An apprentice bricklayer at the Seddon building group has progressed to the SkillBuild national finals. The company has heaped praise on 22 year old Jake Horoszczak who, after winning his North West heat, is now west to participate in the national finals of the competition which take place in the autumn. At the event he will represent both Seddon and Tameside College. SkillBuild, run by the Construction Industry Training Board, is the UK’s largest multi-trade competition and sees roughly 150 people take part in just the North West heat, with experts from the industry judging the entrants’ skills at Stockport College. After his success in the regional heats, Jake says he is now looking to fulfil the opportunities given to him by Seddon. He added that his time as an apprentice with the company has been amazing and that he now feels ready to put all his expertise and training to the test on the biggest stage in the industry as he continues his preparations for this year’s national championships. The company had previously recognised Jake’s achievements through its yearly Building Skills award scheme in which they described him as ‘one to watch’ for the future. Jake has developed his skills range by working on the development at Hindley Town Yard for Wigan and Leigh Homes, a project that has an ultimate goal of building eight bungalows and 25 apartments. Jake’s mentor on the Hindley Town project, Kevin Ripley, said that his apprentice is always getting stuck into the work and ensuring that it is carried out to the highest possible standard. Meanwhile, Seddon’s Head of Training, Tony Costello, said that there should now be more effort put into plugging skills gaps and that this can be achieved through apprenticeship schemes. He said that construction companies should try to deliver more apprenticeships to enable people to get hands on training and develop their careers.

The majority of qualified electricians would rather choose quality over cost, the latest Select survey has revealed. While it is commonly believed that ‘the most important consideration in business is cost’, this theory has been disproved by a survey of electricians carried out by Select (the campaigning trade body for the electrical sector). Instead of cost, the survey revealed that the overriding factors in the electrical sector are service and quality of work. Select MD, Newell McGuiness, revealed the survey results at the Electrical Distributors’ Association’s ‘Regional Business Forum’, which is representative of the UK’s electrical wholesale distribution industry. The forum, which took place last month at the Glynhill Hotel in Renfrew, presented the results of Select’s survey and highlighted the electrical industry’s message that its members have more concern with doing things properly as opposed to doing them cheaply. Mr McGuiness said that it was a breath of fresh air for under-pressure businesses to continue to insist on quality as their main concern, rather than just cutting costs in all areas, therefore showing that the industry will continue to put customers’ interests first. When deciding on a specific manufacturer, the survey showed that 65% of electricians made decisions based on quality, in comparison to just 19% who based decisions on cost. Another consideration that scored highly on the survey was availability, with 51%, which indicates that the respondents are eager to deliver services efficiently and promptly to their customers, while after sales service similarly scored as an important consideration. In addition, electricians said they are more inclined to purchase a product if it was made in the UK, which indicates their preference for quality goods and support of local manufacturers. Select’s Head of Membership and Communications, Alan Wilson, said at the EDA Forum that the results of this survey make clearly show that qualified electricians are seeking quality products in order to offer customers the best possible service.

Housing transactions could go down by 10% if the UK votes in favour of leaving the European Union, according to Hometrack’s latest opinion. The report suggests that the current level of growth in house prices is just over 10% in the city, in comparison to 6.6% a year ago before the General Election. Transactions have seen a surge recently before the changes to stamp duty, resulting in many cities noting a monthly house price growth spike. For instance Cambridge posted an increase of 15.8%, with the only UK city to buck the rising trend being Aberdeen which posted a 6.1% downturn. Hometrack, however, argues that should a ‘Brexit’ vote be successful at the upcoming EU referendum, we could see a reduction of 5% to 10% in housing transactions, with London experiencing a particularly negative impact. In contrast, by choosing to stay in the EU, Hometrack insists that market confidence would receive a boost. It anticipates that large regional cities like Birmingham, Leeds and Manchester benefiting most, as these are cities with growing demand for housing and the current house price growth rates would likely be maintained. In addition, Hometrack said that in the ten year period prior to 2007, volumes of sales went down four times in London, by up to 15%, thus showing the city’s proneness of being impacted by external factors, particularly following swift price appreciation periods. Hometrack Insight Director, Richard Donnell, said that the housing market’s future will be dictated by whether the UK votes to stay in or leave the EU . Mr Donnell added that their analysis of the housing market’s response to external factors across the last two decades shows that a leave vote may mean a 5% to 10% decrease in housing turnover and the city that would suffer the most would be London.

Consumers in the UK are demanding the increase of their heating system control, improving convenience and comfort, suggests research from the Energy Saving Trust (EST). The study shows that one in five households are without a standard radiator valve or thermostat. As a result, almost half of the UK’s households say that they would welcome intelligent thermostats, with experts claiming that smart heating systems are to unlock a new generation of the heading industry. The latest research into consumer habits by the EST shows that one of the growing trends is that the  growing smart phone business has resulted in an increase in app-based technology. As a result, this has seen the creation of householders demand for heating systems that are controlled by apps on mobile devices, including those that provide more manual controls, such as thermostats, valves and timers. EST Client Relationship Manager, Elaine Berry, said that we are seeing an increasing demand from society for services and products that fit into people’s lifestyles by controlling heating systems with little fuss and maximum convenience and comfort. Ms Berry added that it is crucial that the heating industry is made aware of what consumers are increasingly demanding from their heating systems, with more and more ranges of products on the market. She continued to say that despite coming into a season of warmer weather, now is the prime time to begin planning how to market new heating systems controlled by smart phones to ensure a good take up when the cold weather returns. She also said that the best way of educating consumers about their energy use and ensuring that they have comfortable homes is to make use of the EST research. The most recent UK Pulse study also showed that 25% said their heating systems are inefficient and too old, while 40% of home owners said that in the long run they intend to build in modern heating controls to their systems.

George Osbourne’s new budget has put a rather hefty spanner in the works for anyone looking to invest in a second property for buy-to-let purposes. The new buy-to-let tax makes it a lot harder for landlords and those owning second homes to make profit. The new rules introduced mean anyone buying a second property with the sole purpose of renting it out (it’s not their main residence) will have to pay an extra 3 percent in stamp duty. This is likely to hit investors hard, with research indicating that the average landlord will be losing the equivalent of a year’s income. For example, a buyer of a home worth £400,000 will be taxed £15,000 upfront for their investment; this will make a huge dent in any returns generated, compared to the £3000 they would have previously been taxed. However, there are still ways to invest in property and generate ample profit; any one investing in a second property should aim to cut out the middle man and hence side-step the new charge in one swift move.   Peer-to-peer Companies P2P property companies enable investors to cut out the middle man; in layman’s terms, they are specialised companies which allow investors to supply money upfront for property loans and mortgages hence allowing the mortgagee to avoid the banks and the new tax that goes with them – whilst gaining interest. Supporters of this new method to do buy-to-let say that not only is it a hugely profitable venture for Investors (they get returns of around 5 percent) but they also get to cut out a load of the inevitable yet unnecessary landlord hassle; they will avoid having to argue with difficult tenants or having to deal with changes to property tax. Further benefits include being able to place investments into the newly created flexible ISAs, which essentially means up to £15,240 of a return, flow into investor’s pockets completely tax-free.   Professional Opinions Due to all the recent changes in stamp duty and tax relief, wannabe landlords are facing pretty insurmountable sums; the fact of the matter, is it’s just not economically viable to be a first-time landlord anymore. However, people still want to invest in property, and these specialised companies allow people to continue to profitably do so. Ian Thomas, director and co-founder of one of these peer-to-peer companies, argues that investing in property cuts out all the negatives of being a landlord and provides positive returns. “You don’t have to worry about Stamp Duty, Capital Gains Tax, or gaps in tenancies. And you’ll never get a call from a tenant in the middle of the night about a broken down boiler. “Instead you do get to enjoy a great, consistent return, and can diversify across a range of different properties much more cheaply than if you wanted to build your own traditional property portfolio.”   Potential Issues Borrowers need to ensure that they will be able to repay their loans, and if not, the peer-to-peer platforms need to be able to reimburse investors. All loans are secured against a UK property, meaning that the companies are able to repossess a property if a borrower is unable to keep up repayments. Some experts have expressed caution about investing in property through peer-to-peer sites; they claim it’s extremely risky for investors, as if the peer to peer site goes bankrupt then cash will be lost with no insurance – money isn’t secured by the Financial Services Compensation Scheme. Finally, borrowers who decide to use peer-to-peer often come to this decision due to rejection for bank loans; suggesting they are higher risk and are more likely to default on payments. This is obviously less often the case with the regular buy-to-let mortgages. Danny Cox, chartered financial planner said: “Most people have exposure to residential property through their own home, so firstly investors should be questioning whether they need more of the same asset class. P2P property loans are amongst the higher risk of personal peer to peer lending, since these are, in effect second mortgages and not investing in property at all. Borrowers have gone done this route as they are unable to borrow more via their mortgage themselves. And there is always a good reason why a bank or building society won’t lend more.”   Conclusion In conclusion, all investors can do is tread carefully when it comes to parting with their money, especially in light of the incoming property dip Britain is predicted to encounter. This is likely to put borrowers under financial pressure, therefore the real test for these firms is how they react to the financial downturn.   By Leila Glen, for Savoy Stewart.

Falling gas prices could kill off the idea of hydraulic fracturing in Britain, amid further protests. Recently, Third Energy were given the go ahead to use hydraulic fracking in the North Yorkshire village of Kirby Misperton. The energy company has been producing gas in the region for over 20 years and will use its fields to produce fuel for its electricity generation plant (42MW). Other energy groups are also trying to find gas, such as Ineos (a UK chemical group, privately owned with a $40 billion turnover, as well as Cuadrilla. The UK Government has also come out in support of the idea, with David Cameron in particular advocating the benefits of fracking. This desire for energy independence has recently been supported by the British Geological Survey which estimates that there is a resource in excess of 1,000 trillion cubic feet below Yorkshire and Lancashire, that’s more than 10 times the amount of gas that has ever been produced from the North Sea. Therefore, to recover even a minute fraction of the resource could be hugely beneficial to the country’s energy concerns, although price would be an issue. Estimates of producing shale gas from fields in the UK are well above the prices of spot gas, which is around 30p per therm. Another company, IGas, which had been examining the potential for fracking in old coal seams, has also abandoned the idea due to the cost being too much. However it will, for the moment, continue with shale gas. Meanwhile, the output of US gas is rising year on year, with their storage almost at capacity and exports being sent to the UK. One of these importers in Centrica. Despite this, there are still fracking advocates in the UK who maintain that the hydraulic fracturing process can be profitable but investors are being advised to let market forces kill the idea off for good.

1. Background Property management companies (or PMCs) are frequently used by residential developers as a mechanism to maintain control of the common parts of a building during development and sale, while enabling the developer to step away entirely once the last unit is sold. PMCs can be equally appealing to purchasers, enabling them to take control of decisions affecting the common parts. PMCs are not unique entities. They are simply private limited companies with articles of association tailored to provide that only residents (and, for a limited period, the developer) can own a share. 2. How do they work? On incorporation, the developer will typically own a ‘golden share’ which carries with it all voting rights until such time as the last flat in the property is sold. As the developer controls all shareholder votes, it also controls of the board of the PMC. Each time a flat in the new development is sold, the buyer will acquire a share in the PMC, but (in contrast to the golden share) that share has no voting rights until such time as the last flat is sold. Once the last flat is sold, the voting rights attaching to the golden share cease and pass to the shares owned by the residents. At the same time, the developer will expect to resign its nominated directors from the board and for new directors nominated by the residents to be appointed. 3. Common issues Sounds simple? In practice, however, PMCs cause numerous difficulties, attributable either to poor structuring or poor management. These difficulties can impact on the ability of a flat owner to sell his property, and result in significant legal fees in trying to resolve. So what are these difficulties and how are they best avoided? Get the structuring right One size does not fit all… Don’t be tempted to cut down on legal fees by simply replicating the articles of a PMC you have stumbled across before. While the skeleton structure may be the same, each PMC is unique and has been tailored to the property in question. How many shares… Decide whether shares should be allotted on the basis of one share per unit, or dependent on floor space. Allotment v transfer… We recommend that all shares are allotted to the developer at the outset and subsequently transferred, rather than new shares being issued each time a unit is sold. This minimises the administrative burden on the developer, who can pre-sign all the necessary stock transfer forms and certificates, and does away with the need to file an SH01 with Companies House each time a new share is issued. If there is a funder, the shares may need to be allotted to them whilst the loan is in place Ensure control passes effectively Divesting the developer’s share… To ensure the developer can step out cleanly on the sale of the last unit, we recommend the articles provide that the golden share automatically converts to an ordinary share, and is then transferred to the buyer of the last unit (rather than the golden share simply losing its voting rights but remaining as a moribund interest held in perpetuity by the developer). Changing the board… Developers often have difficulty in convincing residents to join the board when control transfers. To avoid this problem, consider inserting an obligation in the lease agreeing that the lessee will become a director on demand, and back this up by requiring the lessee to deliver a signed but undated AP01. Don’t forget the registered address… When control passes to the residents, the registered office (which to that point is typically the developer’s address) will need to be changed. Don’t be tempted to use the generic property address, when paperwork can often go array. Provide the address of a unit at the property, or perhaps use the property manager’s address. Looking forward Keeping up to date… Make sure that the statutory books are kept up to date, so that the share register is updated and a new share certificate issued each time a flat is sold. Trying to track down former owners to cooperate at a later date can be a real head ache and can be a stumbling block for a sale. Use a big stick… Consider a provision in the articles that disenfranchises a member’s shares while it is in breach under the terms of its lease. Keep everyone informed… Make sure directors of the PMC are aware of their statutory obligations and that notice of all meetings is given to all interested parties. Failing to give notice just because someone has ‘never shown interest before’ is not an excuse. If you have any questions or would like to discuss any of the issues further, please contact Victoria Symons: vsymons@brecher.co.uk.