IN THIS ISSUE
THE FORMALITIES
!"
FOREWORD A letter from our Founder, Matt Siddell
INTERIORS
!# THINKING GREEN FOR AN URBAN RETREAT By Holly Gannon
HERITAGE
$% LITTLE WOLFORD IN WARWICKSHIRE By Emma Morby
Cover featuring David Kemp, tells us how changes in the recent planning reforms resulted in a scheme with a £10m GDV on p. 42.
ISSUE NO. 19
Founder of DRK Planning,
ARCHITECTURE
&' TOP 6 ECO-FRIENDLY HOME
PROPERTY FINANCE
(# 4 PROPERTY TRENDS SMART
IMPROVEMENTS FOR 2022 AND
INVESTORS ARE LOOKING AT IN 2022
BEYOND
By Paul Watson
By Giovanni Patania
#! HRMC INCREASES COMPLIANCE ACTIVITY IN THE PROPERTY SECTOR By Danielle Ford & Riocard Hoye
COVER: PLANNING
"' PLANNING TRICKS & TRAPS: HOW WE USED PLANNING TO UNLOCK
#' 40 YEAR FIXED RATES By Lee Langley
£10,000,000 By David Kemp PROPERTY DEVELOPMENT
#) GUEST CONTRIBUTOR PROFILE: JOHN HOWARD
#% STEPPING UP YOUR PROPERTY GAME By John Howard
MEMBER PROFILE
)" JEREMY ASHWORTH
FOREWORD _______________________________ Qandor Founder Matt Siddell Partner, Head of Content & Marketing George Le Roux Partner, Head of Membership Simon Podd Events & Publishing Manager Tess Lawson Photographer Daniel Law Membership Manager Jordan Brown _______________________________ For editorial and advertising enquiries, please email: magazine@qandor.org Visit our website www.qandor.org Contributors Danielle Ford David Kemp Emma Morby Giovanni Patania Holly Gannon Jeremy Ashworth John Howard Lee Langley Paul Watson Riocard Hoye _______________________________ Legal Qandor Ltd does not endorse any of the members or contributors to this publication. Always seek your own independent advice prior to investing or agreeing terms of business.
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“It is not the strongest or most intelligent who will survive, but those who can best manage change.” - Charles Darwin David Kemp, Director at DRK Planning Ltd, references Darwin to introduce his article on page 42 which explains how changes in the recent planning reforms offered the possibility of new permitted development rights and new use classes on a site previously deemed to be ‘frozen’ or off-limits for development. The result is a scheme with a £10m GDV that delivers £500k in value to a north London community as well as much needed additional housing for the area. Experienced developer, John Howard, also references change during his recent presentation at a Qandor Developers Forum and in his guest article on page 68 in which he challenges some of us to adopt new strategies whilst recognising the challenges and risks. As per Darwin’s quote above, at Qandor we recognise that the start of a new year is a time to enact change, adapt and improve. To this end, I’m especially grateful to Qandor’s Membership Committee who met recently to offer support, feedback and suggestions as to how the club can continue to evolve, adapt to change and improve its offering to our much valued member base. Thank you! In the meantime, I hope you’ve all started 2022 with a bang and are setting yourself some exciting stretch goals for the year ahead.
M! Sidd" Matt Siddell Founder
INTERIOR DESIGN
THINKING GREEN FOR AN URBAN RETREAT HOLLY GANNON Design Manager Milc Interiors www.milcstyle.co.uk
In collaboration with Londonbased McQueens Flowers, Milc created the perfect urban retreat with wellness at its core within Shoreditch-based development ‘The Makers’.
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The large-scale development has a striking silhouette with an interconnected podium and tower, reaching 28 storeys. A generous provision of private communal facilities includes a screening room, two landscaped garden terraces, a gym, a treatment room and three lounges, perfect for ad-hoc meetings.
INTERIOR DESIGN
The sensitive, modern design conceived by Avanti Architects ensures the building responds to its environment by referencing the surrounding warehouse typology, but reinventing it for contemporary residents. The brief from the client was to create a design that maximised the natural light, yet reflected the roots of the building and local area. Initial inspiration for the design led Milc to look at the iconic skyline from the apartment with the contrast of brutalist architecture around Barbican through to the glass facade city.
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The view from the 12th floor created a sense of escapism and the chance to admire the city, and so the idea behind the name for the Urban Retreat was developed. The scheme evokes the feeling of calm and luxury; stylish finishes reflect the artisan nature of the surrounding Shoreditch area while transporting you to a place that feels removed from any stress of city living. The design itself uses colours found across the natural landscape paired with industrial influences to bring a variety of textures to the design. Almost all areas of the space reflect natural elements and draw back to organic silhouettes and materials, whether it be the marble dining table or the light wood panelling found in the guest bedroom.
INTERIOR DESIGN
Mental health and individual wellness are watchwords within all areas of life and interior design. In this design Milc were able to create the kind of space to promote wellness. Considering such aspects allowed a touch of life, enabling users to fully rest and recharge. The winter garden features a hanging chair surrounded by greenery for the ultimate place to enjoy the view and unwind. The design leads you from the hallway through to an open plan reception space with a mix of green and blue colour tones. The bespoke upholstered ottoman coffee table is a design favourite; it allows for flexibility but also softness within the design. The use of a subtle green wallpaper in the dining area accentuates the openness, but also provides
an elegant and fun styling story, inspired by the creativity that can be found in the Shoreditch neighbourhood and designed with entertaining in mind. The inspiration behind the design for the bedrooms was to create a warm and cool-toned space to reflect a variety of natural elements and areas that different personalities could resonate with. The idea of different climates fuelled the retreat aspect of the design as people each have their own way of interpreting wellness.
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INTERIOR DESIGN
“In pairing natural elements with an earthy, rich colour palette, the design has a natural ebb and of contemporary, handcrafted design.”
The joyful principal bedroom with terracotta chalk wash ceiling and feature paint mimics warmer, dry Mediterranean interiors, whilst the cooler-toned guest space mimics more tropical environments with a deep jade-coloured headboard contrasted with light oak panelling. In pairing natural elements with an earthy, rich colour palette, the design has a natural ebb and flow, showcasing the very best of contemporary, handcrafted design. Personal objets are filled within the design to give a sense of uniqueness and individuality, from the gallery wall in the entrance area through to the workspace in the winter garden. Q.
Milc work with clients to develop designs that exceed their expectations and deliver a seamless service. If you have an upcoming project that you are seeking design advice for, please visit info@milcstyle.co.uk or call us on +44 (0) 20 7700 1523.
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HERITAGE PROPERTY
LITTLE WOLFORD IN WARWICKSHIRE EMMA MORBY Director of Land Acquisition Heritage England www.heritageengland.co.uk
Little Wolford originates from the 15th century and is the perfect Grade II listed Manor House.
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Keeping many of its original features, you are taken back in time through its great hall and minstrels gallery. The property also has a gate lodge, separate cottage and outstanding views over the 34 acres of gardens and pastureland.
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The property was first listed on 2nd September 1952 for its architectural features both inside and out. Built of Cotswold stone with a stone slate roof, the house is approached through a pair of ornate wrought iron gates via a sweeping drive to the ancient oak linenfold panelled front door. The entrance hall retains the original 15th century oak screen where an arched 024 – Qandor – Issue No. 19
doorway leads into the great hall with its vaulted roof and hammer beams, a minstrels gallery and a huge fireplace with an overmantel carved with the Ingram arms. The staff sitting room, originally a separate bakehouse, boasts an inglenook fireplace with a huge bread oven. Local legend has it that this became a hiding place for King Charles II after the Battle of Worcester.
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“The great hall with its vaulted roof and hammer beams, a minstrels gallery an overmantel carved with the Ingram arms”
There is a stone spiral staircase taking you to the upper floors which are said to retain the blood stains from the Civil War Battle of Edgehill. The master bedroom has limed oak panelling with a stone fireplace flanked by cupboards with a carved overmantel and views over the stunning gardens. It also has its own dressing room and en-suite adding to its grandeur. This historic property boasts eight bedrooms, four reception rooms, numerous bathrooms, a wine cellar, gun room, music room, impressive kitchen and tennis courts. The list does go on, but the photos show a lovely cross section. Unfortunately, this property was snapped up for an undisclosed figure in 2021, but it was marketed for offers in excess of £5,000,000. There are a number of historic properties for sale at the moment, and often these are sold below value as buyers are scared of what work is involved in owning a listed building. So, if you are like me and love the history that surrounds these amazing buildings, then 2022 is going to be a good year to buy an historic building. Q. 030 – Qandor – Issue No. 19
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ARCHITECTURE
TOP 6 ECOFRIENDLY HOME IMPROVEMENTS FOR 2022 AND BEYOND GIOVANNI PATANIA Chief Architect & Co-Founder WindsorPatania Architects www.windsorpatania.com
It’s no surprise the world has become more environmentally conscious. The rapid rise of fossil fuels over the last century has led to climate change concerns, accelerating the adoption of a sustainable way of life. This is a concern affecting us and all future generations, and we need to do something about it. Amongst various industries, transportation and housing have received particular attention. It’s estimated almost 80% of all housing will have already been built by the year 2050, so it’s important we 032 – Qandor – Issue No. 19
address it now. So how can you do your part? What eco-friendly home improvements can you put in place to reduce your environmental impact? If you’re looking to build a new house, what design decisions can you make to reduce the impact during the construction phase or a lifetime? If you’re serious about reducing your home’s environmental impact, this article is for you. I’ll share tips and strategies to help you design a sustainable home or make ecofriendly home improvements to reduce your energy consumption. So, grab a tea or coffee, stick around and read on.
ARCHITECTURE How to Do an Energy Audit? Before implementing any eco-friendly home improvements, wouldn’t it be good to know how much your energy consumption is and how efficient your house is right now? When making any change, it’s always good to know how things are right now so you can measure the improvements. In the UK, house energy performance is estimated via an EPC Test (Energy Performance Certificate). The current system is a universal score where properties are graded from A-G based on their Energy Efficiency Rating. In some countries, thermal imaging cameras are used to study and analyse heat exchange and energy efficiency. Thermal systems are simulated on new builds to study and model the heat exchange. I always recommend getting an EPC test done before any eco-friendly home improvements or renovations. 6 Eco-Friendly Home Improvements for Your Next Renovation Based on my experience designing sustainable houses, here are my top six eco-friendly home improvement tips for your next renovation or new build. 1. Heat Insulation (Check Doors and Windows) At the heart and soul of energy efficiency is controlling the flow of heat (called ‘insulation’). One of the biggest energy consumers are heating and air conditioning. So, by trapping and controlling the flow of heat, you can reduce heating or cooling costs.There are two main ways to insulate a house based on material — 1) Thermal Mass 2) General Insulation 034 – Qandor – Issue No. 19
Right: Contemporary wooden kitchen, image courteousy of Pexels ___________________________________ Thermal Mass refers to the use of highdensity thick material that can store and send heat over a period. For example, heat soaked up from the sun during the day can travel through walls ready to heat the interiors by night. Thermal mass uses materials like concrete, adobe, brick or rammed earth. But thermal mass insulation is more expensive and requires the house design to have fewer openings (e.g., windows/doors). General Insulation is the process of using air as an insulator (as it has low heat transmission capacity). An example of this is double or triple glazed windows that contain air, gas or voids due to their low coefficient of heat transmission. In the case of roof design, vacuum insulated panels (VIP) are used for insulation. General insulation is the closest alternative to thermal mass when you have space or material constraints. The use of double or triple glazed airtight windows can improve thermal performance, but there’s a downside. The lack of circulation may result in moisture, condensation or mould issues but that can be fixed using mechanical ventilation.
2. Eco-Friendly Materials This is one of the easiest to put in place as part of your eco-friendly home improvements. Using reclaimed and reused building materials can go a long way in modernising your home to be more eco-friendly. You can use eco-friendly finishes, and materials like timber for your kitchen top or other furniture. By avoiding marble or stone-based furniture, there’s a less need to quarry or use excavated stone as the timber can be sustainably regrown. Another interesting innovation comes from the British company Durisol which has found a way to generate wall form units from recycled wood pulp as an alternative to stone and brick. The use of ‘solar roofs’ from SolarCity — solar tiles embedded with solar panels — is also a great option for generating solar energy with materials. The use of underfloor heating can help make great strides towards achieving ‘passive house’ status. Underfloor heating is better than standard heating because it heats homogeneously. While standard heating is often limited to areas around the heater, underfloor heating heats the entire house. Besides comfort, it also helps to avoid condensation and moisture or dampness. Condensation happens when water gets to the cold spots due to a sudden change in temperature. Underfloor heating limits the number of cold spots, thus reducing condensation and moisture. Underfloor heating is powered via water-based pipes that run under the floor, carrying hot water which in turn heats up a concrete slab. This warm slab then heats the flooring layers above. It’s driven by a boiler or can be solar-powered, but often has a lag time (not quite as instant as an electric heater). 036 – Qandor – Issue No. 19
4. Green Roof A ‘green roof ’ is a layered combination of plants, vegetation and membrane over a house or building that helps insulate it and provide water management. There are several benefits to installing a green roof with the three most prominent ones being: 1. Makes your house appear more visually sustainable; 2. Provides thermal mass insulation (driven by the layer of earth beneath the plants); and 3. Generates high levels of oxygen and helps with water management. It is possible to install a green roof on an existing property although you’ll need to take the architectural design into consideration. 5. Recycling and Reusing Water This may be obvious but many people don’t know there are ways and systems to recycle and reuse water. Bathroom upgrades like dual flush toilets (first invented in the 1960s in Japan) or a sink above the toilet can go a long way in reusing precious groundwater. Greywater is defined as domestic wastewater from showers, laundry, bathroom sinks or lavatories. Studies show that a typical house generates around 33 gallons of greywater per person per day on average. Greywater recycling systems allow you to reuse greywater for flushing the toilet, laundry or even irrigation. This is a system that can be fitted to your existing home. _______________________________
Right: Example solar roof from Tesla, image courteousy of Tesla and Teslarati
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Above: Example green roof in the Faroe Islands, image courteousy of Unsplash
ARCHITECTURE
your home already is. After all, you can’t improve what you don’t measure.” 6. Architectural Design (Angle of the Sun) The design of the house has a big impact on energy performance. A well-thought-out design can make a difference in the need for energy-hungry heating or cooling. It’s useful to design houses to trap as much heat and natural light as possible. This is a fundamental principle of sustainability. During the summer, the sun’s position is at a higher angle but lower during winter. Your architect should design the doors and windows taking the sun’s location into account. With a lower sun, the light goes deeper inside the building, thus reducing the need for extra lighting. Likewise, in the summer you want to protect the house from overheating. If your house isn’t designed in such a way, there’s not much you can do retrospectively but it’s best to consider this for a new build or major renovation. There’s software that can study your property in 3D and simulate the position of the sun. Based on this we can understand how the architectural envelope performs according to chosen criteria and adjust the design. We can reduce the need for air conditioning or heating through good design. 040 – Qandor – Issue No. 19
Conclusion There you have it. Some interesting ideas for eco-friendly home improvements in 2022. The first step is to do an energy audit and find out how energy efficient your home already is. After all, you can’t improve what you don’t measure, right? We explored six eco-friendly home improvements. Some ideas apply to new builds, but a lot can be applied to your existing home. I hope this article inspired you to tackle your own carbon footprint via ecofriendly home improvements — whether for your existing property or new build. Whether to do it, the answer is personal and depends on your goal and reasons for doing it. Q. If you liked this article and want to learn more about me or my company WindsorPatania Architects, please get in touch via our website www.windsorpatania.com.
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COVER STORY: PLANNING
PLANNING TRICKS & TRAPS: HOW WE USED PLANNING TO UNLOCK £10 000 000 DAVID KEMP Director DRK Planning Ltd www.drkplanning.co.uk
“It is not the strongest or most intelligent who will survive, but those who can best manage change.” Charles Darwin New planning reforms in August 2020 opened up the possibility of new permitted 042 – Qandor – Issue No. 19
development rights and new use classes. These changes have opened up the possibility of development on sites up until now ‘frozen’ in their current use due to local planning policy restrictions.
purposes only. Image date October 2015.
One such case we have been dealing £10 million in development value, whilst with over the last 18 months demonstrates delivering nearly half a million pounds in the need andBorough be flexible new approximately benefits to local amenity, transport, local nt opportunity in to theadapt London of as Barnet opportunities arise, but London also the Underground challenge schools and affordable housing. from Totteridge & Whetstone Station. that this creates for dealing with local cars, higher density! planning authority officers,Hall who y comprises a single storey Church (Useare ClassFewer D1), which themselves often trying sq to adapt this Thecar development approximately 177 sq m (1,905 ft), andtoassociated parking. site comprises a former change. church hall site, no longer used or needed ng to approximately 0.11 hectares (0.28aacres). In this case, we took a site from single- by the church opposite for community use. storey small community hall to a new three- This substantial site, located next to a primary redevelopment for other uses, including residential, subject to storey development comprising 20 new school and within walking distance of buses, ary consents. apartments in North London, making use of underground stations and local shops, was a ehold. changes to the Use Classes rules (as well as great opportunity for a substantial new flatted other planning strategies) along the way. The development. final planning permission unlocked about Issue No. 19 – Qandor – 043
COVER STORY: PLANNING
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The site sits in a broadly residential area, in a location on the fringe of greater densities and building heights, and included large expanses of hard surfacing for car parking, creating the opportunity for a more environmentallysustainable use of the site, returning more soft landscaping and far lower dependency on the car, with the benefit of extra family housing. Therefore, in August 2020, we embarked on an application for planning permission for the redevelopment of this site into a new build three-storey apartment block for nine flats and commercial use on the ground floor. We submitted an application for planning permission for the nine units scheme in late July 2020, following a successful pre-application, and then finally obtained planning permission in October 2020. Submitting for planning for the nine units scheme before going back for 20 units, instead of going straight away for 20 units, had the following advantages: ◉ A smaller number of units draws less attention locally and drew less opposition. The nine units scheme passed with fewer than five objections and under delegated powers. ◉ No affordable housing is required in Barnet for less than 10 new units. ◉ It creates a higher value than the existing use as community centre, which then means on larger schemes, the alternative use value established by this permission reduces the affordable housing contribution on a larger scheme. ◉ Obtaining permission quicker and easier for a smaller scheme helps to raise money against the site which can then help to
manage the costs and delays to the scheme in trying to obtain planning for a larger scheme. ◉ An application for only nine units would not have required an on-street parking assessment, which for reasons explained below could not have been obtained during the pandemic. ◉ It establishes a ‘baseline’ in terms of scale, mass, height and siting. The 20 units scheme was based on the same building envelope and same window openings. This massively narrows the possible grounds for objection and enhances planning prospects. However, the pandemic and successive lockdowns impacted housing choice and the local housing market. Furthermore, the new London Plan 2021 was soon adopted, placing greater emphasis on the need to optimise housing development on brownfield sites, such as this. These factors combined to trigger a significant re-think of the scheme and pave the way for a new application that would more than double the proposed number of dwellings in the scheme, without altering the size of the approved building. As a result, we have finally obtained permission for 20 units on the site, on the basis of a similar siting and building envelope to that approved a year earlier in the nine units scheme. This will make the best use of a previously-developed site and provide new housing in the London Borough of Barnet in North London, reduce car parking and deliver an attractive, exciting and more environmentally-sustainable scheme. We had to meet some unusual and interesting challenges on the way to this result. Issue No. 19 – Qandor – 045
COVER STORY: PLANNING
“Submitting for planning for a nine unit the full 20 units, had its advantages ”
Community Uses Any redevelopment of a site currently in a ‘community-related’ use, such as churches, community halls and medical uses, before September 2020, would have normally been heavily restricted. Usually, the Council will want to see the replacement of at least the same ‘community use’ on site as part of their local planning policies, even if comprised within a residential-led mixed use scheme. This can cause conflicts with new flats above in some cases through increased noise and disturbance or traffic, but also limits the value-add of a sound commercial ground floor tenant, such as a Tesco Express or similar mini-market of strong covenant. The Council had stated in earlier preapplications for development of the site that,
Images Courtesy of HFP Architects
for this reason, it would not accept a full residential development of the site without replacement of the existing community facility. However, this opinion was expressed before the new use classes and new Use Class E (Commercial and Business Uses) came into effect in September 2020. St. John’s Church no longer wanted or needed the church hall, as they were planning to build a new one on their site across the road. However, the Council would still look to retain it in community use until we could be sure that the Church had secured permission for and provided a new replacement facility on their new site. This significantly encumbered the residential opportunity by placing the fate of this site in the hands of a third party and the progress of their own, entirely independent planning application.
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COVER STORY: PLANNING
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Always keep control of your own destiny This would get very complicated if we went this path. Firstly, you are in effect tying the fortunes of your own site to the planning prospects of another associated site when you have little or no control over the course of their planning application. Secondly, it adds to costs and time as the way in which the Council would guarantee this reprovision across two associated sites would be through a Section 106 Agreement to be signed by the Council, my client and the Church. This is best avoided, especially when it comes to Church organisations and trust bodies in my experience, as I have had situations when in some cases they will not sign standard s106 clauses insisted upon by the Council – Planning law and Trust law do not always mix well together! It can basically become a nightmare of unending and avoidable legal complexity, draining cost, time and energy. The Church’s own application for a new church hall remains undecided, nearly two and a half years after it was first submitted! This emphasizes the importance of not being tethered to the fortunes of another scheme beyond your own control. Therefore, we initially retained a ‘community use’ on the ground floor of an equivalent size in the new scheme, although this soon changed with the change in the Use Classes Order in the Summer of 2020.
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Making use of the new use classes A church hall would fall within the new Use Class F1. There is no leeway in this use class to add to the capital or rental value of this use by either permitted development or movements within the same use class. However, before September 2020, the hall fell within the same use class as clinics, health centres and day nurseries – Use Class D1. Therefore, we made use of the final days of the D1 Use Class and moved in a natural health and wellbeing operator (it does not have to be a traditional medical practitioner to fall into these categories). This was set up and in use before 1st September 2020. To satisfy the lawyers and the planners, and as a matter of record, we obtained a Certificate of Lawfulness from the Council to confirm that the new use was a lawful Class E Use (Commercial, Business and Service Use). This also increased the potential value of the development by adding to the rental or capital value of the commercial part, especially as this could be valued on the basis of a retail or office premises instead, for which permission would not be needed as they are also in Class E. Also, by taking the commercial space out of a ‘community-based’ use, this made it easier to avoid the Council’s more restrictive policies on community uses that would probably block any future conversion to residential, so a future residential conversion of this space might be more possible (with planning) or simply a transfer of the space in the scheme over to a higher value retail or business operation (without planning).
Images Courtesy of HFP Architects
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New Build and new Prior Approval for Class E It is worth noting that the new Class E commercial unit created in this development would not benefit from the new Prior Approval rights under Class MA, which came into force from 1st August 2021. This is because these rights will only benefit existing buildings in Class E use which are then converted, not buildings that are demolished and then redeveloped. All PD and Prior Approval rights are normally lost when a building is demolished. Therefore, if we wanted to convert this space to residential in the future, then we would not be able to do so via PD rights. It would require an application for full planning permission. However, not sitting in a community use any longer would make this much easier to obtain. Parking and highways and COVID-19 With a larger development than this, one would normally have to consider the capacity of the highway to take additional on-street car parking. On-street parking surveys done during school holidays or a week or so either side are usually not accepted by local highway authorities (referred to as the ‘Lambeth Methodology’). The lockdown in the UK during the COVID pandemic therefore severely affected the developer’s ability to get this scheme in to the Council for a planning application. Other surveys were also affected at this time.
Therefore, the safest course of action was simply to proceed with a scheme for fewer dwellings where the amount of off-street spaces allocated in the scheme would easily satisfy the Council’s Parking Standards. As a result, on-street parking surveys would not be needed, and this would not hold up the submission of the application for fewer units during lockdown. Getting over the line: ‘community We had to contend with a fair amount of local interest in the scheme – some 76 objections! However, the neighbouring primary school, being an academy school, would not have seen a penny of the £320,000 CIL contribution estimated to go to the Council. Therefore, we agreed a package of ‘green improvements’ and security measures that would directly benefit them. In return they agreed to withdraw their objection to the scheme which gave us a much smoother ride at Planning Committee. The cost of these measures could also be used to mitigate or offset any later affordable housing payments to the Council. Therefore, overall, the final scheme will deliver local improvements totalling nearly half a million pounds, much-needed additional housing, a better and more environmentally-sustainable use of the site, and a scheme delivering a development value in the region of £10 million. Q. !"#"$% &&&'()*+,-.."./'01'2*% 31)% 41)5% ".31)4-$"1.%-.(61)%$1%#$-)$%-%("#02##"1.%-712$% 812)%.59$%+)1:50$'
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FINANCE
4 PROPERTY TRENDS SMART INVESTORS ARE WATCHING FOR IN 2022 PAUL WATSON Head of Lending Blend Network www.blendnetwork.com
Looking at the trends in the UK property market, 2021 was nothing short of a frantic year. But will strong buyer demand carry into the new year? Will the market ease? Where will the place to invest be, and what regions will outperform?
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To answer these questions, Paul Watson, Head of Lending at specialist development finance lender Blend Network, reviews the four property trends smart investors are watching for in 2022.
As 2022 gets underway, I’d like to reflect on the strength and resilience of the UK property market. With prices and rents hitting doubledigit growth in some areas of the country, the post-pandemic property boom has seen many investors looking for their next investment opportunity. So, what are the four property trends smart investors are watching for in 2022? Prices will continue to rise, but momentum will ease We expect prices to continue to increase, but not at the speed witnessed throughout 2021. Rightmove have predicted that the frantic pandemic property market will ease and return to ‘closer to normal’ this year . They expect the national asking price of a property, which is currently at £342,401 , will rise by 5% in 2022, meaning an increase of around £17,000 . The Midlands and the North will continue to outperform We expect the Prime Minister’s Levelling Up policies to continue closing the northsouth divide. JLL’s 2022-2026 UK Residential Forecast report explores the top performing regions and cities, considering social, economic and market factors to create the most accurate forecast. At 7% growth, West Midlands is expected to lead UK house price growth during this period, 2% above the national average. Scotland, Yorkshire, and the Southwest are expected to see similar growth levels. Meanwhile London is expected to see the slowest growth, only 3% .
The private rented market will continue to display buoyancy We expect to see continued strength in the UK rental market. According to Zoopla, the private rented sector is expected to rise by 4.5% in 2022 . Their UK Rental Market Report shows that average UK rents were up 4.6% in the year to October 2021, after climbing 3% in Q3 . Rent increases have hit a 13-year high as demand for property doubled in major city centers. Sustainable eco living will gain center stage With climate change high on the agenda, we could see binding targets on homeowners to improve their homes’ energy performance. UK homes made up 15% of greenhouse emissions in 2018. The Government recognizes that to achieve Net Zero, we need to have largely eliminated emissions from our housing stock by 2050. As a result, it recently published its Green Finance Strategy setting out its target to grow the market for green finance products. In summary, while the 2022 UK housing market is likely to remain buoyant due to a structural shortage of housing and pandemicrelated trends, we believe the market will be less frenetic and more stable than last year. We believe this renewed trust in the resilience of UK property will strengthen the market, leading to increased levels of development and investment activity.
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FINANCE
“We and some others in the market see Birmingham and Manchester as prime investment locations for 2022”
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We and some others in the market see Birmingham and Manchester as prime investment locations for 2022 , with both cities seeing some of the strongest house price and rental growth forecasted of all UK cities in the next five years. Both Birmingham and Manchester are also well-established investment hotspots with a skyline evolving as rapidly as their rental growth. Q.
Blend Network is a peer-to-peer (P2P) property lending platform that provides development finance and bridging loans from £150,000 to £5,000,000 to experienced SME property developers and small construction companies. More information can be found at www.blendnetwork.com. Blend Loan Network Limited is is authorised and regulated by the Financial Conduct Authority (Registration Number: 913456)
FINANCE
HRMC INCREASES COMPLIANCE ACTIVITY IN THE PROPERTY SECTOR DANIELLE FORD Head of Tax Disputes and Resolution
RIOCARD HOYE Senior Manager
www.haysmacintyre.com HMRC receive a lot of information relating to UK property f rom sources such as mortgage lenders, the Land Registry and lettings agents. This information is high-quality and HMRC are able to compare this to tax returns submitted to determine whether
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they believe rental income should have been declared, or a greater amount should have been declared. HMRC will launch compliance activity off the back of a risk assessment.
Traditionally, HMRC’s compliance activity would have involved a full-blown enquiry into a specific tax return; however, we have recently seen HMRC adopt a ‘one to many’ approach. This is where HMRC write a ‘nudge letter’ to individuals who they believe have under-declared rental income, inviting a disclosure to HMRC. It is important to note that a nudge letter is not a statutory enquiry into a taxpayer’s affairs. However, these letters should not be ignored, and appropriate action must be taken. This does not mean signing and sending the requested certificate to HMRC; there is no statutory requirement to do so. If HMRC subsequently open an enquiry and find an error, failure to take action following receipt of a nudge letter could lead to higher penalties being charged. The letter from HMRC states a disclosure should be made to HMRC under the Let Property Campaign (LPC). The LPC offers a defined process for making disclosures, either in writing or online, where HMRC have 90 days following receipt to review and follow up with any questions they may have. We have assisted many of our clients in making LPC disclosures to HMRC which have been successfully accepted. We utilise
Where HMRC have written to an individual, any disclosure is considered ‘prompted’ by the actions of HMRC, and the maximum reduction for penalties is capped. In contrast to this, an individual who voluntarily makes a disclosure to HMRC is considered to be making an ‘unprompted’ disclosure, and penalties can be mitigated by the maximum possible. To illustrate this point, where a deliberate error is made in a tax return, the penalty range is 20% to 70% when ‘unprompted’, compared to a range of 35% to 70% when the disclosure is ‘prompted’. Once satisfied the disclosure is complete and correct, HMRC issue a letter of acceptance which provides certainty and finality for the taxpayer. This is reassuring for those that are affected as it signifies a clean slate going forward. Q. We recommend seeking professional advice to determine whether a disclosure is required, to identify the tax years which should be included in the disclosure, to prepare the disclosure, to negotiate the level of penalties with HMRC and to liaise with HMRC on your behalf. For more information, or to discuss an HMRC communication, please email taxdisputes@ haysmacintyre.com or visit our website.
our knowledge of HMRC penalties to secure the maximum possible penalty reductions for our clients. The LPC is not only available to those who HMRC have written to. It is available for those who wish to make a voluntary disclosure, and in fact those who have had no prior contact from HMRC will be able to settle with HMRC on the most favourable terms. Issue No. 19 – Qandor – 061
FINANCE
40 YEAR FIXED RATES LEE LANGLEY Principal OnPoint Mortgages www.onpointmortgages.com
As fellow Qandor member Dylan Mitchell of Worldwide Property Company will tell you, longterm fixed rate mortgages are very common and popular in continental Europe. Here in the UK, however, most lenders generally only offer fixed mortgages up to 5 years for home mortgages,
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with a few such as Nationwide and TSB going up to 10 years. Ten-year fixed rates with TSB have been available with only 5-year tie-in penalties, a nice feature. Longer fixed for term mortgages have been scarce; however, that is until Habito shook up the market in March 2021 with their Habito One product. This allowed you to fix your mortgage for 10, 15 or even up to 40 years.
This product did not kickstart a trend until Kensington launched their Flexi Fixed for Term deals in November, allowing borrowers to fix their monthly payment for between 11 and 40 years. The rates vary depending on the term chosen and are available up to 95% LTV for purchases and 85% LTV on remortgages. The stability of the rate means the affordability assessment is calculated on the fixed rate itself rather than a higher standard variable stressed rate, meaning applicants can potentially borrow up to 6 times their income, a potentially welcome benefit for first-time buyers after a year of property values increasing.
Forty years is of course a long time, but Kensington have built flexibility into the product. It is portable, meaning you can transfer the mortgage to another suitable property if you move home. In addition, you can overpay up to 10% of the original balance per annum and the early redemption penalties do not apply if a critical illness or death occurs. Subject to affordability you can also apply for a further advance after 12 months. Kensington partnered with pensions insurer Rothesay to bring forth this product. Kensington Chief Executive Mark Arnold said, “Over the last 12 years we have become accustomed to ultra-low interest rates. Many homeowners have never known anything else.
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FINANCE
“Applicants can potentially borrow up to 6 times their income,
property values increasing”
But nothing lasts forever, and it looks very likely that we will see a succession of interest rate hikes and we may begin to slowly approach again an historical average. Whether you’re a first-time buyer or homeowner wanting an affordability boost, a self-employed worker worried about remortgaging, or someone wanting greater certainty on monthly repayments – our new Flexi Fixed for Term can help.” This product won’t be suitable for everyone. You could end up paying more interest overall, as usually the longer the fixed rate, the higher the interest rate. What these products absolutely do, however, is add another innovation into the market, which is great news for consumers battling inflation and concerned about rising interest rates. Q. 064 – Qandor – Issue No. 19
Your home may be repossessed if you do not keep up repayments on your mortgage. Some forms of buy-to-let mortgages and some forms of commercial lending are not regulated by the Financial Conduct Authority. Lee Langley is the Principal Mortgage and Protection Adviser at OnPoint Mortgages. OnPoint Mortgages, a trading style of L&D Mortgages Limited, is an appointed representative of The On-Line Partnership Limited which is authorised and regulated by the Financial Conduct Authority. Registered address: 25 Homefield Road, Bushey, Hertfordshire, WD23 3AP. Registered in England & Wales under 10500099.
GUEST CONTRIBUTOR
Experienced developer, John Howard, spoke
His fervour for advising and helping less experienced
about stepping up one’s property game during his
property developers and investors has led him to
presentation at the recent Qandor Developers’ Forum.
launch the John Howard Joint Venture Fund, where he co-invests with other property developers and offers his
John Howard is one of the most experienced property
own guidance and mentorship.
developers and investors in the UK today, with nearly
John is a director and shareholder of numerous
four decades of experience in the industry. John’s
estate agencies including Fine and Country Norfolk,
proficiency stems from the sale and purchase of almost
property management companies and f inancial
4,000 houses, apartments and developments within
service providers which provide an all-encompassing
the UK.
understanding of the property world. At just 25 years of
With a rental portfolio similar to many investors’
age, John also became one of the youngest directors of
through his property companies, John’s experience
a football league club when joining Cambridge United
is vast, from buying traditional houses, to hotels and
FC, where he stayed for 18 years. John and his business
large scheme developments.
partners purchased Auction House in 2009, which was
One of the recent acquisitions in John’s portfolio is a
grown significantly before selling the shares in 2018.
£26 million development funded by Homes England,
The knowledge that John has gained throughout
although a unique distinction between John and many
his career is now being passed on through his books,
large developers is his passion and drive for small deals
property seminars and TV appearances. John co-
and developments.
produces both Property Elevator and Property Graduate on Property TV on Sky. Issue No. 19 – Qandor – 067
PROPERTY DEVELOPMENT
STEPPING UP YOUR PROPERTY GAME JOHN HOWARD
A buy to let investment is the most common way for people to dip their toe into the property market. And as I’ve said many times, it is a sensible way to start… if slightly dull. That said, if you’re of a cautious nature and have funds to invest into another property, then it may well be the right strategy. However, for those of us without spare cash, we need to step up our game and there are a few ways this can be done. One is purchasing commercial property and utilising the permitted development rights to convert to residential. 068 – Qandor – Issue No. 19
The secret is out on this though – I and many others have been doing this for almost 40 years and I’m always looking for new ways to make money from my property dealings. Like many experienced property developers, I try to keep one step ahead of the crowd, and when others catch up then we move onto a different strategy. It’s also worth saying that there’s nothing ‘new’ in property, just the next great opportunity. Commercial developers have been purchasing brownfield sites for commercial schemes for many years. However, there is now a real opportunity to take brownfield sites to develop for residential homes.
PROPERTY DEVELOPMENT
‘Taking crumbs from a rich man’s table’ is an appropriate adage when it comes to property developing. Every developer that builds less than 500 houses per year is considered small, with the top 10 housebuilders controlling approximately 65% of the new build housing market. Luckily for us, these big players are far more risk averse, giving us the opportunity to get involved and snatch some crumbs. The risk really is where the reward is. The opportunity here is to purchase sites and redundant buildings with no planning and sell them on to these much larger companies, subject to planning. The larger housebuilders are happy to invest in the planning process and take the risk of not obtaining permission. However, you can be confident that if they are willing to spend any money on a planning application, they are fairly assured planning will be granted.
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You must appreciate that these large housebuilders are churning out houses of similar design, and just need more space to put them on. They need sites that allow them to get building immediately. Their overheads are such that if they have any delays in production, it will affect their bottom line dramatically. I’s very much like a factory production line! So, brownfield developments are becoming increasingly popular with the larger housebuilders. Sites that have previously been developed and now lie redundant are high on the Government’s housing agenda. After all, building on brownfield sites reduces the need to take up our green and pleasant land with more urban sprawl. It has taken some time for the Government to recognise this, but they have now made it easier to obtain residential permission.
Last year I met with the then Housing Secretary of State, Robert Jenrick. I showed him the site that we sold on (subject to planning) to McCarthy and Stone, one of the retirement village developers. I explained that I felt something needed doing to subsidise the cost of the archaeological dig. A dig of this kind must be carried out on many of those sites, particularly those in the town and city centres. And without some type of subsidy, this land is often left vacant, or even worthless. When my joint venture partner, Stephen Clarke, and I sold this site we faced several challenges. The site was originally owned by the Archant Group, a newspaper and magazine publisher, and consisted of an office building from the mid-‘60s and a printing works.
One of the main hurdles we faced was it being close to the gardens of Thomas Wolsey, the famed Archbishop of Canterbury, as well as being in the town centre of one of England’s oldest towns. This meant that an archaeological dig would be required, something we allowed £500,000 for. And before we even purchased the site, we spent £40,000 on some trial trenches where nothing of historical importance was found, leaving us hopeful that we wouldn’t need the full half a million. However, an archaeological dig is a bit like putting an alcoholic in charge of a pub – by which I mean there are few constraints on costs or time.
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PROPERTY DEVELOPMENT
“The opportunity here is to purchase sites and redundant buildings with no planning and sell them on to these much larger companies, subject to planning”
What is arguably even more frustrating is that even if something is found, the findings are marked and recovered for future generations to find. Nine months and £490,000 later, very little had been found other than the Saxon path and a bone chiselled into an ice skate. And, whilst it’s nice to be accurate on costing, we were of course optimistic that the final bill would come in at a little less! The next challenge was to demolish the existing buildings, for which we had a fixed price of £340,000. This was duly carried out only to discover that there was another demolished building underneath, which was full of asbestos. The cost of removing the asbestos was £320,000. These challenges come at a huge risk and cost to the landowner, allowing developers and investors to purchase the sites at very low prices, clean them up and resell them to the big national housebuilders.
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Until the government subsidises the cost of the archaeological dig and clean-up process, there will always be opportunities for small developers to do the job and pass them on. There are two profit centres here: (1) cleaning up the site and (2) allowing the buyer to purchase subject to planning, which under the brownfield planning initiative they are sure to get. So, if you began your journey with a buy to let, moved on with commercial to residential, maybe it’s time for the next big thing. And remember, risk equals reward. Q.
MEMBER PROFILE
JEREMY ASHWORTH
When did you join Qandor? January 2019. How did you end up working in property? When we started a family, my wife Marion and I realised we needed to have much better long-term financial planning in place, and that triggered the purchase of our first property, a flat and two office floors in a Victorian building in Bayswater (the two offices we subsequently converted to residential apartments). You don’t know whether you’re going to enjoy or be good at something until you give it a go. It just turned out thankfully that Marion and I had the right combination of skills and qualities, which gave us the confidence to engage with property as more than just an investment. We found we were making generally pretty good decisions together on small conversion projects, and the more success we had, the more involved were the projects we decided to take on, to a point where I wanted to leave my leadership consultancy business that I had been running for 15 years and concentrate mainly on property development (from 2018). What is the best thing about working in property? 1) Working for myself and in property gives so much more freedom of choice. There are no politics, and I am working on a product I really believe in. Your only bosses are your funder and investors. As long as you are picking the right project and picking the right lender, then I can live with that! Your other “boss” is arguably the obsessive tendency that can come with being a developer. It is important to have a balance in life.
2) As a developer, I love being in the driving seat, taking responsibility, making the key decisions, assessing and taking the risks. That obviously comes with potential stress, but I have subsequently come to realise that I probably do have the right personality for it. I’m generally calm, logical and optimistic, and in the main, the only time I will lie awake at night is if I’m excited about something I’m working on, rather than worried about it (not always!). 3) I really like the enormous range of skills required of a developer, from the hardcore analysis that comes in appraising a site, to the many people skills required to work in partnership with so many different property professionals and personality types. What are you working on currently? We are currently engaged with a new build of two spacious luxury houses in Ealing that we hope will sell for up to £2.5 million each when they complete in Q2 2022. We also have an offer agreed for a 6-house/3-apartment new build scheme in Sutton, which has now entered legals. We are in the process of selling the original three apartments we bought in Bayswater to release some cash for further developments, as well as transferring our London portfolio into a Limited company.
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MEMBER PROFILE
What is your ideal project? There are two facets to an ideal project for us. 1) Taking something on where we are pushing the boundaries and scaling up. For example we would want our next project to be in the GDV region of £8-£10 million, on the back of experience that we will have gained: creating new achievable challenges without being naively ambitious is very motivating for me. 2) A project where we have room to be creative and add value in the design. This could be at the planning stage, or in the build itself, where layout, optimisation of space, and design decisions can make all the difference to your sale/rental price at the end. We have done well in this area. What are the biggest obstacles facing developers at the moment? 1) Construction cost increases and availability, well known about currently. 2) Landowners and unfortunately also many agents setting too high and unrealistic a price, which all too often “wannabe” developers agree to pay; those deals then fall through a few months later. It is frustrating but it also presents an opportunity: the last two deals we picked up were on the back of previous buyers not proceeding, the landowners then finding themselves in a distressed situation of their own and needing to find a credible buyer who could proceed at a more realistic price.
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Who would be your ideal guest speaker at a Qandor event? Some big star speakers in the property field can definitely be inspiring, but generally I find I prefer to listen to other developers in the club and understand through practical solid examples their highs and lows, learnings, strategies etc. Matt and the team bring in a real mix of speakers. In the early time of COVID, we had a superb online session with an experienced hedge funder, who really helped to put my mind at rest amidst the impending doom and gloom about the economy in the early days: they provided some truly compelling reasons as to why they thought things would be okay, and so far they have turned out to be right. How does being a member of Qandor add value to your business? Personally I set a limit on the amount of networking I get involved in, because so much of my learning comes from rolling up my sleeves and doing, but being part of Qandor has been important. You pick up on so many subtleties from other members and speakers, and it’s invaluable sharing knowledge and tips. More directly, we have secured two excellent deals through Qandor contacts, and I have been put in touch with one or two really great professionals, who I continue to work with now. I have nothing but admiration for the team at Qandor and I’m very grateful for all the opportunities they create for us.