Housing supply in the new world: developing for profit Working in - PowerPoint PPT Presentation

Housing supply in the new world: developing for profit Working in partnership with #CroftonsDevSem HOUSING & REGENERATION I COMMERCIAL REAL ESTATE I CONVEYANCING

Today’s speakers Julie Loggenberg Partner, Head of Property Jo Savage Head of Governance and Regulatory Housing & Regeneration I Commercial Real Estate I Conveyancing I Charities

Developing for profit: costs and opportunities

Profit for purpose • Non-primary purpose activity • Not developing for affordable rent • Outright sale and PRS • Mixed use and commercial • Competing with ‘spec builders’ • Change and challenge the mindset • Developing the skills • Costs Housing & Regeneration I Commercial Real Estate I Conveyancing I Charities

More profit to fund your core activities Housing & Regeneration I Commercial Real Estate I Conveyancing I Charities

Costs • Land ownership • S106 liability • Abnormals • Funding • Procurement • SDLT • Consultants • Marketing Housing & Regeneration I Commercial Real Estate I Conveyancing I Charities

Opportunities • De-regulation & the freedom to do more? • A level playing field • Government initiatives • Better use of land holdings • Increase profile • Growth • Pooling resources and services • Sector pulling together Housing & Regeneration I Commercial Real Estate I Conveyancing I Charities

Diversification: viability and feasibility Housing & Regeneration I Commercial Real Estate I Conveyancing I Charities

Housing and profit What is the most profitable development/house type you or your organisation have delivered? Housing & Regeneration I Commercial Real Estate I Conveyancing I Charities

Development viability & feasibility Site Market Financial identification research & feasibility segmentation Housing & Regeneration I Commercial Real Estate I Conveyancing I Charities

Site identification Land Buying Strategy Option Competitors agreements Partnering Risk strategy opportunities Land banking capacity Housing & Regeneration I Commercial Real Estate I Conveyancing I Charities

Market research & development Consumer behaviour 1. Research and development strategy • Target audience profile – know your market • Market segmentation - ACORN - MOSAIC • Life stage assessment 2. Product design procedure • Tailored specification • Market testing • Marketing strategy Housing & Regeneration I Commercial Real Estate I Conveyancing I Charities

Financial feasibility Housing & Regeneration I Commercial Real Estate I Conveyancing I Charities

Financial feasibility Housing & Regeneration I Commercial Real Estate I Conveyancing I Charities

Commercial units - viability • Is there a market for your commercial units? • Valuation/appraisal • Key objective If answer is yes … Housing & Regeneration I Commercial Real Estate I Conveyancing I Charities

Commercial units – Heads of Terms and leases • Addressing covenant strength issues • Structuring incentives • User provisions • Break options • Time well spent! Housing & Regeneration I Commercial Real Estate I Conveyancing I Charities

Commercial units – planning and strategy • Where is the investment market at? • Any pre- sale ‘tweaks’ to bolster investment value - Re-gears - Buying out tenant break options • Method of disposal Housing & Regeneration I Commercial Real Estate I Conveyancing I Charities

Get your house in order: structure, regulation & funding

Structure • The right structure: trading company, joint venture, partnering? • RP links and protecting social housing assets • Merger • Parental controls • Profit for purpose • Non-primary purpose trading • Sector pulling together Housing & Regeneration I Commercial Real Estate I Conveyancing I Charities

Governance & regulation • Consents regime – HCA • Risk-based approach • Groups and other vehicles • Intragroup arrangements • Decision-making processes • Deregulation • White Paper Housing & Regeneration I Commercial Real Estate I Conveyancing I Charities

Funding and funders • Loans (new and existing) • Consents and covenants • On-lending • Investment • Institutional investment Housing & Regeneration I Commercial Real Estate I Conveyancing I Charities

Tax implications of commercial development

Tax implications • Stamp Duty Land Tax • VAT • Corporation Tax Housing & Regeneration I Commercial Real Estate I Conveyancing I Charities

Tax implications • SDLT applies to any acquisition of a chargeable interest in land • Who is liable to pay it? • What is the charge based on? • Are there any reliefs or exemptions available? - RP relief - Charities relief - Group relief Housing & Regeneration I Commercial Real Estate I Conveyancing I Charities

Tax implications • Is the price of the site subject to VAT? • Maximise the VAT recovery • Group structures and VAT groups Housing & Regeneration I Commercial Real Estate I Conveyancing I Charities

Tax implications • Profit for purpose – not charitable • Group structure – use of a trading subsidiary • Gift aid – possibly subject to restriction Housing & Regeneration I Commercial Real Estate I Conveyancing I Charities

Last, but not least… Housing & Regeneration I Commercial Real Estate I Conveyancing I Charities

Exit strategy • What happens if it all goes wrong? • Do you have a plan B? • Anticipate risk • Future proofing – Tenure switch – In-built flexibility for market fluctuations – Cost recovery – Funder requirements – Protect social housing assets Housing & Regeneration I Commercial Real Estate I Conveyancing I Charities

Top tips 1. Know your market 2. Look before you leap 3. Don’t waste money 4. Use your consultants effectively 5. Think flexibly 6. Have an exit strategy Housing & Regeneration I Commercial Real Estate I Conveyancing I Charities

What? Why? How?

Any questions…? Housing & Regeneration I Commercial Real Estate I Conveyancing I Charities

And finally, a shameless plug… Free legal seminar: Joint ventures in the housing sector Focus on JVs for property development. Wednesday 17 May, 9.30am Friends’ Meeting House, Manchester www.croftons.co.uk/events Housing & Regeneration I Commercial Real Estate I Conveyancing I Charities

Get in touch Julie Loggenberg 0161 214 4823 / julie.loggenberg@croftons.co.uk Jo Savage 0161 214 6188 / jo.savage@croftons.co.uk www.croftons.co.uk / @CroftonsLegal #CroftonsDevSem