IN THIS ISSUE
THE FORMALITIES
!"
FOREWORD A letter from our Founder, Matt Siddell
TECHNOLOGY
!# DEVELOPERS NEED A FAST, RISK-FREE ROUTE TO DEVELOPING SMART HOMES By Ashley Said-Kirton
HERITAGE
$# BADGERS HALLL
Cover featuring Mike Bristow, CEO and Co-Founder of CrowdProperty, discusses the importance of the capital stack and how the average house price has risen by 18.2% between March 2020 and March 2022, on p. 82.
ISSUE NO. 21
By Emma Morby
INTERIOR DESIGN
%# ARTISTS STUDIOS: FROM A BACHELORS PAD TO A FAMILY HOME
ARCHITECTURE
&" SUSTAINABLE HOUSE OF THE FUTURE By Giovanni Patania
By Alan Waxman
'# A NEW EMERGENCE By Holly Gannon
*! MATTEO BIANCHI STUDIO ADDS A TOUCH OF MAGIC
COVER: DEVELOPMENT FINANCE
(% THE IMPORTANCE OF THE CAPITAL STACK By Mike Bristow
By Matteo Bianchi
#! CAMPDEN HILL, KENSINGTON By Alan Waxman
PROPERTY FINANCE
)" CONSTRUCTION INDUSTRY SCHEME By Nick Bustin & Dinesh Pancholi
$!! LENDING FOR HIGH NET WORTH INDIVIDUALS By Lee Langley
MEMBER PROFILE
$!" EMMA MORBY
FOREWORD _______________________________ Qandor Founder Matt Siddell Partner, Head of Content & Marketing George Le Roux Partner, Head of Membership Simon Podd Events & Publishing Manager Tess Lawson Photographer Daniel Law _______________________________ For editorial and advertising enquiries, please email: magazine@qandor.org Visit our website www.qandor.org Contributors Alan Waxman Ashley Said-Kirton Emma Morby Giovanni Patania Holly Gannon Jake Pearlman Lee Langley Matteo Bianchi Mike Bristow _______________________________ Legal Qandor Ltd does not endorse any of the members or contributors to this publication. Always seek your own independent advice prior to investing or agreeing terms of business.
_______________________________
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!"#$%&'()%*+,$%)&-%.#&-(/%$0$1%(&&2%34526%+.%*&%.$$%#&7%841% )&-90$%5&,$:;% There are countless positive affirmations like this one, urging us not to look back, although sometimes it’s interesting to do so. For instance, looking back at past issues of Qandor Magazine from 2020, I noted that some pundits were forecasting a 7% growth in average house prices. Compare and contrast with the actual data. According to Halifax, as referenced by Mike Bristow, CrowdProperty, in his piece starting (page 82), the housing market has boomed. Between March 2020 and March 2022, the average house price has risen by 18.2% (£43,577) going from an average of £239,176 to £282,753 over this period. In the last 12 months alone the average house price increased by over £28,000 which as a figure is not far off the average UK earnings – let that stat sink in. What will the market and situation look like in two years hence? Against the backdrop of rising inflation and likely interest rate rises we’ll need all the positive affirmations we can share. Developers and lenders have always had to work within the constraints of the wider economic landscape so it’s great to see how Qandor members, such as Ashley Said-Kirton and Giovanni Patania, are looking to help developers finesse their offering to the end buyer; Ashley’s business, Avande Connect allows developers to provide the means for buyers to effectively design their own bespoke smart-home (see page 6) and Giovanni, from WindsorPatania (page 74) is looking to highlight and offer practical suggestions about creating sustainable homes for the future. Lastly, a date for your diary. We’d love to see as many of you as possible at our Pimm’s on the Pier event on Thursday 12th May for some early summer networking, laughs and drinks. Check out our events page for more details. Until then…
M! Sidd" Matt Siddell Founder
BE SURE NOT TO MISS THIS START-OF-SUMMER NETWORKING EVENT!
TECHNOLOGY
DEVELOPERS NEED A FAST, RISK-FREE ROUTE TO DEVELOPING SMART HOMES ASHLEY SAID-KIRTON Managing Director Avande Connect www.avandeconnect.com
Increasingly, homeowners expect properties to be able to deliver efficient and automated control of their environment as well as offer cutting-edge entertainment experiences.
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Ashley Said-Kirton, Managing Director of Avande Connect, examines how developers can address this trend. A key consideration for any new build is how to make the dwelling as attractive
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as possible in an increasingly competitive market whilst keeping costs under control. How does a developer know what features will be the most popular to offer before the buying process begins? In the past, it was normal for developers not to provide some features that are expected today, like a fitted kitchen, for example. Our experience tells us that the smart home is nearing that level of expectation. The best way to tackle these dilemmas is, of course, to find a specialist to partner with, but then how do you keep costs and expectations under control? 008 – Qandor – Issue No. 21
In many other sectors such as yacht or high-end car manufacturers, buyers are offered the chance to pick what extras they want, with any additional costs to the supplier controlled and known up front. Is it possible to achieve something in the developer sector or even go further by creating an entirely risk-free model? After all we are building homes here, and much care is needed to create a process that is smooth, makes the buyer feel cared for and valued, but also controls up-front costs for the developer.
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The Smart Choice There can be no doubt that the smart home phenomenon is on the rise. CEDIA is the global trade association for the smart home sector and recently issued one of its regular UK Integrated Home Market Analysis reports identifying the size, shape, trends and services of the sector. The report showed a market in a bullish mood, boosted by the impact of consumers spending more time in their homes as a result of the COVID-19 pandemic, and a general rise in the awareness of smart home and AV experiences. The report
revealed that there are approximately 3,700 specialist smart home integrator companies in the UK, with 88% of those companies forecasting revenue growth in the next 12 months and one-third considering the need for extra staff in the next 12 months. So, these specialist companies are seeing increased business from somewhere, perhaps your competitors? The types of systems on offer vary significantly, but basically the sector aims to use a range of systems that allow homeowners to enhance their spaces in specific ways that suit their lifestyle. Issue No. 21 – Qandor – 009
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TECHNOLOGY Intelligent lighting is a key offering that delivers not just increased efficiency, switching on or off at specific times and when it detects no presence, but also the opportunity to make homes more attractive with special scenes and colours that match any mood. The homeowner can also enjoy the benefits of automated window treatments and blinds, which can be combined with intelligent lighting to control the amount of ambient light required in a space at any point in the day or to suit any occasion. We also now know that offering lighting and ambient light control that is truly human-centric and matches our circadian rhythms is a big boost to wellness. Families can wake up with the perfect amount (and the right colour) of artificial light, and gradually add ambient light as the sun climbs into the sky. Flip this to nighttime, and a full-on party experience can be enabled with colourful lights and dramatic scenes to add drama and excitement. With fuel prices on the increase, owners can also have the option of creating precise and automated control of their environment. Smart home systems allow heating and cooling to be set to obey precise values for different areas of the home throughout the day, establishing the perfect scenario to match each occupier’s needs. These systems can also offer fast
and easy control in real time to adjust an area to a given need immediately. Every family wants to feel secure in their home, and so security systems that are bespoke to match the needs of every dwelling are also very popular. Enabling homeowners to build in extra peace of mind with additional security for given areas and also allowing them to remotely monitor activity when they are not at home are powerful drivers for homeowners. People love to relax and have fun at home, and integrated entertainment systems allow them to do just that. Adding a multi-room music system that can come under their spell and create the right atmosphere for any time of the day or for any occasion is extremely popular. For those who want to enhance their AV enjoyment even further, home cinema systems are one of the biggest growth areas in the sector. The Options It is now undeniable that offering smart home and entertainment options will put developments on trend and give them an edge over competitor projects. However, how does a developer offer something they have no experience in, and how do companies protect themselves from the initial outlay? Our Avande Select Portal allows developers to offer all of these options to their buyers with no risk to themselves, as the new owner deals
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TECHNOLOGY
their property. Once those choices have been made, our team of expert engineers fits the products in a fuss-free installation process with no detrimental impact on the aesthetics of the property. Our systems are specifically designed so that the homeowner can make these choices to be ready to go when they move in, or they can decide to upgrade at any point afterwards. Once the systems are installed, Avande Select engineers maintain and service them. To reiterate, there is no outlay or risk to the developer – just leave your smart home choices to the experts and reap the rewards of being able to offer 21st century functionality in all of your projects. Our Partners Impact House is a recent landmark project created by Impact Capital Group in the property hotspot of Chigwell. The Avande Select Portal is available to all the new owners of these fantastic and stylish dwellings. Sebastian Whitton, Operations Director at Impact Capital Group, comments, “During the early planning stages we decided that we wanted to make smart home functionality a key part of this development. Moving forward we want all our buildings to be like this, offering cutting-edge technology for a better lifestyle but also offering energy savings and increased efficiency.”
Klaudia Bacinska, Director of Brand and Marketing at Impact Capital Group, adds, “A key target market for us are millennials (born between 1981 and 1996). This consumer group increasingly expects this type of functionality, and we want to lead in offering these options to homeowners. Every development we take on is slightly different, and we will adapt what we offer for each project to suit the building, the surrounding area and the potential target market.” Another recent project sees the Avande Select Portal available across all of the dwellings of a development known as Queens Park in a much sought-after area of North London, executed superbly by Luxgrove Homes. William McKenna, Co-Founder of Luxgrove Capital Partners, explains, “It is always a challenge knowing what additions and specifications to offer on a high-quality new build property. The Avande Select Portal is a strong option for us as it allows our buyers to select the options that suit their lifestyle and to deal directly with the experts that will be installing and supporting the systems.” Q.
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HERITAGE PROPERTY
BADGERS HALL EMMA MORBY Director of Land Acquisition Heritage England www.heritageengland.co.uk
This month I would like to showcase how a listed building can be used as a very successful commercial asset, with strong returns on investment. Not only that, but these beautiful buildings are located in the heart of a town or city.
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Badgers Hall is one of the original central high street properties in Chipping Campden with important historical connections. The property has been lovingly restored to create a tea room and guest house (commercial business). Previously known as Morrey’s Stores, the Grade II* listed historic building dates
HERITAGE PROPERTY
back to the mid-15th century and is built of honey-coloured Cotswold stone. It has two distinctive gables and mullioned windows with drip boards. It was first listed on 25 August 1960, and then the listing was amended in June 1983. It was originally used as a coach house, and it is believed that part of the building became a
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shop in the 1970s, hence being previously known as Morrey’s Stores. The property has a wealth of period features and charm, with door arches and stone fireplaces dating back to Tudor times. Original exposed beams and stonework are also visible throughout the property. The accommodation has been modernised and
“The great hall with its vaulted roof and hammer beams, a minstrels gallery an overmantel carved with the Ingram arms”
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HERITAGE PROPERTY
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partly converted to a commercial capacity over the years, with gas central heating and a well-equipped professional kitchen. Badgers Hall also offers external courtyard space, which is ideal for sitting out in the summer sunshine. The property comes with a ready-made successful business in the form of the tea
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rooms and boasts five bedrooms, each complete with a bathroom, dining room, drawing room and store. Chipping Campden is one of the most historic of all the Cotswold market towns and has an abundance of historic or protected buildings. It lies in a fold of the Cotswold Hills in the heart of an Area of
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HERITAGE PROPERTY
Outstanding Natural Beauty. The town is well-known for its traditional Cotswold architecture, much of it dating back to the Middle Ages. There is also a good train connection with the mainline station to London from Moreton-in-Marsh, which is just eight miles away. This historic building demonstrates how you can use listed buildings to your advantage and bring them back to life as a commercial asset. With a guide price of £1,150,000, this shows firsthand how valuable historic property can be, both commercially and residentially, should you wish to turn it back into a family home (STPP). Q.
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INTERIOR DESIGN
ARTIST’S STUDIOS FROM A BACHELOR’S PAD TO A FAMILY HOME ALAN WAXMAN Founder & Chief Executive Landmass www.landmass.co.uk
In the heart of London, interior design company Landmass transforms a 143-year-old former artist’s studio from a bachelor’s pad to a classy family home. 026 – Qandor – Issue No. 21
Goodbye, big and cold party room – hello, multi-purpose space! Built in 1878 and being in Mews style only – having no equine history, the twostorey property has a painted brick façade
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and a to-die-for floor-to-ceiling arched window that spans the double height space inside. Initially purchased by the client over a decade ago, this double height studio was just that – double height living space with a kitchen, a mezzanine floor above that acted as a master bedroom, a small bedroom to the side and a bathroom. The property lacked depth, and so it was added in the shape of a full-size basement. The basement contributed four spaces to the property – another bedroom, a bathroom, a laundry and a bigger-than-life party room. Ten years later we joined the picture.
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With the family growing, the client wished to transform the basement into a family-friendly space. The requests were simple: a master bedroom, an en suite, a walk-in wardrobe and, above all, storage! Our proposed layout made sure that every inch of the basement had a purpose and wasn’t being wasted. We kept, re-located and re-purposed what we could and heavily concentrated on making the space bright and airy – since basements tend to have very limited natural light. The project didn’t come without a hiccup or two – the biggest one being the logistics of getting the enormous porcelain
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slabs for the bathroom down into the basement. For this we had to remove an entire row of built-in wardrobes in the hallway to give us manoeuvring space. It was all worth it in the end, but a hard lesson was learned. Q.
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INTERIOR DESIGN
A NEW EMERGENCE HOLLY GANNON Design Manager Milc Interiors www.milcstyle.co.uk
As we emerge into brighter seasons, longer days and sunshine, we begin to challenge our environments. We ‘spring’ clean spaces, refresh colours and bring the outside in; we attempt
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to eke out every ounce of the summer, which broadens our horizons.
INTERIOR DESIGN
As designers, we anticipate this seasonally and so create schemes that ignite inspiration to carry our clients throughout the years. However, it appears this year is shaping up differently for our client base of high-net-worth individuals. Following such a long period without transformation in their homes throughout ongoing lockdowns, designers across our industry have been able to supercharge the experience within interiors to exceed expectations. Throughout 2022 we anticipate that interiors will encompass more sustainable products but will also be bolder than in years we have seen previously. This is 038 – Qandor – Issue No. 21
showcased best in London’s hospitality industry, where new hotels and spaces to dine are emerging; even iconic restaurants such as Sketch and hotel Claridge’s have been completely refurbished to create a sense of excitement. Therefore it’s only fitting that the spaces such clientele reside in are just as innovative and emotive. Whether it’s a quiet place of sanctuary they call home or a pierre de tierre full of life in the city, Milc are working to create interiors that reflect each of our clients’ personalities and refreshed requirements following such an extended period at home.
INTERIOR DESIGN
In Milc’s latest show apartment for boutique development 101 Cleveland Street, the design transforms the space to create an eclectic haven, where every surface and detail tells a rich story; in doing so the apartment effortlessly links to its trendy Fitzrovia location with subtle odes to its historical roots. Plush finishes, objets d’art and a combination of dried and fresh flowers embody the spirit of our 2022 trend, emergence. Venturing into this design, Milc aimed to create a space of discovery, offering users an escape into a world of colour, texture and pattern.
The reception area is grounded by an oversized sideboard with black and gold finishes, juxtaposed with a light organic rug and leaning artwork to give an effortless finish. The upholstery includes soft boucle textures and a low-level pastelcoloured sofa. Hints of red, pink and teal come through the accessories and styling, which add depth and contrast to the space. Ambient lighting flows through the space from a series of pendant lights and a stem floor lamp. In the dining area, created as a transition space, the design features neutral tones that are used to balance the emerald green kitchen bar stools and colour tones Issue No. 21 – Qandor – 041
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“There is a triangular relationship between budget, lead time and design, and inevitably any product you select will see a compromise on one of these elements.”
in the reception area. Metallic finishes play a key role in balancing the design to give a more industrial finish and enhance the multifaceted design. The principal bedroom has a soft shell pink feature headboard that changes in light due to the subtle shine in the fabric. The space includes more classic period tones of light blue combined with contemporary lighting, creating a myriad of layers within the space. Our team challenged the feminine colour palette with edgier accessories and headboard detailing to add versatility to the space.
The guest bedroom space follows the same rhythm as the apartment with soothing and undemanding colours. The boucle mirrors the textures from the reception, whilst the cushions and decorative accessories are more muted colours seen in the principal bedroom. The tonal aspect throughout creates an organic flow aimed to calm and create a naturally harmonious space. Q.
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Milc work with clients to develop designs that exceed their expectations and deliver a seamless service. If you have an upcoming project that you are seeking design advice for, please visit info@milcstyle.co.uk or call us on +44 (0) 20 7700 1523. Issue No. 21 – Qandor – 049
INTERIOR DESIGN
MATTEO BIANCHI STUDIO ADDS A TOUCH OF MAGIC MATTEO BIANCHI Director Matteo Bianchi Studio www.matteobianchi.co.uk
Bucking the trend for demure home cinema rooms, Matteo Bianchi Studio has recently
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created a playful, design-led cinema space at a Fulham residence.
INTERIOR DESIGN
Located in the basement of the large, four-floor mansion house, the previously damp and disused space has become a communal area for fun, entertainment and family interaction. The lively yet sophisticated décor, which inspired the design throughout the rest of the house, is aptly named ‘The Magic Room’. The cinema room is accessed through the ‘magic’ corridor, a dramatic walkway that uses distorted mirrors to create a fun atmosphere. Matteo Bianchi’s spectacular Baffo Spotlight is positioned in the middle of the corridor, adding to the uniqueness.
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A sumptuous L-shaped sofa and oversized curtains create a comfortable environment for relaxing and socialising. The wooden wall is home to a neon cinema sign, adding a splash of colour, light and joyfulness to the space. Kept intentionally playful and flexible, the space allows the family to take full advantage of the natural light flooding in from the deliberately oversized skylight. The clients regularly use the bright space for yoga and meditation sessions.
INTERIOR DESIGN
The creation of the cinema room was part of a much larger interior design transformation that included a complete redesign of four teenage bedrooms, a master bedroom and the entrance lobby. Commenting on the project, Matteo Bianchi, Founder of Matteo Bianchi Studio, said, “This beautiful family home holds so many surprises, and the inviting and luxurious cinema room is one of the best. From a damp and dingy basement to a magical space where precious family time can be enjoyed, the cinema room delighted the client beyond any expectations.
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“Cinema rooms are always wonderful, but sometimes they can be rather muted. The creative freedom we had in this project allowed us to create such a special, designled space that brings together colour, playfulness and decadence.” Q.
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INTERIOR DESIGN
CAMPDEN HILL, KENSINGTON ALAN WAXMAN Founder & Chief Executive Landmass www.landmass.co.uk
This five-floor Victorian terraced house situated in one of the most desirable London postcodes was designed around the client’s vision of an opulent living space to match the area. 060 – Qandor – Issue No. 21
The property was reconfigured to maximise the space by opening up the formal areas, enlarging the entertainment spaces and reconfiguring the rooms, whilst focusing on exceptional craftsmanship and key statement pieces to create a luxurious yet welcoming feel.
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Light was a key feature using large period windows to enhance the natural light throughout the house, whilst timber floors and marble surfaces were used to create a sophisticated, timeless and contemporary design throughout the five floors finished with a beautifully restored period staircase. Q. !
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ARCHITECTURE
SUSTAINABLE HOUSE OF THE FUTURE GIOVANNI PATANIA Lead Architect & Co-Founder WindsorPatania Architects www.windsorpatania.com
On reading recent pledges like the RIBA 2030 Climate Challenge and the UK government’s Green Deal, it’s clear that sustainability is no passing trend in construction and architecture. We predict that years from now, property development will be all but unrecognisable due to the significant push for eco-friendly and sustainable housing. Developers, architects and other professionals need to offer sustainable solutions by default and actively encourage 074 – Qandor – Issue No. 21
clients to develop homes that are better for the environment. That means going a little further than just following basic advice on saving electricity and retaining heat. These tips shouldn’t be ignored, but we want to look at environmental sustainability on a larger scale and think about designing and creating the sustainable house of the future. So, what does that mean? Read on to find out, and we hope you’ll agree with us that making buildings sustainable can be an exciting opportunity.
What is the RIBA 2030 Climate Challenge? In 2019, The Royal Institute of British Architects (RIBA), the professional body dedicated to upholding standards in the architectural industry, set some ambitious yet achievable challenges for the sector over the next decade. RIBA’s 2030 Climate Challenge is a set of guidelines to support architects moving towards sustainable house design and construction and enable the sector to contribute to the UK government’s call for a 2050 net-zero greenhouse gas emission target. It’s underpinned by four pillars – operational energy, health and wellbeing, potable water, and embodied carbon – so let’s take a look at each of them.
Four pillars for the sustainable house of the future 1. Operational energy: Using the environment to power our homes The energy used to run and power buildings is referred to as “operational energy”, and reducing it is RIBA’s first pillar for sustainable design. Often, homeowners think of the small steps they can take, like switching to energy-efficient light bulbs, installing smart meters and keeping doors shut to retain heat. Architects, however, should be thinking much bigger and considering how design can shape a building’s use of power. Last year was a huge one for solar panels in the UK, with 36% more new solar capacity installed than in 2020. As technological advances are 076 – Qandor – Issue No. 21
improving the efficiency of solar panels, we wouldn’t be surprised if they become the primary energy source for the sustainable house of the future – not least because any excess energy from them can even be used to charge a car or electric bike. Aside from the environmental perks, there is much evidence that solar energy can also make economic sense. With fitting solar panels generally costing around £6,000 to £7,000 for the average home and energy savings of up to £800 a year achievable, the outlay could be repaid well within a decade. This is before we consider the much-talkedof rises in energy prices expected in the coming months and years. But architects can make use of the sun in other ways, too. For example, it’s also possible to optimise solar energy gains by the exterior walls’ surfaces, exposing them to solar radiation and transferring this heat to the interior. Considering our relatively cold Northern European climate, it makes sense to squeeze everything we can out of the sun. We can look even further north for inspiration on another renewable energy idea – harnessing thermal energy from the Earth’s surface. This is a practice in Nordic nations, most notably Iceland. In contrast to the summer and winter extremes of the ambient air above ground, the Earth maintains a near-constant temperature just a few metres below the surface. It is possible to use this geothermal energy by implementing ground source heat pumps. Choosing geothermal heating and cooling technology can remarkably reduce nonrenewable energy dependency.
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2. Health and wellbeing: The impact of biophilic design on our life Secondly, let’s not underestimate the importance of our health and wellbeing, something addressed by RIBA’s second pillar. Homes that connect with nature, also referred to as biophilic design, have been shown to reduce stress and anxiety while improving our mood and increasing our creativity. One example of biophilic design is ensuring that our homes receive plenty of natural sunlight. Why? Because sunlight releases dopamine in the brain, which in turn is responsible for lifting our mood. Of course, maximising sunlight has energysaving qualities, too, as the previous pillar addressed. When designing houses, it’s even worth tracking the sun’s path to guide decisions on how the property can receive adequate light in all seasons.Don’t forget the importance of natural ventilation either. The size, number and placement of vents can be optimised to provide a natural airflow through the building and bring moist and cool air into it in a controlled way. What an effortless yet effective strategy to enhance indoor air quality, especially in summer! Finally, think about the visual experience of the sustainable house of the future, where interior design choices can create calming surroundings that enable inhabitants to feel connected with nature. 3. Potable water: The importance of water harvesting One thing we do get plenty of in the UK is rain, so why not use it? Water management and potable water reduction 078 – Qandor – Issue No. 21
are the next aspects, captured under the third pillar of RIBA’s targets. There’s growing pressure on our national water supplies and drainage infrastructure, so future homes should reuse and recycle water as much as possible. Rainwater harvesting is one of the most effective strategies to achieve this goal. It enables us to collect rainwater, store it, filtrate it and use it again for non-drinking purposes, such as bathing, showering, flushing the toilet, washing clothes and doing the dishes. We should also make sustainability an essential principle while landscaping around our homes, which could incorporate rain gardens or permeable pavements, for example. Rain gardens are sites that reduce the flow rate of polluted water, such as runoffs from roofs and driveways. They’re beautiful to look at, too, tying in with the previous pillar of health and wellbeing. Permeable pavements, meanwhile, are made of more porous materials than classic asphalt, so they absorb water rather than allow it to accumulate on top. 4. Embodied carbon: How to measure the sustainability of construction materials While the other three pillars are probably familiar concepts to people even outside of architecture and construction, RIBA’s fourth sustainability pillar might be less so. ! "#$%! &'()! *(+,'&-(&! .$/,'01! +($02! ! We’re all familiar with the term “carbon
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Issue No. 21 – Qandor – 079
ARCHITECTURE footprint”, but we often only think of it in terms of how the finished product performs, and not how it was produced in the first place. For example, a car might have low carbon emissions, but how much carbon went into manufacturing it? The construction industry uses the term “embodied carbon” to refer to the amount of carbon generated by the activities behind the construction process and the production and delivery of the materials that come together to create a building. Each type of material, from brickwork to roof tiles, from steelwork to thermal insulation, has a specific value related to embodied carbon. This value depends on the energy needed for raw material extraction, refining processes, transportation, installation, and construction waste disposal. Overall, buildings are responsible for 39% of global energy-related carbon emissions, and 80% of the buildings’ embodied carbon is from structural materials.
3'4! .$0! 4(! /(&5.(! %#(! *(+,'&-(&! .$/,'01!'6!$!,5-7&-082 ! By carefully selecting materials and construction methods and using ecofriendly alternatives where possible, we can bring down the embodied carbon levels of a building. Here are three ways it can be done: $9!
:(7(.%!/(.;.7(&!+$%(/-$7) Metal is the big one to think about here. Recycled steel is considered a low-carbon option compared to using a virgin steel beam – not surprising, as the latter can have an embodied carbon volume of over five times greater. ,9!
<#'')(!7'.$7!=/'&5.%) Of course, this is often not only greener, but cheaper too. Forge relationships with local suppliers, rather than relying on essential items from other parts of the country or overseas. .9!
<#'')(!0$%5/$7!+$%(/-$7) Concrete is a significant contributor to embodied carbon. While ultra-low-carbon concrete blocks can be used for building interior and exterior walls, there are often greener and more sustainable alternatives. These include wood for flooring, and finishings and wood foam for thermal insulation. As these alternatives become more popular, they are often offered at no additional cost, so price shouldn’t be a barrier to going greener. 080 – Qandor – Issue No. 21
7(->*3+?#*+-@+5*8<8)*.+2%$*5&%)#+&'+&'$*5&-5+.*#&/'+0?'#9)%#,A8-2+)&(5%5<=
Conclusion Sustainable house design doesn’t have to compromise the quality of your builds, nor should it leave you out of pocket. We hope that this overview has inspired you to be bold with your developments and think big about environmental sustainability. The world is crying out for greener housing. By meeting this demand, you’ll not only get ahead of the curve, but you’ll likely also get into new and greener habits before RIBA’s recommendations become government legislation. So, please don’t see sustainability targets as a burden. We encourage our fellow architects to actively put environmentally friendly design forward to clients and collaborators. We, for one, are excited to work with clients, builders and collaborators on sustainable design solutions, and start creating eco-friendly houses fit for the future. If you liked this article and want to learn more about WindsorPatania Architects, please get in touch with us via our website: www.windsorpatania.com. Q.
Issue No. 21 – Qandor – 081
DEVELOPMENT FINANCE
THE IMPORTANCE OF THE CAPITAL STACK MIKE BRISTOW CEO & Co-Founder CrowdProperty www.crowdproperty.com
Now two years on from the start of the pandemic, the UK is facing new uncertainties around the war in Ukraine impacting energy prices and the rate of inflation. With
082 – Qandor – Issue No. 21
so many factors that have the potential to impact the market, CrowdProperty shares views on what this will mean for the sector going forward.
has reported that the average UK house price has increased by 1.4% this month (£3,860) which is the 9th consecutive month - the biggest jump since September. On average, the price of houses continues to be at +11% which is around its highest level since mid- 2007. The average house price is now £282,753 which is an addition of £28,113 compared to last year which is not far off the average UK earnings. In nominal terms, average house prices are 41.6% above the 2007 peak but in real (inflation adjusted) terms, this is 8.4% below the 2007 peak, according to the Nationwide House Price Index latest release covering the market to the end of March 2022. Halifax
The causation of this nominal price growth trend remains the same – limited supply and strong demand. Although this month Halifax has noted that they have seen more homes coming to the market, but nothing of any substantial impact to alter the trends we have seen so far. Russell Galley, Managing Director at Halifax summarised as “too many buyers are chasing too few properties.” Reflecting on the two years since the pandemic, the housing market has proven far more resilient than was originally anticipated. Since March 2020, the average house price has risen by 18.2% over that
Issue No. 21 – Qandor – 083
DEVELOPMENT FINANCE period (£43,577) going from an average of £239,176 in March 2020 to £282,753 in March 2022. The pandemic had shifted buyer demand placing a premium on those properties with greater space, both indoor and outdoor. Flats have increased by 10.6% or £15,404 over the last two years in comparison to the price of detached houses which has increased by 21.8% or £77,717. Differing from last month’s report, the South West has overtaken Wales as the strongest performing region in the UK, hitting a new record of 14.6% annual growth rate. Wales is closely second with a rate of 14.1%. Alongside these new records, buyers are dealing with higher interest rates, which in combination with a higher cost of living is expected to slow down house price inflation over the next year. In Chancellor Rishi Sunak’s Spring Statement, measures have been put in place to reduce a hike in National Insurance
084 – Qandor – Issue No. 21
contributions as well as cuts to fuel duties. However, Zoopla has commented that these savings will be small and will do little to offset the rising cost of living. It has now been said that a large majority of those looking to get onto the property ladder will stay put in their existing homes due to the rising cost of mortgages which in turn will increase the demand for rental properties. In response to the Spring Statement and the economic headwinds, Responsibility expects the annual rise in house prices will fall from 10% to 1% by 2023. Russell Galley commented: “in the long-term, we know the performance of the housing market remains inextricably linked to the health of the wider economy. There is no doubt that households face a significant squeeze on real earnings, and the difficulty for policy-makers in needing to support the economy yet contain inflation is now even more acute because of the impact of the war
in Ukraine.” Looking at the wider economy, Silvia Rindone, EY UK&I Retail Lead has called this a period of a “new mindful consumer” with the latest EY ITEM Club Consumer Index reporting that consumerism is shifting as shoppers look to ‘buy less and do more’ - 40% of survey respondents say they are now spending more on experiences. From this, it has been reported that consumers are prioritising sustainability with ‘Planet First’ being the largest identified segment within the consumer index. Secondly, affordability remains key to purchasing decisions as households are experiencing less disposable income. Consequently, in EY ITEM Club’s special Interim Forecast, the 2022 UK GDP growth forecast has been downgraded amid the diminishing consumer confidence due to rising commodity and energy costs. The
latest predictions are now 4.2% down from 4.9% meaning that the forecasted GDP growth for 2023 is 1.9%. IHS Markit has noted that the construction output has continued to rise. However, business optimism has dropped to the weakest since October 2020 as a result of the concerns surrounding the war in Ukraine and inflationary pressures. Construction companies have said that there has been resilient customer demand despite the economic uncertainty. Yet again this month’s new orders outperformed the previous meaning output has increased every month since August 2021. The headline S&P Global / CIPS UK Construction Purchasing Managers’ Index ® (PMI ®) registered 59.1 in March, unchanged from February and well above the 50.0 mark that separates expansion from contraction.
Issue No. 21 – Qandor – 085
DEVELOPMENT FINANCE
Reflecting this strong demand, input buying rose at the steepest pace since July in an effort to accumulate stock. This effort is also in response to capacity restraints, a lack of haulage availability and ongoing logistics difficulties. These obstacles, as well as the widespread issue of the cost of fuel, have created an acceleration in input prices. In addition, Duncan Brock, Group Director at the Chartered Institute of Procurement and Supply commented that: “Construction companies are braced for more disruption on the horizon as a result of the Ukraine conflict…With these severe challenges, it is no surprise that business optimism for the months ahead has been affected and fell to levels last seen in October 2020. The sector is facing several roadblocks.”
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The economic and geopolitical uncertainty has meant that diminished optimism is widespread across many sectors. This is why in these times of economic pressure, property finance by property people makes so much sense – at CrowdProperty we work closely and productively with the developers we back, tackling market, site and situational challenges together in partnership. Having been developers ourselves, we are laserfocused on solving the pains of small and medium-sized developers - which is why we launched CP Capital last month, providing second charge mezzanine finance for property developers. Property developer customers have consistently fed back to CrowdProperty that they would value mezzanine finance for their projects – to understand why, it helps to take a closer look at how development finance works.
The Capital Stack and why it is important The capital stack refers to the tiers of beneficiaries behind an asset, in order of creditor hierarchy – it is the way in which developers structure the finance of projects, from funding the purchase of the asset through to associated development costs and exit. Fundamentally, there are two types of capital in development finance: • Debt capital refers to funds invested directly into a project which are secured against the property asset. There is typically an interest rate associated with this capital that is paid to the lender and the debt (capital and interest) is paid back to the lender first, ahead of any profit. • Equity capital “tops-up” the debt, effectively covering the costs of the rest of the project. It is the most risky element of the capital stack and can be costly for the developers as investors take a (sometimes very significant) share of profits. There are many sub-categories of finance within these two groups which can be used when structuring project capital, with consideration also being given to the distribution waterfall of capital. CrowdProperty has always provided senior, first charge secured debt: this ensures that if the loan defaults, the business is able to take control of the asset and recovery processes, with CrowdProperty’s diverse sources of capital the first beneficiaries to be repaid.
Mezzanine finance also falls under the debt tranche and is often secured by a second charge, meaning investors will only be paid after first charge secured capital and interest (and any recovery costs in the case of default) is repaid. From a loan repayment perspective, this means that the senior, firstcharge loan must be repaid before the junior, second-charge facility. Any funds remaining after these beneficiaries have been repaid will be returned in the form of profit to any equity capital investors and the developer themselves. The balance of the differing types of capital within the capital stack can have a significant impact on the profit outcomes for the developer. For example, using a purposefully simplified example: Consider a project where the developer is purchasing the asset for £1m, spending £1m on the build and on completion the property would be worth £2.75m. A CrowdProperty senior, first-charge loan could cover 70% of the purchase cost (£700,000) and 100% of the project costs (£1,000,000) meaning the developer would need to find £300,000 to cover the remaining project costs. Three possible scenarios for this project could be: 1) The developer puts in all the equity (£300,000) and sells for £2.75m, making £580,000 profit with a developers’ Return on Equity (ROE) of 193%. 2) The developer puts in £40,000
Issue No. 21 – Qandor – 087
DEVELOPMENT FINANCE
and an equity investor puts in £260,000 to make up the £300,000 of equity needed (total 98% of costs). HOWEVER this additional investor requires 50% profit share for bearing such risk. Now if the developer sells for £2.75m, the developer’s ROE is 725% but in cash terms they would only receive £290,000 profit for doing the same amount of work. 3) The developer puts in £150,000 with the remaining £150,000 coming from a mezzanine finance provider at an interest typical of second charge secured capital. In this scenario, if the developer sells at £2.75m the ROE is 360% but the profit in cash terms is £540,000 – the developer keeps much more. As the above example shows, introducing mezzanine finance should be a consideration for raising more capital for a project, whilst keeping as much of the total profit as possible. Whilst calculated 088 – Qandor – Issue No. 21
developer ROE% is higher on the equity investor model, cash profit is much lower… and the alternative ROE (return of effort) is FAR lower for the developer. Never underestimate the value of your time/effort to deliver development projects. Equity investment can be an extremely expensive route to financing your property projects – in fact, the marginal cost of capital of this equity JV model vs a mezzanine capital financed capital stack is 170.5% per annum… that’s the potential opportunity cost of not having your own sources of equity.
How can mezzanine finance be used? Mezzanine finance is additional funding on top of senior debt finance, secured by a second charge. Mezzanine finance from CP Capital enables property professionals to complete any project funding requirements that are not met by the senior finance available. Senior debt typically accounts for 75% of costs; mezzanine finance can top this up to finance up to 95% of costs. There are many applications of mezzanine finance, for example: • To help with funds needed to purchase a property in order to move to development • The global pandemic, supply chain challenges and input cost inflation could cause a project to overrun and eat into contingency - mezzanine finance could help to cover additional costs incurred as a result of these external factors
• On completion of a project, the built assets have added value but may take 6 months to sell – the developer could refinance the senior debt through a development exit and/or top up with mezzanine finance secured against the asset at the new value in order to gain funding to contribute towards the next project
Issue No. 21 – Qandor – 089
DEVELOPMENT FINANCE How it works at CP Capital CP Capital exists to serve developers’ additional funding needs, backed by the deep property expertise, disruptive fintech / proptech business model, absolute customer focus and reliability of our diverse sources of capital that we’ve proven over many years. Examples of projects where CP Capital has already supported developers’ projects include:
- Additional funds to assist with the continued development of a site comprising the restoration and conversion of existing barns plus three new build houses
- A 2nd charge offering to assist the developer with additional construction costs as a result of the pandemic, enabling the completion of a development comprising 10 residential apartments 090 – Qandor – Issue No. 21
- Additional funds provided towards the continued construction of 6 new build houses
All CP Capital mezzanine finance is coupled with senior development finance from CrowdProperty, ensuring that CP Capital security sits behind a rational, project delivery focused and proven senior lender with reliable sources of capital and a value-adding approach. It’s more efficient for developers managing one source of finance through the project capital stack too – the benefits of combining senior and junior finance from the same lender in terms of process, costs, communication and support, include: • Single finance company for your capital stack • Dedicated expert on hand throughout the project • Single due diligence process • Single set of professional fees • Standardised intercreditor agreements • Regulatory cover for junior tranche investment raising As ‘property finance by property people’,
CrowdProperty is dedicated to meeting the needs of the SME developer market in the UK and internationally, bringing back customer focus and changing the game of property project finance. This segment has been poorly served by traditional funding sources for decades, driving a two-thirds decline in their housebuilding output since 2008 in the UK alone. The crux of this decline, as highlighted in our research, was that 42% of developers saw funding as the biggest constraint to building more homes historically and 41% cited ‘better sources of finance’ as the highest potential enabler of more housebuilding going forward. With demonstrated global ambitions and unprecedented technology investment in the sector, CrowdProperty is rapidly delivering innovative customer-centric solutions at pace and scale. We were first to market with our dedicated products for Modern Methods of Construction Finance, Planning Gain Finance and Development Joint Ventures Finance, in Issue No. 21 – Qandor – 091
DEVELOPMENT FINANCE
behind an asset, in order of creditor hierarchy – it is
addition to launching in Australia in 2021. Our in-house team of software engineers / data scientists have a continuous focus on data learning, analytics and machine learning on our processes to deliver excellent customer experience as well as bringing innovative technology solutions to our specialist development finance technology enablement. Our dedication to using technology to deliver a disruptive new era of property project finance as well as our determination to continuously revolutionise means that we’re in a uniquely strong position to go on to dominate the markets we currently play in and the many new markets we will be uniquely well placed to enter. Whilst scaling across many dimensions, CrowdProperty is fundamentally dedicated to continuously innovating and improving our service offering aligned to customer needs. Our many ground-breaking products are now accompanied by a uniquely
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integrated mezzanine finance proposition in CP Capital – bringing senior and junior finance under one roof, with powerful benefits to developers, housebuilding and the UK economy. Together we build. !"#$%&'(%)&*+%,-&'(%)+..,#"#+%/"#,#0+% /*&)% 12% 1,3"(,4% ,(% www.cpcapital.com/ developers% 1*&5$2*&3+*(6% "7% ,% 4+,$"#8% 73+0",4"7(% $+9+4&3)+#(% /"#,#0+% 4+#$+*:% ;,9"#8%/'#$+$%<=>?)%5&*(;%&/%3*&3+*(6% 3*&@+0(7% ,#$% ,8*++$% <A>?)% &/% /,0"4"("+7B% !&*%$+9+4&3)+#(%4&,#7%'3%(&%<C?):%,3346% "#%@'7(%>%)"#'(+7%,(% www.crowdproperty. com/apply% ,#$% &'*% 3,77"&#,(+% 3*&3+*(6% +D3+*(7%5"44%7;,*+%(;+"*%"#7"8;(7%,#$%"#"(",4% /'#$"#8%(+*)7%/&*%6&'*%3*&@+0(%5"(;"#%A=% ;&'*7B
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CONSTRUCTION
CONSTRUCTION INDUSTRY SCHEME CHALLENGES - ARE YOU COMPLIANT? www.haysmacintyre.com
NICK BUSTIN Employment Tax Director
Th e construc tion in dustr y is traditionally regarded as having serious compliance issues. The changes introduced
094 – Qandor – Issue No. 21
DINESH PANCHOLI Senior Manager
f rom 6 April 2021 suggest that HMRC remain focused in their compliance approach regarding the construction industry arena.
Additionally, the government announced in the recent Spring Statement that it will invest £161 million in additional staff resource over the next five years to increase HMRC compliance and debt management, with more than £3 billion expected to be raised. It is the contractors responsibility to operate the Construction Industry Scheme (CIS) correctly, yet errors are frequent, either intentionally or otherwise. This can prove costly, especially if a subcontractor does not have gross payment status (i.e., the invoice is paid gross without any CIS tax deducted), as the contractor is liable for the additional tax due, including any interest and penalties that may be levied by HMRC. In this article, we consider why CIS was introduced, how it has evolved over the years, recent changes and common mistakes contractors make when operating or not operating CIS. Introduction to CIS Historically, self-employed workers were paid gross/cash in hand and it was left up to the worker to register with HMRC. False names were routinely given to contractors requiring a signature for the cash being paid out. The CIS was introduced in 1971 to tackle this compliance problem and has undergone various changes with the current scheme being introduced in 2007. This introduced a change from a certificatebased scheme to: • A requirement for contractors to verify subcontractors with HMRC either
by telephone or, later, online; • The strengthening of the requirement for contractors to show that employment status had been considered prior to operating CIS; and • The introduction of three classes of subcontractor; those with Gross Payment Status (no CIS tax deduction), verified (20% deduction) and unverified (30% deduction) subcontractors. There have been some further strengthening of the CIS rules applicable from 6 April 2021 and 2022 respectively, which we explain in more detail below. Common mistakes made when operating CIS 1.The scope of CIS Only construction operations fall under CIS and although it is easy to identify these in most cases, there are exceptions such as professional services (surveyors and architects), carpet fitting and delivering materials. To illustrate the difficulty, the fitting of carpets, linoleum, vinyl sheeting and other forms of floor covering is not considered a construction operation when carried out in isolation, that is, when done in a situation that does not also involve construction work. However, the fitting of all forms of floor covering included in the specification of a building undergoing construction, alteration or repair is caught by CIS, the exception is carpeting. But even carpet fitting can fall within CIS if it is part of a mixed contract,
Issue No. 21 – Qandor – 095
CONSTRUCTION
for example, the subcontractor is required to fit laminate flooring and fit carpeting under a single contract. This means that it is imperative when considering if the work being undertaken falls within CIS that the contract for the work commissioned is reviewed. This is always the starting point when HMRC undertake a CIS compliance review. This means reviewing the contract and not the payment in the first instance. A mixed contract is a contract that includes some work that falls within CIS and some that does not. In this instance, all payments made under that contract are brought within CIS. 2. Failing to register as a contractor or subcontractor If a contractor fails to register with HMRC, they could face a £3,000 fine for not keeping CIS records, and a further £100 per month penalty per missed return (returns are due monthly – the penalty becomes £300 or 5% of the CIS deductions on the return, whichever is higher if it is 6 months or more late). With regards to potential penalty for a subcontractor not registering under CIS, the immediate consequence is a higher tax deduction rate of 30% (rather than 20%). Furthermore, even if the subcontractor fails to register for CIS, tax returns would still need to be completed. Failure to submit tax returns can lead to fines and estimated tax bills. From our experience, aside from rogue builders, the 096 – Qandor – Issue No. 21
failure to register as a contractor happens more often with businesses whose main trade is not construction. These businesses can fall under CIS if their expenditure on construction operations reach a certain limit. These are called ‘deemed’ contractors. More detail follows below. 3. Has the worker’s employment status being considered? Un f o r t u n a t e l y, a common misconception is that employment status is a matter of choice, it’s not! It is important that the contractor is satisfied that a subcontractor is genuinely selfemployed and that the contract and working arrangements support this to withstand any HMRC challenge. If HMRC successfully challenge the employment status of a subcontractor then the contractor will be held responsible for the underpaid PAYE tax and National insurance contributions (NIC) for past six closed tax years, as well as interest and penalties. Furthermore, there is also a potential £3,000 penalty if incorrect employment status declaration has been made for a subcontractor on the contractor’s monthly CIS return. 4. Has the sub-contractor been verified? To establish the correct rate of tax deduction, contractors need to verify a subcontractor with HMRC prior to making payment. If the subcontractor cannot be
verified, then deduction at the higher rate of 30% should be applied. Any failure to verify may result in the contractor being held liable for the underpaid tax, as well as interest and penalties. 5. Not submitting a return Each month, the contractor must complete a return which details: all subcontractors used, all payments made, a declaration that the employment status of the subcontractor has been considered, and a declaration that all subcontractors have been verified. We do come across examples where a contractor thinks subcontractors who hold gross payment status do not need to be included on the monthly return because no CIS tax has been deducted this is not correct. All payments made to subcontractors that fall within the scope of CIS must be recorded on the relevant monthly CIS return regardless of the amount of CIS tax deducted. 6. Are the materials costs allowable? Contractors are responsible for checking that the direct cost of materials claimed by a subcontractor are genuine and reasonable and have been directly incurred by the subcontractor before allowing the cost to be excluded from the amount on which CIS deductions are calculated. The
wording in the legislation was changed in April 2021 so material costs are only allowable if they are a direct cost to the subcontractor for materials in relation to that particular contract. This rule was introduced to circumvent cost of deductions being incorrectly claimed in cases where there is a chain of subcontractors. HMRC expect contractors to have systems and processes in place to verify the cost of materials claimed. In our experience, material costs are rarely reviewed or challenged. This means that if HMRC carry out a compliance check and decide that the amount claimed was excessive, or had not been incurred by that subcontractor, it will recover any under deducted CIS tax from the contractor including interest and penalties. 7. Who owns the plant? Plant such as scaffolding, cranes, earth-moving equipment, concrete pumps, and compressors are an integral part of any substantial construction project and payments for its hire with an operator are subject to CIS. However, a deduction for purposes of the CIS calculation in relation to the plant hire applies but only where the subcontractor has actually hired the plant from a third party. Where the subcontractor owns the plant (including plant being purchased via a hire purchase agreement) this cannot be treated as a deduction (materials), meaning both the plant hire and Issue No. 21 – Qandor – 097
CONSTRUCTION labour costs will be subject to CIS. The treatment of plant as materials is an area to which HMRC will pay particular attention, so it is imperative that contractors have robust processes and checks in place to be satisfied that the cost of plant hire has been treated correctly. Failure to do so, could leave the contractor with a substantial CIS tax liability, interest and penalties.
criterion is met, CIS must be operated on its next payment to the subcontractor for work that falls within CIS. The key change is that this is a rolling 12-month period so changing year end dates would no longer work. The question of deemed contractor status needs to be considered where any organisation is entering into any significant building or re-development projects.
8. Deemed Contractors - have you spent more than £1 million per year on construction work over the last three years? This question was applicable to all businesses, not just those involved in the construction industry. If the answer to this question was yes, then the company was considered to be a ’deemed contractor’ and consequently would fall under CIS. Conversely, if the annual expenditure dropped below £1m in each of the three successive years then the business ceased to be considered a deemed contractor. Unfortunately, some deemed contractors started employing creative accounting to try and avoid hitting that £1m plus threshold each year. In response, new rules were introduced from 6 April 2021 which means that a business becomes a deemed contractor when the cumulative expenditure on construction operations exceeds £3m within the previous 12-month period. Once this
9. Other changes announced applicable from 6 April 2021 The following is a summary of the other changes which need to be considered: • If the subcontractor undertaking CIS work is a limited company with employees used for the work and have had CIS deductions made, then it can setoff these deductions against its employer liabilities. Unfortunately, this set-off was used incorrectly by non-CIS and CIS subcontractors who are not limited companies so from 6 April 2021, HMRC can correct the amount of CIS deductions claimed where it suspects or identifies incorrect amounts have been claimed. Consequently, should HMRC amend the Employer Payment Summary (EPS), this will lead to an underpayment and if this is not corrected in the following remittance could mean that interest and late payment penalties are charged. Additionally, HMRC can also stop the subcontractor from setting off the deductions for rest of the year.
098 – Qandor – Issue No. 21
It is estimated that these amendments will help HMRC collect additional £20m of tax during the next two years and further £15 million in the 2024/25 tax year. • The final change targets fraudsters who falsely register under CIS rather than those who may have made a mistake. There is already a penalty that applies for providing false information, but this has been expanded to cover “anyone HMRC believes is in position to exercise influence and control over the business and/or the person making the CIS registration”. This would include agents, directors etc. • From April 2022, to make the policy of incorrect set-off more robust, contractors claiming CIS deductions will have to include their Corporation Tax Unique reference (CT UTR) number or Company Tax (COTAX) reference number in their EPS return to claim the credit for the CIS deductions. HMRC will check the CT UTR against its internal systems to ensure that the business is entitled to the deductions. If a UTR is not provided or if the number is incorrect, the claim will be rejected. If the business has lost or cannot find its CT UTR, it can request the CT UTR online. HMRC will send the reference to the business address that’s registered with Companies House. If the company is not a limited company and therefore does not have a CT UTR, it should not claim these deductions
via EPS, but should report the deductions on its Self-Assessment Tax Return instead. A further point which needs to be borne in mind is whether the IR35 legislation needs to be considered when engaging with any sub-contractors as it will take priority over the CIS legislation. Summary Businesses should ensure that it has robust processes, controls, and governance in place so it is fully compliant with CIS.Q.
Issue No. 21 – Qandor – 099
FINANCE
LENDING FOR HIGHNET-WORTH INDIVIDUALS LEE LANGLEY Principal OnPoint Mortgages www.onpointmortgages.com
The Financial Conduct Authority (FCA) defines a high-net-worth mortgage client as a customer with an annual net income of no less than £300,000 or net assets of no less than £3,000,000, or whose obligations are guaranteed by a person with an income or assets of such amount. Often high-networth individuals can obtain the 100 – Qandor – Issue No. 21
funding they need via high street banks, Barclays as an example can consider loans over £5 million at 70% LTV and mortgages over £10 million at 65%. Many struggle via retail options however as their total wealth and affordability is not considered as part of their application.
High-net-worth individuals typically have multiple income streams that can be difficult to fully utilise with mainstream lenders, this is where private banks are able to consider wealth holistically and a broker familiar with complicated income sources are essential. An example of these would be bonuses, commission, contractor income, company profits, stocks and shares, earnings in a foreign currency, rental income or non-executive roles. A client’s biography is essential, with the adviser required to build a precise picture of the client’s overall wealth, background, CV and business ventures.
Borrowing to buy a home or an investment property can be part of a wealth creation strategy, especially while interest rates are still comparatively low despite the recent increases in the Bank of England base rate. A mortgage enables clients to protect existing investments, preserve liquidity and ensure maximum tax planning can be accommodated. Subject to a valid repayment strategy, flexibility in the form of an interest only mortgage may be required, which keeps the committed monthly payment low and may enable a client to keep a valuable asset that they would prefer not to sell to fund the property purchase.
Issue No. 21 – Qandor – 101
FINANCE
“Borrowing to buy a home or an investment property can be part of a wealth creation strategy, especially while interest rates are still comparatively low despite the recent increases in the Bank of England base rate.”
Investec Private Bank for example requires applicants to have £300,000 minimum yearly earnings and ideally a £1 million minimum loan size. Providing a customer has a suitable repayment strategy they can potentially consider 85% LTV on an interest only basis in the right circumstances. Additional features can also be built into the facility such as capital reductions to coincide with cash flow, lump sum repayments at the time of an annual bonus for example. Investec provide mortgage funding for not only home lending, but also buy-to-lets and second homes. In a high inflation environment, amidst recent interest rate rises, borrowing significant amounts of debt can be a risk. Many clients with larger loans have been considering whether to fix into a longerterm product immediately, even if it incurs an early redemption penalty on the existing loan. It is important to review all options with an adviser to ascertain the 102 – Qandor – Issue No. 21
best solution. Since the global pandemic many lenders have increased their mortgage offer validity period to 6 months, so if the client’s existing product is due for renewal, they are able to review and potentially secure a new deal far in advance. Q.
Your home may be repossessed if you do not keep up repayments on your mortgage. Some forms of buy-to-let mortgages and some forms of commercial lending are not regulated by the Financial Conduct Authority.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.
MEMBER PROFILE
EMMA MORBY
When did you join Qandor?
March 2020 I have always worked in property from about the age of 24. I worked in sales and lettings, then owned my own inventory company and finally got the bug for property development when I project managed my mums house, when it was being built back in 2009. What is the best thing about working in property?
For me it’s the freedom it creates. I am lucky enough to be able to take my children to school and collect them every day. I have all the school holidays off and the best part is I get to create memories, which I know sounds cheesy but what’s life if you can’t enjoy the ride. What are you working on currently?
We have just finished a project in High Wycombe which was a conversion of a care home into 14 apartments and I’m looking to add another two buy to lets, to my portfolio in the coming weeks. What is your ideal project?
I enjoy converting old historic buildings into something that can be enjoyed for years to come but the projects are few and far between now, partly due to Covid and partly due to the increase in materials and delays on getting them to site. What are the biggest obstacles facing developers at the moment?
I think we face a number of obstacle in 2022. Rising costs, inflation, increase in
What changes would you like to see within the property industry?
I would like to see more females join the property industry as it is still so heavily male dominated. Women have some of the best natural skill sets to work in the industry but I feel like it is often over looked by too many women, or they just don’t know where to start. I find it hard to find a female property mentor to support me now I’m established in property, so I can’t imagine how hard it is for women just joining the industry not to know what education and support is right for them, as you can spend thousands on courses and never really get the right support. Who would be your ideal guest speaker at a Qandor event?
Karren Brady - she is a strong female presence who has forged her way to the top and now leads a light for all of us women. She is a working mum, fantastic business woman and a great example of how women can have it all in 2022. How does being a member of Qandor add value to your business?
I’m hoping to meet up with more property professionals now we are coming out of Covid and events have started up again. I also love writing the historic property of the month feature for Qandor magazine, which highlights different types of historic properties and what you can achieve with them.
Issue No. 21 – Qandor – 105
MEMBER PROFILE
How did you end up working in property?
taxes and difficulty in getting materials to site. Trades are very busy so you have to book them months in advance.
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AFFILIATES For corporate partners with goods and services that support the lifestyles and businesses of our members:
Catax
CrowdProperty
David Phillips
CAPITAL ALLOWANCES
DEVELOPMENT FINANCE
INTERIORS
Mesh Energy
Nimbus Maps
ENERGY CONSULTANTS
PROPERTY SOFTWARE
Ocean Bathrooms BATHROOMS
Hilltop Credit Partners
Keystone Law LEGAL SERVICES
STRETCH SENIOR FUNDING
Leadenhall Wealth SSAS PENSIONS & IFA
OnPoint Mortgages MORTGAGE BROKERAGE