Property firms make millions buying and selling on MoD land

MoD fails to ensure windfall profits are returned to taxpayer or development occurs, says opposition. Property companies have made millions of pounds by buying land from the Ministry of Defence and applying for planning permission, before selling on the sites. Sites with space for 55,000 houses have been sold off including Fort George in Scotland, two York barracks and five golf courses.

In several cases, no building occurred before the resale; on other sites, no development at all has occurred years after the original sales. In most cases, the MoD failed to ensure that any of the windfall profits were returned to the taxpayer.

Nia Griffith, the shadow defence secretary, said the transactions were appalling and the MoD should have ensured the developers could not simply sell the land on at a large profit.

“The absurd thing is that there is a mechanism when you dispose of land to claw back some of the profits,” said Griffith. “That is quite standard among local authority sales. It is bizarre that the MoD doesn’t do it.”

The property company IM Land bought part of the former MoD Ensleigh site outside Bath for £17.1m in June 2013. Within less than three years, approximately a third of the site was sold to housing developers for £11.3m.

Further smaller parcels of land have been sold for almost £10m and IM Land, which is owned by the Conservative donor Lord Edmiston, still owns around a third of the site.

Houses on the site are being built by Linden, which is part of Galliford Try, and Bloor Homes, which was founded by the Conservative donor John Bloor. The average house price rose by 23% between 2013 and 2016, according to Land Registry data.

A spokesperson for IM Group said: “MoD Ensleigh was acquired by IM Group following a full marketing campaign conducted by the MoD and their appointed advisors. This marketing campaign determined the open market value achievable for the site.”

In June 2013, RAF Brampton, just outside Huntingdon in Cambridgeshire, was sold to a Jersey-based company called JCAM Commercial Real Estate Property for £10.1m. Over the past two years, the land has been sold off in parcels for more than £28m. Part of the site was sold to the Metropolitan Housing Trust housing association for £14.5m.

Tim Leslie, the founder of JCAM, said his company had demolished buildings on the site and spent money on roads, as well as making payments of £7.3m through the community infrastructure levy and to the council.

“Buying land without planning permission is a risky business and, when successful, the returns should reflect that,” said Leslie. “Our gain will be in line with what we expect to make when we buy land and then achieve planning. Clearly, if the MoD had achieved a planning consent and then sold the land, they would have achieved a significantly higher price.”

Another former MoD site in Bath was bought by the property developer Square Bay for £12.5m in March 2013. It was sold on in March 2016 for £29m.

Square Bay was also involved in buying Fremington training camp in north Devon, which was sold in December 2010 for £3.4m.

The members of the partnership set up to buy the training camp, Fremington Developments LLP, included companies registered in the British Virgin Islands, Switzerland and Hong Kong.

In February 2014, three years and two months after the land was bought from the MoD, it was sold for £10.1m to Bovis Homes and a division of Barratt Homes.

Markham Hanson, a partner in Fremington Developments and the managing director of Square Bay, said the company had spent more than £1m to achieve planning permission on the Fremington site.

Hanson said the land had been bought on the open market, following a marketing campaign by the MoD. Hanson said: “We acquired the site without planning consent and with a high degree of risk attached due to the fact that the site had some challenging access issues that needed to be overcome, and a slow development market in the UK at the time.”

The sales come after the controversial purchase of thousands of MoD houses by Annington Homes, a company owned by a Guernsey-based fund managed by the private equity tycoon Guy Hands.

A MoD spokesperson said: “We look to achieve the greatest return for the taxpayer when selling land and have made over half a billion pounds in sales since 2010. Every penny is reinvested back into our armed forces.

“Applying for planning permission before selling land does not always provide the best value for the taxpayer. It can delay the sale, is not always granted and can restrict the freedom of potential buyers to develop the site according to their needs.”

London leads new global green finance rankings

London’s reputation as a leading financial centre has now extended to include the field of sustainability. A new Global Green Finance Index (GGFI) has found the city as the top destination for green finance, leading in both the categories of ‘penetration’ and ‘quality’.

The Index, launched by think tanks Z/Yen and Finance Watch, was compiled using survey data from finance professionals and over 100 relevant instrumental factors. These included human capital, infrastructure, legal, and policy factors.

It found that Western Europe scored the highest, featuring nine of the top 10 centres for the quality of its green finance offering, and seven of the top 10 for penetration.

Amsterdam, Luxembourg, and Copenhagen performed highly; Chinese cities were also strongly represented with Shenzhen, Guangzhou, Shanghai and Beijing all rated for green finance penetration.

Paris scored the highest for the centre most cited to become more significant in green finance over the next two to three years, followed by Frankfurt and New York.

The survey data provided 1,790 rating from 337 experts over a two month period from December 2017-February 2018. The survey will continue to run online and sampled every six months in future editions of the index.

Respondents were most interested in green bonds and renewable energy as areas of investment, followed by sustainable infrastructure investment and energy efficiency. However, divesting from fossil fuels, carbon disclosure and green insurance showed the least amount of interest.

In addition, the two main drivers behind sustainable finance were seen to be the enabling policy framework in place, taking in tax incentives, mandatory disclosure, and technological change; secondly, demand from investors, climate change, public awareness, and infrastructure investment.

Dr. Simon Zadek, Co-Director, UN Environment Inquiry into the Design of a Sustainable Financial System commented: “Ratings and indexes are important instruments to enable effective communication of relative and absolute progress, as well as encouraging a race to the top, and a healthy debate of what constitutes success and how it can best be measured. In this spirit, Finance Watch and Z/Yen have taken us all to the next level in providing us with the first globally applicable index of developments in greening the world’s financial centres”.

Professor Michael Mainelli, Executive Chairman of Z/Yen, added: “The core of the GGFI is a perception survey which observes and promotes change where it matters most – in people’s minds. The more we can get people talking about a sustainable transition, the quicker it will happen. The high level of interest in GGFI 1 is a step in that direction.”

UK commercial property capital and rental valuation sees growth in 2018

The UK saw modest rises in commercial property valuation growth, with total returns up by 0.6% in February while capital value growth and rental value growth were up by 0.2% apiece. The London office space saw total returns in line with countrywide totals, while industrials pushed up the average with a 1.2% climb, and retail property saw modest growth of 0.4%. 

The UK property sector continues to be in a period of acute, but increasingly stable, uncertainty – in light of Brexit negotiations. The impact of which, remains as yet, uncertain – although risks, such as the warning from the Bank of England regarding employment in the capital, remain on the horizon.

However, the recent analysis of leases in the commercial property sector in London showed a slight decrease in activity, including a 9% drop in 2017 from the previous year to a total around 12.6 million square feet of space under construction – the segment continues to see strong performances for planned refurbishments against new builds. The professional services sector is one of the key clients in the segment’s demand for new space.

The latest figures for changes in commercial property valuations, supplied by CBRE a segment-specific consultancy firm, paints a relatively robust picture – even in the late grip of winter. Across the UK, commercial property capital values increased by 0.2% over February, while rental values were also up by 0.2% in the same period – total returns were meanwhile up by 0.6%.

 

CBRE UK Monthly Index Snapshot - February 2018

 

The office segment was relatively resilient, with central London office total returns at par with the national average of 0.6%, while capital value growth was slightly higher at 0.3%, and rental values were slightly lower at 0.1%.

However, the industrial segment was the strongest performer, with total returns at 1.2%, while capital value growth came in at a more modest 0.8% increase for the period – the South East saw increases of 1%, bolstering the rest of the UK growth of 0.4%. Rental values saw an increase of 0.4% for February in the segment.

The retail sector has been impacted by considerable uncertainties, including hard hits to mid-market food and wider impacts of spending power from consumers. Overall rental capital values decreased by -0.1% in February, partly from stronger falls in the UK excluding London of -0.2% for high street shops and -0.8% for shopping centres. Rental values, meanwhile, saw small declines.

The typical steady start to the year for UK commercial property continued into February with capital values increasing 0.2% on average over the month, according to the latest CBRE Monthly Index. Rental value growth was 0.2% at the All Property level in February.

Commenting on the recent figures, Miles Gibson, Head of UK Research at CBRE, said, “UK commercial property continued its traditionally steady start to the year in February. Results for 2018 so far look solid with the Industrial sector lifting overall performance figures.”

The UK’s wealthiest properties have lost millions, thanks to tax changes and Brexit uncertainty

One of the UK’s wealthiest homeowners has just seen an eye-watering £13m fallen off the value of their property, all within a year! With Brexit uncertainty and recent tax changes shows vast fall in the value of homes – property rich list, no more.

According to Zoopla’s new research, Kensington Palace Gardens in west London tops the list of the most expensive streets in Britain, with an average property value of £35.7m – although that is £2.5m less than this time last year when the figure was £38.3m. In 2015 a typical property on the street was worth £42.6m – which reflects a near-£7m decline in just over two years.

However, the ultra-wealthy owners of homes in the Boltons, two miles south, have had a much tougher time… Zoopla stated the average value of a property on the street in South Kensington had plummeted from £33.3m this time last year to just under £20m now.

Other roads in the area, such as Manresa Road in Chelsea, had smaller falls, and a few increased in value over the year.

Other surveys have also reported sharp falls in some of the capital’s most expensive boroughs. Last month the property site Rightmove said the average asking price of a newly marketed home in Kensington and Chelsea fell by £308,000 between August and September.

Rightmove described the slump in the high-end central London market as a “readjustment”, and quoted an estate agent saying that, since the introduction of the 3% surcharge on stamp duty paid by investors, along with the uncertainty over how Brexit would pan out, “investors have been standing on the sidelines.”

Zoopla stated there were now 14,417 streets in Britain where the average property value is £1m or more – up from 12,418 in 2016. Of those, 5,899 are in Greater London. The Yorkshire and the Humber region has 77 £1m streets, north-east England has 45 and Wales has 11.

In line with this trend, 19 of the 20 towns with the highest number of £1m-plus streets are in southern England. Guildford in Surrey takes the top spot with 204, with Reading in Berkshire in second place with 187.

Brexit; Over 10,000 finance jobs cut from UK shores, new research suggests

It’s estimated that 10,000 finance jobs will move out of the country, according to the new Reuters survey.

The survey predicted that job losses are more likely to happen in the long-term, as companies might not make big changes instantly as they wait for the decision of the Brexit discussions.

“If it’s going to happen it won’t be in one big bang”, said a senior executive at one of Europe’s largest banks, which took part in the survey. He also added, “there will be a slow drain of jobs from London over a number of years.”

In total, around 1.1 million people work in the financial sector in the UK, which suggests that initial job losses after Brexit will be at the lower end of previous estimates which have estimated 30,000 to 75,000.

Despite uncertainty over Brexit, London has held onto the top spot as the world’s leading financial centre. In a ranking that surveys industry professionals, extending its lead over both New York and Singapore, despite ongoing uncertainty about the consequences of Brexit. However, political uncertainty from Brexit and the US election has had an “enormous impact” on the state of affairs, as London gain the title ‘Worlds’ Top Financial City’.

London named the ‘World’s Top Financial Centre.’

London has held onto the top spot as the world’s leading financial centre. In a ranking that surveys industry professionals, extending its lead over both New York and Singapore, despite ongoing uncertainty about the consequences of Brexit. However, political uncertainty from Brexit and the US election has had an “enormous impact” on the state of affairs, as London gain the title ‘World’s Top Financial City’.

Global Head Of Investment Banking, based in London quoted; “The British Crown Dependencies are seen as a safe haven from the turmoil in UK and EU.

London has been a leading international financial centre since the 19th century. For much of this time, it has been a major centre of lending and investment around the world, and during the late 20th century played an important role in the development of new financial products such as the Eurobond market in the 1960s and derivatives in the 1990s.

Today 2017 London has exploded the financial market and retained the crown as the world’s top financial centre. With the UK’s prime minister is set to trigger Article 50 on Wednesday, and start Brexit talks, much is still yet to be determined on Britain’s future relationship with the EU.

Mark Yeandle, associate director of the Z/Yen Group and the author of the GFCI, said: “We live in uncertain times and financial professionals hate uncertainty. Brexit has caused uncertainty in Europe and the election of Donald Trump has caused uncertainty globally.

It now feels everyone wants to get in with London’s top title… According to a New York based, Venture Capitalist said, “We now have an office in LA, but we are also going into Europe now – London is the place to be for FinTech regardless of what they say about Brexit.

An Investment Banker, based in Tokyo, added, “If you are a global bank you have to be in all of the top five centres.

Follow These Steps To Become A (Savvy) Property Developer:

Thanks to television series such as, ‘Property Ladder’, ‘Grand Designs’ and ‘Homes Under the Hammer’, it seems like being a property developer is an easy way to make a quick buck or two. However, this isn’t really the case, as there’s a lot more involved than just buying, quickly renovating then selling it at a higher price.

There are in fact a few key skills that a good property developer needs to identify with, in order to boost his or hers portfolio:

Buy To Sell Vs. Buy To Let – Remember there are two options when operating as a property developer, whether you rent the property out to tenants or build, renovate then sell.

The Buy To Sell option can provide you with large returns on your investment in a short-term, but keep in mind your profits can just be easily wiped due to unexpected problems with the renovation or a dip in the housing market. Ideally, you’d need a contingency fund, just in case. Buy To Let often allows you to generate a regular monthly income on your long-term investment – also mortgages for Buy To Let are accessible, providing that you can put a 25% deposit down.

Buying a property at the right time, sussing out the marketplace to find a bargain, whilst understanding its demands and the area trends are pretty much key to success as a property developer.

Remember Location, Location, Location (not the TV show) – Sometimes it’s more profitable to look for properties outside an unknown or perhaps an “up-and-coming” area… Hoping to take advantage of the future regenerated areas and the chances of stadiums, landmarks and BIG businesses being constructed; areas such as Highbury, Shoreditch, Wembley, and Tottenham.

Maximise Your Profit Margins – All smart property developers have a 30% contingency plan (if things go arise), also they tend to aim to work towards a 30% profit margin. The importance of financial control is key, as additional costs can wrack up when development starts.

Bear in mind that it’s not only the property cost that you’re paying, as insurance, builders, materials, stamp duty, solicitor fees and tax (if this falls into the higher tax bracket, it will be as high as 40%. Buy To Sell incur capital gains tax of 18% – 28%, so make sure you comprehend your margins and what you can afford.

Essential Fittings & Kerb Appeal – Keep your costs down, by spending the right amount on fittings, decor, and appliances. Tailor the costs to the asking price and your demographic. Thus meaning no en-suites if your property is for student private accommodation. Be logical in your thought process.

Choosing The Right Property For You – Beginners tend to focus upon what a property can be sold for and its profit, but the true art of property developing is finding something at the right price to you. So, buy property at good value for your money as this allows you to be on track to earn a profit of 30%. Look at options such as purchasing at an auction and or probate – often properties are discounted to 20% off.

Tips for property hunting in London

Trying to find a new home is stressful in itself, as well as being complicated and time-consuming, however finding property in London is a completely different kettle of fish.

 

Bridging Loan estate agent, Tim Mcgee said, “It’s notorious that London’s one of the most expensive places to live in the world…[the majority of] first-time buyers find themselves priced out of the market, and having to look for a cheaper alternative [such as renting or moving away from London boroughs.] So, if you’re one of the fortunate ones with a big budget in our glorious capital then here are a few tips you may want to keep in mind:

We’ve already mentioned property prices, but it really is a big contender on our list, especially in the most sought after the cosmopolitan city that is London. They’re countless things to do and see in the capital, so no wonder it comes with a hefty price tag to live there. The list of positives about living in London is endless, but consider whether you’re really getting value for your money. A London estate agent once stated, “A small bedsit in a central location can cost as much as a three-bed semi in the suburbs, so think about how good your standard of living would be, well before committing to the idea.”

Always consider the fees to pay out – this isn’t as such specific to finding property in London, as you’ll always have to pay fees if you’re buying property through an agent, wherever you’re in the UK.

Haggle. No, really it’s okay to bargain (reasonably). So let’s say you’ve found your perfect home/ property, but you can’t really afford the price-tag that comes with it. There’s absolutely no harm in bartering the price down – a lower offer is even expected from the seller, plus you can find some real bargains when shopping around; this applies to renting as well! If you don’t ask, you won’t get!

We all know that London is continuously growing and evolving. Regeneration projects have taken over the capital, meaning that some of the areas that savvy property hunters may have once not wanted to touch with an extended bargepole are fastly becoming a very desirable to inhabit. So don’t rule out areas like Elephant and Castle, Stratford and Kilburn, as these areas and others alike are on the up! Keep your mind fresh and your eyes peeled.

Living in the capital may seem an astronomical expense and ask of you, but consider cutting down on other costs – do the maths. According to the Financial Times, “The average person commuting from Buckinghamshire into London, will pay almost £550 a month in rail fares, so it could even out nicely if you’re not spending so much time and money on transport.”

 

Doing your own extensive research before making any massive property investment is essential, before making any such commitment. The property market in London still continues to soar, but it is slightly dropping in recent years. So it is a good time to start thinking about moving to one of the best cities in the world. Plus there’s no harm in looking…