This month Andrea Fawell, Sales & Marketing Director of award-winning property developers Kebbell, gives us a very honest account of the market factors that are likely to affect house buyers and housebuilders in 2022. What are the biggest factors impacting the property market at the moment? The long term impacts of problems with the global supply chain and the availability of materials and labour means it is increasingly difficult to build to a normal time scale and I can’t see that changing for a while. Brexit has meant the loss of many European site workers in particular, there is a huge HGV driver shortage and the costs of container ships bringing materials and finished items in has dramatically increased. Procurement departments are desperately trying to get materials to finish off homes. There is also not enough stock on the secondhand market. We are hoping that people can have the Christmas they didn’t have last year and will then put their house on the market because until there is more secondhand stock there is almost an over demand for new homes which is a funny thing for a housebuilder to be saying! Prices are not currently changing but developer’s margins are being squeezed with a 15-40% increase in costs of materials. There are roughly six month delays at some of our developments, but for some developers I understand there are delays of 12-18 months. Supply is simply not able to meet demand, even more so having had such a buoyant market post lockdown. All these factors are having a huge impact on deliverability and the cost of building. Timescales are stretching beyond what can be programmed for, so it comes down to managing expectations of the delivery of new homes. How is the current market for new home-buyers? It is a very difficult time for home-buyers. I have been in the industry for 36 years and I have never seen anything like it. People are committed to buying and to moving home, intensified by the pandemic, but developers simply can’t deliver to normal timelines or even promise when they will definitely be able to deliver because of all of the shortages. Homebuyers are still reserving anyway! Purchasers are frustrated but grateful that we are being so transparent and up front about the market problems. We are constantly looking for solutions and alternatives and we are keeping buyers in the picture with what is happening. Last week we had tiles stuck in a Liverpool port and further supplies stuck in Felixstowe. Neither port had the staff to get the tiles off the containers and there weren’t any lorry drivers to get those materials to site. We sent a van to Liverpool to retrieve the tiles and when they arrived, they were all broken. The purchasers had to choose a different tile that was available. We are in this together. By having a collaborative approach homebuyers trust and work with us but it is a huge upheaval in their lives with many having to go into temporary accommodation whilst developers wait for the right parts to come in. Once they put their own homes on the market, in their heads they have already moved out. Are there any landmark trends or announcements coming up in the industry in 2022? The new Deposit Unlock scheme which has piloted for over a year will start to be a consideration, especially as this will be the last year of the Help to Buy scheme which ends in March 2023. I think part exchange will be increasingly attractive as it means you can stay in your house until the new home is ready for you which is the solution to the delays being seen across the industry. Assisted Move, will continue to help new home buyers sell their property and developers pay the agents fees if they want to sell their house in the shortest time possible. How are housebuilders tackling sustainability? In preparation for my trek across the North Pole in April 2022, I recently went on a trip to stand on Europe’s biggest glacier in Iceland and I was blown away by the impact of climate change. We need to be all over this as an industry and championing sustainability, heightening awareness and being mindful of green credentials and what we need to do to play our part. Small changes add up. We don’t put in wood-burning stoves because it has an unnecessary carbon footprint. We work very closely with sustainability consultants across all disciplines from looking at what is going into our skips to sourcing the best ground source heat pumps, but it is hugely complex, there are no easy solutions and there is a lot of work to still be done as an industry. We face a lot of difficult conundrums about sustainability. For example, will existing homeowners be able to afford and physically put in air source and ground source pumps in their current homes? It is easier for new builds to have these planned in but whilst we are trying to future proof, the technology is moving so fast it is hard to keep up. Our commitment is everyone will have a car charging point or an ability to fit a car charger but in Norway wireless chargers are being piloted so in say two years’ time will we charge our cars wirelessly in which case will car charger ports be obsolete? Or is the future actually hydrogen powered cars? The industry can and must do better, but it is far from easy. Are off-plan sales growing? The nature of our developments next year means we are able to offer off-plan sales for our new developments; Milestones, an 18 luxury apartment development in Ascot and Meadow Court in Iver which comprises 39 two and three bedroom apartments. As a result, we are prioritising sophisticated online marketing tools such as html experiences, interactive screens for colour choices, and many more. We are investing in the online experience that we think will

Almost a third (30%) of credit managers ‘guess’ their bad debt reserve requirement  Less than one in ten (9%) are given any steer/model by their auditors  Construction businesses seeking to take the guesswork out of bad debt provision at Financial Year End could benefit from a new free service being provided by Debt Register, a global payment accelerator. Or, businesses can use an individual involuntary arrangement to help them seek financial stability and freedom. Loading a company’s five largest outstanding debts onto the automated Debt Register collections platform, with a very high chance of collecting those debts, could significantly improve the accuracy of bad debt provision. This will in turn improve the visibility and accuracy of a company’s true financial position and its bottom line, with all the inherent advantages this brings in terms of access to future lending and credit.  The proposal follows research that suggests that almost a third (30%) of credit management professionals guess at a figure when assessing the level of bad debt reserve they require at Year End, while less than one in ten (9%) are able to look to any financial model provided by their auditors. More than a third (35%) opt for generic, age-based percentages to arrive at a figure while a quarter (26%) look to their experience of similar debt.  Gary Brown, Founder of Debt Register, believes the survey proves what he has long thought: that the current process of providing for bad debts is invariably guesswork: “Speaking to firms and accountants, many companies have no clear picture of how collectable or otherwise certain debts are, and make provision simply by taking a best guess,” he says.   “By passing the five oldest or longest-standing debts through our platform, however, there is a very real chance that those debts will be settled. This means the actual bad debt figure being provided for will be more accurate. because there would be no need to reserve for those invoices at all.  “Indeed, even if the money is not collected, then that also helps takes the guesswork out of the process and gives the company and the auditor something more tangible to refer to than a vague model. Either way, Debt Register gives companies a tool that supports a more accurate financial position.”  Real case scenarios with current Debt Register clients have already proven the point and the age of the debt appears not to be a barrier to its collectability. One customer uploaded a debt that was 888 days overdue, and the debt was settled in 27 hours. In a more remarkable example, an uploaded debt that was 1499 days overdue was paid within 45 minutes.   Debt Register is, first and foremost, a global payment accelerator that enables a business to identify late invoices on their ledger and allow the platform to do the rest. This includes validating the customer contact’s email against a database of some 90 billion addresses to a 93% degree of accuracy. The platform contacts the debtor automatically and in the appropriate language, requesting that the payment is settled, and ensuring the invoice is correct and not in dispute.   By leveraging its relationships with leading credit reference agencies (CRAs) to report unpaid and overdue debts, debtors are encouraged to settle any overdues promptly to avoid their credit scores being negatively impacted. In short – there is now a tangible and direct consequence for those companies should they continue not to pay an undisputed, overdue invoice.  Along with shortening the timeframe of remittance, Debt Register provides a series of tools to credit managers including auto-translation for use within multiple territories. The system is intelligent, recognising different time zones, working days and cultural nuances including national holidays or religious festivals, and schedules the dispatch of any communications accordingly.  To date it has successfully recovered debts in 71 different countries and six out of the seven continents   “Using the free service means a business has nothing to lose and everything to gain,” Gary concludes, “and converts a guess into something closer to the truth.”  For a free trial, go to: https://debtregister.com/freetrial/ 

The UK’s largest British designer and manufacturer of premium radiators and towel warmers, Vogue (UK), look ahead with renewed enthusiasm as new development opportunities are expected following investment by Kartell UK, one of the largest and fastest-growing suppliers of heating and bathroom products to the independent merchant and showroom sector in the UK.  “Vogue is something I am very proud of, offering a renowned history which has been developed by a highly skilled and knowledgeable workforce over the last 30 years. In this post-pandemic environment, I am confident the investment from Alex and Kartell will enable future growth and secure an exciting future for Vogue, all its staff and the Kartell Group,” explains Raymond Tunks, one of the founders. Kartell’s investment in Vogue (UK) will support further growth across the UK and internationally, adding to the market presence Vogue already has in the US, as well as enable a more comprehensive range of products and services to be offered by both brands. “When the opportunity to partner with the team at Vogue arose we immediately identified the strategic fit this acquisition represents and we are delighted to announce the deal. Everyone at Kartell is excited about working with Ray, Rob and the team at Vogue to address the multiple market opportunities in the UK, Europe and International export markets. Our shared focus of best-in-class quality and service will bring added value to all of the group’s customers and stakeholders,” says Alex Norford, CEO of Kartell. Vogue (UK) will continue to operate autonomously, remaining a stand-alone manufacturing and design business within the Kartell group under the guidance of the existing, highly experienced management team. This will all be supported by ongoing integration and leadership support from the founders of Vogue (UK), Raymond Tunks and Rob Kelley, respectively. “Vogue’s success can be attributed to the continual endeavour to provide the best in class service and high quality products to our markets and customers. We wanted to find the ideal home for the business to complement and accelerate the work we have done as a team over the last 30 years and believe that Alex and the wider Kartell group are the right people to take Vogue forward,” adds Robert Kelley. Vogue (UK) is the UK’s leading designer and manufacturer of quality towel warmers, designer radiators and heating accessories, with market leading eco-credentials since 1990 and here’s to the next 30 years!

he Hill Group, the UK’s second-largest privately-owned housebuilder, has completed the full portfolio refinance in the first major sustainability-linked loan (SLL) valued at £220m, maturing in 2026. As the group’s main source of debt funding for the delivery of its private development pipeline, this revolving credit facility was last renewed in December 2017 for £200m but has now been increased to £220m, with household UK banks; Lloyds Bank, NatWest, HSBC and Santander, each committing to a £55m loan. The refinance will support the Group’s five-year plan to double the size of the business to £1.2bn by 2025. “Our sustainability-linked loan refinancing is an important step in our overarching group vision to become a leading sustainable housebuilder in the UK. We are extremely pleased with the confidence that these leading banks have placed in our long-term development plans,” said Tony Parker, Finance Director at Hill. The new SLL will fund Hill’s long term development projects including multiple award- winning Knights Park development in Cambridge; Woolwich Leisure Centre, a mixed-used regeneration project comprising 500 new homes and community facilities, and the regeneration of the Teviot Estate in Tower Hamlets, London. Using the SLL for its portfolio refinance, Hill will benefit from a lower interest cost as their green credentials increase in the future. This is based on four sustainability linked criteria – biodiversity net gain, reducing operational carbon, reducing scope 1&2 carbon and the company’s overall sustainability rating as measured by the NextGeneration scoring system. David Cleary, Head of Housing at Lloyds who acted as sustainability co-ordinator for the deal, added: “We are delighted to have helped complete the refinancing of The Hill Group’s assets in partnership with NatWest, HSBC and Santander in our first SLL of the year in the housebuilding sector. It is a great step towards achieving a more sustainable future and we hope to see more housebuilders follow suit in the near future.”

Brickflow, the UK’s first search engine for development finance, reports a record number of loan terms that accounts for £88 million that were issued through its deal forum in November. The deal forum is similar to a competitive tender process; developers input their project details and Brickflow’s algorithms select the lenders most likely to make a loan offer and on which loan terms. Borrowers can then choose up to five lenders to bid in a blind auction. Brickflow’s platform secured competitive interest rates, with Loan to Gross Development Values ranging from 50% to 83%, for 17 developers that have funding for projects in the residential, hotel, HMO, retirement living, light industrial and supported living sectors. “By creating an auction environment, borrowers receive the most competitive rates in record time. A LTGDV of 83% is unheard of, especially at a blended senior & mezzanine rate of 8.49%. Our online tools help borrowers complete perfect lender presentations – with first time users stating they can do it within 15 minutes,” commented Ian Humphreys, Brickflow’s co-founder and head of lending. “Our goal is to connect borrowers and lenders in seconds and give developers seamless and fast access to property finance. Judging by November’s activity, I’m confident we can become the UK’s leading facilitator of all development finance transactions.” Below is a summary of the property types, loan sizes and winning interest rates. The cumulative LTGDV being 65.56% at an average rate of 7.05%. Location Property Type GDV Loan Size Loan to GDV Winning Bid Midlands Residential £2,694,600.00 £1,697,598.00 63% 6.25% Midlands Residential £2,550,000.00 £1,657,500.00 65% 6.25% London Hotel £15,300,000.00 £9,015,230.00 59% 6.00% East Anglia Residential £2,600,000.00 £1,508,000.00 58% 6.25% Midlands HMO £4,250,000 £2,592,500.00 61% 6.25% Scotland Residential £2,200,000 £1,408,000.00 64% 8.40% South-East Light industrial £2,148,000.00 £1,065,408.00 50% 8.10% North-West Residential £7,950,000.00 £5,521,000.00 69% 6.40% South-East Residential £9,460,000.00 £7,851,800.00 83% 8.49% North-West Residential £2,510,000.00 £1,631,500.00 65% 8.10% London Residential £44,000,000.00 £29,040,000.00 66% 7.50% Midlands Retirement living £9,500,000.00 £6,175,000.00 65% 7.25% South-East Residential £14,576,800.00 £9,474,920.00 65% 6.45% East Anglia Residential £3,440,500.00 £2,236,325.00 65% 6.65% East Anglia Residential £1,932,000.00 £1,255,800.00 65% 7.00% East Anglia Residential £7,184,000.00 £4,669,600.00 65% 6.65% Midlands Supported living £2,548,000.00 £1,605,240.00 63% 7.90%

Plumbers have been overlooked in the Government’s plans to end the use of gas boilers in British homes, putting the whole Net Zero agenda in jeopardy, a think-tank warns today. The Social Market Foundation said that the Government strategy aimed at decarbonising home heating does not give plumbers and other workers enough incentive to get training to install the heat pumps that ministers want to replace gas boilers. The SMF is undertaking a major research project with the heat installer workforce.  Its interviews with plumbers suggest that many see little reason to spend time and money getting the skills needed for heat pumps. The UK’s Net Zero plans mean decarbonising the heating of buildings, including homes, which account for 14% of carbon emissions. Over the coming decades that will mean replacing millions of domestic fossil fuel-burning heating systems with new ones, including heat pumps. The Government’s stated ambition is for a deployment of 600,000 heat pumps installed a year by 2028. The Heat Pump Association estimates that 50,200 fully trained heat pump installers will be required to fit one million heat pumps a year by 2030. But the SMF found that the Government does not appear to know how many installers are currently trained for heat pumps.  Official Net Zero documents use different figures, the SMF found. The Heat and Buildings Strategy, published by the business department, suggests that there are 1,100 fully accredited companies.  The Net Zero Strategy, published by Boris Johnson on the same day, suggests there are currently 3,000 trained fitters. SMF analysis of the heat strategy, published today, concludes that the policies it sets out do not give plumbers and installers enough reasons to train for heat pumps.  The strategy overlooks the fact that most the relevant workers are self-employed sole traders, who must spend their own time and money on training. Many plumbers do not currently believe that such training will be soon justified by work installing heat pumps, the SMF found.   The heat strategy does not do enough to support household demand for heat pump, it concluded: the £450 million set aside for grants will support just 90,000 new pumps a year for three years.   The heat strategy also postpones a decision on whether to support the use of hydrogen in boilers as an alternative to fossil fuel gas. That creates uncertainty among plumbers about heat pumps, the SMF said. Finally, the SMF found that some plumbers, especially those closer to pension age, are calculating that existing gas boilers will create enough work for them until they retire.   Ministers have said they hope to end all installations of new gas boilers by 2035, but have not set a firm deadline and insist that no-one will be required to replace a pre-existing boiler. The combined effect will be that Britain risks being left with not have enough workers with the skills and training needed to replace millions of gas boilers, the SMF said. Amy Norman, senior researcher at the SMF, said: “Taking the carbon out of home heating is a vital part of Net Zero, and the Heat and Buildings Strategy is a good start.  But as things stand, the government isn’t creating enough incentives to plumbers and other heat workers to get the training needed to replace gas boilers with greener alternatives.  That can still be fixed, but unless it is, forgetting to call the plumber could put Boris Johnson’s whole green agenda at risk.” “Plumbers, installers and heat engineers are vital to Britain’s greener future. They’re skilled workers who are used to making sure they have the right training to meet customers’ needs. But when you’re your own boss, you need to know the costs of training are going to be worthwhile, and right now Net Zero plans don’t offer enough incentives to train.”