Thursday, 19 March 2015

Cambridge granted 100% control of business rates

“The Cambridgeshire business community is delighted with George Osborne’s announcement that the county can now claim 100% control of its business rates. This will allow the local councils to realise their ambitions and further invest in much needed infrastructure for the county’s burgeoning population due to the influx and expansion of major global firms in the area such as AstraZeneca and ARM Holdings.

Cambridge’s GVA forecasts highlight the city will out-perform the UK national annual figure for each of the next ten years. The city’s rate of GVA growth is also predicted to steadily increase over this period, highlighting the continued out-performance of the Cambridge economy when compared to the national level.

With biotech, education and Information & Communications Technology (ICT) sectors conglomerating in and around the city, we praise the Chancellor’s decision to grant this opportunity for Cambridge to continue to reinforce its position as an economic powerhouse.”

Will Mooney MRICS

Commercial, Cambridge

Osborne's Help to Buy ISA

With just six weeks to go until the General Election, we were not expecting anything drastic from Mr Osborne’s sixth budget . Interestingly, the Chancellor announced a new Help-to-Buy ISA to assist first time buyers saving mortgage deposits whereby the Government will top-up every £200 saved by the individual with an additional £50. Mr Osborne commented that it will “tackle two of the biggest challenges facing first-time buyers — the low interest rates when you build up your savings, and the high deposits required by the banks.”

Our research analyst, Lee Layton, believes that; “The proposed scheme will (like the Help-to-Buy equity loan & mortgage guarantee schemes) undoubtedly boost demand for starter homes, but unlike Help-to-Buy, this demand should be better distributed as participants save and enter the market at different times, preventing a possible super-charging at the lower end of the market.”

This initiative will not however alleviate the severe shortage of stock affordable to first time buyers; it will essentially create more demand. We were anticipating that this year’s Budget would address the escalating lack of supply and focus more on incentivising institutional investment in the Private Rented Sector, which would offer a bridge or transition for many people between the current levels of unaffordability of buying property and a longer-term rebalancing of the house price/ affordability ratio. However we await the revelation of the 20 ‘new housing zones’ with great expectations.”

Lisa Simon, 
Partner Head of Residential Lettings
T: 020 7518 3234 

Monday, 16 March 2015

Mendip Farmers’ Point to Point

In my part of Somerset our version of the Cheltenham Festival is the Mendip Farmers’ Point to Point held at Ston Easton. Well, it’s not quite that standard but to the amateur observer like me it is just as much fun.

The first of six races starts at 12.30pm and these are followed by two pony races for younger riders aged between nine and 15.

These pony races are a relatively recent innovation at point to points which provide interest and excitement for families and are a firm favourite with the crowds, rounding off the day’s racing in an informal, yet competitive and thoroughly enjoyable manner.

However, what astounds me about all point to points - the Mendip Farmers’ event is no exception - is the huge amount of work put in to make this one-day event such a great success.

There is so much to be organised, ranging from the health and safety involving doctors, ambulances and paramedics to making sure the appropriate bar licences have been secured. And that is before the course has been built, marquees erected, hospitality sorted, stewards and car parking arranged, tickets printed, trade stands set up, etc.

The list of tasks seems endless and without the generous support of many local businesses and individuals who sponsor aspects of the event, and of course all the time given freely by the committee, it would simply not be affordable.

But the racing is what it is all about and over the years the Mendip community has had its successes both locally and nationally.

For instance during the 1970s, Max Churches produced top horses, such as Rich Rose and Panmure, both of which won hunterchases, while in 1988, Mendip girl Jenny Litson, daughter of successful point to point owner Bill Gooden, achieved her goal of becoming Champion Ladies Jockey.

In recent years, more success has been seen with horses such as Double Silk, Earthmover and Double Thriller. All three set course records at the Mendip Farmers’ Point to Point, reached the top of the hunterchasing field and progressed to the higher reaches of National Hunt racing.

So, why not come along on Sunday and join the fun? There will be good quality horse racing, bookies, the Tote, bars, trade stands and a great atmosphere for the whole family to enjoy and all at a very reasonable cost for a family day’s entertainment.  

James Stephen MRICS FAAV
Rural Practice Chartered Surveyor, Wells

T: 01749 683381

Monday, 9 March 2015

Is British farming lagging behind other countries?

The Oxford Farming Conference (OFC) often presents challenging ideas for the farming industry to consider and this year is no exception.

The OFC’s report, which was written by agricultural consultants, Andersons pulls no punches. The Chairman of the OFC, Richard Whitlock comments, “Britain has some world-class farmers, but as a whole, our farming industry is lagging behind other countries and must make bold strides to becoming more globally competitive,"

This will come as a surprise to many farmers but agricultural productivity in this country, although it has improved, has not improved at the same rate as many of our competitors. This includes many of our European neighbours such as Germany, Denmark and the Netherlands as well as other non EU countries such as New Zealand and the United States.

The report’s author identifies a number of key factors which are necessary to improve competitiveness which include:

  • Halting the decline in public research expenditure on agriculture which to the contrary needs to be increased. 
  • The need to spend these research funds “on near-market” research which can be put in to commercial use quickly which in turn would attract more private funds for research.
  • The research will help top performers improve productivity and their techniques will filter down to other farmers more widely.
  • Focus should be centred on the top and middle sectors of farm operators on the basis that those that do not seek information will always be very difficult to influence.
  • Opportunities for restructuring UK agriculture through facilitated young farmer access should be improved. Younger farmers are often more strategic and visionary operators than their elders. They are also more frequently prepared to use loan, venture or external shareholder capital to expand the business.
  • Farmers as with all business people should help themselves by seeking greater (non-agricultural) business acumen.

The author also identifies the receipt of direct support subsidies from the EU as a factor which hinders competitiveness because it enables farmers to retire from dairy farming for example and keep a few cattle or sheep, with this “lifestyle” being underpinned by subsidy rather than profitable farming practices. It is considered this holds back the beef and sheep sectors in particular.

The report also highlights the need to embrace wider use of “joint venture” arrangements, so as to give younger farmers the opportunity to get in the industry. Indeed, I have only been discussing such issues this afternoon where a retiring dairy farmer has entered in to a contract milking arrangement with a young farmer/contractor and because the contractor has performed so well, the farmer has invested significant sums in improving the dairy buildings and equipment to the benefit of all.

This is just one example of where such an arrangement can work, but what is clear is that in order for UK agriculture to regain its competitive edge we need to increase our agricultural research and farmers must be prepared to take on board new and innovative ideas so as to attract young farmers and new entrants in to a sustainable and profitable sector in the long term.

James Stephen MRICS FAAV
Rural Practice Chartered Surveyor, Wells

T: 01749 683381

Friday, 6 March 2015

Negative split times

Will Mooney, Carter Jonas partner and head of commercial and professional services in the eastern region, feels the economic recovery is now a marathon not a sprint.

No athlete myself, I am, however, familiar with runners’ focus – which can border on obsession – on their negative split times. My familiarity extends no further than knowing that, in essence, this means finishing a run faster than you started while acknowledging that there might be a sag in the middle.

Look at coverage of and comment on the Bank of England’s latest Inflation Report and it could be concluded that the UK is in that sag. We definitely started this post-recession recovery slowly and we gathered pace in the past 18 months. While we know we’ll get there in the end, the doom and gloom first glance coverage of the prospect of deflation is enough to bring the Eeyore out in any of us whose natural disposition doesn’t tend toward the Tigger at the best of times.

But the prospect of a fall in UK interest rates to the point of a negative rate was laid out in conditional terms by Governor Carney. Interest rates might fall but could rise and banking sector activity would suggest a tendency to expect the latter. Last year, we bemoaned the prospect of the rise of interest rates and many people adjusted their borrowing and spending accordingly merely in anticipation of something that has yet to happen or might not happen for a good while yet.

Financial markets don’t deal in something called futures for nothing.

The current weakness of the price of commodities such as food, oil and energy - as cited by the Bank of England – shouldn’t really be mistaken for debilitating deflation. What goes up must come down and vice versa.

Thinking of the pound in our pockets, may be deflation is not so bad for commodities in the way it is for consumer durables of which the ‘big television’ is used as shorthand. We might put off buying the new big telly but we only bought our old big telly back in the days of easy credit when consumer durables weren’t treated as durable because they were so easily replaced.

But look where that got us?

Day to day consideration of the wider UK economy can be troublesome for those whose business, professional and personal interests are rooted in this region which is so dominated by the success of Cambridge. The latest Centre for Cities report once again confirms the economic pre-eminence of Cambridge among the top ranking cities of the UK. The city scores top marks in the ranking of cities across a range of measures including the lowest number of claimants for Job Seeker’s Allowance (JSA), the highest skilled workers, the most number of patents granted per 100,000 population and the highest house price growth.

It has become normal for Cambridge to occupy these top slots in the Centre for Cities annual rankings but it’s important that this normality shouldn’t be mistaken for complacency. Those of us privileged to live, work and thrive here are acutely aware of the national and international context in which Cambridge succeeds.

There’s talk of economic normality on the horizon for the UK from some commentators but it can be a struggle to recall what that is – if we ever had it in the first place.

Before the next Bank of England inflation report, there will be a General Election and politics and democracy have a habit of interrupting economic programmes.But what do I know? It’s all Greek to me.

Will Mooney MRICS

Commercial, Cambridge

What the energy efficiency proposals really mean for the PRS

With apologies to Mark Twain for the paraphrasing, reports of the demise of poorer-rated, less energy-efficient domestic rental properties have been greatly exaggerated.

Twain was referring to the premature publication of his obituary notice. He was happily able to tell the world he was still alive.

Publication by the Department for Energy and Climate Change (DECC) of the Private Rented Sector Energy Efficiency Regulations (Domestic), which sets out the views of the Government on proposals for energy efficiency in the private rented sector (PRS), led to immediate reports that properties with EPC ratings (placing them in Bands F and G) could be doomed.

On the face of it, that’s what the document says. But read it and the story is less pessimistic. Owners of such properties should not give up hope.

The basic premise of the document, a response to a wide consultation on making let properties more energy efficient, is that from April 1, 2016, domestic tenants will have the right to request consent to make energy efficiency improvements and landlords would need to respond within a month under the regulations that have been laid before Parliament.

The minimum energy efficiency standard applied to all categories of domestic private rented property will be set at E energy performance, in line with the non-domestic sector. From April 1, 2018, the regulations will apply upon the granting of a new tenancy to a new or existing tenant, extending from April 1, 2020, to all privately rented property within the scope of the regulations.

But, crucially, there is the ability for landlords to seek exemptions. The essential paragraph reads:

Where a landlord considers an exemption applies allowing them to let their property below the minimum energy efficiency standard, the landlord will need to provide such evidence to a centralised register, the “PRS Exemptions Register.” Landlords may be required to submit relevant evidence and details of their exemption to the Register. The Government may use this information to assist local authorities in targeting their enforcement activity.

There will be a number of safeguards to ensure that only appropriate, permissible and cost effective improvements are required. Landlords will be eligible for an exemption from reaching the minimum standard where they can evidence that one of the following applies:

- They have undertaken those improvements that are cost-effective but remain below an E EPC rating. Cost effective measures are those improvements that are capable of being installed within the Green Deal’s Golden Rule. This ensures that landlords will not face upfront or net costs for the improvement works.

- They are unable to install those improvements that are cost-effective without upfront cost because the funding entails Green Deal finance, and they or their tenant fail the relevant credit checks.

- The landlord is required by a contractual or legislative obligation to obtain a third party’s consent or permission to undertake relevant improvements relating to the minimum standard, and such consent was denied, or was provided with unreasonable conditions.

- The landlord requires consent, and the occupying tenant withholds that consent.

- Measures required to improve the property are evidenced by a suitably qualified independent surveyor, for example from the Royal Institution of Chartered Surveyors (RICS), as expected to cause a capital devaluation of the property of more than 5%. Only those measures that are expected to cause such devaluation would be exempt from installation.
- The regulations will also include specific protections relating to wall insulation improvements as an additional safeguard for the minority of situations where such insulation may not be appropriate. There will be no requirement to install wall insulation under the regulations where the landlord has obtained a written opinion from a suitably qualified person or from the independent installer engaged to install the measure advising that it is not an appropriate improvement due to its potential negative impact on the fabric or structure of the property (or the building of which it is part).

The long term hope is that the ratio between the cost of implementing change in comparison to the value of savings to be made in the domestic energy bill will naturally adjust to the point where they coincide in the vast majority of cases. The recent fall in oil prices, and consumers’ hope that domestic energy prices will follow more closely, might damage these prospects in the short term.
However, energy prices will inevitably rise again in tandem with technology improving to make energy efficiency more easily achievable at affordable costs.

Coupled with this is the knowledge that no Government will want to willingly remove otherwise good housing stock from the PRS. The political colour of the UK Government at Whitsun is likely to be very different from that of the Government on the May Day bank holiday. But whether the predominant shade is blue or red, and whatever fringe parties are tugging at the sides of the wheel to get their own policies into play, neither major party will steer a course that sees homes with lower energy efficiency ratings removed from the PRS in the foreseeable future.

Labour will not want to deny people perfectly good homes when voices are already loudly raised about the amount of good housing stock that stands empty. The Conservatives, with their commitment to austerity, will not want to fund the replacements for these homes from the public purse. Of course, nobody will get away with using the regulations for letting seriously sub-standard property and nor should they.

The Government is promising guidance between now and the implementation of the regulations from April 1 next year and there’s a requirement to review the operation and effect of them at no less than five yearly intervals, with the first in 2020 by which time it will have evidence about the progress and effectiveness of the regime.

Far from being a portent of doom for domestic rental properties in Bands F and G, look on the proposals as a long term fitness regime for the less able to be brought up to peak physical performance and with the proviso that those who can’t won’t be relegated to the scrap heap.

Details of the legislation can be found here.

Lisa Simon, 
Partner Head of Residential Lettings
T: 020 7518 3234 

Monday, 2 March 2015

All things to all men

When the new regulations for permitted development rights to convert agricultural buildings to residential use were introduced on 6th April last year, the hope was that this would allow farmers to convert old farm buildings to generate much needed additional income or a capital asset to sell. At the same time it was hoped that this would also help alleviate the shortage of residential accommodation in the countryside.

However, the reality has been very different because the regulations are open to wide interpretation. They state that the local planning authority can consider “whether the location or siting of the building makes it otherwise impractical or undesirable for the building to change from agricultural use…” to residential use. What does that mean I may hear you ask? Well the answer appears to be “all things to all men”.

As a consequence, some local authorities have been very relaxed while according to the Country Land and Business Association (CLA) nearly 60 local authorities have refused all applications.

In the Mendip area, anecdotal evidence appears to indicate that many of the early applications were permitted but as time has gone on, the planning authority has become more confident in turning down applications. Common reasons for refusal are that the building is in an “undesirable” or “impractical” area or the conversion is considered to be “unsustainable”.

Fenella Collins, head of planning at the CLA has commented that, “There is real frustration and there needs to be greater guidance to reduce misinterpretation”.

I suspect frustration is also felt by local authorities who are having to balance what on the face of it are contradictory policies coming out of national government, which on the one hand discourages new development in isolated areas and then on the other appears to be encouraging exactly the opposite.

Therefore government needs to clarify what they are wanting to achieve and in so doing provide clearer guidance on what may be considered to be “undesirable” or “impractical” or indeed what may be considered “sustainable” in the context of farm buildings, which by their very nature are often found in the countryside.

For example government may consider giving consent for conversion of an isolated building down a long farm track to be “undesirable”, whereas the conversion a building or group of buildings that may in themselves be close to existing residential property or near a bus route or village may be considered desirable.

These are only a few of my thoughts but if government were to provide some more explicit guidance on the subject I think this would assist farmers and local authorities alike so as to avoid the “post code lottery” that currently exists.

James Stephen MRICS FAAV
Rural Practice Chartered Surveyor, Wells

T: 01749 683381