Author: Paul Chases, Partner and Head of Corporate Real Estate, London
In this post, Paul Chases, a partner in the HSF London Real Estate team comments on his experience of the Shedmasters event at the MIPIM real estate conference, and on the direction of travel of parts of the real estate industry.
- Continued Growth
- Future of the Shed
- Impact of Brexit
1. Continued Growth
The popularity of this year’s Shedmasters event at MIPIM (sponsored by Savills, Gazeley and Prologis, amongst others) is testament to the ongoing strength of the logistics sector, which, in 2017, saw record highs for investment in the industrial and distribution sector. The general view seems to be that this trend is likely to continue for 2018 and beyond with returns for the industrial and logistics sectors predicted to outperform those for office and retail (for example) over the next five years. Already this year, HSF has acted on a number of logistics deals. With such positive forecasts, the expectation is that new investor entrants will look to enter the market and there will be further consolidation by those already involved in the sector.
Authors: Alice Dockar, Partner and Will Turnbull, Senior Associate, Real Estate London
New technology is changing the way people live and work, and flexible workspace is the subject of several events at this year’s MIPIM real estate conference. Debate at the conference has centred around whether the changes led by technology are temporary or permanent and how the industry and its participants, including landlords, tenants, agents and financiers, will adapt to this new world.
In this post, HSF partner Alice Dockar and senior associate Will Turnbull provide some observations from MIPIM on this debate.
Authors: Matthew White, Partner and Head of UK Planning; Catherine Howard, Partner; and Lucy Morton, Professional Support Lawyer, Planning, London
The Government is recommending that viability is assessed in detail by the local authority at the stage of setting its development plan and allocating land for certain uses, and that specific assumptions should be made at that stage regarding land value and what is a reasonable return for a developer – using the ‘existing use value plus’ (EUV+) land valuation method and assuming a return of 20% of gross development value (GDV) for the developer in appropriate circumstances. It could then be more difficult for a developer to re-open negotiations on viability at a later stage.
The Government’s new Draft Planning Practice Guidance for Viability sets out more detail on the new proposals, as we explain in this post. This draft guidance is one of a raft of new publications which the Government have released, including new draft National Planning Policy Framework (NPPF) and a consultation on developer contributions including Community Infrastructure Levy (CIL) which are all aiming to increase the supply of housing, provide certainty for developers, capture land value more effectively and improve and speed up the planning process.
Matthew White, partner and head of the UK planning team in the London office of Herbert Smith Freehills talks to Lucy Morton, another lawyer in the planning team, about what he’s expecting from the MIPIM real estate conference in Cannes (13th – 16th March 2018) and about his forthcoming cycle ride to the conference. Please listen to this short (5 minute) podcast. Herbert Smith Freehills will have a team attending the MIPIM conference, please contact us for more details.
If you’d like to sponsor Matthew White on his cycle ride, he’s raising money in aid of Coram, a UK charity for vulnerable children and young people, here’s the link.
Matthew WhitePartner and Head of Planning, LondonEmail
+44 20 7466 2461
Lucy MortonProfessional Support Lawyer, Planning, LondonEmail
+44 20 7466 2626
Author: Catherine Howard, Partner, Planning, Real Estate, London
In this blog post, we explain in simple terms how a developer is now expected to set the level of affordable housing which the Mayor of London deems viable for a particular site. This is part of our ‘back to basics’ affordable housing series.
The Mayor is fed up with developers arguing that it’s not viable for them to deliver policy compliant levels of affordable housing due to the high prices they are paying for sites. In his Supplementary Planning Guidance (SPG) on Affordable Housing and Viability issued last August, Sadiq Khan refers to the ‘circularity’ this causes: land prices are higher than they should be because buyers and sellers are not factoring in delivering much affordable housing.
The Mayor wants to stop this by ’embedding’ delivery of policy compliant levels of affordable housing into land prices. To do this, he is going to have no regard to the price developers actually paid for a site. The maximum he will let developers factor in to viability calculations is the value a site has in its existing use plus a margin of 10-30% where appropriate (what he refers to as the “benchmark land value”).
Please read on for the five step guide to calculating the level of affordable housing the Mayor considers viable.
Herbert Smith Freehills is running workshops which talk through an example calculation to show how this approach to viability assessment works in practice. In the workshop we also run through calculations showing how early and late viability reviews work (post-planning) under the Mayor’s SPG. This will be the subject of future blog entries. Please contact us for more information.
Step 1: Gross Development Value
Step 2: Residual Land Value
Step 3: Benchmark Land Value
Step 4: Comparing Residual Land Value and Benchmark Land Value
Step 5: How much affordable housing can the developer afford to deliver on this site, factoring in the benchmark land value?
Author: Alice Dockar, Partner, Real Estate, London
Herbert Smith Freehills was out in force at a fantastic, thought provoking breakfast event yesterday at the Hilton, Park Lane organised by Bisnow and entitled “Women Leading Real Estate”.
There was a keynote interview with Alison Nimmo, CEO of The Crown Estate, and a panel session on “Driving Change & Building the Pipeline for Aspiring Young Leaders” with panellists:
- Colette O’Shea, Managing Director at LandSec;
- Sherin Aminossehe, Head of Offices at Lendlease;
- Brian Bickell, CEO of Shaftsbury;
- Lynda Shillaw, CEO of Magairports; and
- Sue Clayton, Executive Director, Capital Markets at CBRE
Closing remarks were given by Vivenne King, Chair of Real Estate Balance and Andrea Carpenter, Director of Women Talk Real Estate.
The turnout was impressive – over 500 people attended this event, and the audience was predominantly female. We are proud to be positively engaged with and part of the change taking place in the Real Estate industry.
For us, the key take home messages, for women and men in the world of real estate, were:
Authors: Matthew White, Partner and Head of Planning; Lucy Morton, Professional Support Lawyer, Planning, London
What if land values fell because the value attached to future potential planning permission was disregarded? This is what the Labour party is proposing, through reform of the compulsory purchase process. A Government committee is also asking questions on whether the Community Infrastructure Levy (CIL) is working and what other methods could be used to capture the value of land (here is the link to the inquiry). We’ve seen some dramatic headlines recently but land value capture is not a new idea and has been around for decades. What are the implications for developers?
Authors: Paul Chases, Partner and Head of Corporate Real Estate; Alex Wright, Associate, Real Estate, London
For any real estate developers with trusts in their holding structures, there are new regulations in force that make it a requirement for trustees to obtain and hold up-to-date details of the beneficial owners of their trusts on record and to register these annually with HMRC where the trust is liable to pay tax in the UK.
The HMRC penalties for failure to comply could potentially be severe and as such, trustees should ensure they are familiar with these reporting requirements, particularly as the deadlines for registration are fast approaching.
To learn more, please click on the link below to read our e-bulletin on the new registration requirements. Please note that since publication of the e-bulletin, HMRC has extended the deadline for compliance for trusts already registered for self-assessment from 31 January 2018 to 5 March 2018.
Author: Michael Chivers, Senior Associate, Real Estate, London
Are you a landlord or developer of property which includes residential flats? Are you going to dispose of your interest in that property? If so, you may be obliged to offer your residential tenants a right of first refusal before selling to anyone else. If you don’t, you could face serious consequences including criminal sanctions.
In this blog we go back to basics to explain when the statutory right of first refusal applies, what the consequences are when it does and how it is relevant in the context of mixed-use developments.
The Landlord and Tenant Act 1987 gives tenants this statutory right, however, the legislation was rushed through parliament in the run-up to the 1987 general election by a Conservative government who were under pressure to redress the balance of power between landlords and tenants in the residential sector. The result was a complex and defective piece of legislation which has been heavily criticised by the courts over the years.
1. When does the right of first refusal apply?
2. What are the consequences when the right of first refusal applies?
3. How is the right relevant to mixed-use developments?