Category Archives: Property Investors

Property development funding

The government like many builders and property developers is keen to get Britain building again and has identified a number of large development sites that have stalled simply because of a lack of suitable speculative property development funding. The government is looking to provide some of this much needed funding although the details have not been fully released. The funding shortage will be either in the form of primary funding the usually standard type of development funding currently available on the majority of site at around 55-65% of the loan to value. The second and less secure type is mezzanine funding this is a secondary and more complex type of development funding. It sits on top of the primary development funding and tops up the short fall usually taking care of the percentage difference between the maximum loan to value and a shortfall on the primary development. It is sometimes used to take care of the cash gap between paying the main contractors JCT stage valuations and the sales of the properties. Mezzanine funding often makes the difference between a development taking place and simply not being built out. However this type of development funding is considered risky for the investor as well as being an expensive solution for the site developer. The typical charges are between 25-40% of the investment required and this is usually the first monies to be realised after the primary development funding has been repaid from the sales of the properties. The developer who borrows the mezzanine funding usually also picks up all the soft costs like legal contracts and the mezzanine funder may ask for a directorship or other control of a SPV or special purpose vehicle or limited company used to run the development. It can also be beneficial to the developer because often mezzanine funder will have extensive property development experience and be able to give advice on contractors and with build specifications and off plan sales.

House prices set to rise in 2013

Many property pundits and property professional like to make predictions on the future of the UK property market and house prices. There are also a number of banks and economists that are prepared to put their reputations on the line and estimate where the average UK house price will end up. These projections rarely vary greatly but some have proved far more accurate than other particularly after the last property boom. Amongst one of the best respected and accurate is the Royal Institute of Chartered Surveyors. They do have the advantage of having so many members who have the unenviable task of valuing people’s homes and properties. For the new year of 2013 they are predicting a rise in house prices of around 2 percent which given the economic landscape is a positive and sustainable increase. They are also tipping an increase in transaction volumes with the number of property sales thought to rise by a around the three percent mark edging them tantalisingly closer to the million sales marker. This is still a far cry from the heady days of average number of transactions edging up towards 1.7 million at the height of the property boom in 2006.

Cheap houses at property auctions

Many property investors, property developers or speculators are often looking for cheap or bargain properties most professional developers usually purchase off market. This is usually through property traders or from property auctions. Property auctions have changed dramatically in the last fifteen years with people from all over the country and world having access to online property auction listings. Many novice property developers and investors believe that it is simply a matter of chancing your arm at the auction buying a cheap property and then finding a good builder to get it back up to standard. However it is better to get your builder involved before you buy, they can often spot problems that you may miss and could potentially save you thousands of pounds. One thing to consider is that if you had a property with a serious structural or other defect and you wanted to mask the issue you would probably look to off loading a problem property through the property auctions. So be aware that less honest vendors may pass their problem properties onto you. So before you buy set a realistic budget for all the various trades and work that may be required to your auction property. A quick look at the type and age of the consumer unit (fuse box) can give you an indication of if the property may require a re-wire. There are some items that may seem a luxury but dependant on the area can be a good investment. Things like reinstating original period features or altering load bearing walls to open up smaller reception rooms to suit more modern family living styles. It is also important that you do not miss out items like outside space as this could put off drive by viewers and will affect the look of online details. You will find that many builders have worked on auction properties before and will be able to advise on what has worked well for other property speculators and developers.

Modern loft conversions

Home owners are often looking to add a bedroom or master suite and often with houses or bungalows that have large loft spaces a loft conversion is the answer. Loft conversions vary in cost and complexity dependant on the size, specification, layout and design of the existing construction. With more modern properties the roof structure is often constructed using roof trusses rather than the traditional stick built method of purlins and larger rafters. This means that members of the roof trusses are often in the way of living space and need to be removed to make the loft space useable and ready to be converted into a loft room. However when the roof trusses are altered or sections removed this can affect the structural integrity of the roof and this can be potentially dangerous and costly to repair if not done correctly. So your building contractor or architect will need to employ the services of a structural engineer to make sure that the new design conforms to part A of the UK building regulations and is safe. The alterations can be made if the existing structure is upgraded this is usually done by adding additional timber and steel supports usually in the form of steel beams or RSJ’s as they are more commonly know. These are often used to support the new floor joists and upgrade the roof structure once sections of the roof trusses have been removed. These new steels transfer the weight or loads from the new floor and roof structure down onto existing load bearing walls. It is important to select a building contractor who has experience in working with structural steels and carrying out more complex projects as the positions of these steels is critical to the structural integrity of the roof. This is particularly important if you currently have a trussed roof and you are installing ridge or cranked beams to carry the loads that have been transferred from the trusses that have been altered or removed.

Black mould and condensation

With the temperatures dropping some home owners are having problems with condensation which can lead to black mould growth. This can be an unpleasant issue in the home and can affect your plaster and decoration and can also be a potential hazard to health. The issue of black mould growth appears in houses at cold spots that are called dewing points. This usually happens when the building fabric becomes cold and the condensation condenses on the cold spot and allows the correct level of dampness for the black mould to grow. This can then spread to other areas of the property the places that tend to be worse affected are behind furniture the corner of rooms and ceilings particularly on and adjacent to external walls. Many homeowners suffer this year after year and face the annual spring clean and redecoration but there is a permanent solution. You can fit a unit in the roof void called a P.I.V. this stands for positive input ventilation. These units work excellently as they work to reduce the humidity levels in your home solving the root cause of the problem which is condensation and high humidity levels within the property. Once a unit has been installed and all the historic mould growth has been removed the property will remain free from condensation related mould and you can start to enjoy your home again. Many home owners try various other options first from dehumidifiers through to cutting in additional air bricks. The majority of the time this is not enough to resolve the issue and it is either only partly resolved or the mould and condensation will simply move to a different area of the home.

Buying a new house in 2013?

The property market may have been in the doldrums for the last couple of years with the number of new build properties and transaction volumes languishing at historic lows but many potential buyers are still out there. Many have become feed up of waiting for signs of a housing market recovery and with no signs of prices falling are choosing 2013 as the year they step on the property ladder. So are there still bargain properties to be had? Well the answer is yes but as with most bargains there is usually a catch, and in the case of cheap properties it is usually either the area is less desirable not much can be done about this. Or the property requires some form of a renovation, repair or improvement project it is important that you get an idea of what sort of costs are involved in these works prior to you buying the property. The other issue is that especially in the current climate mortgage companies are becoming far pickier about the type of remedial repairs that will affect a property’s mortgagibility. So ideally get a good local building contractor around before you buy to give you some indication of the costs that will be incurred in bringing the property back up to standard. They also have the experience to know where to look and what problems are associated with that type of property. For instance a good local builder will know that certain streets suffer from poor foundations or issues with the concrete floor slabs. This costs nothing and could save you thousands of pounds so take the time to check your bargain property has not got expensive building works that you may have missed.

Dilapidation reports and repairs

Dilapidations is a phrase well know in the world of commercial property but is something that can catch out and be an expensive lesson for commercial tenants. Depending on the wording and conditions of commercial property lease agreements will depend on who is responsible for which and to what degree of property repairs and other associated costs. For instance if you are a commercial tenant and you have occupied a property for many years you may be responsible to return the property to the landlord with the appropriate statutory requirements in place. This does not sound to onerous but if could mean the introduction of various fire safety and other stator requirements. This could mean a new electrical fire detection system, fire doors and frames and some additional fire separation between fire exists. Dependant on the size and condition of the property this could leave the tenant with a bill for tens of thousands of pounds of refurbishment works. It is important to get a contractor on board who understands not only what needs to be done but also who needs to be informed and how to manage your dilapidation and repair budget. Even if the work is carried out by the correct competent person to the correct standard using the right materials you could still fall foul of the regulations and approval of building control. This could then create further issues and costs associated to getting in or out of the lease. There are different types of commercial property leases but retailers are very often only prepared to sign what are called weather leases. This term is used to describe a lease agreement where the landlord remains responsible for keeping the building weather tight and the tenant for the internal elements. So essentially the landlords keeps the roof, walls and external windows and doors in safe and serviceable condition while the commercial tenant looks after the rest.

Speculative property development funding available?

This area of bank lending has been one of the least favoured sectors of bank funding in recent years as banks have looked to repair their battered balance sheets and reduce their exposure to property backed lending. A recent survey of European Property Finance trends has seen lenders surveyed increase their likelihood to lend. With three quarters reporting they expect to finance some form of speculative development funding in the next five year period. As always those with the best track records, prime sites and pre-let or sold developments would be their favoured lending targets. Ultimately the banks know that speculative property development can deliver stellar profit gains that allow for developers to pass some of the gross development margin back to their bank financers. So as always in this stage in the property cycle the banks return in search of profits and gentle ease back into an area of the economy that has proven to provide good returns for savvy developers and bankers over many years. It is the speed at which bankers and investors can enjoy their profits and returns, with most speculative building development projects taking between a year and two years to complete. It means that banks and investors can enjoy returns well into double figures quickly with the advantage of a first or second charge of security over a valuable asset. Will this change in attitude now make it easier for builders and property developers to obtain speculative development funding as well as kick starting the property and construction industries?

Do you need property management or property maintenance?

Many landlords dread those Monday morning calls saying they have a bill for boiler repairs or a leaking roof. This is often why landlords chose to use a letting agent or property management company however with many tenants now paying by direct debit the only main advantage is the repairs and maintenance. What if you could find a single point of contact, one company that can look after all your investment property requirements and arrange all the repairs and certification. You could save hundreds of pounds a year in property management fees. We have experience of providing this service to many agents and facility management companies that carry out exactly this service. So you could cut out the agent and come direct for all your repairs and also enjoy the benefit of our various experts and skilled tradesmen. Do you need a company that can advise on roof repairs right down to a blocked drain and also arrange for all the electrical and gas certifications? Our team have been managing and developing properties specifically for the residential rental market since the 90’s. So we know how to look after a maintenance budget to give you the best value and keep your tenants happy. We know that landlords are happy when their tenants are happy with the condition of the property and pay their rent promptly.

What do I need to do before I alter my shop or office?

Many business owners move business premises or open new businesses and are looking to get the most from their new buildings and fit out budgets. There are many things to consider when opening a new business so here are a few of the items that business owners can overlook. First you will need to see the existing asbestos register all commercial buildings are duty bound to have a register that details the presence, type and locations of any materials in the building fabric that contain asbestos. If you do not have one you are not only potentially putting employees and the public at risk you are also breaking the law. The good news is that you can get an asbestos surveyor to carry out a survey relatively quickly and they are a lot less expensive than potential fines or decontamination. The second vital certificate is a fire safety certificate this can be obtained by contacting a fire safety risk assessor and getting a survey underway. You will also need to get the electrical and gas safely checked if these certificates are not available or you are making alterations. If you are making alterations you will probably need the works to be pasted by the local authority building control department or a similar local building control contractor. Check what arrangements or alterations are required for a disabled access again this can require a separate survey. Finally particularly with commercial buildings it is a good idea to get them checked out by a structural engineer if you plan alterations or have concerns about previous alterations or any existing building defects. Your surveyor or a good competent building contractor should be able to advise and recommend the various professionals required to make sure your commercial property redevelopment is completed properly. People are often afraid to undertake structural alterations as they fear the costs however these can often be less than expected and make your building far easier to use or sell from making it a worthwhile investment.