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A One-Day Briefing

Residential Development

Where to build, what to build, how to fund it – profitably; in both the current and near-term markets

Chair
Judith Jackson QC
Maitland Chambers

Speakers
Andy Blenkinsop
Area Director,
Specialist Finance
Bank of Scotland

Alan Collet
Senior Partner
Allsop & Co

Shamik Dhar
Director
Fathom Financial Consulting

Jack Goulde FRICS

Jeremy Hinds
Head of Planning (Manchester)
FPD Savills

Rosalind Rowe
Director
PricewaterhouseCoopers

Tim Tolcher
Director
Carey Jones

Cleo Van Kempen
Head of Research
Allsop & Co

What will the markets do? Which markets will do what?

  • Current and future prospects - prices and activities
  • The standard measures of the housing market and what they suggest about value sustainability
  • The sustainability of house prices (relative to incomes): - future activity vs past levels
  • Analytic and empirical research models and predictions for where the market will move
  • Have P/E ratios risen far enough to avoid a hardish landing for the housing market?

 

Site identification, land banking and risk sharing with the landowner: the options

  • Finding the sites:
    - Agents
    - Statutory Undertakers
    - Redundant and Neglected Public Sector sites
    - Review of Government Regeneration Land
    - District/ County Councils
  • Which sites are most likely to become more valuable as time passes and the planning regime changes?
  • Landbanking strategies for housebuilders and developers
  • Sharing risk with the landowner: Clawback, Overage, Conditional Contracts and Options to buy. What is achievable?

 

What to do about current planning policies

  • New local development frameworks: Development plan documents, core strategies, Action Plans, Proposals Map, Planning Brief. How can these be used to your advantage?
  • Development Control changes: how much longer will outline permissions endure? How can statements of Community Involvement help to enhance planning applications?
  • Changes to Planning Gain: is the cash for permission application becoming a reality?
  • Key changes to:
    - Housing densities
    - Affordable housing provision requirements
    - Car parking standards
    - Revisions to the sequential test
  • Will Greenfield land become available for housing in the near future?

 

Funding the development

  • Who is lending in the current market? What schemes do they favour? Who are the biggest lenders? Who are the specialist lenders?
  • Common loan to value/ loan to cost ratios available on senior debt funding. Recourse? Non-recourse? What are typical additional costs and fees likely to work out to?What will mezzanine and equity cost for residential development. What sort of step-in-rights will equity funders expect?
  • What do the funders really want to see in your loan application?
  • What a funder expects to see in your development appraisal and why.

 

Design, Procurement and Specifications: giving consumers what they want now

  • ‘Quality design’ and the new residential consumer. What has been selling, what will continue to sell
  • Innovations in build specification: what has worked, what hasn’t
  • Size and what does the consumer expect for their money?
  • Is the consumer ready for open plan living?
  • Recent design innovations that enhance quality yet don’t hurt the bottom line
  • Latest thinking on procurement methods suitable for residential development: Management Contracting, Design and Build, Two Stage Tenders, Traditional Construction Management. Selecting the route to take.
  • Construction case studies: what works, what has sold, what has generated profit

 

Turning commercial into residential – the art of converting tired and obsolete commercial and community properties into trendy city centre homes: real life case studies examined in detail

  • Where is it and what does it look like now?
  • What are the city centre trends and what is the perceived workplace mobility
  • Local transport and infrastructure improvements and revisions - vital to the success of this form of conversion
  • Size and scale of building - is it appropriate, is it saleable, and equally importantly is it fundable?
  • What type of units are really required to encourage young professionals and other key workers back into city centre living - alternative forms of long term rental and home ownership
  • Will the units I produce be able to be mortgageable in purchasers’ hands?

 

Who should you be building for – The Demographics and Market Segments to focus on

  • Who are the key residential consumers, what does each group want/ need:
    - The ‘mature’ middle class
    - The first time buyers
    - The grey market
    - Housing Associations and Registered Social Landlords
    - Student accommodation
    - Key Worker accommodation,
    - Urban villages
    - Buy to Let investors
  • What the demographics, population and age statistics, GDP and income predictors tell us about which groups will be demanding more residential property? Where they will be seeking it and what they will want.

 

Where to build it – Situation, Location, Region

  • Which locations are improving, which are deteriorating. Where can value be found?
  • Geographic and regional house values, which areas look expensive, which look cheap? Where will values rise in the future? Where are development margins highest?
  • What about the inner cities and urban regeneration: are the government’s policies working? What are the implications?
  • Transport nodes and amenity values: where?
  • Flats vs houses. What do the statistics tell us?

 

Tax planning and mitigation for Residential Developers – what still works, what doesn’t.

  • Is the Barker Review’s Development Land Tax a paper tiger or a whirlwind the residential developer will soon reap?
  • Tax issues on site acquisition and disposal
  • SPVs and corporate tax burdens relating to property development
  • Limited Partnerships and Joint Venture Companies: what are the tax advantages of each?
  • REITS/PIFS: What sort of tax regime should we expect?
  • Anti-avoidance legislation and the new disclosure rules: how far will these affect property development?
  • VAT planning
  • The new Stamp Duty Land Tax: are there any schemes left?