Posted on

Will your property pass the new MEES energy test?

There are now only six months until the new Minimum Energy Efficiency Standards (MEES) are implemented. This sweeping change due in April 2018 will rule out any new or renewed leases on commercial property with an Energy Performance Certificate (EPC) rating of F or G.

Time is running out and landlords with commercial portfolios would be well advised to prepare carefully, or risk losing out on significant amounts of rental income.

Below are some key tips to help protect you from inadvertently allowing your property to become ‘unrentable’.

Organising a well-maintained property database

    Having a comprehensive and accurate property asset list, including a detailed record of current EPCs, is invaluable when it comes to compliance with MEES legislation.

    Open communications with all parties involved in changes to your portfolios will help you to keep on top of your assets. This way you are fully aware of assets that are being sold, refurbished or tenanted.

    Keeping a stringent log of tenant movements will result in an asset list that can quickly and easily be referred to for accurate and current data. This will reduce time and resource required to draw information from multiple sources and avoid any duplication of effort required to collate the data.

    It is essential that good EPC records are kept. They should detail the EPC rating, date of expiry and EPC address, which is often different from the addresses known to property management teams. It is worth remembering that EPC’s can be commissioned by any individual. A tenant may have authorised a new EPC since the landlord last ordered one.

    Reassess EPC ratings

    An EPC is based on the characteristics of a building and its services (such as heating, ventilation, air conditioning and lighting). As such, energy assessors often do not have detailed and updated information about a property.

    As a result, they need to gather as much information as possible during their EPC site assessment visit, modelling their findings before determining the EPC asset rating. With time constraints and a lack of readily available information, existing EPC’s are often based on assumptions, conventions and default settings. These will represent worst case scenarios. They often do not provide an accurate representation of the current building status.

    Before refurbishing a property with an EPC that is currently considered sub-standard, we would recommend that its building energy model is re-assessed to eliminate as many estimates as possible and improve the EPC rating.

    Don’t limit your analysis

      There are a number of additional factors you should consider to ensure a comprehensive understanding of your risk exposure:

        Listed Building status.

      Despite popular belief, listed buildings are not exempt from EPC legislation. In fact, they are likely to fall within EPC F and G bands because of their poor fabric specifications in terms of energy performance (single glazing, uninsulated walls etc).

        E-rated EPC buildings.

      EPC’s are linked to the UK Building Regulations, Part L, which are regularly updated and become more and more stringent each time they are revised. Hence previous EPC’s, whose Asset Ratings were E, may fall within the F & G categories once their 10 years validity period has expired.

        Rental Values.

      If refurbishment works are abandoned in favour of offering sub-standard properties, landlords will not be permitted to market buildings with a subsequent loss of rental income. The rental value per annum, per square metre, should be taken into account in order to undertake suitable risk assessments and prioritise remedial actions.

      Two birds with one stone

      Many owners are unsure about their exposure to MEES compliance risk. That’s why undertaking a desktop review is vital. You can also save time and money by simultaneously commissioning reviews of additional environmental compliance risks when third-parties are involved in determining MEES risk exposure.

      For example, ever changing climatic conditions often reassert the importance of understanding flood risk. Property owners therefore need to understand their risk exposure to reduce business threats and develop action plans for guaranteed business continuity.

      MEES however provides the perfect opportunity to ask further questions about the environmental legislation agenda. Property environmental compliance risk exists in many areas including air conditioning inspections (ACIs), ESOS energy audits and asbestos registers among others.

      On top of providing a valuable assessment of regulatory and non-mandatory environmental risks, high level reviews also highlight opportunities, like solar PV installation, that impact on the wider business.

      Plan ahead to ensure leases provide protection

      You must consider the risk that a tenant could carry out works that may lower the EPC rating, thereby affecting re-letting once the property becomes vacant. Whenever the opportunity arises, owners should be looking to introduce provisions against the tenant carrying out alterations thatadversely affect energy performance. You may also wish to restrict the tenant’s ability to commission its own EPC, as this would invalidate the existing certificate.

      At the same time, the new regulations are also an opportunity for greater engagement with tenants through the use of green leases. A green lease is a standard form lease with additional clauses included which provide for the management and improvement of the environmental performance of a building. Both owner and occupier can agree carbon, energy, waste and water reduction strategies which best fit with the circumstances of individual properties.

      Conclusion

    Using some or all of these strategies, landlords can safeguard themselves and their portfolios ahead of MEES – and potentially ensure not only that they are scraping by for compliance, but that they are leading the way in terms of property and asset management, and demonstrating the value of this attitude when it comes to environmental protection.There are now only six months until the new Minimum Energy Efficiency Standards (MEES) are implemented – a sweeping change due in April 2018, that will rule out any new or renewed leases on commercial property with an Energy Performance Certificate (EPC) rating of F or G.

Posted on

New build property investment returns: Liverpool V’s Manchester V’s Birkenhead.

We have all heard a lot over the past months about the death of new build buy to let investment in the UK. Undoubtedly the second homes SDLT surcharge has caused investors to carefully consider the maths for new purchases. Likewise, the upcoming changes to the taxation of mortgage interest relief will cause many landlords with existing portfolios to reconsider their position. So with these changes already known, why is BTL still considered not just a viable, but a desirable investment?

My area of interest is the North West of England, particularly the areas around Manchester, Leeds and Merseyside. We presented a couple of investment seminars at this year’s Homeowner and Property Investor Show in Docklands Arena. They were standing room only, so we know there is plenty of interest from out of (our) area investors wanting to buy here. We also run tours for investors around the local area to highlight the vast range of projects currently underway (see Liverpool and Wirral Waters, the new Liverpool 2 port, China Town, Salford Quays, et al in my previous posts). We have around 2 groups a week here from London for our own Grand Tour – think Clarkson, Hammond and May but with fewer car crashes and more coffee.

The most regularly asked question is about the comparative returns available on new build between Manchester, Liverpool and Wirral, and what are the prospects for the 3 areas.

My own view is that they all have their own merits, depending on your aims. There is no space on this short post to go into too much detail, but in brief:

    Manchester

Manchester offers the widest range of existing high quality provision. The market for better quality apartments is more mature than the other areas, and the job prospects for the city are very good. Unfortunately this is reflected in the prices, with current new build 1 bed flats achieving around £2,100 per M2. Prices start around £110,000 per unit for mid-range developments on the periphery of the city centre. Rents are high compared to the wider region, but so are prices. Despite this gross yields are around 5.5%, with net yields of 4.2% in better quality new-build sites.

    Liverpool

Liverpool has seen very rapid development, in the past 5 years particularly, driven by the rapidly improving local economy and some major infrastructure investments. Prices are still far below Manchester levels but rising quickly, as are rental rates – 1 bed flats close to the river regularly go for £685 pcm. If you are looking for an absolute bargain you are probably 18 months too late, although there are still some very good buys available if you know where to look. Prices range from £1,500 – £2,000 per M2, with the prices rising the closer you get to the River Mersey, particularly in the L1, L4 and L69 postcodes. Gross yields are averaging at 7%, or 5.6% net.

    Wirral

Wirral is still the wild west for new build investors. Until recently there was not much good quality stock to buy into, although things are now changing. A number of schemes are completing and there are other interesting developments in the pipeline around the Birkenhead and West Kirby areas in particular. The area benefits from being only 10 minutes by train from Liverpool centre. We see more people moving from Liverpool to Wirral to take advantage of the lower prices whilst still retaining access to the big city experience. Good quality stock goes for around £1,400 per M2. Gross yields are holding at 8.5%, Net around the 7.2% level.

conway-st-to-tunnel

So, who comes out top? For range of options Manchester is difficult to beat. If your target investment is only city centres then Liverpool is a very good bet, especially the area south of the Albert Dock and into the Baltic Triangle.

However, our winner is Birkenhead. Our view is that east Wirral in particular offers the best opportunity for price increases in the next 1 – 5 years, coming off its current low (some would say undervalued) base.

With low but rising prices and high yields, coupled with the 10 minute transit time to Liverpool city centre for both work and leisure, Birkenhead is our top tip for property investors in the region.

Posted on

UK Housing Market activity hits six-month high

UK housing market activity reached a six-month high in September and remortgaging experienced another stand out month, according to the latest research from Connells Survey & Valuation.

Last month, the total number of property valuations was the second-highest monthly level on record, with only 0.5% fewer valuations carried out than in March 2015, the current high.

Total valuation activity is up 29% compared to September 2014, following a 23% month-on-month rebound from August 2015.

The number of valuations carried out specifically for first-time buyers rose 25% in September compared to the previous month. This is an 18% increase on September 2014.

Connells, who carry out a lot of valuations in Wirral, said valuation activity among established home-movers performed even better, with the number of valuations carried out for those moving house up 26% compared to last month and 23% since September 2014.

The number of valuations for those remortgaging rose 16% since August and was up 49% from September last year.

Meanwhile, the number of valuations in the buy-to-let sector has grown 13% since September last year. On a monthly basis, valuations activity carried out on behalf of buy-to-let investors was up 21% compared to August.

John Bagshaw, corporate services director of Connells Survey & Valuation, said: “Britain’s housing market is going from strength to strength. Against a brightening economic background, players in all parts of the market are feeling more confident about their prospects. Valuation activity is growing beyond the seasonal pick-up at the end of August, with year-on-year growth gathering momentum”.

 

This is reflected in our own experiences at Hamilton Square Estates.  There is a marked increase in enquiries from both owner occupiers and investors, and we are finding that 2 and 3 bed family homes are much in demand in Wirral especially. As ever, 1 bed flats are very popular with investors chasing a good return on their money.

Posted on

Wirral Property – House Price News

 Latest data on house price changes in Wirral make interesting reading.  The headline figure is that prices are up an average £8,653 or 4.21% across the area.  This is slightly below the national average of a 5.2% increase.

This shows an average sale price of £199,017 for Wirral, with 2,035 sales taking place in our area within the past 12 months.  Property prices are now higher than before the property crash of 2008 – 2011.

Within Wirral the usual areas remain popular, with Heswall and West Kirby doing well according to our friends at Zoopla.  Less expected is the resurgence of values within the Noctorum area.  Vyner Road South has done particularly well in the past year, but so has the whole area between Noctorum Lane to West Rd.  Clatterbridge has out performed the local market and looks set to continue the trend, with some good quality properties coming to market.

The most surprising data related to parts of New Brighton.  The area around Warren Drive has seen substantial activity and has done very well.  There are a number of large, well appointed houses and there seems to be an increased interest in the market.  It is about time that all the fantastic improvements in New Brighton are reflected in the local house prices.  I am sure this trend will continue.

My tips for the coming months?  Upton and New Brighton for owner occupiers.

For investors, however, things are very different.  Demand remains high for single bed flats, and for 2 and 3 bed houses.  Rents are stable in Wirral despite reports of a slowing trend in other part of UK.

The Council’s selective licencing scheme is about to come into effect.  The expectation is that it will drive down prices in the affected areas for a few years, as more properties are “forced” on to the market.  We should then expect prices to rise again, fairly sharply I suspect, as the benefits of the scheme become manifest.  Avoid buying in those areas for now.

Central Birkenhead, Tranmere and Rock Ferry continue to offer some of the best yields for investors.  That’s where my money is going.

 
Posted on

Wirral best place to live in England

At last, the rest of the UK now acknowledge what we have been saying for years – Wirral is a great place to live, work and bring up a family. With 3 spots in the top 10 in England we should be shouting more about the benefits of the area and not listening to the (mostly) southern types denigrating our peninsula.

Bebington in Merseyside is the most desirable place to live in England, according to a Royal Mail survey.

Royal Mail said the study, conducted by the Centre for Economic and Business Research, looked at green spaces, affordable housing and commuting times.

Seven northern locations, including Dalton-in-Furness in Cumbria, were in the top 10 in England, the survey said.

Bebington residents, who live near the River Mersey and Port Sunlight model village, “enjoyed the ideal balance” of living close to their workplace, good schools and high employment, according to the report.

The most desirable postcodes according to nation

England
◾CH63 – Bebington, Wirral
◾IP5 – Kesgrave, Ipswich
◾LA15 – Dalton-in-Furness, Cumbria
◾NR8 – Taverham, Norfolk
◾FY6 – Poulton-Le-Fylde, Blackpool
◾DT1 – Dorchester, West Dorset
◾WA1 – Warrington, Cheshire
◾CH62 – Eastham, Wirral
◾CH45 – Wallasey, Merseyside
◾LA13 – Barrow-in-Furness, Cumbria

Posted on

Liverpool Property – Update on Liverpool landlord licensing scheme

Liverpool city council says it is “looking very closely” at the wording of a government letter about its pioneering plan to force all landlords to sign up to a licensing scheme.

The council is the only one in the country to introduce a blanket licensing scheme – believed to apply to around 5,000 landlords who own 50,000 private sector rental properties. Under the scheme the council determines that any landlord to be granted a licence (for which the landlord pays up to £500 per property) must be a ‘fit and proper’ person.

As with the licensing schemes introduced in many other local authorities, Liverpool’s landlords have to meet a variety of conditions around fire, electric and gas safety; rectify disrepair issues; tackle pest infestations; keep the exterior in a good state of repair and deal with complaints about anti-social behaviour caused by tenants.

The scheme was introduced following a consultation which produced 2,000 responses; the council claims the significant majority of respondents were in favour.

However, the council has now received a letter from Brandon Lewis, minister for housing and planning, saying the blanket approach is flawed, and forces perfectly good landlords to pass the costs of the licences on to tenants. Any such scheme introduced from April 1 must receive ministerial approval first – but of course Liverpool’s is already underway.

The Liverpool Echo newspaper says the council suggests that so far 1,341 landlords who between them manage 5,870 properties have registered their details.

Posted on

Wirral Property News – Selective Licensing for Landlords in the Wirral to be rolled out

Wirral Borough Council are currently in the process of rolling out selective licensing for landlords in certain areas of the Wirral. These licenses have to be purchased and last for 5 years.

From Wirral Borough Council’s site: “The Council would also need to determine if the proposed licence holder was a ‘fit and proper’ person and suitable to manage properties before issuing a licence.”

The landlord will not need to go through costly training to pass the tests for these licenses, but they may have to make expensive changes to their properties to get them up to spec.

Hamilton Square Estates can help you with this.  As your Managing Agents, we can act on your behalf, eliminating the time and expense of going through the training. We can also help make any changes needed to the property through our sister property development company – Wirral Property Group.

Please get in touch on info@hamiltonsquareestates.com