permission. It is their view that the regime is “overly restrictive and unnecessary”.

An extensive list of pre-commencement conditions not only runs the risk of delay and additional costs to developers, but also creates resourcing issues for the Local Planning Authority (LPA) who are tasked with reviewing the information submitted to discharge the condition.

The latest proposal follows on from the deemed discharge of planning conditions which came into effect on 15 April 2015. This sought to address unnecessary delays in approving condition details and the new proposal goes a step further in avoiding their imposition in the first instance.

The government proposal

The government proposes to prohibit the use of pre-commencement conditions unless the applicant has agreed to them in writing beforehand. The aim is to ensure that pre-commencement conditions are only used when necessary, so that development can commence without delay, while retaining the ability of the LPA to impose conditions that are required to achieve sustainable development. This will provide the applicant with an earlier opportunity to challenge any pre-commencement conditions that may be unnecessary, such as conditions that could be discharged at a later stage of development.

The approach will not apply to outline permissions.

The Bill also gives the Secretary of State the power to prescribe the circumstances in which certain conditions may, or may not, be imposed.

The principal difference between this and the tests set out in the National Planning Policy Framework (NPPF) is that developers will have the opportunity to confront any pre-commencement conditions they feel are unjustified at an early stage.

Applicant/LPA agreement

Whilst in most cases, it is likely that the applicant and LPA will reach an agreement on what pre-commencement conditions should be imposed, if the applicant does not agree to a certain pre-commencement condition, the LPA would have the option to alter the condition in question, allow the developer to comply with the condition after the development is underway or remove the condition altogether. However, the LPA will still have the right to refuse the application if it considers a pre-commencement condition is necessary to make the development acceptable, as it does currently.

If this is the case, the developer would have the option to appeal the condition and the LPA would be expected to justify the condition and why it is needed at pre-commencement stage.

Agreement of conditions

Before giving their written agreement to conditions, developers should ask themselves a number of questions:

  • Is there scope for negotiation of the conditions?
  • Does the LPA want an appeal?
  • Will the conditions cause concern to funders or other third parties?
  • Is there an opportunity to amend the conditions at a later date by submitting a non-material or minor material amendment application?

Consultation

The Consultation seeks comments on the proposed process to prohibit pre-commencement conditions from being imposed where the LPA does not have the written agreement of the applicant. The paper also seeks views on whether it would be necessary to make provision for a default period, after which an applicant’s written agreement would be deemed to have been given, if no response has been received. This would allow the LPA to proceed to impose the pre-commencement condition if no response has been received from the applicant within a given period.

The Secretary of State will have the power to prohibit certain conditions in defined circumstances. The Bill provides that the Secretary of State may only make such regulations if he is satisfied that the conditions are necessary, relevant, sufficiently precise and reasonable, that is to say that the conditions satisfy the existing policy requirements on planning conditions.

Although the proposals are to be cautiously welcomed, there is some reservation about whether the examples given in the paper are being enforced by LPA’s, and therefore that new regulations would make any real difference in the challenge to boost housing delivery.

Whilst it is an admirable attempt by the government to speed up the planning process there is some uncertainty as to how effective these changes will be. When put into practice, previous attempts to speed up the planning process have shown that despite the best intentions, the process is not usually sped up in any significant way and delays are still apparent. There is also some caution that more complex planning applications may be refused where they should otherwise be granted, or negotiations over the imposition of conditions and details to satisfy the LPA are simply shifted to before determination.

Consultation ends at 12pm on Wednesday 2 November and it will be interesting to see the response.

If you have any questions about the above, wish to submit representations or would like to discuss any other planning matter, please contact a member of our nationwide team.

 

From previous newsletters you will be aware that the new Rateable Values are to be made available to the public at 8 am tomorrow morning, Friday 30th September.

However, until the Government announces the rate in the pound and details of the Transitional arrangements, which will phase in the increases or decreases in liability, rating agents will not be able to give clients accurate details of their rate liability.

This morning we were notified of a consultation on Transition which will last from 28th September to 26th October and means that the Actual Transitional Regulations will not be in place until November at the earliest and there is even a mention in the document that the Regulations have to be in force by the 1st January preceding the Revaluation, so it could be that late.

For your information we have included the link to the consultation document because there are some interesting statistics on the Valuation Office’s view on what is going to happen to the level of assessments in various parts of the country but also there is a major change proposed with regard to the Transition for properties with assessments above £100,000 RV.

Click here to view the consultation document.

A very interesting statistic is that the column that says “not in Transition” states that nearly a million properties are not in Transition in the first year and, that figure will go up every year as properties fall out of the Transitional arrangements.

Two options for Transition are mentioned but the Government’s preference is Option 2 and this potentially means that “large” properties, mainly in London and the South East where rental values have increased significantly, could see results in

rate liabilities increasing by 45% between this year and the new Rating year 2017/18. The following year it could go up by another 50% and so on, as you can see from Option 2 Transitional arrangements in the consultation document.

Option 2 has a similar effect on “Downward Cap” for the new list large properties, as the “phased” reductions from the 2010 List were slightly higher than those mentioned for the new list.

The Transition figures for what the Government is calling small and medium properties are exactly the same as for the current Rating List which only had two bands rather than the three now being proposed for the new list.

The numbers affected may not be huge but there will be significant changes in rate liability for the 49,800 properties mentioned in the large downward cap group and the 8,800 mentioned in the large upward cap group.

Until the Transitional arrangements are settled it is unlikely the Government will be able to announce the actual rate in the pound for next year which means providing the clients with accurate rate liabilities for 2017/18 is going to be very difficult, if not impossible.

One final point in the consultation document is in Point 1 which states “the Government will reduce the tax rate – known as the multiplier – to offset the overall change in rateable value” and yet when you look at the statistics immediately below, the vast majority of rate liabilities are expected to reduce as a result of the Revaluation, except in London. So is the rate in the pound really going to be reduced, or will it increase?

For more information, please don’t hesitate to get in touch.

 

The Revaluation comes into force on 1st April 2017 BUT the draft list figures are to be made available on 30th September by the Valuation Office Agency  – just three weeks away. However, until the government announces both the rate in the pound for 2017/2018 and the transitional arrangements, it will not be possible to calculate rate liability for the next rate year.

Any obvious discrepancies in the “new” rating assessment can be brought to the Valuation Office’s attention between the publication of the draft list and 31st March 2017.

The new assessments are based on the levels of rental value as at 1st April 2015, so any worries about property values as a result of the “Brexit” vote will be completely ignored.
A completely new system of examining the Valuation Office’s new figures is due to come into place which is as follows

1. Check – This requires factual survey information to be checked against the information used by the Valuation Office to produce the 2017 valuation. If no agreement can be reached the process moves to the next stage.
2. Challenge – This requires further supporting information and detailed evidence from the ratepayer along with a valuation based on the information provided. If this cannot be agreed the process moves to the formal appeal stage.
3. Appeal – This stage gives access to the Valuation Tribunal where for the first time, a fee will be payable to lodge the appeal.

How we can help
For existing and new rating clients, our services include the following:

  • We can identify all 2017 draft rating list rateable values
  • Provide budget forecasts for changing rates liability from 1st April 2017
  • Examine “new” assessments in order to notify the Valuation Office of any obvious errors
  • Provide factual and rental information in the correct format to avoid the possibility of misinterpretation and potential for increased liability
  • Undertake a portfolio review with appeal recommendations
  •  
    Why Rapleys
    Rapleys has provided specialist business rates advice for over 30 years and has successfully reduced clients’ operational costs over successive revaluations.

    Our clients benefit from  full UK coverage through our network of six offices including Scotland.

    We have a loyal client base which is testament to our friendly, practical and cost effective service, providing strategic advice to our clients.

    Our successes
    We are specialists in the business rates sector, saving our clients over £60m so far over the life of the 2010 rating list.

    Rapleys’ Scottish town planning experts give their views on the outcome of the Scottish Planning Review.

    In September 2015, an independent panel was appointed by Scottish ministers to review the Scottish planning system. The panel was asked to look at ways to achieve a quicker, more accessible and efficient planning process. The review focused on six key themes – development planning; housing delivery; planning for infrastructure; development management; leadership, resourcing and skills; and community engagement.

    The review panel provided 48 ‘recommendations’ which they feel might achieve a quicker, more accessible and efficient planning process. In summary, the key recommendations identified in the report propose:

    • Giving more focus to the National Planning Framework (NPF), including regional housing targets;
    • Simplifying the development plan review process;
    • Empowering communities with the introduction of “Locality Plans”;
    • Encouraging Simplified Planning Zones (SPZ) within town and regeneration areas;
    • Establishing a national infrastructure agency;
    • Streamlining complex planning controls.

    By recommending a simpler approach in preparing development plans, the onus will shift onto making sure the NPF is more focussed. Removing the main issues report stage and making improved links with community planning will result in a shorter two year plan preparation process. Not a bad outcome. With strategic development plan authorities re-purposed to focus on co-ordination and delivery, this might redress the balance. Another big change would be the proposed 10 year development plan cycle, which, the report states, could have flexibility in parts; to be updated to react to circumstances, such as economic change. We think this is a fairly mixed bag of proposals.

    We think the biggest eyebrow raiser is the idea for regional housing targets, set within the NPF. The possibility of empowering communities to bring forward their own “locality plans” might result in over-consultation locally. Resources will need to be in place to referee the new procedure.

    A key “game changer” within the report includes the expansion of simplified planning zones to allow use on a wider scale, such as in town centre or regeneration areas. A fillip for our town centres. We also like the proposal suggesting allocated sites be afforded planning permission in principle and/or benefit from exemptions from pre-application consultation requirements and fast-tracked appeals. That might speed things up.

    Proposals to streamline and minimise the use of planning obligations could help speed up delivery of development; as from Rapleys’ practical experience, we are aware how this can result in significant delays and affect commercial decisions for clients. We think a very interesting recommendation within the report is the proposal for a national infrastructure agency which would have statutory powers and potentially could be a positive way to bring key stakeholders together.

    The Scottish Government is now considering the recommendations put forward by the panel and will publish its response “in due course.”

    Rapleys can help by examining what the review proposals means for you. For our retail and town centre clients we can advise on the implications of simplified planning zones; for our residential clients we can comment on the effect of moving to a 10 year planning horizon and for all other clients we can suggest ways of challenging some of these ideas as they proceed to scrutiny during 2016-17.

    Please contact the above for further information or advice regarding this update.

    To view this as a PDF please click the link adjacent.

    Two main issues dominated the news headlines in 2015, one positive and one negative.

    The first was the VW emissions scandal which first reared its head in September, the full effects of which are yet to be felt. It is likely that the impact of this in practical terms will not be felt for some time as the true cost to the company emerges. However, the first negative effects were realised in November as used car sales for VW brands fell by 20% whereas the overall used car market improved by 3.8%. Headlines continue to be negative with the US President of VW resigning earlier this month.

    The second, was that the used car market and new car registrations reached a record breaking 2.63m, beating the previous record of 2.58m in 2003, after 43 months of consecutive growth. Many in the sector believe 2016 could see a new high for registrations and we believe this will positivity fuel demand for new sites and premises. However, a slowdown in the housing market is what many in the sector want as numerous requirements cannot be satisfied owing to higher alternative use values, particularly for residential.

    There have been a few high profile business acquisitions in the last few months of 2015/start of 2016 which has consolidated the sector even further. Those of particular note are as follows:

    • Vertu acquired Greenoaks Mercedes-Benz who have dealerships in Reading, Ascot and Slough.
    • Group 1 acquired Spire Automotive, a 12 dealership group.
    • Marshall Motor Group acquired SG Smith in November for £24.4m. They represent a number of VWG brands in South London.
    • Lookers acquired Benfield in September for £87.5m. They trade 30 dealerships across Northern England.
    • Vantage acquired Toyota/Lexus in Leeds/Wakefield for £12.7m
    • Eden Motor Group acquired Wokingham Motors who represent Vauxhall, Mazda, Fiat and Hyundai in the town.

    It is common knowledge in the market that Jaguar Land Rover (JLR) is seeking to redefine their market areas at the same time as enhancing their retail network. This has led to many business and property transactions involving the two brands and we highlight a few below:

    • Rybrook buy Jaguar/Land Rover businesses in Huddersfield from Perrys.
    • Cambria acquires Land Rover in Welwyn Garden City from Jardine for £10.8m.
    • Ridgeway announce plans for a new Jaguar/Land Rover facility in Oxford at Milton Gate.
    • Charles Hurst opens a new Jaguar/Land Rover facility in Belfast.
    • Inchcape acquire Land Rover in York from Armstrong Massey.
    • Lookers buy Amersham Jaguar from Jardine.

    It certainly seems as if JLR are the major brand leading the quest for new and improved premises although many other, particularly premium, brands continue to dictate their requirements to dealers. We see no signs of this activity diminishing through 2016 as car sales figures continue to improve.

    To view this as a PDF please click the link adjacent.

    More permitted development on the way

    Further changes to permitted development will come into force on 6 April, the most important being:

    Office to residential
    As previously announced, the right to change the use of most office space to residential without planning permission is to become permanent. It will continue to be subject to a prior approval procedure, albeit this will be extended to consider the impact of noise on new residents.

    Current non-geographic exceptions will remain in perpetuity, but geographic exceptions (including Central London and Manchester city centre) will expire in May 2019, although one can expect many of the local authorities affected to promote Article 4 directions to retail the restrictions beyond this.

    Interestingly, there is no mention at present about the idea mooted last autumn of extending permitted development to include demolition and redevelopment of office buildings for housing. This was quite a radical proposal, raising many questions about how it might be implemented – the government may feel that it needs more time to consider this.

    Light industrial to residential
    A new three-year temporary permitted development right for changes of use from light industrial to residential will come into force on 1 October 2017. Beyond its temporary nature, there are a number of other restrictions imposed, including:

    • A floorspace limit of buildings less than 500sqm;
    • Evidence will be required that the building was used solely for light industrial purposes on 19 March 2014 (or, if the light industrial use was established but the building was vacant in March 2014, the date the building was last in that use would be relevant), and
    • Whether the site is identified as being particularly sensitive (for example, listed buildings, scheduled monuments or in a site of special scientific interest).
    • Prior approval will be required relative to flood risk, contamination and transportation considerations. In addition, the prior approval process will include consideration of the impact of the change of use on surrounding light industrial operations, where these are deemed to be “important”. Prior approval must be granted before 1 October 2020, and development must be completed within three years of the prior approval date

    Commentary
    Office to residential conversions have proved popular with developers – according to government figures, almost 4,000 conversions were approved between April 2014 and June last year and no doubt the extension of this right in perpetuity will also be welcomed. However, the change of use from light industrial floorspace may not prove as popular, given the restrictions improved (not least on floorspace), and the level of additional work that might be required to render sites fit for habitation. Further, it will also be interesting to see how local authorities will define areas that are considered “important” for light industrial use – from past experience, some local authorities may take a very broad view.

    To view this newsletter as a PDF please click the adjacent link.

    Business rates were mentioned nine times in the Budget when the Chancellor kept saying “help for small businesses”.

    The fact is that none of the help comes into force until 1st April 2017 at the earliest.

    Small Business Rates Relief

    • The doubling of Small Business Rate Relief (SBRR) is already in force but currently has to be announced annually, however, from 1st April 2017 it will be a permanent relief.
    • A business with only one property with a rateable value below £12,000 or one with additional properties whose rateable values are all below £2,600 don’t pay any rates at all currently.
    • From 1st April 2017 that figure will rise to rateable value £15,000.

    Larger Businesses

    • Larger businesses currently pay for SBRR through the small business supplement which is a 1.3 pence addition to the rate in the pound for 2016/2017. In London this applies to businesses whose rateable value is
    • £25,000 and above and outside London £18,000 and above.
    • From 1st April 2017 these thresholds will be considerably increased to rateable value £51,000 and above so, for example, this will save those with a rateable value of £50,999 some £661.70 per annum – proportionally
    • less for those with a lower rateable value.

    Uniform Business Rates

    • Currently the Uniform Business Rate increases each year by Retail Price Index figure from the preceding October.
      This will change to the lower Consumer Price Index but not until 1st April 2020.

    Help for local newspapers

    • There will be a £1,500 business rates discount for office space occupied by local newspapers in England (a maximum of one discount per local newspaper and per hereditament) for two years from 1st April 2017.
    • However, it would seem the retail relief offered over the last two rate years has disappeared, which will greatly affect many small businesses.

    Public Lavatories

    • Good news if you own a public lavatory local authorities will be able to offer discretionary relief – I thought you all needed to know that.

    Retail Relief

    • The help for small businesses for 2016/2017 is, therefore, less than it was previously with there being no retail relief.

    2017 Revaluation

    • How these reliefs will affect a business’s rates bills is largely unknown because of the 2017 revaluation.
    • Until the draft rating list is published in October this year, a business has no idea what its rateable value is going to be from 1st April 2017.
    • No one knows what the rate in the pound on the small business supplement will be for 2017/2018.
    • There has been no mention yet of whether large increases or decreases in rate liability following the revaluation will be “phased” through a transitional relief scheme as they have over the last five revaluations. There was no such scheme in either Wales or Scotland following the 2010 Revaluation.

    The Autumn Statement Update 

    • In the Autumn Statement, it was announced that going forward cities with elected Mayors would be able to levy an infrastructure tax from 2020 and all billing authorities would be able to set their own rate in the pound.
    • However, yesterday the Chancellor announced that the Greater London Authority will move towards full retention of the business rates from 1st April 2017 – three years early and this could well impact on businesses with property in London

    It sounded good as the speech was made but in reality it is all 12 months away at a minimum and there are so many imponderables that it is impossible to calculate the effect

    Rate Bills
    A comment on the note from the Valuation Office Agency that is arriving with your rates bills.
    It asks businesses to register to receive details of your draft rateable values in October.
    If you have instructed Rapleys to look after your rates from 2017 onwards you do not need to bother with this. Rapleys will provide clients with a list of draft assessments and as soon as there is an announcement about the rate in the pound for 2017/2018 and whether there is to be any “phasing” in England, will also provide estimates of rate liability for 1st April 2017 onwards for rating clients.

    To view this as a PDF please click on the adjacent link.

    The Scottish Government has issued Draft Planning Delivery Advice on “Housing and Infrastructure”. This has come as a result of the “root and branch” review of Scottish planning. The Government has commissioned a separate study on housing and infrastructure to tackle one of the practical issues of the current shortage of housing.

    The draft advice is concerned with improving housing and infrastructure delivery primarily through the development plan process, but it will also be a material consideration in the determination of planning applications and appeals. Once finalised, it will replace Planning Advice Note (PAN) 2/2010.

    Developers have found delivery of housebuilding in Scotland has become increasingly challenging in recent years. There has been a reduction in completion rates and shortage of deliverable sites coming forward. This guidance seeks to improve the way in which this is handled.

    Effectiveness
    The document sets out that there should be a lesser focus on numbers of houses planned. Instead a stronger emphasis be given to delivery of houses, providing levels of what is required to meet current demand, but also to prepare for the future in places which can successfully evolve and grow over time. The advice addresses the issue of effectiveness (i.e. how a planned site performs) and in doing so identifies a number of criteria against which the effectiveness of a proposed housing site will be assessed. The most notable change is the removal of marketability as one of the effectiveness criteria. Is this an admission that previously identified sites were not attractive for housebuilders and buyers?
    Infrastructure
    In terms of Infrastructure, emphasis is given to partnership working, with a focus on working with stakeholders and agencies in “Delivery Groups”. The advice states that the costing of infrastructure developments should be explored as early as possible to ensure that the correct funding is in place to achieve delivery. The advice suggests this can be done, in a number of traditional methods, for example, Planning Agreement, Developer Contribution, Scale or Kind, but also new approaches such as Cumulative Contributions, thought to be particularly useful for strategic projects.

    We consider this a welcome approach given that the most attractive sites currently appear to be smaller but more deliverable.

    Rapleys is working with a number of landowners, housebuilders, and housing providers in Scotland and we look forward to putting our practical experience to use on these projects when the new guidance is adopted.

    To view this as a PDF please click on the adjacent link.

    Hot on the heels of the consultation on changes to the NPPF, the Government reforms of the planning system continue. Specifically, two further consultations were launched late last week on initiatives to speed up the planning system and bring forward new housing. Comments are being accepted on both consultations until the 15 April 2016.

    Nationwide changes to simplify and speed up the system
    Under the seemingly innocuous title of “Technical Consultation on Implementation of Planning Changes” the Government is seeking views on some potentially radical proposals, not least “fast-tracking” and introducing competition to the processing of planning applications (although decision-making will stay with local councils). Other matters include:

    • Further proposed details for the procedures for “permission in principle” (PiP) and subsequent “technical details consent” (TDC). This includes an indication of the matters to be addressed by each process – location, use and amount of residential development will be addressed at PiP stage, with matters such as design and infrastructure at TDC stage. Additional detail includes proposals relative to timescales and the scope of information required to make applications.
    • Additional detail relative to “brownfield registers”, which local authorities will need to prepare and should include all brownfield land except land that has no realistic prospect of being used for housing.
    • Options to raise planning application fees, but linked to performance.
    • More detailed proposals on the circumstances under which the Government would intervene in the local plan process.

    The consultation document is wide-ranging and begins to add much-needed detail to the operation of the Housing and Planning Bill. Nevertheless, gaps remain on how the Government’s flagship planning legislation will be implemented and everyone involved in the planning system (and particularly local authorities) will be looking at future detail with a magnifying glass.

    Building upwards in London
    In the interests of reducing the take up of green belt land for housing, the Government and Greater London Authority want to make it easier to add height to existing buildings in London, suggesting the following options:

    1. Permitted development, under a prior approval procedure, for additional storeys up to the height of an adjoining roofline but there will be limits and exceptions, and neighbours will still need to be consulted;
    2. Local development orders, in specific areas to be defined;
    3. A new policy in the London Plan to support additional storeys, where a site specific planning permission application is still required.

    Although the proposals are to be welcomed, it is arguable how much of a change this measure represents, given the levels of identified housing need in the capital.

    To view this as a PDF please click on the adjacent link.

    Rapleys undertakes traditional valuation work including for transactional and secured borrowing as well as portfolio valuations for investment and occupier clients. We provide a full range of valuation services including specialist planning enquiry support, compulsory purchase advice and dilapidations negotiations.

    In addition we deliver a spectrum of specialist valuation services including expert witness valuation support.  We are very active in residential development consultancy allied with our development and planning teams. Notably, we recently expanded our affordable housing services to include project viability reporting.  Below are a few examples of the diversity of relevant instructions.

    Commercial Property & Residential Investment
    Rapleys is undertaking valuations of commercial property and residential investments for a number of national lenders and banks as well as specialist development funders. Two recent portfolios have included office, retail and industrial buildings; both of which in aggregate exceeded £15m. A further recent challenging commission was for the valuation of circa 170 parish houses for a Church of England Diocese.

    Affordable Housing
    The expansion of our affordable housing and viability team has enabled us to service growing demand for specialist S106 and viability expertise from developers, landowners and house builders. Current instructions range from a luxury 20 apartment scheme in Bush Hill London to 1,100 and 1,200 unit brownfield developments in York and Manchester respectively.

    CPO Advice
    We have provided CPO advice on a number of schemes including the Brentford FC redevelopment and HS2 as well as submitting expert evidence to the Westfield/Hammerson Croydon Inquiry. We have also provided valuation evidence as part of dispute resolution proceedings as well as advising in respect of potential damages arising from breach of covenants and the statutory grant of electricity wayleaves.

    S18 Valuations
    In association with our building surveyors we have provided S18 valuations in connection with terminal dilapidations disputes, such as those carried out recently for The Co-operative relating to sites in Worthing and Clacton on Sea. Our assessments of diminution helped to achieve an approximate 80% saving on one claim and superseded a significant portion of the contractual claim in the other.

    To view this as a PDF please click on the adjacent link.

    2015 was a strong year in the Automotive and Roadside sectors and was generally characterised by more occupiers chasing fewer opportunities and trying to compete with residential demand and values. We see the strong residential market continue to frustrate expansion plans in 2016. Our predictions are set out below.

    Dealerships

    • We see further consolidation likely, albeit probably outside of the top 10-20 dealer groups.
    • Demand for sites is expected to be stronger, particularly in the south-east as dealers and manufacturers seek to improve/upgrade/relocate.
    • More manufacturers are likely to require premises to be upgraded. Jaguar Land Rover and Nissan rolled out substantial upgrade programmes in 2015 and we believe this is likely to be particularly prevalent at the prestige end of the market.
    • Capital and rental values are likely to climb, at least until interest rates start to increase, as investors chase fewer opportunities.
    • There will be more representation from dealers in major shopping centres; eg. the “pop up” shops in Westfield and The Bullring and possibly even the opening of stores on the high street.
    • Demand from investors will remain very strong for dealership property and it is possible we will see a record yield in 2016 as investors chase prestige opportunities.

    Fuel

    • 2015 saw supermarkets curtailing their acquisition programmes, oil companies exiting direct retailing and the significant injection of capital into the larger independent dealer groups by private equity companies.
    • 2016 will see the dealer groups expanding further and more new to industry developments with complementary food offers. “Churn” will still occur as lower margin sites are closed and converted to other uses.
    • Yields will harden in the investment sector.
    • Specialist developers will start to build up a pipeline of schemes to satisfy an ever growing demand from existing and new entrants to the roadside market.

    Roadside retail/trade counter

    • Values are likely to increase as occupiers have far fewer opportunities to pursue.
    • Further expansion is likely, for example from Topps Tiles, Vets4Pets, Formula One Autocentres and Halfords Autocentres.
    • It is also possible that stronger demand could lead to increasing confidence from developers to build speculative schemes.
    • In order to satisfy shareholder demand for further expansion, occupiers may need to be more innovative in changing their store formats such as Topps Tiles recent “Boutique” format, located in generally affluent areas, particularly inside London.

    To read this as a PDF please click on the adjacent link.

    The market in 2015 for office and warehouse/industrial property was a strong one and we see things continuing in a similar manner in 2016, subject of course, to the possibility of any major global changes dampening the UK economy.

    Barring such change, we believe the parallel trends in each sector will continue:

    • Sustained rental growth coming through from new lettings and driving the case for uplifts at rent review.
    • Lengthening lease terms with landlords resisting three/five year lease breaks that would have been commonly available two years ago.
    • Tenant rent free incentives shortening to commonly one month or less per year of lease term – certain, from what might have been two months as recently as 2014.
      In the face of limited options, occupiers will show willingness to be more flexible in their requirements and, in particular, to consider new locations that would previously have been regarded as too off-pitch.

    Specifically in the office sector:

    • Developers’ commitment to new schemes two plus years back will bolster a supply side that was lacking new stock, but competition for the best buildings will be strong and lettings significantly in advance of practical completion will be more common.
    • Secondary office buildings will continue to be eroded from the available pool by conversion to residential thereby reducing options and pushing up rents on the remaining stock.

    In the warehouse/industrial sector:

    • Retailers and e-tailers will continue to be active drivers of the distribution market throughout the UK, particularly as a consequence of sustained internet sales growth.
    • Home delivery and click and collect will press the need for facilities closer to market in larger metropolitan areas with the scarcity of stock bringing secondary/older buildings back into frontline use, particularly if they have good yardage.
    • In larger urban conurbations, the demand for and political focus on providing more housing will bring further erosion of previously “protected” employment land.
    • In extra-urban locations throughout the UK, there has been significant speculative warehouse development but not on the large scale of the previous cycle. We regard the market to have greater balance going forward in that developers holding enabled land are more commonly agreeing design and build deals with occupiers who are keen to secure buildings more closely suited to their operational requirements.

    In summary, more of the same in 2016 as we had in 2015.

    To view this as a PDF please click on the adjacent link.