Game on for Cambridge makers

It’s back to school and back to work this coming month for many and while gearing up for a busy autumn, Will Mooney, Carter Jonas partner and joint head of its commercial agency and professional services in the eastern region, shows how there was no summer slouching in Cambridge.

With the nation still basking in a post-Olympics glow which looks set to be sustained by the achievements of our Paralympians, we’re told we’re returning to our desks in a new, positive frame of mind.

Positive in spirit and mindset at least, as we’re still faced with what’s become the certainty of economic uncertainty.

The regular round of statistics – inflation up, joblessness falling, employment rising yet GDP down in consecutive quarters – continues to baffle our brightest and best economists and policy makers.

Added to this, was a report by a core of MPs which has the British workforce down as ‘among the worst idlers in the world’ and bemoans our lack of productivity in comparison with our Brazilian and Chinese peers.

Taking a look around Cambridge, one could hardly accuse it of idling the summer away. Far from it. The summer months have seen commercial and business interests fired-up by various issues and announcements.

The beginning of August saw the new bank, Cambridge & Counties - which is owned by Trinity Hall, one of the oldest of the Cambridge colleges, and the county council’s pension fund - confirm that it had approved loans to the tune of over £2 million with an eye on a further £6 million commitment in the pipeline.

Fast and efficient work as it only opened officially for business in June which was also when the Government welcomed its establishment.

While, at first, our newest bank is focusing on lending to SMEs – with loans secured against commercial property - it does have retail bank ambitions too in the future.

What a banking contrast to our return from holiday in September 2007, when, like in many UK cities, we witnessed customers queuing in Cambridge to withdraw their deposit and close current accounts at the Northern Rock branch.

The queues were the harbinger of what was to transpire a year later when the term ‘credit crunch’ was coined and which been in use as common currency since then.

Interesting- and most encouraging for those of us in the property business - that the Cambridge & Counties Bank is securing loans against commercial property.

The enduring investment value of bricks and mortar for those in it for the long term received further fillips, locally, during the summer.

Last month saw councillors’ unanimous approval in a process which will bring forward the next stage of the substantial development of North West Cambridge. This is development on a scale which will see 2,000 student bedrooms and 1 million sq ft of academic, research and commercial space.

Also of commercial property note are the plans for a new, four-storey building at St John’s Innovation Park on which Savills is acting for St John’s College and on which public consultation was running over the summer.

In mid-August came the news that private healthcare provider, Nuffield Health is planning to replace its Trumpington Road hospital – built in the 1920s and for those of us who’ve been around almost as long, still known locally as ‘The Evelyn’ - with a brand new £25 million state-of-the-art facility.

So it’s been a busy time for Cambridge businessmakers but it’s also been a busy summer for the city’s policymakers as the City Council and South Cambridgeshire District Council both launched discussion about housing numbers and locations in July which will see pressure on the city’s green belt.

Far from being the silly season, this past summer has seen news of some august property projects taking great leaps forward either in rising apace from the ground – look at the rapid progress of both the Eastern Gateway entrance and cb1 – or in planning for the future.


Will Mooney MRICS
Partner
Commercial, Cambridge

A game of patience anyone?

With both the negotiating and conveyancing stages of residential transactions increasing exponentially, the tendency is for agents and their clients to become frustrated as a potential agreed sale, let alone exchange of contracts, appear to be well beyond the horizon.

With the right approach however, sales are being agreed, exchanging and completing but the entire process requires a greater degree of patience.

For the majority of properties, certainly in the Bath area, the days of quick-fire negotiating and rapid agreements on price are a thing of the past. This is currently due to both buyers and sellers rather than one party or the other.

The best opportunities for sellers to achieve the best price is within the first four weeks of marketing, but even if you inform your client of this from the outset they are usually opposed to agreeing a sale, taking the view that they may get a better offer if they are patient.

Buyers are taking a similar standpoint but naturally for opposing reasons. They are taking the view that there are fewer quality buyers in the market (and they are correct) and that they are more likely to get the property on their terms if they leave an offer on the table for the owners to consider over a longer period of time rather than hastily over-pay. 

In times gone by agents would be forgiven for thinking that a sale wouldn’t materialise out of these circumstances, usually because the buyer loses interest or finds something more suitable. That trend has changed though. Maintaining contact with your client, providing regular market feedback, as well as consistent and frequent updates to your buyer can be rewarding for all parties concerned. Over the course of the last six months properties from terraced town-houses to small country cottages and even larger country houses with land have benefited from this patient if somewhat protracted approach with negotiations ranging from one month to four months but significantly ending with happy sellers and purchasers alike. 

Unfortunately for everyone involved further reserves of patience are required to see us through the seemingly never ending conveyancing process. Between scrupulous solicitors, anxious surveyors and inefficient lenders, the timescale between exchange and completion is becoming cavernous, regardless of how often you are talking to all parties concerned.

Of the last eight properties to be sold by the Bath office this financial year only two have managed to exchange contracts within three months and nine of the properties under offer have already exceeded at least two months.

It is a trend that I believe will last as long as the market remains depressed. Buyers and their solicitors will remain nervous. Most surveys lead to a number of specialist reports with damp, timber, electrics and wiring being the most common. With lending criteria so stringent and the sheer amount of time that it is taking to process applications and book valuations those purchases requiring a loan will no doubt continue to take considerably longer than those that do not. 

It is imperative that sellers remain calm and patient, as we agents must do too and we must manage are clients expectations from the outset and throughout the process as a whole. Neither buyers nor their advisors will be rushed, and trying to force the process will only have a negative impact. Just recently the owners of a building plot became exasperated with their purchaser and the length of time everything was taking. Against our advice they enforced a deadline upon their buyers and the buyers promptly walked away and our clients are now back at square one, in fact it is now far more likely that the plot will sell for a lower figure next time round. The important thing to remember is that it is better for everyone concerned if a sale proceeds to completion and not when.

Patrick Brady
Associate
Residential, Bath

Park Life

It might be the summer festival season but in considering the great outdoors Will Mooney, Carter Jonas partner and joint head of its commercial agency and professional services in the eastern region, goes urban so no wellies required.

The Queen Elizabeth II Fields Challenge is a Jubilee initiative where, a charitable trust will enshrine 2,012 spaces, in perpetuity, for public recreation. Yet, by June there were still more than 700 spaces being sought and the Fields in Trust chief executive expressed her disappointment with lack of progress.

The week after the Jubilee Pageant saw Granary Square, King’s Cross open as London’s newest public space, built on the former site of the station’s sidings and goods yards. This occasion saw one broadsheet newspaper initiate debate about ownership of public spaces.

It’s a debate worth having.

As a nation, we’re living an increasingly urbanised existence and so, on a daily basis, the bulk of our population’s encounter with the great outdoors is open spaces in cities or towns.

A seam of this debate is consideration of just who owns public space and what is meant by ‘public space’ in our times. In certain quarters, there’s discomfort about these spaces being owned by private interests and the fact that the owners specify what can and can’t be done in these newly created spaces.

However, the counterpoint is that while this model of private ownership might be new, bylaws and protection of public spaces to make them clean, safe and useable is not.

As cities expand, public spaces have to be created as part of wider development. Granary Square is a new space created by the modernisation of the King’s Cross complex which, before its recent development and that of St Pancras next door, was a neglected and dingy part of a main London gateway.

Now it’s a showpiece.

Just west, along Marylebone Road, is Regent’s Park. Developed to a masterplan incorporating open spaces and surrounding houses in the early 19th century, the freehold of the Park is owned by The Crown Estate and it’s managed by a government agency, The Royal Parks. The Park is gated, activities within it are regulated and public access is restricted at night.

But which Londoner or visitor would say it’s not a public space?

Holland Park is a similar case. It was a rural part of London until 19th century development, along a similar model as that of Regent’s Park. The Park itself has byelaws and is gated yet it is a district and public park managed by a local authority – albeit the Royal Borough of Kensington & Chelsea.

While these parks are funded and managed either directly or indirectly through the public purse, to create, develop and maintain new sites for public open space in densely populated areas, we need to see that Granary Square is more the model now in a time when private interests fund what the public purse can’t or won’t afford.

It’s not just in the crowded south east where private investment is being offered in order to ensure the perpetuity of public open space. Aberdeen City Council is considering the need for a £50 million gift from a local businessman for redevelopment of its famous Union Terrace Gardens, as part of a wider £140 million scheme for an arts complex. Although the proposed development will re-shape the gardens, they will still be public.

The Gardens were once the site where Aberdonians laid out washing to dry.

What we want from our public spaces has always evolved.

We are happy to shop or enjoy leisure pursuits in safe, clean, cool, modern shopping malls – owned and managed by private interests – so why does that attitude change when it comes to public open space, just because there’s no roof?


Will Mooney MRICS
Partner
Commercial, Cambridge

Funding for Farmers

During these straitened times, we often hear that one of the main concerns for businesses is the difficulty of borrowing money, but for farmers this is probably less of a problem than for other sectors of the economy. This is because farming has generally prospered in recent years as commodity prices have risen; this has been reflected in higher farming profits, except perhaps in the dairy industry, and soaring agricultural land values.

Consequently banks are more confident to lend to farmers although even then it has to be said they are certainly not lending indiscriminately and are looking at every business case very carefully. In this context I have had a reasonable amount of experience drawing up both business plans for presenting to banks and carrying out valuations to support lending proposals and what is clear is that money is being lent but only on the back of good businesses. Even then the interest rates being offered are much higher than they were four or five years ago despite the historically low Bank of England 0.5% base rate The reason for this is that all banks have had to widen their margins to increase the capital they hold in order to put themselves in a stronger position to withstand another financial crisis without having to be bailed out by central government. Thus it must be of significant interest to hear that one bank which specialises in lending to farmers, the Agricultural Mortgage Corporation (AMC), has negotiated access to a multi million pound European Investment Bank (EIB) investment fund which can effectively subsidise eligible loans with a significant discount of 0.65 % off the AMC’s normal loan margin.

"Our access to this fund allows us to effectively subsidise loans for a wide range of farm improvement and diversification projects including building works and livestock housing, machinery and equipment purchases, farm shops, milking parlours and farm energy schemes. The total fund pot is limited and we have already seen a good level of interest. Farmers with a particular project in mind are urged to contact their local AMC agent," said Jonathan Allright, Head of AMC.

As one such agent I would suggest this scheme provides an opportunity for farmers who are considering expanding or investing in their farm to access favourable loan rates at a time when interest rates are already historically low. I see it as an important tool to help reduce the effects of price fluctuations and input cost volatility.

The minimum amount borrowers can apply for in the scheme is £25,500. The discount is available on loans of up to 10 years for projects that have a definite start and end date and must complete their loan by December 2013.

A wide range of projects within the scope of the scheme and I suggest farmers should consider using this funding to strengthen their farm business for the long term. Indeed with the demands to produce food for a growing world population increasing, this funding offers a real financial boost at an important time for many farm businesses Should anyone have any queries regarding this scheme please contact James Stephen.



James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk

Testing times for arables farmers

As I pen this article I am looking out of the window at blue sky – a rare commodity this summer and with the forecast looking a little more positive, maybe the worst of the summer weather is behind us which will not come a moment too soon for our arable farmers.

Indeed, I have already seen the first crops of winter barley being harvested and if the weather was to stay fine for the next month or so this could prove to be a profitable year. This is because cereal prices have increased sharply in the last month due to warnings for poor harvests in the United States and Russia, both due to drought conditions.
As a result the spot price for old crop wheat has risen to over £210/tonne and prices for new crop wheat are up to around £180/tonne and on the futures market up to £190/tonne for delivery in November this year.

At these prices our arable farmers should be able to make a healthy profit provided of course the weather does dry up for a reasonable period. This will enable heavy machinery to get in to the currently waterlogged fields and also hopefully dry out the grain sufficiently so that it will not need to go through the time consuming and expensive process of having to be dried before storage.

However, the wet weather has been very testing and some crops have suffered from fungal diseases in particular. It has been difficult to keep such diseases under control because there have been very few opportunities to spray the crops either because it has been too wet or too windy. So even though the cereal prices may be high it remains to be seen how yields will have been affected by other factors such as disease and the generally wet weather.

The prospects for arable farmers are of course in stark contrast those of their dairy farming neighbours who are suffering badly as milk prices fall as sharply as arable prices are rising. This has driven some to direct action and as many will have seen on the news this has manifested itself in this area with farmers blockading the Robert Wiseman Dairy just of the M5 near Bridgwater.

This only goes to demonstrate how complicated the farming industry has become with droughts in the United States benefitting our arable farmers through increased cereal prices while a fall in the price of cream on the world market has stimulated the latest controversial cut in milk prices. Sadly these are all things over which our farmers have little or no influence and so all they can do is manage their own business as efficiently as they can and then just hope for the best with those things they cannot influence – such as the weather. 

James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk

James Stephen comments on RPA Business Plan

The Rural Payments Agency (RPA) Business Plan 2012/13 was published last week and the chief executive officer Mark Grimshaw said: “Thanks to the hard work of our people and the support of our industry partners and Defra, I believe we have now turned a corner on our way to becoming a trusted, efficient and effective organisation.

“Farmers and food producers rely on RPA support to make their businesses more competitive and, thereby, our rural communities more sustainable. For their sakes, there will be no let-up in our drive to improve performance for our customers and the tax-payer in 2012/13.”

So, at last the RPA seems to have made some substantive progress in its performance, although this is not a moment too soon following the debacle of the introduction of the Single Payment Scheme in 2005, the aftermath of which is still haunting some farmers.
For instance I am aware of applicants who still think they are owed money back to 2006 and so it must be welcomed that the RPA achieved their best performance to date in 2011 and are promising to do better next year.

Indeed their pledge is to pay 91 percent of claimants and 84 percent of value for the 2012 scheme year by the end of December 2012 but there is no doubt their next challenge will be to ensure that when the CAP is next reformed in the next couple of years they do not make the same hash of it that they achieved last time.

This was reiterated by the chief executive of the Tenant Farmer’s Association, George Dunn who said: "The performance of the Rural Payments Agency continues to improve under the leadership of its chief executive, Mark Grimshaw.

“The TFA is pleased to see that the RPA has been set tougher targets for the coming year particularly in relation to payments under the 2012 Single Payment Scheme. The big challenge ahead for the RPA will be implementation of whatever is eventually agreed within the next CAP reform.

“The TFA is in on-going discussion with the RPA and its parent department, DEFRA to ensure that the mistakes made with the implementation of the last CAP reform are not repeated this time round."

To be fair to the RPA the manner in which the scheme was introduced in England by our government was particularly complicated. So, I hope that when the next reforms are agreed at a European level, we do not decide to overcomplicate the regulations at a domestic level so as to give the RPA a fighting chance of making up for their mistakes in the past which cost both farmers and the UK tax payer millions of pounds.


James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk

The Generation Game

Unable to find his name on the latest rich list rankings again this year, Will Mooney, Carter Jonas partner and joint head of its commercial agency and professional services in the eastern region, seeks solace in the wise words of one who knows.

Those of us who are parents acknowledge that we’re blessed with, in equal measure, life’s greatest treasures and the biggest drain on finances. For parents fortunate to have wealth – however meagre and diminishing - to pass on to the next generation, we fret about how to do it responsibly. We don’t want to indulge but we’d quite like to ensure we’ll be remembered fondly by successive generations.

A report published by insurer LV= earlier this year, entitled Cost of a Child:From cradle to college 2012, pegged it at around £218,000 but that is just to the child’s 21st birthday.
While my children are younger than that presently, those parents I know with post-university age children would love to have stopped subsidising their children at 21 or at the £218,000 threshold, whichever came first.

So when consoling myself that Clan Mooney had failed to make it to the Sunday Times’s rich list again this year, I came across some words of wisdom from one of the world’s richest men: Warren Buffett is quoted as saying, on the matter of inheritance, “Leave your children enough to do what they want but not enough to do nothing.”

But what’s enough? And what’s considered doing nothing? Socialite, fashion designer and heiress Petra Ecclestone - one of Formula 1 supremo Bernie Ecclestone’s daughters - has complained in a published article that she feels she isn’t recognised enough for her hard work starting with the feat of getting up in the morning.

She’s been ridiculed but she does have a point. As the owner of a 14-bedroom mansion in Los Angeles and six storey mansion in Chelsea with attendant entourage to see to her every need, why should Petra bother doing anything at all?

None of Ecclestone’s children appear in the frame to take-up the family business of running the Formula 1 circus. This is entirely in keeping with the archetype of first generation entrepreneurship.

First generation entrepreneurs who create substantial business wealth for the first time in their family’s history, tend not to pass on their business unless there is a child who shows not just ability but exceptional ability. They are very protective of the business that has created the family wealth. The same kind of protective instinct means they want to cushion offspring from having to put in the hours of hard graft that were needed to make the business the success it has become.

Apparently by the time you get to the third generation and beyond of any inherited wealth which originated from entrepreneurship, capability has been succeeded by the need for equality when it comes to divvying up the spoils among the family and also the business itself – if it’s still going.

While living among entrepreneurs in Cambridge and being in a business which benefits directly from their wealth creation locally, I make no claim to be one. Also, having never been the heir to a substantial family fortune, I don’t seek recognition for getting up in the morning to earn a living.

Apologies to my children on these two counts.

Still, I’ll never have problem of selecting which one of them, if any, is capable enough of taking over the entrepreneurial reigns from me. They, in turn, will thank me that, unlike Petra Ecclestone, they won’t have to decommission a gift-wrapping room in one of their mansions because they were useless with ribbons.

Will Mooney MRICS
Partner
Commercial Cambridge
T: 01223 558032
E: will.mooney@carterjonas.co.uk