Qandor Property Magazine | Issue No. 13 | May 2021

Qandor.. ®

PR O PERTY M AG A Z I N E

PAUL WATSON

SME Housebuilders' SOS! How alternative funding can help

SSAS PENSIONS

The smart way to finance your next property project

TROPOLIS. TM

Issue No. 13 | May 2021

IN THIS ISSUE

THE FORMALITIES

04

FOREWORD A letter from our Founder, Matt Siddell

MARKET COMMENTARY

06 GREEN MORTGAGES

By Lee Langley

HISTORIC PROPERTY

08 BACKFORD HALL

By Emma Morby

INTERIORS & HOME TECH

12 WHAT A DIFFERENCE STAGING MAKES

Cover featuring Paul Watson

By Gary Ellerd-Elliott

explains how alternative lenders could provide a lifeline to SME housebuilders (p.36).

ISSUE NO. 13

of Blend Network who

20 HOW BTR DEVELOPMENTS CAN SUPPORT THE SHIFT TO MORE WFH

By David Ives

26 CINEMAS, “SKYFALL” AND HOW ABOUT YOUR NEXT COMPANY PERK?

By Luke Crutcher

MARKETING

DEVELOPMENT

28 IS THE LONDON PROPERTY MARKET

48 NIGHTINGALE QUARTER, DERBY: Q2

GOING TO BECOME INCREASINGLY

2021 UPDATE

RELIANT ON DIGITAL MARKETING

By Adam Buchler

BECAUSE OF THE LONG-TERM IMPLICATIONS OF THE PANDEMIC?

By Charlie Firebrace

INVESTMENT

52 5 KEY PRINCIPLES FOR INVESTING IN EXIT LOANS COVER STORY

36 SME HOUSEBUILDERS: HOW

By Rob Wilkinson

ALTERNATIVE LENDERS CAN HELP REVERSE THEIR DECLINE

PENSIONS

By Paul Watson

56 HOW A SSAS PENSION CAN FINANCE YOUR PROPERTY PROJECT

By John Moore

QANDOR SUCCESS

42 SOLVING A $73 BILLION PROBLEM FROM MY BEDROOM IN CLAPHAM

By Paul Conway

A HIVE OF ACTIVITY

Qandor Founder Matthew Siddell Managing Director Kevin Taylor Managing Editor Gabrielle Winandy QANDOR TEAM Membership Manager Rekha Patel rekha@qandor.org Videographer James Evans james@qandor.org For editorial and advertising enquiries, please email: magazine@qandor.org Visit our website: www.qandor.org Contributors Adam Buchler Charlie Firebrace David Ives Emma Morby Gary Ellerd-Elliott John Moore Lee Langley Luke Crutcher Paul Conway Paul Watson Rob Wilkinson Legal Qandor Ltd does not endorse any of the members or contributors to this publication.

Always seek your own independent advice prior to investing or agreeing terms of business.

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Each month, when I page through the summary of member contributions to the club, I am reminded what a fantastic group of people we have in Qandor. In the past 30 days, a swathe of events, made possible only by the dedicated contributions of our members, all but guarantees the club’s unmatched reputation when it comes to peer learning and relationship building.

Philip Howard (HGS Property Group) and Oliver Lowrie (Ackroyd Lowrie) filmed an on-site showcase of their 9-unit property development project in London called The Perfume Factory where, through collaborative architectural design, over 700sqft of saleable space i.e. a large piece of profits, were skilfully added to the scheme.

I was also joined by Lee Langley (On Point Mortgages) and Paul Watson (Blend Network) for our monthly Qandor webinar for a mortgages market update and some top tips on development finance.

We published our second e-book which features Dorian Payne (Castell Group), William Stokes (Co-Space), Denis Gleeson (Gleeson Build & Develop) and Naman Pathak (Mountbatten Homes) sharing hugely insightful advice on The Essentials Of Property Development.

Charlie Firebrace (Wonderhatch), Chris Oates (Creative Oates) and Chris Harman (Parent) presented a Q.Online panel discussion to Qandor members on how to build a brand and what you should be doing when it comes to harnessing the power of your brand to grow your business.

Alan Waxman (Landmass) hosted a Premium Members’ roundtable discussion and shared his experience when it comes to the importance of having the right design and construction team, as well as the psychology of understanding buyers, staging properties to attract them and interaction with selling agents.

And last but not least, two members presented case studies and content at our monthly Platinum Workshop. Ricky McLarnon (Brookland Property) took us through a series of impressive case studies that mapped the growth of his multi-million pound portfolio in Northern Ireland, and Sam Cherry (Legal & Contingency) explained Legal Indemnities, and their ground-breaking insurance which underwrites the cost of taking sites through planning – that’s right, potentially all your money back if your site fails to secure planning permission!

As always, a huge thank you to our members for consistently raising the bar when it comes to quality information sharing and contribution to our industry!

Matt Siddell Founder

E-BOOKS PROPERTY DEVELOPMENT ESSENTIALS Expert advice to get it right!

What are the biggest challenges developers face?

Four rising stars in property working on successful deals share their knowledge on what to do and what NOT to do when it comes to property development.

Dorian Payne Castell Group

William Stokes Co-Space

Denis Gleeson Gleeson Build & Develop

DOWNLOAD NOW www.qandor.org/books

Naman Pathak Mountbatten Homes

MORTGAGES

GREEN MORTGAGES. LEE LANGLEY Principal OnPoint Mortgages www.onpointmortgages.com

New Carbon Brief analysis shows a record-breaking 11% drop in greenhouse gas emissions in 2020, largely due to the pandemic. This puts the UK’s greenhouse gas emissions 51% below 1990 levels, meaning that we are halfway to meeting the target of ‘net-zero’ emissions by 2050.

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This illustrates the progress made so far, but also the challenge ahead, with emissions likely to rebound next year as the economy recovers. In 2018 the PRA and FCA issued papers challenging financial institutions to consider how climate change may impact their business, and since then we have seen a gradual increase in pressure for lenders to ‘green’ their loan books.

In July 2019, the Government launched its Green Finance Strategy to improve on climate change, the environment and sustainable development. A £5-million fund was set up to develop green mortgages and encourage households to improve the energy rating of their home. There is no standard definition of a ‘green mortgage’, but the idea is that consumers can benefit from a better rate or fees when purchasing an energy-efficient property or when raising funds to improve the efficiency of their home. Initially creation of the products was slow, but options are improving and growing.

Some of the smaller providers have had green mortgage products for a while. In fact, the Ecology Building Society were decades ahead of the competition after their launch in 1981.

It was set up by a group of pioneering founder members who wanted to start a building to help finance environmental building renovations and support sustainable development. Saffron Building Society, meanwhile, launched their Enviro Saver and Retro Fit Mortgage in June 2020, a product designed for borrowers wishing to upgrade their home to a better energy efficiency rating.

Green mortgages are not just restricted to building society offerings. Barclays have a scheme that you can apply for when purchasing an energy-efficient new-build property from one of its partner house builders. Nationwide borrowers can access a green advanced loan when making suitable home improvements and Natwest offer improved products when purchasing a home with a valid EPC rating of A or B. For landlords, Foundation Home Loans reward those who have proactively improved the energy efficiency of their rental property

to a rating of C via a competitive rate, reduced fee and cashback.

Foundation Home Loans found that 74% of lenders expect green finance to become a larger part of the wider market, with 83% expecting the ability to save on energy bills being the biggest driver behind this market.

Since April 2020, all landlords are required to have an EPC rating of at least E even when there has been no change in tenancy. Through the Green Homes Scheme, they could have accessed up to £5,000 for measures such as insulation or upgrades to glazing or heating but this was recently scrapped. However, as green mortgages grow moving forward, it will undoubtedly be an area to watch. Q.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Lee Langley is the Principal Mortgage and Protection Adviser at OnPoint Mortgages.

OnPoint Mortgages a trading style of L&D Mortgages Limited is an appointed representative of The On-Line Partnership Limited which is authorised and regulated by the Financial Conduct Authority. Registered address: 25 Homefield Road, Bushey, Hertfordshire, WD23 3AP. Registered in England & Wales under 10500099.

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HISTORIC PROPERTY OF THE MONTH

BACKFORD HALL: BREATHING NEW LIFE INTO A CHESTER MANOR. EMMA MORBY Director of Land Acquisition Heritage England www.heritageengland.co.uk Backford Hall is an impressive period Grade II listed property and has some magnificent architectural and historic importance. Located in Backford, Chester, the existing hall is believed to have been built in the early 19th century, replacing the original older hall built in 1565, and first became listed by Historic England in 1983.

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Backford Hall remained a country house until the 1940s when it was reportedly sold to a shipping company, and then in the 1970s became local authority offices. The building needed to undergo a huge restoration project at the turn of the century and the local authority sold the hall to developers, with the agreement that planning would be granted in the hope to save this historic building.

The local authority also granted an enabling

development on the grounds to support the restoration of the great hall.

The hall has been sensitively converted into 11 apartments, some of which are duplex.

There’s a well-balanced mix of historic and modern features throughout, making these flats a very desirable place to live, with high ceilings, spacious room, decadent fire places and loads of natural light!

The communal gardens are wellmaintained with ample parking and storage facilities on site. The hall is also well-situated, with Chester being less than 4 miles away, and should you wish to venture into the city, Liverpool City Centre is 18 miles away.

The duplex apartment is currently on sale for £625,00 and comprises an entrance hall, magnificent living room with sitting and dining areas, fitted kitchen, 3 double bedrooms, 2 bath/shower rooms (1 ensuite), direct access to basement storage and 3 parking spaces and is just over 2,178 sqft… which is huge! ➳

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Backford Hall showcases how developers can restore a historic building while creating beautiful, unique homes to live in. So, next time you see a dilapidated manor house or great hall, perhaps consider a conversion and etch your name in history forever! Q.

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DEVELOPMENT

WHAT A DIFFERENCE STAGING MAKES. GARY ELLERD-ELLIOTT Founder & CEO 3e Asset Management www.3ehub.co.uk

As developers, our primary focus is on the numbers, making sure we keep a tight rein on the costs as well as making sure we achieve the end value we envisaged.

However, how many of us focus on the soft skills such as design and presentation?

This is a lesson we have learned on our most recent development, The Wheatsheaf, and it’s one I think is important to share.

The development consisted of converting a former coaching inn and barns into four properties as well as building a new property in the car park.

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properties and were completed at the beginning of September 2020. This was on time and the agent was excited to bring them to market and confident that they would achieve close to the list prices. The properties were as follows: • Plot 3 - a 1982 sq ft 4 bed end mews property – Listed at £725,000 • Plot 4 - a 950 sq ft 2 bed mid mews property – Listed at £325,000 • Plot 5 - a 1126 sq ft 3 bed end mews property – Listed at £425,000 The agent organised an open day event, which attracted a lot of attention, and we were confident of receiving offers. However, that wasn’t the case. In fact, we received nothing –

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not one offer. The agent stated they had more viewings arranged and, as agents do, they continued with how confident they were.

One week turned into two weeks and three became four and still no offers. We were confident with the pricing as we were getting viewings, but no offers. After sitting down with the agent, we assessed the feedback, and the main points were the lack of parking and the lack of storage.

We asked the agents what screening they were doing and what conversations they were having with the potential buyers before they viewed. We were told that all the buyers had been screened and the properties were what they were looking for.

In the end the agents raised the point of price and felt we had overpriced the units.

Given the pressure we were under to sell, we agreed to reduce the prices as follows: ➳

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• Plot 3 - £695,000 • Plot 4 - £295,000 • Plot 5 - £395,000 However, even with the price reduction, we still didn’t receive any offers, so in December, we brought on a second agent as a bit of competition for the first agent; at the same time, the larger properties were finished and listed by both agents.

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• Plot 1 – a new build 2850 sq ft 5 bed detached property – Listed at £950,000 • Plot 2 – the former coaching inn – 4200 sq ft 5 bed detached property – Listed at £1,100,000.

The first agent stepped up and within two weeks we had agreed sales on plots 1, 2 and 4, which was great news, and also confirmed our pricing was right. However still nothing on plots 3 and 5. ➳

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In January we agreed to lower the price one more time to try to generate interest and hopefully with the SDLT holiday ending on the 31st of March, we would get the two properties sold. The prices were lowered to: • Plot 3 OIEO of £650,000 • Plot 5 OIEO of £375,000.

Both agents felt this was the correct course of action and again the viewings started. However, it quickly became evident that the same issues were being raised. This is when we decided to take drastic action.

Throughout the timeframe, we had felt that the agents had only been interested in the larger properties, as these were the easy sells, and had just been paying us lip service on the others and hoping that by lowering the prices, someone would make an offer.

So in mid-February we took both plots 3 and 5 off the market and dis-instructed both agents. I spoke with an agent I had been following on social media whose presentation of the properties they were selling was in another league compared to how the previous agents had presented ours.

After an initial meeting they suggested we stage both properties and put us in contact with the staging company they used. The owner came out and surveyed the properties and suggested a scheme for both properties.

Given the cost involved, we spoke with the agent about relisting the properties at a higher price point than when we delisted them. The agent confirmed they agreed with us on the price and were confident of achieving them.

The staging was done mid-March and the new marketing material was completed with brochures, video tour of each property and an amazing set of marketing photos.

We relisted the properties on the 24th of March at the following prices: • Plot 3 - £700,000 • Plot 5 - £400,000.

Straightaway the agent had viewings lined up and we agreed a full asking price sale on plot 5 on the 29th of March and we agreed a sale on plot 3 for £690,000 on the 31st of March. In less than a week we had agreed sales for higher than the last list price with the old agents who had not received one offer in 5 months.

What was the difference? The staging and presentation.

Both buyers commented on the staging and felt that the properties felt like home, so much so that they have both asked if they can buy the furniture and take the properties turnkey.

The real key takeaway for us is: people want to buy a feeling of home, which is very difficult to do when all they are seeing is an empty shell.

The cost of the staging was more than covered by the uplift in the agreed sale prices and the speed we received the offers. Our only regret was we didn’t do it sooner. However, we have already agreed to use them on our next project. Q.

We would like to give a huge thank you to the following people for helping us achieve the above sales: • Jan, Ildi and the team at Fine & Country Rutland office.

• Elaine and her team at Lemon and Lime Interiors.

• Dean of Dean’s Aerial Photography.

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INTERIORS

HOW BTR DEVELOPMENTS CAN SUPPORT THE SHIFT TO MORE WFH. DAVID IVES Business Development Manager David Phillips www.davidphillips.com

Working from home (WFH) is here to stay. Among the many changes that COVID-19 has brought about in recent months, the shift in how our work and home lives interact has been one of the biggest. This is more than just changing people’s daily routines. It also has potential to change the spaces we live in, especially in build-to-rent (BTR) developments, which attract many people with jobs that can easily be done remotely.

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In 2019, only around 5% of people employed in the UK mainly worked from home. Fast forward to lockdown around April/May 2020, and around 60% of the adult population were doing it. If this was you, chances are you’ve experienced many of the WFH challenges – finding a quiet space, getting all-day comfortable, getting your tech set up – as well as the perks, such as zero commuting and a more flexible working day.

More WFH is what people want As the COVID uncertainty continues, it

pattern is what many people want. Surveys have shown that most people who can, want to WFH more in the future. They feel more productive and they relish the flexibility. And an overwhelming majority want a balance between home and office working, rather than five days of commuting.

So, if part of home is always going to be for work, what does this mean for the way interiors are designed and put together, especially in developments where space is at a premium?

seems that many people expect to WFH for the foreseeable future. Of the 40% of people still working from home in September 2020, two-thirds expect still to be in their home offices well into 2021 and 12% think it will be forever. But despite the challenges, this new

Keeping work and chill space apart First, there’s the question of separation. Lack of a work/life boundary was cited as one of the worst aspects of remote work in a study of start-up companies and their founders – and it’s one of the things they miss most about office working. Given that this group is likely to be made up of digital natives who are very happy to work flexibly, being able to separate the home office from the place where you chill on evenings and weekends is clearly important.

Industry commentors expect growing interest in BTR developments that support working from home, and it’s a trend that David Phillips has responded to, according to Tom Grey, BTR Director: “The shift to home working is already changing the way we’re thinking about furnishing BTR developments”, he says. “As well as offering conventional ranges of furniture for typical apartment layouts, we have now introduced ‘configurable’ furnishing options, so residents can personalise their space and, for example, switch a second bedroom to become an office if that’s what they need. It gives BTR ➳ Issue No. 13 – Qandor – 021

operators a flexible and attractive offer for prospective customers who are more likely than ever to need their home to double as a workspace”.

Flexibility in the smallest spaces Not every flat can offer a clearly separated workspace. But even the smallest units can be configured to offer much more than the perching on beds and sofas that many people had to put up with when they were compelled to work from home. Tom says: “With clever design and use of space, we can create a comfortable and ergonomic workspace that’s part of a broader living area, for example by using fold-out desks, dining tables with cable access, and seating that’s designed for work use.” ➳

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Communal areas can bring back the sociability of the office People are happy to ditch the daily commute.

And they relish the distraction-free peace and quiet that WFH can bring. But what they miss most about the office is the social side.

Being in a home workspace five days a week may suit some people, but for many, work is also chance to chat, swap ideas and build friendships and networks.

This is another area where BTR developments can support the new world of work. Shared spaces are strong selling points for BTR developments. Although they’re not a substitute for the office, they can offer some of its buzz and many of its social aspects. The ability to switch between a workspace in their flat and a bigger communal area makes for a more varied and sociable home-working day. Even if they may currently need to be set up for social distancing, these spaces can be configured in many different ways to enhance residents’ work and home lives.

The new shape of living It’s widely said that this pandemic will change some things forever. We think living space, especially in BTR developments, is one of them. It’s a positive shift, giving developers a new offer and residents a place they can (comfortably) call both home and work. Q.

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Queens Gate Terrace Project in conjunction with Amos Goldreich Architecture Photo by Ollie Hammick

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HOME TECH

CINEMAS, “SKYFALL” AND HOW ABOUT YOUR NEXT COMPANY PERK? LUKE CRUTCHER Director Living Home Technology www.livinghometech.co.uk

Well, what a year that was. It feels as if spring 2021 has an extra special meaning. This year, it isn’t just the birds, trees, plants and insects coming back to life with the lengthening of the day.

For most of us, life in general is starting to get back to normal, the latest marker being 026 – Qandor – Issue No. 13

the opening of our pubs (outdoors only, just in time for April snow!). With this reinvigoration of life comes a new lease of life in general.

Plans that have been put on hold suddenly seem possible, likely even.

This is exactly the case with one of our more recent projects, a wonderful home set in the hills above Marbella, Spain called “Skyfall”.

We’ve completed projects all over the world

– St Lucia, the US, Portugal and Spain – but never in the midst of a global pandemic…

Now, regardless of our opinions and thoughts on how this has been handled or whether the lockdowns were needed at all, I think we can all agree that business is much more difficult whilst they are in operation.

Add into the mix designing and installing a project in another country whilst they are still in severe lockdowns and restrictions.

Add to this the political games being played before our eyes – “Your vaccine is awful and dangerous” and then “Give us your vaccines now” coupled with the more usual Brexit games around import/export and we have what can best be described as the perfect storm.

The project itself is a wonderful opportunity to flex our design muscles.

The owner being a fan of 007 (if you hadn’t guessed by the project name), we got to work some of this theme into the look and feel of both the cinema and the adjacent bar and vast entertainment area. The views are of course absolutely stunning and the architect has done an amazing job of maximising both the view and the privacy from room to room. There are no less than four pools, a gym, BBQ terrace and huge open plan living areas.

This is truly a home fit for Bond, or more

likely a Bond villain, Scaramanga style, from The Man with the Golden Gun, although it would be equally at home in a futuristic TV series like the Thunderbirds. Living Tech have of course been employed as tech consultants throughout, but we are fast moving towards the installation phase of the project, so our attention has turned to logistics.

Whilst we’re on the subject of our “design muscle”, over the past couple of years we’ve seen a trend towards clients asking us to install a home cinema within their business premises, using us to design a company branded home cinema experience for their employees and clients. It can be an extremely fun and effective way to provide a perk or talking point with their own customers and clients.

Over the years we’ve used neon lighting, embossed leather, brand colour lighting, sourced props and parts from movies sets, sporting events – you name it, we’ve likely done it. The guys are currently working on a dual cinema install for a well-known video games giant based in London. More to follow on this one as things progress. Q.

If you would like to experience real home cinema for yourself or enquire about our 3D design service, feel free to drop us a line on luke@livinghometech.co.uk.

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PROPERTY MARKETING

IS THE LONDON PROPERTY MARKET GOING TO BECOME INCREASINGLY RELIANT ON DIGITAL MARKETING BECAUSE OF THE LONG-TERM IMPLICATIONS OF THE PANDEMIC? CHARLIE FIREBRACE Sales Director Wonderhatch www.wonderhatch.co.uk

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At the start of January, PwC published its report on the UK and global economic outlook for 2021. One of the biggest takeaways from the report? The fact that PwC believes that both the birth rate and population of London will decline this year for the first time since 1988.

The Office Of National Statistics had predicted up until this point that the population in London will continue to rise each year up to 2025. But the report from PwC rather strikingly contradicts this with a projected drop in the number of people living in London by as much as 416,00 people. Roughly 4.5% of the city’s population.

PwC has conducted their research through surveys of Londoners living both within the city centre and the boroughs. The increase in remote working opportunities, alongside a projected rise in unemployment, indicates that London is not going to hold the same appeal to younger people entering the workforce. What’s more, people already living in the city are re-thinking their living circumstances, and some have already decided they see their future elsewhere.

The south of England is one area that has seen

a surge in property activity throughout the last year.

The main cause of this has been put down to people moving out of London and making the most of the flexible working arrangements that are in place now, and look to be remaining that way for the future.

It seems that all the signs are showing there will be a significant change to both living and working in London. If the population of the city is set to decline sharply within the next year and potentially, continue to fall even after that, then what will this spell for the future of the housing market in London?

Is the Universal Appeal of the London Property Market Coming to an End? So we have a shrinking job market, rising numbers of unemployment, fewer graduates taking positions

in the city and more people wanting to move out from it. This all means we can expect fewer people to be interested in purchasing property in London at present, and in the future, right?

Well, no. London’s property market has had considerable international appeal for quite some time. There are varying numbers on how much of the market is actively owned ➳ Issue No. 13 – Qandor – 029

by foreign interests, but last year, according to London Central Portfolio, 22% of all prime London properties were purchased by overseas buyers. None of these purchases had a single viewing of the property.

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Does this mean then that we can expect buyers to continue purchasing property in London no matter what state the city may be in? Perhaps to some extent, yes. London will always have an appeal in the world of property

and not just to international buyers either.

But we also must not rely solely on unconcerned buyers snapping up anything they see as a good deal without much further research or investment into even living in the

property. We don’t just need people buying property in London. We need people living here too.

So going back to those who are responsible for the 22% of purchases last year, ➳

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surely, they have to be looking at or seeing properties listed somewhere? With such ease of access now to just about everything in the world we could want to look at, courtesy of the internet, we must be seeing more and more sales for property in London coming online during the pandemic.

So is now the time, perhaps, to go all-in on digital marketing to attract buyers to a city they might not want to live in? We think so.

Is Going Digital Going to be the New Normal?

The importance of digital marketing has never been so great to those working in the world of property. For property developers and estate agents, engagement has always been crucial to the way that business works.

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Relationships are built and maintained in the physical world to further future acquisitions and sales of property.

Naturally, operating in a pandemic has meant that we have had to contend with some very serious restrictions limiting our capacity to interact with each other physically. The world is not quite as severe now as it has been in the last year or so, but everything, from property viewings to just peering at properties listed in an agent’s window on the street, has been a lot more challenging at times.

Consequently, as busy as many of those working in property have found themselves in this last year despite the pandemic, the way they have been working has seen some significant changes. Unsurprisingly, virtual viewings are up, in a very big way. Purple Bricks conducted a survey of London residents in March that indicated a staggering 43% of Londoners would be happy to purchase a property after viewing it online!

Now, of course, the pandemic has played a very big part in increasing the number of viewings being carried out online. The first thought one might have is that this trend will not continue after society is released from all social distancing measures currently in place.

But we wouldn’t be so sure. The benefits of online viewings are considerable.

The fact is, online viewings are a viable medium for the public to access, whether we are in a pandemic or not. They save time, both from travelling to the viewing location itself and the duration of the viewing. They are more convenient to arrange thanks to the flexibility with the time a viewing takes place, opening up a chance to be guided through a property at any hour of the day.

At the end of the day, despite whatever a property agency may want its potential buyers

to do, it is them who remain at the mercy of the buyer, not the other way around. If buyers are happy to continue viewing and ultimately buying property online, then the property market needs to do more than just support this. It needs to actively encourage this.

Why the Growth of Digital Property Marketing Is Vital for the London Market Going back over everything that’s been discussed in this article, with a shrinking population in the city, foreign investment still coming in from abroad without the need for viewings in person, and continued interest in doing everything digitally, it seems like a no brainer to focus more on digital marketing for the future of London Property.

A new buyers market has to be discovered, outside of the city, if the property

sector is to last past the aftershocks of the pandemic. Some people are leaving the city, more than those who are wanting to move in right now, it seems. But that doesn’t mean there aren’t more people who might want to move into the city.

Investment is going to be needed to ensure that the digital presence of London’s property market succeeds in attracting this new market of buyers. Relying on wealthy foreigners buying the best property on the market will not be enough to offset the potential population decline we will see in the city for the next few years. But where to start?

We don’t think everyone needs to start setting up accounts on TikTok to reach out to millennials and persuade them to buy flats in Kensington. But the power of social media platforms as a pulling force for sales in every field is well-known. Property, as anyone with ➳ Issue No. 13 – Qandor – 033

a Facebook profile has known for the last few years, is already changing hands thanks to social media. But it isn’t simply about selling.

This new audience needs to be found online for them to buy what you want to sell, so how to achieve this? Every property agency needs to start seriously looking at its social media presence and asking if it’s doing anything. A lack of social media presence will result in a lack of brand awareness. A lack of brand awareness will not help bolster an agency’s online presence, which will not do anything to help the sale of a property.

It is not out of the question that the property industry is going to have to get very creative in inventing new ways to entice buyers into London, or even potentially, reinvent the entire property market within the city. If the predictions about London’s population decline prove to be true, then the impact of this will be significant for the entire property market of the city.

If there is no one left within the city itself to buy property, then the industry needs to start looking outside of London for investment. The digital market is the most obvious starting point for this, and it should arguably be front and centre for all property companies operating within London at the moment and potentially, the foreseeable future. Q.

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"As a practising doctor, I know that the best relationships are built on mutual trust. With each person inspiring, supporting, challenging, teaching and uplifting the other, we are both better off for having worked together.

How can I support you?

What can we learn from each other?

Let’s connect and find out."

John Friis MD of synserahomes.co.uk

HOMES

COVER STORY

SME HOUSEBUILDERS: HOW ALTERNATIVE LENDERS CAN HELP REVERSE THEIR DECLINE. PAUL WATSON Head of Origination Blend Network www.blendnetwork.com

The UK has seen its small housebuilder demographic fall by 80% in a single generation.

Funding, or rather the lack of it, has been and remains one of the key reasons for the drop. Paul Watson, Head of Origination at alternative development finance lender Blend Network, asks whether alternative lenders, with their flexible structure and dynamic approach to lending, can help reverse the ill-fated decline of small housebuilders.

036 – Qandor – Issue No. 13

Small and medium-sized housebuilders, defined as firms that produce 100 units or fewer every year, have fallen in number from over 12,000 in the mid-1980s to approximately 2,400 today. According to a 2017 report by the Home Builders Federation titled ‘Reversing the decline of small housebuilders: Reinvigorating entrepreneurialism and building more homes’, small builders are responsible for just 12% of homes being built in the UK today compared with 40% in the 1980s, with lack of funding for SME property developers as

one of the key reasons. According to this report, availability and terms of financing for residential development have become extremely difficult for small housebuilding companies over the past decade or so.

Lenders have drastically changed their attitudes to the construction sector since the 2008-09 financial crisis, and while small sites are consistently efficient in their delivery of new homes across multiple market areas, these are often the ones who struggle most to unlock funding.

In parallel with this lack of funding for SME property developers, the UK currently finds itself in the midst of the worst housing crisis in decades whereby there are too few homes available and those homes that are on the market are far too costly. For generations,

successive governments have embarked on seemingly ambitious building programmes to solve the housing crisis. In 2017, the then Prime Minister Theresa May declared her ‘personal mission’ to solve England’s housing crisis by turbo-charging the delivery of new homes and pledged to boost the housing stock by 300,000 units every year.

However, with just over 170,000 new homes having been completed in the year ending June 2019 and with construction having taken a big hit during the pandemic, the Government is currently very far from reaching this target. So, it was unsurprising that the housing market featured heavily in Mr. Sunak’s Spring Budget as he laid out the UK’s COVID-19 response in early March. ➳

Issue No. 13 – Qandor – 037

Cover Story: Paul Watson is Head of Origination at London-based property lending company Blend Network

We join in welcoming measures that allow an increasing number of first-time buyers get their feet on the property ladder. However, as development finance lenders work closely with SME property developers trying to channel much-needed funding into new housing, we urge the Government to also consider measures that tackle the supply side of the property market, especially more funding support for SME property developers and small construction companies. Failure to do so will risk further intensifying the decline of small housebuilders and deepening the existing affordability gap that continues to price out first-time buyers from the market in and

038 – Qandor – Issue No. 13

around major UK cities such as London, Birmingham and Manchester.

Fueling demand without addressing shortage of housing supply and the challenges faced by SME property developers risks creating a ticking time bomb by further inflating prices in the medium to long term, and pricing out first-time buyers and professionals trying to get their foot on the property ladder.

So, how can the UK reverse the decline in the number of small housebuilders and help build more much-needed homes? More specifically, can alternative lenders help reverse the decline of small housebuilders and support the housebuilding activity in local communities, towns and cities where those houses are most needed?

The answer, in my opinion, is that alternative lenders can and must be part of the solution to the UK’s deep housing crisis that is making so many people unable to get their foot on the property ladder. The core role of alternative lenders in channeling much-needed finance to the construction sector was evidenced throughout 2020 when the pandemic meant many traditional lenders were busy trying to administer the Coronavirus Business Interruption Loan Scheme (CBILS).

Since then, the case for alternative finance has become increasingly compelling at a time when banks have continued to tighten their credit criteria and have had to face increased regulations and capital adequacy ratios restricting their lending capabilities.

With their nimble set-up, dynamic lending criteria and sharp use of technology, alternative lenders are able to serve borrowers who have grown accustomed to faster,

better and simpler processes. In a market – property – where time is money and winning a deal may depend on the lender’s ability to move quickly, speed is one of alternative lenders’ key selling points. Their online process and technology bandwidth help speed everything up. For example, at Blend Network we recently funded a £1,700,000 loan in just six minutes.

Their ability to provide higher gearing compared to traditional lenders is another major selling point in the case for alternative lenders such as Blend Network where we currently offer up to 68% LoanTo-Gross Development Finance (LTGDV) finance. This is especially important in the property sector where developers are often asset-rich and cash-poor looking to borrow as much as possible against their assets.

Furthermore, alternative lenders’ flexible and individual approach to lending means they ➳

Issue No. 13 – Qandor – 039

are often happy to fund quirky, non-off-theshelf deals that traditional lenders wouldn’t typically fund. In other words, alternative lenders do not go through a box-ticking exercise.

But alternative lenders must receive the support they deserve from the Government, and one concrete and effective way the Government can support house building is by working with alternative lenders to channel funding to SME property developers. Due to their nimble size, flexibility and efficiency, alternative lenders and P2P property lending platforms have demonstrated they can and must be part of the solution to the UK’s housing crisis.

Furthermore, these innovative FinTechs form part of a sector that according to the recent Kalifa review, generates £11bn in annual revenue. We hope the Government will recognise the key role of alternative lenders and bring them to the fold to solve housing supply crisis.

In summary, the case for alternative finance has become increasingly compelling, and I strongly believe the time is ripe for the Government to bring alternative lenders into the fold to solve housing supply crisis and help achieve its 300,000-unit annual housebuilding targets. Q.

Blend Network is a peer-to-peer (P2P) property lending platform that provides development finance and bridging loans from £150,000 to £5,000,000 to experienced SME property developers and small construction companies. The company, based in London, is an active lender all across the UK. More information can be found at www.blendnetwork.com.

040 – Qandor – Issue No. 13

C R E AT I N G B E AU T I F U L S PAC E S F RO M WO R N O U T PL AC E S ANDREW MCDONALD andrewm@credoliving.co.uk 07711 140955 A N D R E W TAY LO R andrewt@credoliving.co.uk 07811 946001 RYA N W I N D S O R ryan@credoliving.co.uk 07752 534905 G I OVA N N I PATA N I A giovanni@credoliving.co.uk 07931 050159

INVEST IN THE FUTURE

C R E D O L I V I N G .C O.U K

SUCCESS STORY

SOLVING A $73 BILLION PROBLEM FROM MY BEDROOM IN CLAPHAM. PAUL CONWAY Founder & CEO Yuno www.goyuno.com

Why a Qandor member has backed Yuno and how can you get involved as an investor, partner or client.

As is often the case, SaaS businesses start off really slow for two reasons. Firstly, tech costs A LOT and, secondly, you need many subscription customers to even meet payroll. So, this was us, up the creek without a paddle. Trying to meet payroll, bootstrapping services to pay for tech and trying to get investment right when COVID struck... and to top it all off, someone broke into the office 042 – Qandor – Issue No. 13

and stole all our computers. Now, where’s my paddle again?

Don’t worry about the computers though, ‘find my mac/iPhone’ tracked them in under an hour; the police were still taking statements when we were there taking our computers back off them. In hindsight, perhaps the safety rating of this exercise was pretty low, but we needed to keep the lights on and this was the last straw.

Yuno was created to empower businesses in property to make smart decisions. This is because how we make decisions is disjointed,

often based on emotion, a hunch, and almost always made without all the required information. Even with the benefits of 30 years’ experience, the market and legislation moves fast – the latter changing on average every 9 days.

But why ‘Yuno’, I hear you ask? Yunonna is a Japanese word for ‘competent’, a word that became a pillar of what Yuno is today. It comes down to who we all take advice from: are they actually experts and should we listen to them? Can the people we are taking advice from be proven to be competent? Are they qualified, experienced and accredited?

Yuno was born out of a London based consultancy company serving high street agents such as Douglas & Gordon and Marsh & Parsons using this very motto, helping their landlords through complex legislation and tricky decisions on their investments.

Data was complex and inconsistent with local authorities’ information and so-called experts regularly lead us up the garden path with poor advice. It became clear there was a need to systemise and automate the data and advice being given to landlords. The Yuno concept was born.

A huge learning curve ensued, full of wacky ideas and wild dreams that only a young tech company could fulfil; the only issue was… Yuno wasn’t a tech company. Yet. I started my tech journey with one simple step (leap): ‘What the hell does Full Stack mean?’ For the non-techies among us, it means a developer (tech, not property) that can code in front end and back-end code. I won’t go much further but you get the idea of where the starting point was. Luckily, I

“A huge learning curve ensued, full of wacky ideas and wild dreams that only a young tech company could fulfil; the only issue was…

Yuno wasn’t a tech company. Yet.” am from an engineering background in the oil industry, so the learning curve after this point wasn’t so steep.

Fast forward about 3 days, we needed to get some excited techies on board and find a development partner to help make something valuable that a customer would want. Luckily, we were already working with Hamptons International and they stepped up to the plate and were excited to work with us on our journey. Our product manager got stuck into all the complex and time-consuming processes that Hamptons have in-house to manage compliance and the development of Yuno was underway.

We started with creating two key data sets, Property Licensing and Article 4 planning permission, which came from huge headaches from our partners on constantly changing legislation varying from borough ➳

Issue No. 13 – Qandor – 043

to borough, street to street and sometimes house to house. We created a user-friendly platform to display the data sets and, scanning thousands of properties at the same time, we could easily let Hamptons know where their biggest risks lay hidden in their portfolio. Risks running into the hundreds of thousands of pounds were easily displayed to the user rather than random maps from the council as below.

044 – Qandor – Issue No. 13

Under the hood, Yuno is all very legislative and perhaps can be seen as a little boring, though on the surface Yuno is there to help you make smart investment decisions and empower you and your clients on the best steps to take on investment to reduce risk, increase revenue/yield and save time.

Through our unique data sets, personalised journeys and smart insights, we help empower better decisions in property.

We have created a user-friendly platform where access to property data, insights and guidance is only a click away. Unique datasets in areas like licensing, planning and energy, are matched with existing data like sales and rental prices. Based on the property address

you give us, we match you to a UPRN (Unique Property Reference Number) and tie all the data digitally back to this unique identifier.

From there, based on how you are running the property (residential - flat, house or building - or Commercial), we create a unique property journey, helping you make smarter decisions to increase revenue/yield, save time and drive down risk.

The platform is entirely bespoke to you

and your property. When you edit details about your preferences or your property, Yuno adapts and surfaces the relevant information to you. We use smart algorithms and large data sets to empower the best property decisions.

Once the technology had advanced, we secured a partnership with the next fastest growing property tech company: in steps Sprift, the most comprehensive UK property reporting in the market. ➳ Issue No. 13 – Qandor – 045

And here we are today. It’s all about growing the value to the user, and our partners - from investors to portfolio landlords, property managers, estate agents, architects, planning companies, surveyors, letting agents, portals, mortgage and insurance brokers.

The team has grown organically and today we have Freddie (a notorious proptech mogul) as our COO; Linlin, or Frank to you and I, (a talented Machine Learning and AI) as our Data Scientist; Russell (an old school friend and experienced techy) as our CTO; and Alex (ex 999 rapid response operator) serving our clients as our lead Account Manager. Matching these rock stars with the rest of the team are investors and advisors and there is never a dull day in Yuno.

What’s happening next? Yuno is fundraising at the moment to take this model UK wide and in the future worldwide.

Frank, our data scientist, is also working on machine learning models to predict events in the property market. Not all properties are ideal for investment properties and certainly 046 – Qandor – Issue No. 13

as legislation changes are shaping a new landscape for the PRS, we hope to make this all seem a little more clear and stress free at every stage of the property journey with Yuno.

Could you be sitting on an asset that is a ticking time bomb and isn’t even worth holding anymore, or could it be generating a higher yield? And what obstacles are in the way?

Luckily for us, we have some really exciting interest in Yuno and it’s hard to keep up; we have one of the big portals looking to help add value to their agents and one of the largest Mortgage Brokers trying to add value to their landlords with Yuno.

If you want to come on the rest of the journey, you can join us as a partner or a member of the team, and Yuno is also fundraising EIS investment of £300K, which Antony Senny, a Qandor Member, has opened the round to and is our lead investor. Q.

Click here to book a call with Paul to discuss how Yuno can help you

HMO & Co-Living Conversion Specialists CrowdProperty was set up to address fundamental market pains around raising property project finance that our founders felt personally when looking to fund their own projects, many of which were HMO conversions.

The property expertise at our core means we work in partnership with developers to put together the perfect package, leverage our extensive hands-on property development experience to help the project get completed and can work closely with developers on purchasing portfolios of HMOs and major co-living schemes.

The speed, ease, transparency and certainty of funding we offer enables the property developers we work with to secure better deals and grow their property businesses quicker, bringing customers back to CrowdProperty for future projects as long-term partners. We are bringing back customer focus and changing the game of property project finance.

Apply in just 5 minutes for an initial decision in 24 hours www.crowdproperty.com/apply

PROPERTY DEVELOPMENT

NIGHTINGALE QUARTER, DERBY: Q2 2021 UPDATE. ADAM BUCHLER Managing Director BBS Capital www.bbscapital.com

At the beginning of March 2020, we were delighted to share our progress report on this prime city centre regeneration with Qandor.

We had successfully launched our Phase 1 sales at the end of February, taking reservations beyond our original targets, and construction was well under way.

Little did we know that just a couple of weeks later we would all be in the grip of COVID-19 going into our first national lockdown!

048 – Qandor – Issue No. 13

Given the wider backdrop of the past 12-months, I’m delighted to report that the project and our team have weathered the storm well and the development remains firmly on-track: on time and on budget.

Background By way of reminder, the development is a joint venture between Wavensmere Homes, BBS Capital and Cedar Invest, regenerating an 18-acre site which was once home to the Derby Royal Infirmary. Adjacent to Derby’s main shopping centre and a five-minute walk

The first 5 completed plots, with Pepperpot South behind

from both the station and the city’s CBD, it will ultimately deliver 800 homes masterplanned around green spaces, cycle routes, an outdoor gym and children’s play area. The iconic historic “pepperpot” buildings will be home to a café, gym, exhibition space and meeting rooms.

We are in the process of delivering the 125 houses and 349 apartments across 2 blocks. Other, smaller apartment blocks will follow in later phases.

Finance As could be expected, there have been bumps in the road. The project had originally been debt-financed by Urban Exposure PLC (“UE”). As many of Qandor’s readers will be aware, as a specialist regional development lender, UE came under real pressure from investors and shareholders following COVID and is now in the process of winding down and delisting from the stock market. As a result, whilst UE provided some shortterm support to maintain the construction

programme, the joint venture was forced to refinance the project. As a testament to the quality of the project and the delivery team, we received viable term sheets from more than six lenders and successfully closed our new facility in Q4 2020, porting UE’s professional advisors for project continuity and efficiency.

Construction More than a year into the project, we are delighted to report completion of the first five houses in recent weeks. James Dickens, MD of Wavensmere Homes, says: “Despite the pandemic, work continued on site at a fast pace, which avoided any delays to the timeline. We are immensely proud of our subcontractors who have worked so hard to meet milestones despite the challenging year with unprecedented weather and the restrictions imposed by the pandemic.”

Our showcase Pepperpot South has been substantially refurbished and will shortly be launched as an on-site marketing ➳ Issue No. 13 – Qandor – 049

Ongoing progress to plots 1-5 on Phase 1, with Pepper Pot South behind

suite with sales and management offices.

All the Phase 1 houses are wind and watertight and at various stages of internal fix, plastering and decoration. All the Phase 2 houses are now underway, at various stages of groundwork, brickwork and roofing.

Work has also commenced on Block A (140 apartments), and Block B (209 apartments) will follow very shortly.

Sales Phase 1 of the houses is now fully sold out, and we have taken substantial reservations on Phase 2. Demand has been from a combination of both owner occupiers and investors, the latter being attracted by the projected 7% yields that can be achieved.

More than 80 of the 125 houses are now secured or exchanged, with our first completion taking place last week! Our show home has just been completed and the landscaping is now being planted.

Derby The City of Derby has bounced back strongly following the pandemic. Over 11.8% of the local Derby workforce is engaged in hi-tech functions, which is four times the national average, and the Centre for Cities has recognised Derby as a top 10 UK location in which to start a business.

Aside from the stalwarts of Rolls Royce, Toyota and Bombardier, in March 2021 alone: • SmartParc announced a £300m food manufacturing and distribution park close to the city centre which will create 5,000 jobs; • Europe’s largest industrial developer

050 – Qandor – Issue No. 13

Panattoni began construction on the 900,000 sq ft development of Derby Commercial Park, having agreed a 371,000 sq ft leasing to healthcare logistics company Alloga UK; • Lidl announced the development of a 550,000 sq ft Derbyshire bottling plant, hailed as the largest single company investment in the county since Toyota in the 1990s; • Grainger was reported as being under offer on the city’s first BTR scheme at the Becketwell regeneration scheme.

Overview In all we remain confident and enthusiastic for the delivery of the project and the creation of a new urban community. With built product covering everything from 1-bedroom apartments to 3-bedroom houses, we can cater for a broad demographic, and the concentration of outdoor green space so close to urban amenities is well suited for owner and renter requirements given the changes which have come about following the pandemic. Q.

Readers can follow our progress at www.instagram.com/q_derby/

PHOTOGRAPHY & FILM SPECIALISTS FOR THE PROPERTY INDUSTRY.

Creating inspiring content that works. www.wonderhatch.co.uk

Charlie Firebrace Sales Director E Charlie@wonderhatch.co.uk M +44(0) 7595 375132

INVESTMENT

5 KEY PRINCIPLES FOR INVESTING IN EXIT LOANS. ROB WILKINSON Co-founder and Director Crowd With Us www.crowdwithus.london

Development Exit Funding: A short-term loan facility used to finance a recently completed or near completed development whilst the units are sold Exit funding can make for an interesting investment where the construction phase is complete or close to completion and the current facility is coming to an end. In this situation, in most instances, the development risk is greatly reduced or eliminated altogether, allowing the borrower to focus on the marketing and sales, or refinance, of the units for the duration of the loan term.

052 – Qandor – Issue No. 13

There are a number of factors which need to align in order for an exit loan to be successful and, based on our experience, we outline our top five here.

Our latest project to repay investors in full was Bellmere Gardens, which launched on the platform in October 2019 – before the world had even heard about COVID-19.

Although the construction phase was complete, sales of the units had been slow.

CWU provided a mezzanine exit loan behind Aspen Bridging for £600,000, taking the combined loan-to-value to 80%. The discounted interest rate for the duration of the term was 20% per annum.

The project appealed to us for a number of reasons. First and foremost, as the construction element of the project was already complete, the overall risk of the project was low. The built units held intrinsic value with the main variable being the sales component. The loan-to-value ratio, although relatively high, still gave room for an exit with a combination of sales and refinance of the units. We understood that the previous sales agent had performed very badly, and since changing agents a number of sales had been agreed. These factors gave CWU a level of comfort in the project and enabled us to approve the project for listing on the platform, with an attractive projected rate of return.

While the risk was reduced for the project, it is never eliminated, and so we thought we’d share our top five principles to adhere to when investing in an exit loan: 1. Security With all investments, understanding and ensuring your investment has the correct level of security is imperative. In the case of CWU, we only fundraise for projects with first or second charge security. As Bellmere Gardens was a second charge (mezzanine) loan, it offered investors a higher level of projected return. The charge was lodged at Land Registry, a debenture registered at Companies House, and personal guarantees obtained from the borrower. An intercreditor ➳

Issue No. 13 – Qandor – 053

deed outlining the terms of the relationship between Aspen, the Senior Lender and CWU was drawn up and agreed.

2. The Exit As the name suggests, an exit loan is all about the exit. Refinancing a project after an initial loan term where the units have been completed still carries an element of risk, so it is vital to analyse and assess the exit strategy – whether this is sales or refinance or a combination thereof, you will need to be comfortable the exit is viable and the timeframe is reasonable.

3. Timeframes The term of a second charge loan will generally mirror that of the Senior Lender and so you will need to feel comfortable that it provides a realistic timeframe for the sales / refinance of the units. In the case of Bellmere Gardens, delays were caused by the pandemic and the loan term needed to be slightly extended. As an investor, it is important to be aware that with many moving parts comes uncertainty.

Where a developer requires and requests more time, you will need to be able to assess the position to understand the implications of allowing an extension or not.

CWU had been working closely with both the borrower and Senior Lender. We were aware of sales proceeding and refinances underway. We also took into consideration the pandemic. We endeavoured to work with the borrower while also maintaining the interests of our investors and as such, agreed a period of extension at the existing rate of return (20% pa) and only increasing it to the higher rate (24% pa) once the extension period came to an end. As such, investors received an overall

054 – Qandor – Issue No. 13

return of more than 20% per annum.

4. Partial Repayments Sales and refinances may occur at different points in time. This allows for partial repayments to be made during the loan term, which gradually reduces the exposure and loan-to-value of a project. It is important to be clear up-front as to how these partial repayments will be handled and how the interest will be calculated.

5. Partnerships The final element to be aware of is the importance of your working partnerships.

These are your relationships with the borrower, Senior Lender, solicitors and other professionals. Open channels of communication and a collaborative approach to these relationships is vital to enable the loan to run smoothly and to overcome and navigate any issues that may arise.

Exit loans offer an attractive opportunity to investors where the risks and opportunities are fully assessed and where the correct structure is put into place. If you would like to find out more about raising funds for a project or investing in similar schemes, please visit our website and / or contact us on hello@crowdwithus.london. Q.

Risk Warning: The returns of this investment represent a higher-risk investment than a savings account and there is the possibility that you could lose all your money invested in this product. The investments on this website are only available to investors who meet certain net worth or investment sophistication criteria.

Restoring historic buildings for the future generations

Heritage England Ltd 38 Oakley Road, Chinnor, OX39 4TW Contact Number: 07703324325 Email: emma@heritageengland.co.uk Website: www.heritageengland.co.uk

SSAS PENSIONS

HOW A SSAS PENSION CAN FINANCE YOUR PROPERTY PROJECT. JOHN MOORE Director at Leadenhall Wealth Management www.leadenhallwm.com

‘Pensions’ can be a taboo word amongst property investors and developers. The notion of tying up money until the age of 55, in spite of the potentially significant advantages, can often be unattractive to those adept in the property world.

It might be that property is a more familiar and tangible asset, where the investor is in control of how returns can be achieved, versus investing in a typical 056 – Qandor – Issue No. 13

portfolio of dozens of companies, but unable to influence matters. Or perhaps the general inability to borrow against pensions, to leverage returns, which can be achieved with property.

However, what if pensions could provide a mechanism that might allow a property project to break ground?

Accessing capital for property is often the primary obstacle to getting projects underway, and developers are constantly looking to secure funding.

This article explores how using

pensions might provide an alternative option to traditional property financing strategies with the use of Small SelfAdministered Schemes (SSASs).

What is a SSAS? A SSAS is a trust-based, occupational pension available to limited companies, in which up to 11 people can be members. A SSAS can provide useful strategic planning opportunities for the company, directors, shareholders and upper management throughout the firm’s lifecycle, not limited to: 1. Property finance via ‘loanback’ – a SSAS can make a secured loan of up to 50% of its value to a limited company for a maximum of 5 years, known as a ‘loanback’. For example, three directors have £500,000 of pensions each, which they transfer into a SSAS to form a combined pension of £1.5m. A loan can therefore be made to a limited company from the SSAS for £750,000 to assist the business with its trading activities.

2. ‘Loanback’ interest – any loan from the SSAS will need to be repaid with interest, which has the advantage of increasing the value of the directors’ own pensions, rather than paying this to a bank or third-party lender.

3. Syndicated funding – as a SSAS can have up to 11 members, there is potential to pool funds together to finance property projects.

4. Leveraging via ‘borrowing’ – a SSAS can directly buy land or commercial property. It can also borrow a further 50% in addition to the SSAS value via a pension mortgage, e.g. a £1m SSAS may have purchasing power of £1.5m.

5. Loans to ‘unconnected parties’ – SSASs can lend up to 100% of their value to ‘unconnected parties’, such as property developers. Security is not required in this case but is absolutely advised.

6. Profit extraction – a SSAS provides a potentially efficient way to extract profits from a business via company pension contributions, as opposed to taking salary and dividends where a deduction of tax of up to 45% or 38.1% applies respectively.

7. Corporation tax planning – company pension contributions to a SSAS are a deductible expense in the calculation of corporation tax. Therefore, companies making substantial profits, particularly those that might be affected by the recently announced corporation tax increases of 19% up to 25% from April 2023, can reduce the tax they pay.

8. Protection from creditors – as the SSAS is a pension trust, assets within, such as commercial property or land, cannot be taken possession of if a business fails.

9. Tax efficiency – if property or land is bought within the SSAS, it grows free of capital gains tax (CGT) and income tax. ➳ Issue No. 13 – Qandor – 057

“Loanback”-residential or commercial property Leadenhall Wealth Management

£500K Personal Pension

2.

Small Self Administered Scheme (SSAS)

£750,000

Ltd Company

£1.5m

3.

3 owners

£178,200 is repaid each year, for 5 years

1.

£500K Final Salary Scheme

£750,000 is repaid, and £141,000 of interest is paid to the Directorsʹ pensions

£500K SIPP

Objectives Business requires funding for residential property development

SSAS Rules Pension trust Ltd company required Up to 11 Members 50% Loanback (Max) 5 year term (Max)

Directors advised to transfer their pensions to a SSAS SSAS value is now £1.5m A 50% Loanback of £750,000 can now be made to the business First repayment of £178,200 isn’t due for 1 year

10. Passing assets down the generations – the assets of a SSAS can be passed to children and beneficiaries free from inheritance tax (IHT). Any assets within the SSAS can be provided tax free if the person dies before age 75. If they die after age 75, then benefits are paid at the beneficiaries’ highest marginal rate of tax.

11. Exit planning – a SSAS can provide liquidity for shareholders to exit a business via a SSAS ‘loanback’.

Additionally, business asset disposal relief (BADR), previously known as entrepreneurs’ relief, is less advantageous than before, where the allowance has fallen from £10m to £1m. Therefore, keeping assets in the business might be less attractive than it used to be.

058 – Qandor – Issue No. 13

Interest

Pensions / Loanback

As the Directors are borrowing from themselves, interest is paid back to their own pensions instead of a bank or lender

Example businesses The “Loanback” can apply for any trading Ltd company Including companies that develop residential property

Case Study – SSAS ‘loanback’ An existing client had a defined benefit pension (final salary scheme), which increased in value from c£450,000 in 2020 to c£950,000 in 2021. The pension was transferred to a SSAS, with a view to the client’s property development business receiving a ‘loanback’ to purchase a commercial unit for c£350,000, which will be converted to residential flats and sold for approximately £1m.

A loanback of £400,000 (term of 5 years, interest of 5%, repaid annually) will be paid from the SSAS to her company, to help the business purchase the unit and complete the project. The c£52,000 of interest payable after the 5 years is repaid back to her own pension scheme, rather than a bank, had she borrowed the money there. The business is able to repay the ‘loanback’ in full before the 5 years, if required.

In addition to the loanback, the client is also providing an ‘unconnected’ loan of c£200,000 to another property developer from her SSAS, where the project aims for returns of 30%.

The remaining c£350,000 has been invested in a portfolio of global shares.

Property and pensions Upon reading, many may feel that the 50% ‘loanback’ facility, the pooling of pension assets to syndicate and ‘borrowing’ are the SSASs’ most useful features in terms of investing in property.

However, given the advantages stated, we suggest that the majority of profitable limited companies can benefit from utilising SSASs as a ‘financial toolkit’ for the business, where pension contributions are made in successful years to reduce corporation tax, with the knowledge that the business can access 50% of these same contributions via a ‘loanback’.

Considering that finance can be raised from pensions, or that capital within can be used to invest directly in property, may just persuade investors and developers to reconsider the use of such vehicles. Q.

Note that each director’s financial position and objectives are different. What might be appropriate for one business owner may not be appropriate for another. There are risks to this planning, and these need to be fully understood before initiating such a strategy.

Therefore, before pensions are utilised to invest in property projects, it is important to seek appropriate, regulated advice.

Issue No. 13 – Qandor – 059

™

Tropolis PROPERTY EDUCATION REDEFINED

®

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Qandor.

Unlock access to the best program online and start ‘building’ your dreams today!

The best property strategies for 2021 Do you...

Need more knowledge Need more experience Need more time ​Need​to​find​the​right​people​to​work​with ​Need​help​to​understand​the​costs ​Not​understand​the​planning​system ​Not​know​how​to​find​good​deals ​Not​know​how​to​manage​the​builder​and​other​professionals?

The​Tropolis Accelerator Program​covers​a​large​variety​of​property​strategies,​all​ through​online training,​including;​ Self-build,​land​buying,​development,​refurbishment,​auctions​and​flips,​JVs,​newbuilds,​HMOs,​finance,​legal,​planning,​construction,​building​regulations,​project​ management​and​design And​that’s​not​all,​the​program​also​reveals​the​insider​secrets​to​creating​homes​from​ various​types​of​commercial​property​such​as​offices,​shops,​industrial​property​and​ barns!

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Access to live Masterclasses with over 30 experts Lifetime access to the online 10-week program Be part of a connected community

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MULTIPLE MEMBERSHIP OPTIONS AVAILABLE Become part of an exclusive community of business leaders, entrepreneurs and investors in real estate and construction Apply now and book a call to discuss your membership options

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Qandor Affiliates

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CrowdProperty

David Phillips

Capital allowances

Crowdfunding

Interiors

Hilltop Credit Partners

Keystone Law

Leadenhall Wealth Management

Stretch senior funding

Mesh Energy Renewable Energy Consultancy

OnPoint Mortgages Mortgage brokerage

Legal services

SSAS Pensions

Nimbus Maps

Ocean Bathrooms

Property Software

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