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Brexit: A threat to the UK commercial property market?

As the Brexit steamroller continues unabated in Parliament, we stop to consider whether Brexit is a threat to the commercial property market in the UK.

First things first, this is of course, an opinion piece rather than a journalistic study into the market. However, as a firm we are pretty united in our views that Brexit, as a whole, is incredibly damaging to the country. Not only in terms of the economy, but also our standing as an international leader, our ability to access and wield ‘soft power’ and our influence across the world. The entire Brexit process has weakened the UK, splitting the population down the middle into crude caricatures of ‘Remainer’ or ‘Brexiteer’.

The Brexit campaign

The Brexit campaign was designed to appeal to the nation’s worst selves, revealing racism, nationalism, a distrust and deep dislike of ‘the other’; and was at its base level a shameful, embarrassing call to arms by a breed of pro-Empire, pro-England, anti-immigrant political train of thought that most of us hoped and believed had died with Enoch Powell.

The Remain campaign on the other hand simply failed to grab the mettle and sing the extensive virtues of EU membership loudly enough. Whether through arrogance or simple lack of leadership the Remain campaign was, at best, lukewarm in its delivery. Of course, the extent to which the Brexit campaign was lawfully delivered is questionable but nonetheless, the Brexiteers won on the day, kickstarting a juggernaut that continues to run.

But back to the commercial property market in the UK. Markets are, of course, based upon confidence by and large, and the property market can be vulnerable to both excessive confidence (hello property bubbles) and dramatic loss of confidence (hello financial crash of 2008). A simplistic view perhaps, with other factors of course having their own effect, it is nonetheless probably safe to say that investors in property across the UK are watching the Brexit process closely.

So what will Brexit mean for the market?

To a large extent, it will depend upon the type of exit from the EU delivered. A no-deal Brexit would be likely to create a real shock to the market and the economy as a whole, on both the announcement of no-deal and then probably again on the exit date.

A Brexit deal delivering increased certainty would be preferential of course, but in the current climate, looks less likely than either a no-deal or Remain scenario. There is currently little common ground amongst both Remainers and Brexiteers for any deal agreed between the Prime Minister and EU.

If a general election and / or referendum is triggered, it seems likely that the options will boil down to no-deal or remain. Whilst of course our preference would be to remain, the no-deal option becomes considerably more likely.

For investors, confidence is inherently linked to certainty, and investors certainly dislike uncertainty. Although commercial property is often seen as a ‘safe’ investment, it is still at the mercy of the market. In the worst case of a no-deal Brexit, we could see a sharp drop in investment into the market, a reduction in moves and investments and falling rents. At best, we may see a pause in activity.

Whilst we do not offer investment advice, we foresee a potentially difficult road for the commercial property market across the UK. Businesses reviewing their office space, and investors their portfolios will need to keep a close eye on the Brexit process, and ensure they have access to strategic advice. Interesting times follow and we will be following developments in Whitehall closely.

Commercial Property: Top Tips for a Stress-Free Conveyance

Buying or selling property can be nerve-wracking – and commercial property conveyances are no different to residential. How do you know that the firm or individual you select are good at what they do? Will the conveyance be long-winded, complicated or hard work? Our brief tips will point you in the right direction when it comes to managing a stress-free commercial property conveyance.

Whether you’re an experienced property investor or fledgling developer, and regardless of whether you’re dealing with a multi-titled commercial property, or a corner shop unit, you’ll need a good commercial property conveyancer on hand. Lots of law firms offer a range of different services, and if you decide to engage one with a wide range of specialisms – ensure they can help you with your particular transaction. Ask for examples of their past work if you are unsure.

2. Be upfront with any complicating matters or potential issues
Unfortunately property transactions can be complicated. If you know of any potential blockers such as flood risk or issues with the title (the property sits on unregistered land or there’s a boundary dispute for example), be upfront at the outset – this will allow your chosen solicitor to give a realistic quote, as well as advice on whether the issues could slow down the transaction or derail the deal.

3. Have your house in order
Literally! Before you instruct a commercial property solicitor to start work on your sale or purchase, try to collate as much of the relevant documentation as you can, and give it to them at the outset. If you are reliant on mortgage finance, bridging finance or any other external funding, and are organising this yourself – have the paperwork ready to hand over. The same goes for any pre-existing insurances, options and any other information relevant to the transaction.

4. Be realistic
Unfortunately property transactions can be long-winded and ultimately frustrating. This can be for a number of reasons – a long chain of buyers and sellers, problems with finance; your own or the sellers’, title problems or even a missing piece of paper. All of these things can cause exchange/completion dates to be missed, or even cause transactions to fail at the last moment. One way to combat stress is to try to avoid ‘needing’ to complete by a particular date – giving a guideline period is sensible, but sometimes unavoidable issues can threaten the most concrete of completion dates.

We hope you’ve found this information helpful. If you are involved in commercial property, and need advice or practical guidance on any type of commercial property transaction, please do not hesitate to contact Gisella for an informal chat on: 0161 464 9542. Alternatively, drop her a line at: gisella.alberici@ratiolaw.co.uk

The RealBuzz Group appoints Ratio Law…

The RealBuzz Group has appointed Ratio Law!

Exciting news here at Ratio Law, where we are excited to announce our appointment by The RealBuzz Group. We will be responsible for managing property transactions for the UK retail arm of the industry leading tech-retail provider in the active endurance sector. The appointment comes as the business seeks to grow its sports and leisure retail offer through bricks and mortar shops across the UK, aiming to capitalise upon the brand’s strong web and social media following.

Our retail property expert, and lead partner for The RealBuzz Joanna Norris commented: “We are very excited to announce our work with RealBuzz, a company that leads the way as a new type of retailer; focussed entirely upon what the customer wants, and providing a seamless on- and off-line service that meets and exceeds expectations.

“We will be supporting the business as it expands its reach throughout the region and further afield, and look forward to continuing to provide outstanding support and assistance in this respect.”

Mark Brownhill, Head of Retail Operation at The RealBuzz Group added: “We needed a law firm that could help us to quickly and efficiently carry out the legals required for us to enter new destinations – we aim to open 45 stores by the end of 2019, and 70 by the end of 2021. With its focus upon providing a partner-led, cost-conscious service, Ratio Law was our natural choice. We look forward to our continued partnership as we grow our retail network across the UK.”

If you would like to know more about our retail property work, please give us a call on: 0161 464 9540 or speak directly to Joanna on: 0161 464 9543 or via email: joanna.norris@ratiolaw.co.uk

How to avoid fraud in commercial property conveyances

Property fraud in commercial property conveyances, sometimes called ‘Friday afternoon fraud’ is on the increase. In this blog, we look at how these frauds are perpetrated and the simple actions that can reduce the risk of falling victim to them.

A recent survey by property search company TM Group revealed that 80% of conveyancing solicitors are “definitely more worried about security and risk of fraud in 2016, compared to 2015. Further, Action Fraud – the UK’s national fraud and cyber crime reporting centre, reported a combined loss as a result of property fraud of £2,665,819 between November 2015 and January 2016 alone. 2017’s figures are likely to be higher again.

What is property fraud?
There are two typical patterns of fraud relating to property. The first is where financial information is recovered from one of the parties to the transaction, and legitimate funds diverted into fraudsters’ accounts. The second is where a ‘seller’ with no right to sell (sometimes a tenant) fraudulently receives profits of sale, leaving an innocent buyer without the property they have ‘purchased’ but also often with the liability to meet mortgage payments.
The good news is that there are simple steps that can be taken to prevent commercial property conveyancing fraud. The following tips are easy to implement and free.

Tips for preventing commercial property fraud
1. Carry out identity checks
Before transferring any monies or providing sensitive or valuable information, check the ID of the person you are dealing with, and be sure that you are completely satisfied they are who they claim to be.

2. Avoid using email to confirm bank details
Try to avoid swapping financial details via email. Emails can be hacked and there have been cases of criminals creating fake message, replacing legitimate bank details and diverting large sums to their own accounts. If you need to provide or receive details this way, always confirm their accuracy before completing a transaction.

2. Transfer a nominal sum first
Before transferring significant sums, send a nominal amount first, say £1 and confirm receipt before sending the balance.

3. Make use of fraud-fighting tools
The Land Registry’s free Property Alert service issues email alerts when certain searches or applications are made against a property. Where these could signal fraudulent activity owners can take immediate preventative steps to protect their assets.

Revenge is not so sweet – new law bans ‘revenge evictions’

By Rachel Haymes, head of conveyancing at Ratio Law

Over the last year or so, there has been growing pressure on the government to protect tenants in rented properties from so-called ‘revenge evictions’. And now, after much discussion and lobbying, a law has been passed by the House of Lords to put a stop to them.

But what was the problem in the first place? In November 2014, Citizens Advice revealed one in three private rented properties in England failed to meet the government’s decent home minimum standard. It reported a 14 per cent increase in people asking for help with repairs and maintenance problems between July and September 2014, compared to the same period for the previous year.

There have been a number of cases identified by Citizens Advice where renters who had complained about repairs, damage, damp and other issues found themselves facing eviction for no apparent reason. In fact, the charity’s Advice Trends report revealed a 15 per cent increase in the number of cases where people were harassed or illegally evicted by landlords.

According to the homeless charity Shelter, in 2014 200,000 people faced eviction because they had asked their landlord to fix a problem in their home. The charity campaigned heavily to fight revenge evictions, calling on people to sign a petition to demand better rights for renters.

The worry from some campaigners was that rogue landlords may take advantage of a ‘loop hole’ in the law. Previously, Section 21 of the Housing Act 1988 enabled landlords to apply for a court order requiring tenants to vacate, without providing specific reasons. Now, under the new law, which was passed as part of the Deregulation Bill, it will no longer be possible to evict tenants by relying upon the a Section 21 notice procedure following a complaint about the condition of their home. The courts will now strike out any application to evict in such cases.

For the majority of landlords who look after their properties and tenants, this change will be nothing to worry about. To help protect themselves, landlords should clearly outline how they go about repairs and maintenance in their properties in their contracts and make sure this is pointed out to their tenants on signing the paper work. It’s also important to keep a record of any problems reported by tenants, along with how these were resolved.

If you are a landlord and you have any concerns about how the law affects you, contact Ratio Law.

Buy-to-let: An easy money-maker?

By Rachel Haymes, head of conveyancing at Ratio Law

Since 6 April 2015, people aged 55 and over have been able to access as much of their savings from their defined contributions pensions as they want. The new pension freedom reforms mean people can now take a lump sum payment and there are estimates that more than one in ten intends on cashing in their entire pension pot, with 16 per cent planning on reinvesting the cash into property.

Property may seem like a safe investment and an easy way to make money, but there are a number of points to consider. Firstly, it’s been suggested that many people fail to think about the costs associated with renting out properties. A recent study estimates that when you add up all the costs such as maintenance and repairs, marketing, mortgage interest and letting agent fees, you’re looking at an average of £8,359 a year – a figure which will make a serious dent in most buy-to-let landlords’ profits.

And the financial considerations don’t stop there. There are significant tax and financial consequences for people cashing in their pensions to become a buy-to-let landlord and you should also consider taking financial advice if you will need amortgage to fund the purchase. There have been reports of some mortgage lenders offering anyone up to the age of 70 a 35-year-old loan – meaning they wouldn’t pay it off until they were 105-years-old!

Secondly, landlords have a lot of legal responsibilities – and these are changing all the time. Adhering to the Energy Act 2011, ensuring properties meet new safety legislation and making sure you treat tenants fairly and legally [insert link to revenge evictions blog] are just some of the points landlords need to consider.

Despite the potential drawbacks, the life of an ‘amateur’ landlord is appealing to many. In July last year, the National Landlords Association released figures which showed part-time landlords made up more than 70 per cent of the sector – its highest ever level.

Like with any business venture and investment, if you research the market well, understand your legal obligations, appreciate you will have to invest time and money in making it a success and have professional help at hand to provide reliable and trustworthy advice, then it can be a profitable venture. But remember – house prices can fall and interest rates can rise, so investing in buy-to-let is never a completely safe bet.

If you’re considering becoming a buy-to-let landlord and want some advice, contact Ratio Law.

What makes a property spot hot?

By Joanna Norris, partner at Ratio Law

Recently, Lloyds released research which revealed the UK’s new property hotspots. Daventry, Corby, Margate and Slough all made the top ten list, which was compiled by comparing the percentage increase in property sales between January and October 2014.

The league of locations has attracted a lot of media attention, with journalists describing them as “unlikely property hotspots” and warning people who have visited the towns to “prepare for a shock”.

But regardless of how desirable the public view these places, what actually helps a property spot become hot and how can people look out for the next up and coming area?

Well connected: A good transport network is important, not only to help people get around their local area but also to connect them to other major towns and cities. Look out for locations where transport improvements are planned, as properties in these areas often benefit as a result. Manchester, for example, has invested considerably in improving and expanding the Metrolink network. The new lines have helped to boost property prices, with reports suggesting that living near a Metrolink station could add as much as £8,000 to a property.
A job lot: If there are plans to open a new business park, hospital, factory or other establishment that will create a number of jobs, this could be an indication that an area is going to grow in popularity. Not only will the job prospects attract more people to the area, but an increase in residents will naturally lead to an increase in amenities.
Food for thought: According to some property experts, areas with a growing number of independent restaurants, coffee shops and delicatessens are often up and coming. Successful retail and leisure businesses like these suggest that residents have a good level of disposable income.
Go further afield: Online estate agent Rightmove points out that people who are priced out of property spots which have become too hot often want to stay as near to these areas as possible. This results in a ‘ripple effect’, so it can often be a good idea to look at houses and flats on the outskirts of popular locations.

Be warned though, while some areas show the perfect signs of becoming a property hotspot, house and flat prices can fall as well as rise. Are you an estate agent or property developer? What factors do you look out for when identifying new up and coming areas?

Happy Birthday to us!

By Gisella Alberici

We’ve been celebrating in the office this January as Ratio Law has turned five!

It feels like only yesterday when myself, Joanna Norris and Stuart Stones started talking about setting up the firm. We all wanted to offer a genuinely different type of legal service to our clients; we wanted to be able to deliver first-rate legal advice and business support on a one-to-one basis. By working in this way, we believed we’d be able to make a real impact on our clients’ businesses by becoming an extension of their team and delivering a truly bespoke service.

This ethos has been integral to how we run our business and key to our success over the last five years. We’re committed to staying true to our roots and will continue to work in this way as we move the firm forward over the coming years.

In 2013, we moved into our new office in Hanover House in Manchester city centre. A couple of years in and it definitely feels like home. Looking around the office, it’s hard to believe we now have a team of 9 people – a number that is sure to increase this year as we look to expand further into our areas of specialisms, especially property finance.

Starting and growing any new business presents challenges, but thanks to our fantastic team and clients we’ve been able to build a law firm which we are truly proud of. We’d like to thank everyone for all their support over the last five years and raise a toast to the next five years and beyond.

Autumn Statement 2014: Stamping out the UK’s property problems?

By Joanna Norris, partner at Ratio Law

One of the most talked about points from last week’s Autumn Statement is the reform of residential property stamp duty, which will see anyone purchasing a property worth less than £937,500 paying less tax, with a corresponding rise for those above that figure. George Osborne said the changes, which came into effect at midnight on 4 December, would cut the tax for 98 per cent of homebuyers.

Following the announcement last Wednesday, a number of estate agents and solicitors saw a flurry of activity – especially in London – as people hoping to purchase higher priced properties rushed to exchange before the strike of midnight.

Some are criticising the stamp duty reform for targeting families in London and the South East, and there are worries from some that it will lead to average house prices increasing – just as they were beginning to level out again.

Ultimately, we will see a boost of activity in the property market. As well as being good news for estate agents, the likes of DIY retailers, furniture manufacturers and retailers and building and repair contractors should all benefit too.

But the one issue the stamp duty reform doesn’t address is the fact there remains a huge housing shortage in the UK. Although the Autumn Statement revealed a new garden city will be built in Bicester and Chief Secretary to the Treasury Danny Alexander made an additional announcement that the state had “radical” plans to build 300,000 new houses a year, it will be interesting to see what the next 12 months hold for the sector.

Housing is on the top of all of the parties’ agendas, as we looked at in one of our previous blogs, but it all very much comes down to who will win the general election in May – and whether the winning party stays true to its promises.

What do you think about the changes to stamp duty – should it be welcome news or will it simply push up property prices for your average house buyer?

The Politics of Housing: Labour, Conservative and Liberal Democrats

By Joanna Norris, Partner at Ratio Law

Housing is a hot topic; there aren’t enough affordable homes, it’s getting harder to get a mortgage and wannabe first-time buyers are living with their parents for longer. Unsurprisingly, housing was top of the agenda for all of the main parties during their recent conferences – the final ones before the general election next year. As Labour, Conservative and Liberal Democrats go head-to-head, where does each party stand on housing and what will success for either in the general election mean for the industry?

More new homes

Labour leader Ed Miliband repeated his promise from last year to increase house building rates to 200,000 a year by 2020. A review was set up in 2013 to see how this target could be reached, however we’re yet to see evidence of the review or details on how Labour would achieve this goal.

In theory, if Labour could achieve this it would not only be great for house hunters, but the economy as a whole. A sudden increased demand for materials, combined with increased construction and greater supply to market would provide more jobs, greater tax returns and hopefully kickstart a greater trend in the right direction. However, as many of the smaller players in the sector are still struggling to find their feet again following the recession, support would be required to enable them take advantage of these opportunities. Ultimately, this means giving them access to finance. With the banks more cautious over lending though, it’s unclear where this would come from.

As part of the wider plan to create 300,000 homes a year, the Lib Dems announced it would build more social housing as well as five new garden cities, each with 50,000 new homes. The focus was on making housing accessible to all, not just those who are already on the property ladder. Treasury secretary Danny Alexander also suggested that central government should be given the power to build new homes, which would apply to both social housing and the private market. In terms of financing new housing, the Lib Dems promised to set up a housing investment bank to make it more straightforward to allocate public funds and encourage private backing to help with developments.

First-time buyers

Conservative leader David Cameron also pledged to build new homes; specifically 100,000 new starter homes that would be offered at a discount of 20% to first-time buyers under the age of 40.

With first-time buyers in mind, Labour promised to double the number of people getting on to the property ladder – although failed to go into the details of how it would do this. In July, 30,000 first-time buyer obtained mortgages, and to help 60,000 first-time buyers – especially when it is becoming increasingly difficult to get a mortgage and interest rates are likely to increase – does seem quite a stretch.

Rich and poor

Labour announced that homes worth more than £2million would be liable for an annual charge if it came into government. Dubbed the ‘mansion tax’, it is thought this would raise £1.2billion, which would go towards the NHS. A lot of people have criticised the scheme, arguing it would penalise those who live in areas like London and the South East where property prices can be considerably higher than other parts of the country.

Instead of boosting revenues by taxing ‘the rich’, the Conservatives would save money by reducing financial support to ‘the poor’. If Cameron was successful in the general election, he said he would freeze working-age benefits until 2017, cut the benefit cap from £26,000 to £23,000, and scrap benefits for 18 to 21-year-olds.

While the country does need to simultaneously make savings and boost revenue, both parties’ responses to how to achieve this are bound to divide people.

Building our future

While their pledges are different, the parties are at least in agreement that we need more homes and more support for first-time buyers. However, there is a distinct lack of detail from all sides in terms of how exactly they would achieve their goals.

While low interest rates have helped to kick start the economy recently, they won’t stay down forever. When rates begin to rise, it will be even more important to make sure there is financial support and incentives available to drive the housing market – and the wider economy – further.

Whoever comes into power, with debts high and available funds stretched, there is only a limit to how much the government can do. Private investment will therefore be even more important and we need to make sure that we encourage investors by making the long-term returns on such investments attractive and secure.

What do you think of Labour’s, the Conservative’s and the Liberal Democrat’s housing policies? Is one stronger than the other, or do you think they’ve all got it wrong?