WATER NEUTRALITY: A CHALLENGE OR AN OPPORTUNITY FOR DEVELOPERS?

In a recent roundtable discussion, Des Sudworth, of Kreston Reeves, joined Tarniah Thompson, Head of Facilities Management & Sustainability at SHW, and Peter Rainier from DMH Stallard Planning to address the growing impact of water neutrality on development.

The focus of the conversation was on whether water neutrality poses an obstacle or presents an opportunity for developers, landowners, asset managers, and local authorities.

While nutrient neutrality has already hindered residential development across many parts of the UK, the government’s drive to reduce water usage and achieve water neutrality remains relatively unnoticed. This initiative will significantly influence development, as seen in Sussex, where the experiences provide a glimpse of what others might face.

Despite the UK’s frequent rain, much of the country experiences water stress, raising concerns about the future availability of water. The Environment Agency has projected that by 2050, an additional 3,435 million litres of water will be required daily to meet public consumption needs.

Natural England’s Position Statement, issued in September 2021, mandates that all developments within the Sussex North Water Supply Zone (SNWSZ) achieve water neutrality. This affects areas such as Horsham, Crawley, parts of Chichester, and the South Downs National Park. Local authorities in these regions have appointed water neutrality officers to enforce this policy through the planning process.

Impact on Development

Water neutrality presents both challenges and opportunities for residential developers. High water usage sites like restaurants, hotels, and pubs offer potential for redevelopment. For instance, converting a pub into three or four homes with water-saving measures can achieve water neutrality. However, these small-scale projects do little to address the broader housing needs.

Larger developments face more significant hurdles. Developers must first assess the water usage of their proposed sites and implement substantial water-saving measures to reduce household water use from the typical 110 litres per person per day to just 70 or 80 litres. Even this may not suffice to meet the stringent requirements of water neutrality.

Landowners with independent water sources, such as underground aquifers, find themselves in a valuable position, with developers approaching them for water extraction and development opportunities.

Collaboration and Innovation

To navigate these challenges, developers are exploring collaborations with high water usage property asset owners, including social housing schemes, schools, healthcare providers, and industrial managers. By funding water-saving measures, developers can generate 'water credits' to offset their projects. This approach, however, requires a 30-year commitment to maintaining these water-saving measures.

Asset owners remain cautious about the long-term implications of these commitments. Questions about the impact on future expansions or the sale value of properties with water restrictions linger. The water credit scheme initiated by local authorities in West Sussex is not expected to be operational until late 2024.

Currently, partnering with social housing providers has been the most straightforward route for developers. Implementing water-saving measures across social housing schemes in exchange for housing allocations allows developers to bypass the need for water credits.

Political Implications

Water neutrality is poised to become a significant political issue in housing delivery. It underscores the urgent need for additional reservoir capacity, although realising this within a functioning planning regime could take decades. The political landscape's volatility may delay the necessary tough decisions, leaving landowners, developers, local planning authorities, and homebuyers to bear the brunt of water usage challenges.

While water neutrality introduces a new set of challenges for developers, it also offers innovative opportunities for those willing to adapt and collaborate. As the UK grapples with its water usage and the impending impacts of climate change, the balance between development and sustainability will be crucial in shaping the future of housing.

Covid-19 & Construction: A Surveyor’s non-exhaustive thoughts

by Tim Grierson, Head of Dilapidations, Delva Patman Redler

With the view to helping us all and to save you time, I’ve gathered the following information to help us all make informed decisions on live sites and want to share my findings here:

We must do what is best to help the UK’s at risk people by social distancing and following government guidelines for ‘people’, and ‘employees, employers and businesses’. Email updates from government can be obtained here.

Further to this, if sensible, and you are able, please do consider volunteering for the NHS or your local council.

If you are a Client: your Surveyor, Architect & Legal Team will collectively be able to advise you on what your best, case specific course of action is; practically & contractually. Some consultancy tasks can be accelerated now and benefit from the situation.

At present the majority of builders’ merchants are now closed and therefore the only course of action may be to pause works until the Government releases the next statement on COVID-19, in relation to social distancing, as builders are presently struggling or unable to get construction materials.

If your site/trades do have the materials they require, when deciding whether to shut a site, a construction site professional should as a minimum be considering the following guidance:

Construction Industry Council – CIC response to COVID-19 outbreak

• Key: What sites should remain open?

Construction Leadership Council – News

• Mandatory: Site Operating Procedures during Covid-19

RICS – RICS Response to Covid-19 (Coronavirus)

• Key/Mandatory: How to deal with coronavirus under NEC and JCT contracts | 9 April 2020 05:00 PM – 06:15 PM

Chartered Association of Building Engineers – COVID-19 – 25/03/20

Federation of Master Builders – Responding to Coronavirus (Covid-19)

CLC – The Specialist Property Law Regulator – Coronavirus: Resources and Information

BuildUK – Coronavirus Impact on Construction

Building – Coronavirus and Construction

I hope this information is helpful to you. If you have any queries, thoughts or tasks you need help with, please do not hesitate in contacting me or any other member of the Delva Patman Redler team.

Stay safe.

Property Lending in 2020

by Chris scott, Lending Director, Pluto Finance

As we come to the end of the first month of the new decade, in just a couple of days, Britain will no longer be a member of the European Union (EU).  While the threat of a no deal Brexit is still hovering, all be it at a distance, and no one can tell what 2021 Britain looks like, it does seem as though the Conservative majority has given the market a nudge in the right direction, with a flurry of properties being brought to market since the turn of the year.

Average asking prices have surged 2.3% since the election and mortgage approval rates in December were up 19.6% year on year. This is particularly encouraging considering house price growth ground to a 0.7% low in 2019, down from 3% in 2018. All of this points to a well-timed recovery heading into the traditionally busy spring market. It is therefore likely that we are in for an encouraging few months ahead, before another batch of uncertainty due to fall toward the end of the year. Should Boris and his team be able to share some early insights and provide some post Brexit certainty, the good times may well roll on.

Commercially, we have seen and expect to see more activity in the office, hotel and industrial sectors. With interest rates set to remain low, commercial and residential investments will remain attractive proposition for domestic and international investment. Save for retail, we expect to see increased activity in these sectors and the use of bridging finance is well placed to support it, particularly when it comes to acquisition or repositioning. Pluto offers bridging rates from 0.6% per month up to 70% Net LTV.

The development space is one we are particularly excited about coming into the year. All things considered, housing supply is still a major issue for the UK economy and one the government is well aware of. The rental demand/supply gap is also widening due to the impact of tax changes for portfolio landlords, leaving BTR and PRS operators an opportunity to thrive.  With proposed changes to the planning process and continued pressure on housing targets, there is undoubtedly still an opportunity for residential developers. However, due to land trading at a premium, cost of materials on the rise and a shortage of qualified labour, developers will have to ensure efficiency and deliverability is a key consideration. The construction industry in particular will also embark on a period of change. Enhancements in Proptech and the emergence of modern methods of construction (MMC), 3D printing and a data driven approach to delivery will start to revolutionise the space. We have a strong appetite to support experienced borrowers delivering schemes across England. Our products, priced from 3.95% above LIBOR, are market leading and we are currently funding the construction of over 2,000 homes.

Looking forward over 2020, it looks set to be an exciting and largely positive year. Whilst uncertainty will remain in part, what is certain is our appetite to lend across the development and bridging landscape. As a non-bank lender, our processes, decision making and customer service is a key differentiator in our space. This approach, coupled with a market leading product offering and ability to close complex transactions, will underpin the year ahead.

Increasing housing supply - Catch 22?

by Malcolm Frodsham, Real Estate Strategies 

Catch 22 , written by Joseph Heller and published in 1961, is often cited as one of the most significant novels of the twentieth century. The housing crisis is certainly one of the most significant problems today and my mind often drifts back to the novel when listening to politicians out-bidding each other with schemes to ‘solve’ the housing crisis. Housing policy epitomises the type of bureaucratic reasoning justifying actions in Catch 22 - the political imperative to avoid any housing policy that actually makes houses affordable!

The housing crisis is real, and solving it requires house prices to fall, either through massive new supply or a reduction in demand.   But there is a catch: politicians know that a fall in house prices will be unpopular with homeowners. Housing is the nation’s chosen store of wealth, so reducing housing costs equates to reducing the stock of wealth. So we have a Catch 22; action must be seen to be taken on the Housing Crisis, but on no account should this action result in lower house prices.

So politicians compete with each other on promises to build more ‘permanent dwellings’, but only ‘affordable’ ones, or in other words, homes that will not actually impact the prices of the rest of the housing stock.

Building any homes is of course tough and unpopular locally, so in order to have a policy to announce, the Government subsidises the buying of houses (Help to Buy). This has the benefit of actively supporting house prices and therefore perpetuating the crisis. This political wheeze would sit happily with any of the absurd notions in Heller’s classic novel.

An achievable solution to affordability, is to switch taxes away from income and instead tax housing wealth. The investment motive to own housing is reduced, encouraging occupiers of homes with more bedrooms than required to trade down to smaller houses (there is a an astonishing 1.8 rooms per person in Great Britain, which is a very peculiar housing shortage indeed).  This would boost housing supply and reduce prices.

Will this happen? Yes, under Labour’s ‘progressive property tax’. Will the electorate vote for such a tax, or is it Catch 22?

A Month's Worth of Rain in One Day?

Malcolm Frodsham, Real Estate Strategies

I’m not sure if it is my advancing years or having three teenage children, but some expressions cause me late night irritation. “A month’s worth of rain has fallen in one day” we are reverently told, but what is this statistic intended to imply? Has this amount of rain ever fallen in one day before or does this happen quite often?

Expressing rainfall, as with many other measures, with reference to an average is not necessarily helpful without further clarification. How often does the average monthly rainfall total fall in one day? What impact will this amount of rain have on the transport infrastructure?

Measuring portfolio risk is similarly subject to the tyranny of averages. The average vacancy period for a particular unit might be 6 months, but what is the likelihood of a longer vacancy period?

Are such events likely to be isolated or are similar units also likely to be affected? Understanding the vulnerability of portfolio income to such events is the key to risk management and measuring the empirical history is the key to estimating the risk. If you are interested in such a study please get in touch.

As with the weather, we may not be able to predict extreme events, but we can at least understand their likelihood and make the necessary preparations and contingencies.

NB: the portfolio affect is amply demonstrated by daily rainfall totals for the South east as a whole for which no single day’s rain has exceeded the monthly average since records began in 1931.

Does Twitter help SEO?

The answer is YES!

Research shows that up to 85% of users will click a company’s social media profile before clicking their website. From all the platforms we decided to focus, today, on Twitter. 

Let’s look at some of the statistics:

According to information available on the web, this channel boasts of 326M monthly active users; There are 500 million tweets sent each day and 6000 tweets every second.  The growing user commitment is a great opportunity for brands.

If numbers are anything to go by then, according to a Twitter survey, 54% of users reported that they had taken action after seeing a brand mentioned in Tweets (including visiting their website, searching for the brand, or retweeting content).

Let’s not forget the Google and Twitter partnership which makes many of the top tweets searchable. Neil Patel aptly points out that search engines use social signals from social media to rank your website. Likes, shares, and comments affect SEO in huge ways.

Here are a few ways you can start to take full advantage of the benefits of Twitter for SEO:

1. Have a dedicated strategy to increase your following

2. Add key words and key search phrases to your Twitter bio. Use these words periodically

3. Show appreciation for those who forward your Tweets. Use @mentions to reference people when they engage.

4. Retweet to help double your traffic

5. Redirect users to your website by inserting backlinks to your content

6. Engage with your audience

7. Include images, videos and Gifs in your posts. They help the tweets to stand out 

 At Flashbulb we have been using Twitter to drive results for our clients. Get in touch to know more.

People-centred workplaces are centre stage for war on talent

Attracting and retaining talent, as well as maintaining employee productivity is becoming a real concern for organisations, according to a survey carried out at the 12th Property Directors Forum, hosted by Avison Young.

Adopting more ‘flex space’ will be key in talent recruitment and retention, as will improving company’s employee feedback process and the inclusion of employees in decisions that influence how the workplace is run.

The survey, carried out by occupier property directors, identified a people-focused divide in workplaces, with 10% of respondents stating that their firm did not measure employee engagement at all and 57% only measuring employee engagement through a simple question in an annual HR survey. Only 32% of respondents were found to have a dedicated employee engagement tool. 29% of those surveyed have an employee advisor group and 14% are regularly asked to contribute ideas as part of a monthly review.

Jason Sibthorpe, Avison Young’s Principal and President, UK comments: “One of the striking takeaways from our latest Property Director’s Forum is the putting aside of technological advances that have been hot topics over the last couple of years. What employee satisfaction appears to boil down to is the simple things like employee engagement, offering clean facilities (nice loos!) and providing simple perks like tea and biscuits.

“In keeping with the employee engagement theme, the results of the survey suggest that employers need to invest in flexible and people-driven spaces to create more productive and appealing workplaces in order to retain talent,” Jason adds.

On attitudes towards the move to flexible working, the survey found:

• 57% agreed that flexible space is an appealing environment for employees, with 50% agreeing that flexible space makes attracting and retaining talent easier

• 39% agreed that flexible working improves employees’ mental well being

• 62% agreed that the use of flexible space in their real estate portfolio will increase in the next 5 years

Jason concludes: “With the majority of our respondents concerned about attracting and retaining talent, we need to go back to basics. As well as keeping abreast of the latest gadgets and timesaving methods, we shouldn’t forget the need for employees to feel appreciated. A nice workplace, flexibility and a bit of facetime goes a long way in boosting employee productivity.”

The next Property Directors Forum will be held at The Royal Society of Chemistry, Piccadilly, London on Thursday 27th June 2019.