Energy Performance Certificates

A word of caution in relation to putting too much store in Energy Performance Certificates. Having a low EPC rating does not mean that a property is better than one with a higher one, just that the carbon footprint of the property is lower on an annual basis.

However, you might like to bear in mind, that on hot days a well insulated property with no cooling has very limited ways to disperse a build up of heat. Efficient properties may be cheap to run in the winter, but can be quite unbearable in the summer.

Recession

Recession

I am going to be brave and call it. The Recession is over, prices have fallen to their floor and we are seeing a pickup.

A number of observations have led me to this decision:

There has been a steady increase in the number of RICS Homebuyer surveys with an emphasis on a speedy service as people are keener to complete their deals.

Solicitors are having a longer turn around for paperwork as there is more conveyancing being done to the point where some firms are looking to rehire people that they let go.

The level of property on Commercial Agents’ books is falling, with fewer new instructions and this is further indicated by a reduction in the number of EPCs being ordered. 

In Ilkeston, Chartex have had three national firms interested in the same High Street unit and on Pride Park, Derby, anecdotal evidence is that office space is becoming more expensive as supply has drastically dwindled.

With all this in mind,  there are two pieces of advice that I would like to offer (on a without prejudice basis of course!); firstly, if you want to move, then you probably ought to look now as it will be more expensive in six months time. Secondly, if you have a non performing asset, contact your local commercial agent as they may well be very keen to assist you and should be able to get you a price/ rental level that you deem acceptable.

There are an increasing amount of funding sources available, and whilst the rates are (by historical terms) insulting, remember that these costs would have been extremely palatable in 2007. This flow of funds is encouraging more people to venture back out into the market. The good news is that we have not lost that habit, just having a more cautious approach.

Despite there being a large overhang of commercial property for sale, that is waiting in the wings on the Banks’ bad loan books, I don’t think that you will be disadvantaged by selling at today’s prices. Besides, unless you are trading down, selling at the lower end of a market bubble is not an issue as long as you buy something else. 

An increasingly common way of buying new assets is through Crowdsource Funding. Small amounts of money can be invested in a variety of commercial assets and you will own a few percent, depending on your stake. This limits your risk and helps you create a diverse property portfolio that is managed by professionals for you. As specialist commercial property chartered surveyors, we at Chartex can help you either buy these investments or provide the advice to sell your property in this modern and innovative way.

RICS Homebuyers Reports

If you are buying a home, then we do recommend that have a RICS Homebuyers Report of a RICS Condition Survey. All sorts of hidden problems and issues can lurk around a property and using a professional can save you far more than the cost of the survey.

Damp, wet rot, dry rot, subsidence, poor electrics, unsafe gas, drains, damage to guttering and roofs are just part of a long list of items that you may overlook when you go around a property. For example, have you ever noticed that supermarkets do not generally have ceilings?

On my last two reports, there were a couple of interesting defects; the first one looked like the balcony on the fifth floor apartment was coming away from the wall. Could have been deadly. The other was that the current owner had removed the chimney in the lounge, but not the one above, so the weight of several tons of masonry was sitting on the floor, rather than steel.

A lay person might not have noticed these, as with some professionals too. However, if a professional misses things, then you do have some comeback. Think of it as an insurance policy as well as excellent advice that might help you either renegotiate the price or withdraw from the sale (or even lease in the case of a commercial property).

New Planning Rules

Additional change of use permitted development rights applying from 30 May 2013:

Put simply. If you have a vacant shop with A1 planning use (normal retail), then for the next two years this can be used for A2 (financial services) or A3 (restaurant).

It is all a bit unclear what will happen on 1st June 2015 to successfully trading businesses, but presumably they will be granted consent to continue if they are not acting as a nuisance.

Agricultural buildings under 500 square metres can change to a number of other uses (A1, A2, A3, B1, B8, C1 and D2). For buildings between 150 square metres and 500 square metres, prior approval (covering flooding, highways and transport impacts, and noise) is required.

Premises in B1, C1, C2, C2A, D1 and D2 use classes can change use permanently to a state-funded school, subject to prior approval covering highways and transport impacts and noise.

Premises in B1(a) office use can change to C3 residential use, subject to prior approval covering flooding, highways and transport issues and contamination.

Buildings with A1, A2, A3, A4, A5, B1, D1 and D2 uses will be permitted to change use for a period of up two years to A1, A2, A3 and B1 uses.

Thresholds for business change of use. Thresholds increased on May 2013 from 235 square metres  to 500 square metres for permitted development for change of use from B1 or B2 to B8 and from B2 or B8 to B1.

Business Rates Mitigation

In 2012 Makro won a court case that gave assistance to those looking to mitigate their rating liability. In essence, they stored a pallet of files in a warehouse and this was deemed to be occupation, even though they were only using 0.2% of the space for six weeks. The practical result was that the landlord could then claim another six months grace from paying Rates.

Two weeks ago, a similar scheme was outlawed by the High Court. This case involved a charity, PSCT, that takes out leases and charges landlords a reverse rent. The charity then installs bluetooth transmitters, creating a quasi network in the unit.

As a charity, they were entitled to an 80% reduction in the Rates payable. Three councils argued, successfully, that it was not a genuine occupation and that full Rates were now payable. The local authorities won, with the judge rejecting PSCT’s arguments that they were providing a public message system for charitable purposes.

Business Rates Mitigation is a complicated field and we, at Chartex, have the skills to help you plan ahead. Every case is different and there are no off the shelf solutions, so please call or email to discuss how we can help you.

Property Market

As we move into Spring, there is a noticeable pick up in the commercial property market. 

Retail is having the biggest bounce, because I suspect, the impact of opening a shop is immediate; to retail, you may want some premises straight away, whereas  an office based business may start up from home to begin with.

Shop keepers, attracted by the low rents, have taken up most of the well priced units that we have on offer and we have even found that some shops are now being sold too.

There is a steady flow of interest in renting office space as businesses look to expand their operations as well as those taking advantage of the lower rents and moving. 

The trade in industrial units continues to develop and we are seeing stock both sold and rented, especially if they are priced well. I think that this is a reflection of industrial units being the future of commercial property (warehousing, offices, retail and free parking all make them more attractive than traditional office and retail).

Like most addicts, even after five years of being off their drug of choice, the desire to go back still lingers. For some, they will have kicked the habit, but for others it will not go away. To this end we are seeing some investors returning with an increase in enquiries as they redevelop a taste. This process will inevitably lead to more developments taking place and the town/ city landscaping evolving again.

Mary Portas

There has been a bit of a show recently with the Government piloting various schemes to reinvigorate the main shopping streets.

Blaming the supermarkets is an obvious start, but not helpful; they are here now, so we can’t do much about them. Besides we all use them because of their slick marketing, smart retail spaces, free car parking, easy access and perceived value.

And there we have the solution to the High Streets!

1. Free parking for shoppers, redeemed at tills by shopkeepers but reimbursed by Councils.
2. Tidy up the streets and shops.
3. Use the collective might of the local businesses to pool resources and creativity to create a decent marketing campaign.

Local authorities also need to allow High Streets to develop; we recently had two applications for A2 use turned down- not very helpful when shops are vacant.

One of the curious results of supermarkets being given planning consent for large stores is not that they usually come with dowries of transport improvements etc., it is that they can bring an enormous Business Rates windfall of several million pounds every year.

Why not use this windfall to reduce Business Rates for independent occupiers on the High Street rather than some ill thought out scheme such as the Velodrome in Derby?