Last week, Theresa May announced she is lifting the Housing Revenue Account (HRA) Borrowing Cap, which has been a constraint on local council’s ability to finance new build housing projects. The Prime Minister has stated that the only way to fix the broken market is to create new homes for new
In nearly six months’ time, on 29 March 2019 at 11pm UK-time to be more exact, the Brexit is expected to happen and the UK will leave the EU. The construction industry has already started to feel the impact of Brexit, and has ongoing concerns about, amongst other things, skill
The first concrete look into how the UK market has performed on the two-year anniversary of the country’s decision to leave the EU has been provided by the latest UK HPI release of property price data for June. With the headlines showing house price growth is at a five year
Leading apprenticeship provider Develop Training has welcomed news that large employers are now able to transfer their levy funds to other organisations. However, the company cautioned that firms will have to manage the process well to maximise the potential business benefits. It also warned that the move is adding more
The Construction Leadership Council (CLC) has released a new industry report ‘Procuring for Value’, authored by CLC member, Global Board Director of Rider Levett Bucknall (RLB) and industry expert Ann Bentley. This follows the launch of the government’s Construction Sector Deal last week, As the Public Administration & Constitutional Affairs
Activity levels at the very top of the London property market have stabilised after a tumultuous few years, the latest analysis reveals. Sales in the super prime market with homes valued at £10 million plus have been underpinned in many cases by the release of pent-up demand, says the report
Prime minister May’s announcement last month to spend £400m on the repair & refurbishment of 158 high rise buildings identified within England’s social housing estate has been widely welcomed by the construction industry and housing chiefs alike. However, the considerable war chest earmarked by government to bring these dwellings up
Investec, the asset management group, has announced it will offer a £43 million loan to the Labtech Group, a real estate development and investment business, to fund the development of a major 140,000 square foot (sq ft) mixed-use scheme in King’s Cross. Owned by Israeli billionaire Teddy Sagi, the business
The Property Redress Scheme (PRS) has today announced it is working with The National Approved Letting Scheme (NALS), to offer discounted membership to NALS firms. After Ombudsman Services: Property announced its decision to pull out of providing redress to the property industry, the PRS stepped in to help NALS firms
The latest ONS statistics on UK productivity show construction is yet to turn around productivity levels in line with other sectors. Last week, the Office of National Statistics (ONS) released the latest statistics on productivity. Across the economy as a whole output per hour increased by 0.8%, however the construction
Last week, Theresa May announced she is lifting the Housing Revenue Account (HRA) Borrowing Cap, which has been a constraint on local council’s ability to finance new build housing projects. The Prime Minister has stated that the only way to fix the broken market is to create new homes for new buyers, but that isn’t the same view as a lot of the population, and the decision has ruffled some feathers. Agitation from the decision comes through the idea that councils are not the reason there is a fundamental housing problem occurring across the country. Josh Ryan-Collins, a researcher at the University College of London’s Institute for Innovation and Public Purpose, published his research paper: Why Can’t you afford to buy a house? Which aims to shed some light on the current housing turmoil across the United Kingdom. The basics of his argument lie in that the housing crisis, above all else, is a product of the banking system in society, meaning that rising house prices are simply out of reach for the average house income, which is putting people off the purchase of a new home. Now that councils are once again able to borrow money in order to fuel new local builds, there is the idea that new wealth can come to an area and people are able to get onto the property ladder more easily. That being said, the alternative view is that councils being able to once again borrow money will in fact do little for the economy, and will not actually address any greater aspects of the housing crisis, instead this will simply add more debt to local areas, and more money into the banking systems. Josh’s argument is that central banks should be guiding away from property and into more productive areas of the community to slowly build up wealth, rather than borrowing for a quick-fix build. An incentive system is not in place at the moment which could, and should, be implemented to see housing in the future be a more successful sector nationwide. It is not just the UK who have been suffering from housing epidemics, as across the world a trend of struggling economy has begun to surface. This problem has been as such since the post-war popularization of home ownership was introduced and put pressure on governments to reduce their property taxation. This in turn made it more attractive for banks to lend larger sums of money, such as in the form of a mortgage, which now has become a major part of banking business across the globe. While it remains uncertain if Theresa May’s decision will be for better or worse, it does not look as if the housing crisis cannot be resolved by simply building more homes.
In nearly six months’ time, on 29 March 2019 at 11pm UK-time to be more exact, the Brexit is expected to happen and the UK will leave the EU. The construction industry has already started to feel the impact of Brexit, and has ongoing concerns about, amongst other things, skill and labour shortages, the increasing price of materials, potential import and export tariffs. Another area of concern for the construction industry has been how the system of advertising UK contracts for works, goods and services to EU companies would work post-Brexit and how businesses in the UK construction industry would be able to continue to bid for work, goods and services in Europe. This is important because many UK construction and consultancy businesses benefit and need to continue to benefit from smooth and open working relationships with EU businesses. The government’s position While the government continues to negotiate with the EU, in the hope of reaching agreement on a number of key points in the next few months, it is also starting to prepare for a ‘no-deal Brexit’. As part of that, a couple of weeks ago the UK Cabinet Office released guidance entitled ‘Accessing public sector contracts if there’s no Brexit deal’ which sets out how works, goods and services can continue to be accessed across the UK and EU in the event of the UK leaving the EU without an agreement in place. The current system At the moment, UK public bodies and authorities can procure certain works, goods and services for construction projects, including from EU businesses, by advertising them on the Official Journal of the European Union (OJEU) via Tenders Electronic Daily (TED). Equally, UK contractors, consultants, manufacturers and other construction businesses can bid to provide works, goods and services to EU public bodies through OJEU via TED. This means that, for example, a UK public authority procuring specialist offshore trenching and vessel services for a government-funded offshore renewables project can receive tenders from specialist construction companies throughout the EU. It also means that UK companies, for example a UK architectural business, can tender for a commission to design a high profile development project in Spain on the same basis as companies based in other EU member states. But post-Brexit, without a deal, this position would change. The government’s guidance There are two key messages in the government’s guidance ‘Accessing public sector contracts if there’s no Brexit deal’: First, the UK is aiming to accede to the World Trade Organization (WTO) Agreement on Government Procurement (GPA). The GPA is an international trade deal that the UK currently participates in by virtue of its EU membership, but in a No-Deal Brexit world the UK will need to become a member itself. Whilst this is not a new position it does confirm that there has been no change to the government’s position on the need to seek GPA membership. Second, the UK will develop a UK version of OJEU / TED, which it refers to as ‘a replacement UK- specific e-notification service’. The guidance states that: UK-based contract opportunities would no longer be advertised to the EU on OJEU / TED and would instead be advertised on the new replacement UK-specific free-to-use e-notification service This UK e-notification service will be available from ‘Exit day’ The requirement to advertise and ability to access other UK domestic systems will remain eg on Contracts Finder, MOD Defence Contracts Online, Public Contracts Scotland, Sell2Wales and eTendersNI UK businesses who wish to tender or bid for EU contract opportunities may continue to do so via OJEU / TED and To enable the above, some changes to how the current procurement rules operate may be necessary, and these will be made by amending existing UK legislation. The government has also said that further information will be provided nearer to the Brexit date. So, has the government provided clarity? In part, yes. The government has at least given some insight into its thinking about how works, goods and services can be advertised and procured across the EU in the event of a No-Deal Brexit. However, there is very little detail around how this will work in practice. In particular, while the guidance says that “Suppliers who wish to access contract opportunities from the EU may continue to do so via OJEU/TED”, it is not clear whether this position would be agreed to by the EU or whether they would have to access OJEU/TED as third country participants. UK public authorities, construction companies, construction industry professionals and other construction industry businesses may also be concerned that, during a period in which they dealing with other challenges that may arise for their businesses due to Brexit (such as skill and labour shortages), they will potentially also have to familiarise themselves with a new UK e-notification service. One thing is clear though, with no agreement yet reached with the EU, and with the Brexit date looming in a matter of months, the government should be working hard behind the scenes to flesh out its guidance, to provide certainty for UK public authorities and the construction industry before 29 March. We would hope to hear more on this by the end of this year.
The first concrete look into how the UK market has performed on the two-year anniversary of the country’s decision to leave the EU has been provided by the latest UK HPI release of property price data for June. With the headlines showing house price growth is at a five year low across the UK, leading Hybrid Estate Agent, Emoov.co.uk, has crunched the numbers to see where has suffered and where has shrugged off the wider market slowdown to enjoy strong price growth. The UK Nationwide, prices are up 7.3% since the vote, with England and Scotland both enjoying the same increase, while price growth in Wales trails slightly at 7.1% and has hit 7.7% in Northern Ireland. Regionally, the West and East Midlands are ahead of the rest with price growth hitting double-digit figures in the last year, 10.9% and 10.3% respectively. The North East has suffered the most with prices increasing by just 0.3% in the last two years. The high cost of living in the capital has also taken its toll with London the second worst performer at 1.8%. This is largely due to central London and when split, Inner London price growth falls further to 1.2% while Outer London picks up the pace at 4.1%. The Best Across the UK it’s the Orkney and Shetland Islands that have enjoyed the largest growth since Brexit, up a huge 36.1% in the Orkney’s and 19.9% in the Shetlands. England compiles the rest of the top 10 largest increases with Thanet (18.8%), Harborough (18.4%), Kettering (18.4%), Tendring (17.8%), Maldon (17.7%), Sandwell (17.2%), Blaby (17.2%) and North Norfolk (17.0%). The Worst The City of London has been by far the worst area of the UK for property price growth with a drop of -21.9%. However, with an average house price of over £900,000, homeowners aren’t completely out of pocket. The City of Aberdeen is the second worst and only other area to see a double-digit drop at -12.3%. With an average house price of £1.2 million, Kensington and Chelsea has also seen a notable drop at -7.4%, with the Western Isles (-6.2%), the City of Westminster (-6.0%), Three Rivers (-5.7%), wider Aberdeenshire (-5.4%), Hammersmith and Fulham (-4.4%), Wandsworth (-2.9%) and Southwark (-2.9%) all seeing some of the largest declines in price growth.
Leading apprenticeship provider Develop Training has welcomed news that large employers are now able to transfer their levy funds to other organisations. However, the company cautioned that firms will have to manage the process well to maximise the potential business benefits. It also warned that the move is adding more complexity to a system that many employers have had difficulty in understanding. From May, large employers who pay the Apprenticeship Levy will for the first time be allowed to transfer up to ten per cent of their annual funds to other organisations. It means firms can use some of their unspent levy funding, which would otherwise go to the exchequer, to support smaller employers to take on apprentices. “There are potential business benefits for larger businesses to support firms in their supply chain to take on apprentices. I would recommend working with your chosen supplier and an apprenticeship provider to align the scheme with your own training programmes and to focus the money where it will benefit you both the most. You should be aware that apprenticeships can cover management training as well as the kind of trade-based training traditionally associated with apprenticeships,” said Chris Wood, CEO of Develop Training. “Putting some thought and effort into this process will pay dividends all round, for the large employer, the supply chain business and the apprentices who go through the scheme. As with everything to do with the levy, it makes sense to get expert help and advice from specialists such as ourselves,” he added. Initially, firms will only be able to transfer funds to one organisation. After user feedback from the first phase, they will likely be allowed to split their ten per cent funding into several smaller payments across multiple organisations. The ESFA has advised those transferring the funds to be aware of “the funding rules around transferring apprenticeship funds, which will be published at a later date”. Once a transfer is made, it cannot be refunded. Apart from their own supply chain, levy-paying employers who want to transfer funds can find companies who want money for apprenticeships in a number of ways. These include making contact with an approved Apprenticeship Training Agency such as Develop Training or working with regional partners. After Develop Training’s Industry Skills Forum in November revealed concerns among major employers about the levy, it has been offering advice on the levy process and guidance about the kinds of training that can be provided under the scheme.
The Construction Leadership Council (CLC) has released a new industry report ‘Procuring for Value’, authored by CLC member, Global Board Director of Rider Levett Bucknall (RLB) and industry expert Ann Bentley. This follows the launch of the government’s Construction Sector Deal last week, As the Public Administration & Constitutional Affairs Committee concludes that government procurement policies contributed to the collapse of the Carillion, Ann promotes a sustainable business model for the whole supply chain. The three-pronged approach includes procuring on the basis of whole-life value and performance; measuring and rewarding good performance and; “getting the basics right”, including fairness of cash-flow and reforms to the practice of retentions. Procuring for Value highlights that the industry accounts for over 10% of the UK workforce (the equivalent of £600 billion contribution to the economy per year), while outlining how it needs to change to improve productivity, end user satisfaction and safeguard those in the sector. It also estimates that a more “joined up” approach to procurement could result in a saving of over £ 15 billion per annum. Moreover, the report builds on the Sector Deal’s strategic principles of Digital, Manufacturing and Whole-life Performance and makes practical, long-term recommendations for both government and industry to facilitate change. Following on the Farmer Review published by the CLC in October 2016, the report extends existing government policy to encourage an integrated industry approach. “The Procuring for Value report is a fundamental strand of our policy, outlining the best practice for the industry delivered through standardisation and digital technologies. Construction needs to change. Every rung of the supply chain needs to take responsibility and understand their impact on the industry and the larger financial picture that is at play. The report highlights as an industry how we can do just this,” said Ann Bentley. The Procuring for Value report is available to download from the CLC website here and there will be a number of briefings and roundtables hosted by the CLC for organisations and industry leaders regarding the Construction Deal and the Procuring for Value report.
Activity levels at the very top of the London property market have stabilised after a tumultuous few years, the latest analysis reveals. Sales in the super prime market with homes valued at £10 million plus have been underpinned in many cases by the release of pent-up demand, says the report from international real estate firm Knight Frank. The figures show that the number of new prospective super prime buyers registering in the first three months of 2018 was 7% higher than last year. And, although the number of transactions in the year to March was 9% lower than over the previous 12 months, this is an improvement compared to annual falls of more than 20% registered throughout 2016 and the first half of 2017. The steepest price decline since the peak of the market in prime central London in August 2015 has been in Chelsea where a 15.5% fall took place between then and March 2018. However, buyers have responded to the decline and the value of super prime sales has risen as a result while the effects of a weaker pound also continue to drive sales, alongside the continued appeal of London. The report points out that US dollar denominated buyers would have benefitted from an effective 11% discount at the end of March compared to the period before the European Union referendum ‘Though London has had a tough time recently, it is seeing renewed vigour. The effective discount provided by a weaker pound has certainly helped some buyers seeking value. There is a continued focus on safe haven investments for the long term with increasing focus on income generation and longer-term returns,’ said Paddy Dring, head of global prime sales at Knight Frank. ‘Although political risk remains with us, economic fundamentals underpinning the market remain strong, with interest rates at an all-time low and global economic growth improving,’ he added. Family houses in the Kensington and Chelsea are in relatively strong demand at the start of 2018 among needs driven buyers, according to Thomas van Straubenzee, head of Knight Frank’s private office . ‘While international investors are proceeding with more caution, British families committed to London are more comfortable buying given that pricing has largely adjusted for stamp duty. It means areas like Notting Hill have done very well at the start of 2018,’ he pointed out. But some buyers remain hesitant. ‘There has been a definite uptick in enquiries from prospective buyers, which is feeding through into sales. However, those buyers making commitments have either been in the market for a while or have a pressing social or personal need to move,’ said Daniel Daggers, a prime central London partner with Knight Frank. ‘So there is a ticking clock for many of them which, together with the price declines and favourable currency movement, means they are now deciding to act. Buyers are less location specific and new focal points include Fitzrovia and W2,’ he added.
Prime minister May’s announcement last month to spend £400m on the repair & refurbishment of 158 high rise buildings identified within England’s social housing estate has been widely welcomed by the construction industry and housing chiefs alike. However, the considerable war chest earmarked by government to bring these dwellings up to standard should also be used to create a new culture in UK housing, which treats residents in the private and public sector with equal respect. That is the view of James Butler, commercial director of PURA Facades, part of Vivalda Group, the UK’s largest independent distributor and fabricator of high performance cladding systems. ‘Based on the average cladding area of 3,000 sq.m for a high rise, this budget suggests a figure of over £2.5m per tower, which on the face of it appears generous,” he said. “Our calculations indicate that it’s more than enough to dismantle the existing cladding and replace this with quality, market-leading incombustible facades. And this includes all the elements of a through-wall rainscreen cladding system comprising fireproof linings and fire breaks, insulation, weatherproof sheathing boards and all the necessary associated fixing systems.” “There should also be enough within this budget to install the necessary fire protection measures as long as each tower’s needs are carefully assessed on a case by case basis,” said Butler. “While ensuring all of these homes benefit from the very best safety precautions the industry can offer, it’s also an opportunity for councils and social housing organisations to send a strong message to both residents and the construction sector in general; that there should be no gap in the quality of products being used on public or private housing. The Grenfell enquiry, led by Sir Martin Moore-Bick, has shown that there is a definite class theme running through this sorry chapter – and this funding provides us with the opportunity to change that divisive culture.” James Butler highlighted the fact that Pura had significant experience supplying high performance products to the private sector, and that there was no reason why this ‘quality first’ approach should not replace the recently discredited ‘value engineering’ process, which was widely used in the public sector as a cost cutting tool. He said: “While the image of cladding may have been tarnished by association with the Grenfell tragedy, the fact remains that there are many excellent, fireproof products out there that would be ideal for the 158 high rise residences awaiting refurbishment. We have the budget now, all we need is the will power and imagination from local council leaders and their appointed architects to change the culture of cladding within social housing.” Pura has now begun working in the social housing market, demonstrating how products and methodologies used in the private sector can be adopted by public sector developments. Butler said: “While we have already worked on a couple of social housing projects that have used non-flammable natural cladding including terracotta or glass reinforced concrete (GRC) cladding from manufacturers such as Rieder of Austria, we’re also excited to see a new generation of aluminium cladding now coming onto the market.” “Valcan is a well-established, respected manufacturer of aluminium panels that has developed Vitracore G2, which comprises exclusively layers of aluminium which form an internal, non-flammable honeycombed centre. This type of innovation shows that the market is responding positively to Grenfell and this should enable architects to consider this new generation of cladding for the social housing sector.”
Investec, the asset management group, has announced it will offer a £43 million loan to the Labtech Group, a real estate development and investment business, to fund the development of a major 140,000 square foot (sq ft) mixed-use scheme in King’s Cross. Owned by Israeli billionaire Teddy Sagi, the business has also arranged a £29 million loan with Bank HaPoalim, Israel’s largest bank. “We’ve been working hard to build strategic partnerships with like-minded lenders so that we can support our clients beyond the scope of our own balance sheet,” said Simon Brooks, co-head of origination at Investec. “We are glad that with the relationships we have built with other lenders such as Bank HaPoalim and Harel, we have been able to build on our capability and support our clients,” he continued. The development project is located on Camley Street, next to King’s Cross station, where Labtech is planning to develop 121 one, two and three bedroom luxury apartments and 29,000 sq ft of co-working space. The apartment will be let and operated by Sagi’s private rented sector (PRS) and co-working platforms. “This is a very exciting project for The LabTech Group, creating another valuable ecosystem for co-working, living and events,” said Chen Moravsky, president and CEO of The LabTech Group. “We are delighted to be working with Investec on this project and look forward to a long and beneficial relationship.” Work has already started on the scheme and it is expected to approach completion in 2020. Investec raised last month £195 million for the Cain International-led consortium the Stage Shoreditch to fund the development of a 550,000 sq ft mixed use scheme in Shoreditch.
The Property Redress Scheme (PRS) has today announced it is working with The National Approved Letting Scheme (NALS), to offer discounted membership to NALS firms. After Ombudsman Services: Property announced its decision to pull out of providing redress to the property industry, the PRS stepped in to help NALS firms continue to meet their legal requirements by belonging to a government-approved consumer redress scheme. Effective from today, NALS agents will be able to take advantage of the simplicity offered by the Property Redress Scheme, giving both tenants and landlords the right to impartial, independent redress in a straightforward way. Isobel Thomson, Chief Executive of NALS stated, “PRS offers NALS firms a way to comply with their legal requirement of being a member of consumer redress scheme, and to continue to provide the high standard of customer service we expect. We were particularly pleased that the PRS are able to offer two membership models which gives our agents choice in how they join.” Sean Hooker, Head of Redress at the PRS also stated, “NALS are an organisation that takes great pride in the quality of service its members’ offer and we at the PRS look forward to working closely with NALS to continue improving standards in the industry.” The main purpose of the PRS is to settle or resolve complaints made by consumers where the Members’ internal complaints procedure has been exhausted – and with change aplenty in the industry, the PRS offers the stability desired by many within the sector. It also offers an easy-to-use, easy-to-access online Members’ area to help agents manage complaints, as the Scheme prides itself on being there for consumer and complainants as we seek to continue to raise professionalism and standards within the industry. The PRS offers two membership options – an Enhanced Model which includes complaints and an Entry Model where the agent pays to deal with complaints. NALS agents can benefit from a discounted membership on either model and can join the PRS online, here. Members can benefit from the PRS’ enhanced membership for £120, and the entry option for £60. To receive the discount, NALS members simply have to contact the PRS and confirm their NALS membership.
The latest ONS statistics on UK productivity show construction is yet to turn around productivity levels in line with other sectors. Last week, the Office of National Statistics (ONS) released the latest statistics on productivity. Across the economy as a whole output per hour increased by 0.8%, however the construction industry is yet to take advantage of improving technology and techniques to increase productivity alongside the rest of the economy. (See below Figure 2). “There are many simple ways for construction to catch up with the other sectors, and the sooner the industry acts, the better. New technology offers a proven, cost effective way to create efficiencies. myConsole is specifically designed to improve in work winning – creating both time and cost savings across the entire process,” says Phillip Collard, CEO myConsole. Pressure has been mounting on the sector over the last few years to increase productivity. Analysis and reports, including the Farmer’s Review (October 2016), have led the government, through the Construction Leadership Council, to recently announce a deal in November aimed at transforming productivity. “Time is running out, construction and pre-construction businesses need to step up and innovate. We estimate myConsole will increase efficiency and reduce workloads by 20%. Early feedback from our clients confirms that using myConsole will save them a day a week per person in the work winning process compared to their old methods.” Says Philip Collard, CEO myConsole. Contact myConsole to find out how to use the power of digital to streamline the procurement process and win more bids.