Edinburgh revealed as number one UK ‘hot spot’ for hotel development

Colliers International’s latest UK Hotels Market Index shows continued year on year growth for the hotel sector, with revenue per available room (RevPAR) increasing by 3.8%; significantly ahead of GDP growth.

The annual report, which is in its third year, paints a positive picture for the hotels sector. Regional markets have continued to catch up to London in terms of their attractiveness to investors and cities such as Hull and Plymouth entered the list of top 10 hot spots for hotel development and acquisition in the UK for the first time in 2017.

Edinburgh topped the Index, moving up four places in 2017 since the previous year with its high position mainly attributed to strong occupancy levels and average daily rate (ADR) growth in 2017, resulting in a four-year upward revenue per available room (RevPAR) trend combined with constrained new supply.

Bath ranks second, moving ten places up, as a result of strong ADR performance, combined with a lower active pipeline, and Belfast came third.

Marc Finney, head of hotels & resorts consulting at Colliers International, said: “Cities such as Bath and Belfast have really upped their game in the last year to make it into the top five, despite failing to feature in the top 10 last year.”

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Build to Sell VS Rent

Click here for your Free Report on Building a Property Deal Pipeline

A three per cent stamp duty surcharge and a change in tax regulation are factors future landlords will have to consider.

Talk to a seasoned landlord and the chances are that they will moan about the good old days before George Osborne added higher stamp duty on second homes and withdrew higher rate tax relief on mortgage and finance interest.

Few experts are predicting a buy-to-let bonanza in 2018. “The changes in taxation and other rising costs of home ownership are not making it easy to be a landlord,” admits Kate Eales, Head of Lettings at Strutt & Parker. But where Eales does expect to see growth is in so-called build to rent (BTR) properties. This is an emerging sub-market within private residential rented stock, designed specifically for renting rather than for sale and typically owned by investors. In fact, Strutt & Parker’s analysts believe that the UK is ‘on the brink of a large-scale commercially developed, owned and operated BTR sector’.

For more traditional landlords, with a portfolio of older properties, this year has been frustrating following recent tax changes. But if profit margins are tight, that does not necessarily mean that the buy-to-let game is not worth considering.

The great thing about the buy-to-let sector is its adaptability. If some landlords fall by the wayside, others learn how to weather the bad times and cash in during the good times. And if the 2016 tax changes were a jolt to the system, there is evidence that the buy-to-let sector has absorbed the shock and is starting, albeit slowly, to bounce back.

“Rental values in prime central London fell by 2.5 per cent in the year to October,” says Tom Bill, Head of London Residential at Knight Frank. “We now expect rental values in London as a whole to move from broadly negative to flat in the near term. It looks as if the large spike in new stock that followed the additional rates of stamp duty introduced in April 2016 has been largely absorbed by the market.”

Another factor keeping rents high enough to attract would-be landlords, is the shortage of supply. Paradoxically, because some landlords were discouraged by the 2016 tax changes and slimmed down their portfolios, the ones who have held their nerve have realised that their properties can still command decent rents with demand remaining strong.

The key thing, as always, in the buy-to-let sector is to research the market properly. Asking rents in the capital fell by 3.2 per cent in the year to June 2017, but rose by 1.7 per cent in England and Wales as a whole, according to Savills figures. ‘‘The rental outlook is strongest in regional cities that attract investors from high value sectors such as professional services, technology and finance,” says Lawrence Bowles, Research Associate at Savills. Cities such as Edinburgh, Bristol, Oxford and Cambridge all seem to tick the right boxes.

You would have to be very clever, or very lucky, to make a killing in the UK buy-to-let sector in the near future. However, property has always been a long game for those prepared to do their research, budget carefully and become hands-on landlords. There are still interesting times ahead for savvy investors.

Keep it simple:how to do your own fire safety assessment online if you're a landlord

Like most landlords, I would do everything possible to keep my tenants safe. However, I can’t say hand on heart that I have complied with all the fire safety regulations that apply to one of my properties — because the regulations themselves are so darned confusing.

The property causing me concern is a four-bedroom duplex that was previously let to a group of friends on a single tenancy agreement and is now let to four sharers on individual contracts. It is, therefore, labelled as a house in multiple occupation — an HMO — and as such requires me to take greater fire precautions than if it were let as a single unit.

But what extra fire precautions do I need to take? Obviously I have smoke alarms on both floors, which has been a requirement in all rental properties since October 2015, but I am not sure these are enough both to comply with the law regarding non-licensed HMOs and to give my tenants enough warning in the event of a fire.

I have spent hours trawling the internet for information and poring over official fire safety guidance, but I still can’t work out whether these alarms should be replaced with more expensive mains-operated ones, which avoids the risk of tenants removing or forgetting to replace the batteries.


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Also, do I need special fire doors, fire alarms and special fire-fighting equipment such as sprinklers, or at the very least fire extinguishers on both floors?

Thinking the local authority would be able to help I gave them a call but they referred me to the local fire service, who told me I’d need to pay for a private company to carry out a fire risk assessment. However, all the firms I contacted told me this was neither a necessity nor a legal requirement for my type of property.

Instead, I downloaded my own fire risk assessment form from the internet and, using the accompanying guide, did it myself.

As a result, I’ve decided to err on the side of caution and install interconnected mains-operated alarms. I am also going to install a mains-operated heat alarm in the kitchen, which will be connected to the smoke alarms. In total, this will cost about £600.

I probably ought to provide a fire blanket for the kitchen, which I can get for less than £5 from my local hardware store. I’d been wondering if I should get a fire extinguisher, too, but after reading the official guidance I think this might do more harm than good.

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Far better, I think, to tell tenants to evacuate rather than try to fight a fire. I certainly wouldn’t trust any of those ditsy students to use an extinguisher effectively.

I had also considered fitting a self-closing arm to the kitchen door to try to prevent a fire spreading to the rest of the flat, but apparently these can make a door hard to open, trapping someone inside a blazing room.

During my assessment I spotted that a couple of the tenants had extension leads plugged into other extension leads, which they had loaded with multiple plugs for things such as hairdryers, curling tongs and laptops, all of which they had left on standby.

I emailed them all warning this was a hazard and asked them only to use one extension lead at a time and to turn off appliances when not in use. They will ignore me, but I can only do my best.

I just hope that all this is enough and that at least now I am complying with all the law

UK Property: Number of homes for sale in UK falls to new RECORD low

THE AVERAGE amount of properties available per estate agent fell again in February, according to the Royal Institution of Chartered surveyors, meaning that the number of homes currently for sale across the UK are now at a new record low level.

The data from RICS released this morning also suggests that there are significant regional variations in terms of market activity, with some areas of the UK performing better than others, making a ‘one size fits all’ market very much a thing of the past.

As property values fell again in London, the South East and East Anglia, which previously had seen unprecedented house price growth, other areas of the country, such as Wales, the North West, Northern Ireland and the East Midlands all saw further price hikes last month, probably for the most part due to the lack of available homes to buy.

The report also cautions that new buyer enquires have dropped significantly over the last month - the eleventh consecutive month such a trend has been reported - which some may see as a cause for alarm, however there is a common-sense interpretation.

Brian Murphy, Head of Lending for Mortgage Advice Bureau explained: “Overall, the fact that the number of available properties for sale has fallen to record lows is bound to have an impact on purchasers

"It stands to reason that if fewer properties are on the market for sale, buyer choice is restricted. This means that those who are actively looking are likely to view fewer properties, hence why we would see a reported reduction in new buyer enquiries.”

That said,the data also indicates that alongside regional variations in house price growth, buyer activity is also varying significantly with Scotland, Northern Ireland and Yorkshire and Humberside all seeing levels of property viewings increasing in February, rather than falling.

Simon Rubinsohn, RICS Chief Economist commented: “The consultation announced earlier this week on housing delivery put the onus squarely on developers and planning departments to up their game to lift the supply pipeline, but the feedback to the latest RICS Residential Market Survey casts some doubt as to whether this will be sufficient to address the challenge.”

“Significantly, the longer term national house price indicator has begun to creep upwards once again in recent months despite the current somewhat mixed climate and the private rent series also remains firm, in both cases pointing to increases of at least fifteen percent over the next five years.

“Meanwhile, the divergent regional picture is becoming increasingly pronounced with key RICS indicators across huge swathes of the country still showing considerable resilience but data for London, the South East and East Anglia rather more subdued.”

Founder and CEO of Emoov, Russell Quirk suggested of today’s data: “The market has certainly slowed to an extent, but while some agents are noticing a reduction in buyer enquiries, their experience isn’t completely representative of the wider market.

"Halifax reported yesterday that UK home sales exceeded 100,000 transactions for the thirteenth consecutive month and there was a notable uplift in mortgage approvals, so there is definitely still a big appetite for UK property.”

Russell continued: “A dwindling index of stock alongside sustained buyer interest suggests the market is in better health than many are giving it credit for.

Has the Government made Peace with the CIL Review?

For those of you eagerly awaiting an update to our previous Community Infrastructure Levy (CIL) blog, SIT and LIsTen, the Government has - as previously promised - provided its initial recommendations in response to the CIL review in the Autumn Budget. For those not in the above category (CIL anoraks are apparently a niche group), planning obligations and CIL remain a significant consideration in the viability and deliverability of development, and therefore the Government’s stated first Budget objective of supporting more housebuilding.

The independent CIL Group, led by Liz Peace, prepared their report ‘A New Approach to Developer Contributions’ in October 2016 and this was released in February 2017 alongside the Housing White Paper. The Group’s report provided a number of recommendations, with the overarching objective of simplifying the levy, a laudable and welcome aim, but not an easy proposition.

We identified five headlines from the Review report in our February 2017 blog. So to what extent does the Government propose to take these on board?

A ‘new approach’ of ‘Local Infrastructure Tariff’ (LIT), ‘Strategic Infrastructure Tariff’ (SIT) and s106

LIT is not mentioned but the ‘3 tier’ CIL and planning obligation regime is been pursued through the introduction of SIT.

LIT rates linked to house sale prices

CIL indexation is to be linked to house price inflation, rather than CIL rates themselves. Whilst indexation is important – as highlighted by the Wandsworth/ Peabody case – this proposal does not get to the nub of the issue.

The CIL Group’s report recommendation to simplify CIL rates themselves has seemingly not been progressed. In fact the Government appears to want to do the opposite, proposing to consult on charging authorities having greater opportunities to vary CIL rates based on land use changes, so as to ‘better reflect the uplift in value’ - for example, higher CIL rates could be charged for the development of agricultural land for new homes, than say the residential development of industrial land.

Mandatory LIT charged on new development with no reliefs and exemptions

Silence on this proposal, as it currently stands.

Small developments only pay LIT and larger/strategic development would be able to negotiate s106 obligations, s106 pooling restrictions removed and potential offset LIT against s106 obligations

Pooling restrictions are to be removed… but only in ‘certain circumstances’ such as in low viability areas, or where significant development is planned on several large sites. The Government claims this will avoid ‘unnecessary complexity’.

However, the absence of the potential to offset LIT against s106 obligation contributions is a major omission. The current disconnect between strategic developments and associated infrastructure delivery seems likely to continue. In recommending offsetting, the CIL Group noted:


A further benefit of the combined LIT/Section 106 approach will be that large developments will be able to address, through the Section 106, not only the funding of the infrastructure but also the delivery of the infrastructure, which has been one of the failings of CIL.

SIT contributing to identified infrastructure projects similar to the current Mayoral CIL

SIT is to be taken forward with consultation on whether this should be used by Combined Authorities and planning point committees to fund both strategic infrastructure (as the Mayoral CIL does for Crossrail in London), and local infrastructure too.

So where does this leave us? Still facing uncertainty arising from ongoing issues with the detailed and technical workings of CIL; more clarity is certainly anticipated when DCLG launches the proposed consultation on taking these headline measures forward – and we hope, further CIL amendments that resolve day-to-day problems inherent in the current rules.

The Government’s measures are seeking to make the CIL regime encapsulate opportunities for land value capture, as evidenced by the proposal for more variance in CIL rates and the commitment to speed up the process of setting and revising CIL. The latter also recognises that the current two stage consultation process and evidence base requirements can present a time and cost barrier to charging authorities putting CIL in place. This particular proposal is to be commended and anything that can make the levy more responsive should be welcomed.

However, those dealing with CIL ‘on the ground’ will no doubt recognise the need for the CIL Regulations themselves to be more transparent, simplified and useable. Introducing greater ‘flexibility’ in terms of CIL rates (and the more extensive evidence base needed to support this) should be alongside streamlining the Regulations and simplifying how they are applied to development projects – a very difficult balance.