Virtual Conference: Current Property Issues 2022

KEY SUBJECTS

• CASE LAW UPDATE
• PROPERTY VALUATION: VALUATION MODELS AND VALUATION REPORTS
• LEVELLING-UP AND REGENERATION BILL 2022-23
• MEES REGULATIONS AND DILAPIDATIONS UPDATE
• PROPERTY MARKETS: ALL CHANGE PLEASE
• BUSINESS RATES UPDATE – REFORM AND THE 2023 REVALUATION

SPEAKERS

Sarah Thompson-Copsey, Non-Practising Solicitor, Legal Lecturer and Trainer

Nick French, Real Estate Valuation Theurgy, Property Education

Ben Strange, Director, Mobius Building Consultancy Ltd

Malcolm Frodsham, Director, Real Estate Strategies

Jerry Schurder. Partner and Business Rates Policy Lead, Gerald Eve LLP

CONFERENCE PROGRAMME

09.30am CHAIRMAN’S INTRODUCTION

CASE LAW UPDATE

A practical review of recent commercial property and landlord and tenant cases, which will include:

• Easing development: modifying restrictive covenants
• Overage and the duty to disclose
• More on lease renewal terms: rent review and tenant’s break right
• Adverse possession: the evidence needed

Sarah Thompson-Copsey, Non-Practising Solicitor, Legal Lecturer and Trainer

PROPERTY VALUATION: VALUATION MODELS AND VALUATION REPORTS

The role of the valuer has always been to reflect prices in the market but since the RICS Independent Review of Real Estate Investment Valuations was published in January 2022, there has been much discussion on the use and appropriateness of valuation models.

The Valuation Process encompasses many facets from regulation and standards, through the content of the report and then the use of the appropriate valuation Approach, Method and Model. Historically, many markets have been dominated by the analysis of capital values to determine the Net Initial Yield (NIY) to feed into the use of a capitalisation multiplier (the All Risk Yield – ARY) in the implicit valuation. And this is fine as simple capitalisation models are the bedrock of many financial markets. But, as the use of spreadsheets and bespoke packages has increased, it has been possible for investors in certain property types (shopping centres, student housing, Private Rented Sector (PRS), multiple let offices, etc) to start analysing their portfolios and potential purchases using explicit discounted cash flow models. In such cases, using the old adage “value and you analyse”, it makes sense that the property valuation profession start to adopt similar models as their principal valuation model for such assets.

This talk, through a number of case studies, will look at the appropriate use of explicit models and highlight the significant inputs and comparable evidence.

Nick French, Real Estate Valuation Theurgy, Property Education

LEVELLING-UP AND REGENERATION BILL 2022-23

Allowing “local communities to rent out shops which have been sat empty for a year or longer” in an attempt to “breathe new life into high streets” the Levelling-up and Regeneration Bill gives local authorities the power to ‘auction’ off vacant high street premises for up to 5 years. How will this work in practice and what does it mean for landlords – as well as for high street tenants?

• Qualifying criteria: “designated high street” “vacancy condition” and “local benefit condition” –what do they mean?
• What notices must be served and can the landlord appeal?
• How will “rental auctions” work and what will the new tenancy look like?
• Potential problems with consent to change of use, alterations and sub-letting: working round them?

Sarah Thompson-Copsey, Non-Practising Solicitor, Legal Lecturer and Trainer

MEES REGULATIONS AND DILAPIDATIONS UPDATE 

With concurrent changes to EPC assessment and the Building Regulations, combining with the proposed increase to a minimum standard of ‘B by 2030’ under MEES, there is much heightened uncertainty, risk, and opportunity around a building’s energy efficiency. Here we will look at some worked examples of:

• How much should prospective property purchasers be looking to reduce their offer in light of a given EPC rating? How can a vendor avoid such a discount?
• How can a lease deal be structured to protect a landlord against the impact of MEES? What are the most advantageous terms for tenants?
• Can a higher rent be justified by a better EPC rating?  Can tenants gain a ‘brown discount’ for poorer performing properties? What happens at rent review?
• What happens when a landlord faces enforcement action?  Can either party end the lease early? What are the remedies?

Dilapidations is a field which has seen much fluctuation during the course of Covid. Increased occupier moves bidding to reduce overheads combined with landlords in increasingly challenging markets have led to parties taking staunch negotiating positions. Here we will look at some current trends and innovations in dilapidations, including:

• VAT in Dilapidations – an already complicated matter made even more difficult by an HMRC gaff – clarity at last?
• Cost of works and Tender Price Index – the dangers of landlords not accounting for the rise in tender pricing between claim production and settlement.
• Impact of MEES upon Dilapidations – an increasingly silver bullet?
• Capital Allowances in Dilapidations – how tenants may immediately reduce items of claim by 25% through simple principles of identifying a landlord’s actual net ‘loss’.

Ben Strange, Director, Mobius Building Consultancy Ltd

PROPERTY MARKETS: ALL CHANGE PLEASE

The variations in performance between the sectors in recent years has been unprecedented in our working lifetimes. The built environment has pivoted from working and shopping in central locations to home delivery and home working. This has decimated retail rents and super-charged industrial demand around urban centres. The drive to net-zero has left some office stock ‘stranded’ and focussed demand on stock with the strongest environmental credentials.

This talk will look at the market drivers for retail, office and industrial property and a number of possible scenarios for UK property going forward.

• Outlook for the key economic drivers of the real estate market
• Investment volumes and sources of capital
• Market expectations for rents and values
• Current pricing – the impact of rising interest rates
• Forecasts for retail, office and industrial market returns

Malcolm Frodsham, Director, Real Estate Strategies

BUSINESS RATES UPDATE – REFORM AND THE 2023 REVALUATION

In their 2019 election manifesto the Conservatives promised a fundamental review of the system and to reduce the burden. This session will cover the outcome of the review, the significant new administrative burdens to be placed on businesses with analysis of the predicted impact of the next revaluation on 1 April 2023.

• The outcome of the fundamental review of business rates
• More frequent revaluations on their way, but accompanied by new reporting duties
• Why are businesses still dissatisfied and what do they seek?
• Labour party policy regarding business rates
• How will Rateable Values change at the 2023 revaluation?
• And how will these feed into changes in rates bills?

Jerry Schurder. Partner and Business Rates Policy Lead, Gerald Eve LLP

5.00pm CLOSE OF PROCEEDINGS