Tue, 22 May 2018
Nick Leavey - Chairman of Coffin Mew and head of the commercial property team
The charity Shelter reports that house prices are now more than seven times people’s incomes, leading to more people renting privately at risk of rising rents, fees and limited long-term security, writes Nick Leavey.
Thousands are homeless, yet international investors are trading prime residential property, adding to pressure on prices and locking people out of the market.
Despite tinkering with the planning system, stamp duty land tax, help to buy and other affordable housing schemes, the Government acknowledged the housing market problems and expanded Sajid Javid’s role to Secretary of State for Housing, Communities and Local Government.
The Government aims to ban most new leasehold houses and the massive premium ground rent hikes seen in some residential leases.
Furthermore, the Law Commission will focus on unfair leasehold contract terms, why commonhold failed, enfranchisement and regulating managing agents.
However, these legal initiatives do not address property prices and the fact that supply is nowhere near demand.
Indeed, many are calling for a long-term housebuilding plan outside of party politics, which successive Governments need to commit to implement.
Businesses are increasingly demanding something different to what they required in the past – flexible workspace.
According to property consultant Cushman and Wakefield’s 2018 report, flexible workspace accounted for 17% of all office leasing activity in the UK’s nine largest cities in 2017, up from just 6% in 2016.
With technological advances and growth in agile working, this figure is likely to increase.
This means that, while businesses can benefit from flexible workspace that meets and evolves with their needs and resources, neither landlords nor occupiers will necessarily enjoy the same levels of security as they have previously.
In some regions, speculative office development has stalled, lessening supply and adding pressure to rents.
Landlords and occupiers need to be aware of their rights and obligations in flexible workspace contracts, which will evolve as the market matures.
While online retailers flourish, high street retailers are struggling. Retailers such as New Look have closed stores, and House of Fraser is approaching landlords to negotiate lease rents downwards. In some regions, the high street is dying.
Disappointingly for smaller high street retailers, the 2017 business rates revaluation favoured out-of-town giants such as Amazon. However, over the next two years the way increases are calculated will change, which should result in lower increases.
It is also disappointing that the Law Commission has not selected a commercial leasehold project, which might have improved tenant security in commercial leases and their ability to freely transfer their leases on a relocation, sale or closure of their business.
With no other support forthcoming, many high street retailers have created Business Improvement Districts (BIDs), pooling funds and resources to deliver projects to enhance their areas, increase footfall and support their businesses.
So, change is under way in the commercial property sector, but the residential sector is lagging.
Would-be homebuyers urgently need Government and the housing market private sector to join the revolution.
Nick Leavey is Coffin Mew’s chairman and partner who heads the commercial property team and can be contacted on 020 3002 2891 or by email to firstname.lastname@example.org