Housing supply in the new world: developing for profit Support/NW... · Housing & Regeneration I Commercial Real Estate I Conveyancing I Charities Market research & development Consumer

HOUSING & REGENERATION I COMMERCIAL REAL ESTATE I CONVEYANCING #CroftonsDevSem

Housing supply in the new

world: developing for profit

Working in partnership with

Housing & Regeneration I Commercial Real Estate I Conveyancing I Charities

Today’s speakers

Julie Loggenberg Partner, Head of Property

Jo Savage Head of Governance and Regulatory

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


More profit

to fund your

core activities


Costs

• Land ownership

• S106 liability

• Abnormals

• Funding

• Procurement

• SDLT

• Consultants

• Marketing


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


Diversification: viability

and feasibility


Housing and profit

What is the most profitable

development/house type you or your

organisation have delivered?


Development viability & feasibility

Market

research &

segmentation

Site

identification

Financial

feasibility


Site identification

Land banking

capacity

Risk strategy Partnering

opportunities

Competitors Option

agreements

Land Buying Strategy


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


Financial feasibility


Financial feasibility


Commercial units - viability

• Is there a market for your commercial

units?

• Valuation/appraisal

• Key objective

If answer is yes…


Commercial units – Heads of

Terms and leases

• Addressing covenant strength issues

• Structuring incentives

• User provisions

• Break options

• Time well spent!


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

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


Governance & regulation

• Consents regime – HCA

• Risk-based approach

• Groups and other vehicles

• Intragroup arrangements

• Decision-making processes

• Deregulation

• White Paper


Funding and funders

• Loans (new and existing)

• Consents and covenants

• On-lending

• Investment

• Institutional investment

Tax implications of

commercial development


Tax implications

• Stamp Duty Land Tax

• VAT

• Corporation Tax


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


Tax implications

• Is the price of the site subject to VAT?

• Maximise the VAT recovery

• Group structures and VAT groups


Tax implications

• Profit for purpose – not charitable

• Group structure – use of a trading

subsidiary

• Gift aid – possibly subject to restriction


Last, but not least…


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


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

What? Why? How?


Any questions…?


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

http://www.croftons.co.uk/events

#CroftonsDevSem

Get in touch

Julie Loggenberg

0161 214 4823 / [email protected]

Jo Savage

0161 214 6188 / [email protected]

www.croftons.co.uk / @CroftonsLegal

Documents

Housing supply in the new world: developing for profit Support/NW... · Housing & Regeneration I Commercial Real Estate I Conveyancing I Charities Market research & development Consumer