Despite recent changes in tax rules affecting landlords who could face losing thousands of pounds in profit, investing in a property in the UK shows no sign of slowing down. A survey carried out by Perrys Chartered Accountants has revealed that 35% of the participants are most confident in property compared to any other investment, including pensions and ISAs. Another research carried out last year by Halifax revealed that the UK’s housing wealth has passed the £6 trillion mark for the first time. It is estimated that the average net equity worth – the difference between the value of a home and the outstanding mortgage – is £247,233. In order to maintain a similar lifestyle at retirement, £25,000 per annum will be needed, meaning that equity from a single property could provide up to 10 years of income. However, this does not factor in other costs for releasing the equity, such as estate agency and legal fees or any stamp duty charges, which could stretch into the thousands. With an average life expectancy of 81 in the UK, relying on property equity from a first home could mean there is a possible income shortfall of at least 6 years. “Whilst maintaining your current lifestyle will always be the first consideration, it is also important to be aware of the other possibilities that life can throw at you, such as ageing relatives, long-term illness, or the chance you might need residential care in the future,” said Stewart Pope, CEO at Perrys Chartered Accountants. Some of the issues faced by the ageing nation will be addressed with the recent introduction of auto-enrolment for employee pensions. However, only a quarter of those aged between 35 and 54 felt confident in pensions as a future investment with 40% saying that putting their money into property would be their first choice. But the Government’s latest changes to tax regulations and the significant increase in the stamp duty charges paid on second homes are making property investment a more difficult and expensive prospect for many. “It is worth taking a look at your existing assets to see how you could maximise potential for the future. With the right advice and some effective tax planning you could find that this makes a long term difference to the shape of your financial future,” concluded Stewart.

The Federation of Master Builders (FMB) has officially announced that almost 80% of builders and homeowners are calling on the Government to introduce a licensing scheme for the UK construction industry to finally stamp out rogue traders. The benefits of introducing a licensing scheme for the whole construction industry, as well as a proposal for how it could work are detailed in an independent research report by Pye Tait and published by the FMB – ‘Licence to build: A pathway to licensing UK construction’. In addition, the FMB also conducted a new consumer research that revealed that most home owners support the introduction of a mandatory licensing scheme. The key findings from both pieces of research include: 77% of small and medium-sized construction firms support the introduction of licensing to professionalise the industry, protect consumers and sideline the cowboys; 78% of consumers also want to see a licensing scheme for construction introduced; nearly 90% of homeowners believe that the Government should criminalise rogue and incompetent builders; and over half of people (55%) who commission home improvement work have had a negative experience with their builder. Commenting on the research report is Brian Berry, Chief Executive of the FMB: “The vast majority of builders and homeowners want to see the construction industry professionalised and it is time for the Government to act. It’s unacceptable that more than half of consumers have had a negative experience with their builder. However, we shouldn’t be surprised by this given that in the UK, it is perfectly legal for anyone to set up a building firm and start selling their services without any prior experience or qualifications. This cannot be right given the nature of the work and the potential health and safety risks when something goes wrong. In countries like Australia and Germany, building firms require a licence and we want to see the UK Government regulate our industry in a similar manner.” There are numerous advantages of introducing a licensing scheme, including health and safety benefits, the barring of the worst firms operating in the construction industry, increased consumer protection, as well as a more favourable impression of the industry, which could lead to more young people choosing a career in construction. Berry explained that the proposal the report puts forward suggests a scheme that covers all paid-for construction work by firms of all sized, with fees starting at as little as £150 every three to five years. “In terms of how it’s governed, the licence should be administered by a single authority with a broad range of scheme providers sitting underneath. We are now keen to reach out to the whole construction sector to get their input on the proposal. If we can demonstrate broad support for this approach, we are optimistic that the Government will take it forward,” Berry concluded.

Network Rail has been reviewing and amending its standards, practices and approach to risk management governing how it works with other organisations wishing to build on or near the railway. When working with Network Rail, third parties can expect to see better working practices, streamlined and consistent processes, and a slicker, less bureaucratic structure under a more consistent framework. A national ASPRO framework has been produced and is in the process of being rolled out across the business. This will support in driving a consistent and transparent approach for third parties working with Network Rail, meaning there will be clearly defined processes, working practices, responsibilities and contacts right across the business. Moreover, in order to raise the professional competency, assurance and drive consistency within Network Rail’s route ASPRO teams, a new role has been created. Mona Sihota has been appointed at the new national professional head of ASPRO, bringing nearly 30 years of railway experience spanning design, construction and asset management. This new role has been created at each of their eight geographic routes, with the positions in the process of being recruited. “The path to changing the culture and behaviours of a large organisation such as Network Rail will take time, however we are committed to becoming open for business and the journey has begun. We’ve published our high-level national framework and have begun drafting the processes and procedures to support the variety of external party projects we will engage with. In addition, we’ve produced our national policy around ASPRO so that we maintain line of sight to our national ASPRO objectives,” said Mona Sihota. Network Rail has worked with and consulted AMEY in a special advisory capacity to formulate ASPRO service levels by which other organisations can hold them to account. By having service levels in place, third party promoters of projects on the railway can know what to expect from Network Rail’s service and when to expect it by. The changes being implemented to Network Rail’s ASPRO organisation mark the culmination of a year-long project, being part of a much wider business transformation. A new streamlined approach to ASPRO was proposed, along with a new structure and improved high-level ASPRO framework, all of which the Anglia route volunteered to trial, testing much slicker, less bureaucratic and easier to implement ASPRO processes.

The government is asked to implement a new bricks and water sustainability code for house-building to account for future flood and drought risk. A cross-party inquiry, published by Policy Connect and the Westminster Sustainable Business Forum, states that by 2050 climate change could see 2.5 million homes in England face the flood risk that just 4.48% of homes face now – with cost to the taxpayer of dealing with the damage caused by flooding already running over £1 billion every year. Moreover, the report estimated that an extra 4 billion litres of water will be needed every day by 2050, with projected water demand shortfalls of 22%. As the government advances on its target to build 1.5 million new homes by 2022, WSBF warns of a need to ‘rethink’ the house building agenda to include flooding and drought risk A brand new bricks and water sustainability code should be implemented in order to achieve fairer, tougher and simpler planning framework.  WBS also recommends the new environmental watchdog body proposed by environment secretary Michael Gove is independent with robust powers to hold government to account. “WSBF’s in-depth year-long inquiry into housing, water and planning policy strongly concludes that the government needs to act now to improve guidance and standards for the houses that being built – water is a precious resource and we must use it wisely,” said Angela Smith MP and Baroness McIntosh. “The government needs to ensure we are building the green, water-efficient, flood-resilient communities.” The report suggests the relationships between water companies, housebuilders and local authorities are disorganised and have no designated forum to initiate strategic discussions about how to tackle problems at scale or nationally. Each sector is said to have had a different planning horizon leading to ‘incoherence of approach’, with palpable distrust between some housebuilders and water companies evidenced by breakdown in communication.  

The Private Rental Sector (PRS) has been officially named as the second largest housing tenure in England, according to the most recent Government paper on the issue ‘Building the New Private Rented Sector: Issues and prospects’. With the majority of PRS homes in the country supplied to market by buy-to-let landlords, Tower Eight explores the significant cost issues around the Build to Rent model and how landlords can mitigate them.       Building Fabric & Balconies The architectural aspect, planning element and greater consideration around durability of materials, their replacement and cleaning need to be balanced. The operational considerations should be also reviewed to include greater provision for cleaning and maintenance. However, the ability to facilitate the ongoing maintenance of the building will inevitably be much more of a consideration than on scheme with units for sale.         Modular Components As the BTR model expands, there will be growth in the supply chain that services this element of the market and with this will come more specialisation of components.  In turn, this will reduce build time and cost as the sector matures.       Apartment Fit Out BTR schemes will generate a significant body of work around the life cycle costing of wall and floor finishes against the refresh period of units.  A key element of this assessment will be the use of durable products that can be easily replaced due to high usage and different occupiers over the lifecycle of the scheme.  This will also involve the substitution of high end fixtures for those that offer more durability, much as we see a balance between practicality and quality in the hotel model.          Amenity Spaces & Offering PRS planners need to work hard to generate a sense of place and introduce elements that encourage long-term occupancy, while also developing a sense of longer term brand loyalty. In recognition of the need to adapt to tenant demand, amenity areas should be kept flexible as use may change depending on demand and demographic of tenant base – this should be incorporated in design so that the cost of change is kept minimal.         Communal Areas Proper consideration of the design facets of communal areas will extend the tenants’ demise.  If it retains customers for the long-term and improves a sense of “brand” then it will need to be in the costs. This will also lead to other considerations such as the introduction of natural lighting in communal areas and furnishing requirements.          Unit Sizes & Mix Both the mixture of units on the scheme and their sizes will have to be led by higher density schemes to ensure the fundamental business case stacks up. In a market where land values are as high as they are, the higher unit density will increase the revenue generated per sq. ft. and, ultimately, make these schemes competitive with the residential sales model. The schemes will have to be designed for functionality and be highly efficient with unit sizes closely aligned to rental value and price points that have been scrupulously researched.       Mechanical Electrical and Public Health Systems The careful adoption of the right technology will ensure that elements of these schemes do not become quickly obsolete as that would obviously impact on their ability to provide a long term solution for tenants. And, it will also affect ongoing rental value and drive up the cost of refurbishments so they must be future proofed from the outset.          Procurement To gain significant competitive advantage and deliver on the necessary housing numbers, developers need to be thinking about seven or eight schemes at a time and benefit from the ensuing economies of scale. This will facilitate programme wide procurement and service level agreements, all of which we contribute to scalability and a lower cost model.         Warranties As the operator of the space,  the developer will fall liable for the upkeep of these goods – that is the way many PRS schemes are now going – and ensuring sufficient warranties will minimise that risk but increase costs in the short-term. Latent defects insurance will also come into play too by which to recover the costs of replacing, strengthening or repairing the site if an inherent defect is discovered.      Refurbishment Responsibility will sit with the operator of PRS schemes to maintain its standards, so the ability to replace fixtures and fittings, and the durability of these items must be factored in.  Similarly the longevity of the building itself must be maintained as these schemes are a long-term play and any signs of fatigue will impact on the long-term rent-ability of the scheme. All of these elements will play a key role in developing and maintaining the brand of the schemes and the operators responsible for them.