Over 80% of all new leases signed are at five or less years with many new commercial occupants never to face a rent review. With only 3% of businesses having a ten year lease or longer lease period it seems that 2009 has been a tough year for landlords and tenants as the old adversaries have battled hard to negotiate more favorable terms during a tougher economic background.
There are many property professionals that believe that the commercial property world has reached the point of no return where long lease periods will soon be assigned to history.
1. Schedule of payments
This as the title suggests details the client?s responsibilities and the clear deliverables that form the frame work for the payment of the deposit, staged payments, final payments and retentions.
2. Schedule of works
Again as the title suggests is this section of the builder?s contract it shows the scheduled works. This is a detailed and definitive list of the works and costs as agreed with the building contractor or contracts administrator.
Retention is a pre agreed amount usually 2.5-5% of the contract?s value that is retained by the client until all works are complete and the defects period has lapsed.
4. Defects periods
A defect period is a clear pre agreed period of time (Usually six months) at the end of the defects period all minor cracks are filled and any other issues and snags are resolved. Once this has been done to the satisfaction of the client or contracts administrator the final retention payment then falls due.
5. Provisional sums
Provisional sums are costs for works that are very difficult to pre determined prior to works commencing. They are usually items like the repair of defective existing timbers or works below ground. The building contractor will place in a provisional sum for the building tender process and the final costs will be controlled with the use of scheduled rates or at the digression of the client or contracts administrator.
6. Contract administrator
Contracts administrators are usually commercial or general surveyors, quantity surveyors or architects that are employed by the client for their specialist experience of costs and good practice in the building and construction industry.
7. Schedule of rates
Schedule of rates are used mainly for repairs to existing building fabric, they will be set rates for items like ?supply of joiner for one day to cut out and splice rotten and friable timber?. They are pre agreed and determined rates that protect the client from being over charged.
8. Contractors statement of inclusion
This is simply a list and agreement of which items are included or omitted in the schedule of works. They are often items like waste removal of taking delivery of items ordered direct by the client. Or it may be for works associated with mechanical or electrical installations, like service trenches or access equipment.
A contingency is usually a percentage of the contract value 10-15% that is set aside and controlled by the client or contracts administrator for additional costs that could not have been foreseen prior to works commencing, additional ground works or hidden items.
Works variations or change of works are items that the client or contracts administrator have requested as a personal preference items like additional electrical sockets or extra kitchen units. These should also be used to monitor items that may be omitted like items that a client chooses to supply after the contract has been signed.
This month sees the second monthly fall in new home loans, and gross mortgage lending has also dipped below the six month average. Some property pundits expect the increase in available property and slower house price growth will filter through into an increase into gross mortgage lending. Many believe that the UK housing market has now stabilised and will continue at a slower and steadier pace of house price inflation as has been seen in previous economic recoveries.
Derby City Council have received a planning application from Land Securities for a new scheme at the Meteor Retail Park. The new development scheme is thought to include a large food super store and five new retail units. The new development if the planning permission is granted would create hundreds of jobs on the new development.
Recent data shows a significant increase in brown field development site values over the last quarter with increases in green field land values of over 5%. This puts the annual rise in land price inflation at around 20%, which echoes my comments last year that development land was at the time an undervalued asset class. The increase in prices of development land is no surprise as enquiries for development land have out stripped new instructions by three to one.
One of the main issues that have kept land values depressed is the difference of attitude to risk between land buyers and property development funders. Bankers and private investors are cautious and have changed their attitude to risk mitigation. Thinking they would rather not fund than look for relatively low risk sensible property development plans and appraisals. With smaller and high yielding sites returning to the well known usual suspects, those individual developers with an extensive property network of funders, site and deal finders who often dominate small geographical areas. These usual suspects usually have positive relationships with planners, local estate agents and main contractors. This leads to less competition for site acquisition and will cause land values to become erratic as vendors dispose of sites at low values and use joint ventures and other special purpose vehicles to active the maximum site values.
As all experienced property developers know getting sensible resale values in place for a development appraisal is critical. With many surveyors wishing to remain cautious secondary areas may be valued down as surveyors still have concerns about the gross development value of a site outside of primary locations like London, Cheshire, and the golden triangle in North Yorkshire.
So what is the best way to profit from the current lending drought? Well if you can get the funding, buy sites that have a depressed capital value because of unfavorable local economic conditions that are soon to be reverse.
Now that the economy is returning to a steadier pace those that manage and maintain Hotels, offices and other commercial buildings are looking to find good contractors and project managers for their business expansion plans. Converting Hotels and offices can often present its own set of unique challenges. Gone are the days when commercial enterprises closed their doors to get the builders in. Now with cleaver planning and preparation it is possible for businesses to continue and run while commercial refurbishment works are taking place. This allows business to continue to receive important revenue as they invest in refurbishments which increase the capital value of their business premises.
If you have cracks or your property or it seems to be out of square, is now the time to call a structural engineer? Structural engineers deal with many issues from underpinning to stepped cracking masonry fractures. They can advise on a whole range of issues from land heave to roof spread as well as advising on home improvements like knocking through rooms or giving advice on loft conversions. For most issues they can provide a site visit and a report from just a few hundred pounds. If you compare these costs with the costs of building repairs or re-work their professional fees are a worthwhile investment.
Black mould is often a sign of high levels of condensation and often manifests its self as black mould on exterior walls, or as black mould on and around windows. Condensation problems are often confused with rising damp, roof leaks and penetrating damp.
The good news is that condensation can often be easily treated, by balancing ventilation and heating but with serious cases of black mould growth many properties are remedied by the installation of a positive pressure unit. These units can usually be installed in just a few hours in a central hall way and they give fabulous results.
It is becoming increasingly easier to fund buy to let borrowings with more buy to let mortgages being launched and a very slight loosening of buy to let lending criteria. Many buy to let landlords who have been waiting to expand their buy to let property investment portfolios have decided that they have waited long enough.
Investing in buy to let is always a long term investment vehicle so you do not need to buy right at the bottom of the property cycle. In fact once people start to call the bottom of the property market many of the bargain properties disappear as people build possible gains in capital value into their purchase offers.
This is a question that many home owners find themselves asking themselves when planning their home extension. A House extension is a big financial commitment and the last thing that you want is to have your exciting home extension tainted by your experience with your building contractor. One thing that is a good idea is to speak to some of the building contractors previous customers. Of ask if they have any alliances with other property professionals like commercial surveyors, structural engineers, quantity surveyors or Architects.