Hot Topics Flashcards
How are you seeing the economy at the moment
Fairly poor state at the moment, but signs of cautious optimism as inflation seems to be levelling off at lower levels and the BoE has kept a consistent base rate since August.
How is the current economy impacting your sector?
There is still a negative outlook within the land buying profession at the moment.
House prices have fallen by c. 5% this year, with further decreases expected next year. Alongside c. 25% build cost inflation since 2020, a lot of sites that we on the cusp of being viable a few years ago now are just not viable to bring forward for a residential scheme.
We’re seeing less and less new construction sites commencing, which will lead to a lagged reduction in the availability of new housing coming forward in the next few years.
Due to such conditions, it’s becoming increasingly difficult to obtain board sign off for new acquisitions unless they are subject to planning with heavily deferred payment terms which just won’t be particularly attractive to many landowners.
How much have build costs inflated?
- 8.7% inflation last year
- Up 24% since 2020
- Material costs increased 43% in two years
- Labour costs up 10% in same period
- Following surge in price in 2021 and 2022, ONS data points to 20% price declines for some key building materials (concrete, steel, timber)
What is the current Bank of England base rate?
5.25%
Highest level in 15 years
Been consistently increased since November 2021 - first time its been kept at the same level since this date
What is the current inflation rate?
6.7%
Down from 6.8% the month previous and 9.9% last year but still far above the long term average of 2.8%
BoE target rate is 2%
What are the proposed changed to the NPPF?
Housing targets become advisory instead of mandatory
LPAs will not need to review their 5YHLS if their strategy document is less than 5 years old
The presumption in favour of sustainable development will not come in to act if the Local Plan is less than 5 years old
There will no longer be a 20% buffer on housing need applied if the LPA falls below the 85% threshold
LPAs will not need to consider release of green belt land even if they cannot demonstrate a 5YHLS
Emphasis on building beautiful, every LPA will be required to produce area specific design codes.
Can you take me through the updates to fire safety legislation?
Amendments being made to Approved Document Part B (Fire Safety) which now introduces a requirement for buildings over 18 metres to include a second stair case within their core. The government has announced a transitional period of 30 months from the date this approved document is amended to allow the industry to account for this new regulation
Fire Safety Act 2021 and Fire Safety Regulations 2022 were both adopted in wake of the Grenfell tradgedy.
Now - high risk buildings, multi occupancy and over 18m in height must be registered with the building safety regulator, and a Responsible Person must be appointed to undertake a review of the buildings fire safety, including a structural review into the buildings materiality and internal apartment doors. Details of the fire safety initiatives must also be stored on site in a secure box and communicated to the local fire brigade.
What are some key updates to sustainability legislation you need to be aware of?
Changes to Approved Document Part L (energy efficiency and fuel consumption) - requires 31% reduction in carbon emissions
Environment Act 2021 - requires 10% Net Biodiversity Gain on new development sites - this is now coming into action January 2024
What have the RICS published in regard to sustainability
RICS Guidance Note Sustainability and ESG in Commercial Property Valuations
new Red Book - latest changes makes more reference to importance of sustainability credentials in valuation
What commitments has the UK government made to sustainability
Net Zero Carbon commitment by 2050
The government has stated that we have overdelivered on carbon reduction requirements to date, so they have slowed down some new measures. For example:
- Ban on new gas fired boilers being moved from 2030 to 2035
- Same with ban of sale of diesel and petrol cars 2030 to 2035
Are there any changes to key valuation documents?
The RICS has recently published an update to UK Red Book National Supplement - Requires a mandatory rotational policy to be in place for valuation firms who are valuing assets for regulatory purposes
