It is true but it only applies to prime central London commercial property, the rise was driven by a surge in the office market. There is an increase in demand from both tenants and investors putting those in the prime London office market in a fabulous position. This has lead to a reduction in the availability of both quality investment properties and quality rental units. Many in the property industry closely watch the London market as an indicator of the future performance of the rest of the UK?s commercial property sector. Those in the London market closely watch the prime and super prime London markets performance as their indicator.
Converting larger period properties into smaller self contained flats makes sense for a lot of developers and property investors. It could potentially triple the gross rental income in many properties, however it is not something that can be undertaken lightly. Back in the sixties many landlords just bought properties put a few stud walls up and off they went, things have changed you need at least some project management experience or to employ a professional who does.
You will of course need planning permission, there are still a few that don?t bother but these days they usually regret cutting corners. As a basic planning rule, you always need planning permission to subdivide a residential property into more than one smaller residential unit, flat or apartment.
The next challenge is building regulations and these can be a challenge dependant on the location and original construction. The location can affect this because if the original house is listed or in a conservation area you will have to carefully manage the balance between the requirements of the building control officer and the requirements of the conservation officer. Your property conversion will come under the current UK building regulations, the two regulations that often cause property conversions into multiple units the biggest challenges are the acoustic and fire separation of the individual units. Getting fire and sound separation often requires retrospective fitting of acoustic walls and floors. The individual units require separation form communal parts, these include service voids for drainage and other shared services, it usual at these junctions that novice developers fall foul of the regulations.
One of the main concerns for all developers experienced or novice is cost controls, building projects are notorious for going over budget and schedule. So making sure you have the right management team on board is essential. Cost control starts with the initial inception and needs careful planning right through the design and build phases of your project. For large projects it is a worthwhile investment getting some contractual advice to make sure you as the client are protected against the common issues affecting JCT?s, building tenders and Schedules of works. Your accountant and bank may be interested in Investment appraisals, development appraisals, Project monitoring for funders, valuations of works, grant applications, project cash flow forecasting, and VAT issues.
Before your project starts you will need to make sure you have estimated your project budget, looked at your procurement procedures and prepared a tender document. Then finally when the construction phase starts carefully monitor costs and client variations.
If you have the right project management team on board and have all the above in hand, you will be able to complete your property development project without any unpleasant surprises.
The NHBC has provided some very positive data on the new build housing development market for the period of December 2010. With a rise in the registration of new build homes of over 3percent just in December. These figures are particularly impressive considering this was during one of the worst weather periods in decades. Many in the property industry are starting to call the beginning of the property market recovery, even some of the pessimists believe it is the start of an end to bad news. Many believe if interest rates can be controlled and mortgage availability improves as banks start to rebuild their battered balance sheets we could see a recovery take off.
Figures released by the Office of National Statistics show construction output has dropped by 3.3% in the final quarter of 2010. The extreme weather towards the end of 2011 has undoubtedly had an effect on these figures. Many in the construction industry have concerns that a reduction in the construction output is not just an issue for the construction industry but also a warning sign for the wider economy. With the outcome of the public spending cuts still not clear for the construction sector we could see some very interesting figures for 2011.
The welfare minister has revealed that he intends to carry out a full ?comprehensive and thorough?, review of the effects of cutting housing benefits. The review is thought to look at several controversial issues within the housing benefit system. These are thought to include an introduction of a cap on weekly rates, removal of the ?15 weekly housing benefit excess amongst other things. Many landlords and tenants have long argued that it makes finding a good basic standard of housing for benefit claimants a much larger challenge.
Average UK rents ended the year at around 3.8 percent higher than at the beginning of 2010, with continuing shortages in mortgage finance for first time buyers and buy to let property investors it looks like this trend is set to continue in 2011.
Landlords in the UK are suffering the worst debts since 2009, many agree that an end to the payment of rents direct to landlords for housing benefit, has not only exaggerate the problem but also allowed millions of pounds to leak out of the benefit system. Ministers had promised they would restore these payments after they were elected, now many wait with bated breath for some action on direct payments. Evidence is emerging that this is prompting landlords to discriminate against benefit claimants leaving council housing offices under increased pressure to house families.
1. Make sure you have retained the services of a member of the Royal Institute of Chartered Surveyors who has experience of your type of lease and property. They will cost you some money but could save you tens of thousands of pounds.
2. Get advice from a good fire safety company to make sure you have met all the legal requirements for fire safety.
3. Check that the property has a current asbestos management plan this is a legal requirement for all commercial properties.
4. Check the basic fabric of the building is the roof leaking? Is the electric installation safe? Commercial properties are far more expensive to upgrade and modernise than private houses, this is due to the usual extra legal requirements and the sheer square footage of many commercial buildings.
5. Have you got a lawyer who has experience in negotiating commercial property leases, some leases are over complicated and can hide some onerous clauses?
6. What are the break clauses and how do you serve them, break clauses do not just protect the tenant; landlords often use them as an opportunity to redevelop their sites or buildings. If you have a successful business based in someone else?s building you need to make sure you have protected your interests.
7. What is going on in the local area? Some areas can be zoned for grants or redevelopment this can be both positive and negative so make sure you check it out.
8. If the building is a shared or mixed use development what type of tenants are in the other parts of the building? If you intend to run a relaxing beauty studio you will probably not wish to be underneath a drum school.
9. What is the footfall of the property although this is not important to all types of business it is critical to many retailers and restaurateurs.
10. Is there any restrictions on decorating externally or internally, do you need neon signage will your landlords allow it?
Commercial property rents continue to rise although at a low level, the interest is in which segments of the commercial property market are faring best. Retail is not having the best of times as peoples disposable income continues to be squeezed by high fuel and food inflation. The sector which is helping to stabilise commercial property rents is the office market. Both office and retail have performed well in the capital with both sectors reporting strong growth during 2010. For this and other reasons investment demand has also been strong in the capital, which many believe does partly predict the future performance of secondary commercial property. So will we seen increase rents for commercial property in the midlands and the rest of the UK, with further yield compression as investors become more confident of the UK commercial property market.