Opinion

Ultimately the government need to be doing more for SME builders and developers who are facing what is already an uphill struggle. We regularly hear complaints from our clients about the rising costs of building new houses; anything from labour to supplies have been on a steady increase of late. When this is twinned with a flat property market all that leads to is a squeeze on margins, making opportunities for developers scarcer.

There needs to be a bigger push from the government to incentivise people to build homes again. We all know we’re a long way away from the targets that we are supposed to meet and this is not going to improve without drastic changes to both the demand and the supply side.

I was a big fan of help-to-buy when it was first introduced however this was only supposed to be a temporary short-term fix, and not long term dependency as it appears to have morphed into. There is a distinct lack of dynamism and forward thinking from our government when it comes to housebuilding and sadly I don’t see this changing anytime soon.

Lucky landowners with properties in the right spot have been able in the mobile phone revolution of the past 20 years, to rent out land for phone masts, over 40,000 now in the UK. With the telecom provider obtaining planning in place, surplus land has been able to help the owner from helping these big corporations and putting in place a phone mast. Historically, these values have been between £4.5k to £9k annually under 15-year leases, depending on location.

With the coming of 5G and the need for another 40,000 new phone masts, the new Electronic Communications Code contained in the Digital Economy Act 2017 and introduced on 28 December 2017, is as a result likely to sharply reduce landlords’ income from these agreements and leave them with less control over their properties. The government in a bid to help roll out new phone masts for 5G had the bright idea to change the way mast contracts were negotiated under this new code so that instead of mutual negotiation the value was changed to alternative land use. No doubt the big telecom corporates were involved in its drafting.

In the city this value may be higher, but in the country some of these spots have very low alternative use values, as a result existing phone mast locations at the end of their contracts have seen offers from the telecom companies for annual lease values plummet from an average £6k annually to sometimes now offering as low as £32 pounds only a year.

So, in that instance you would then think the landowner could just give the telecom mast company notice, and tell the provider they can take their £200k of equipment elsewhere, but no, in the new code, the mast provider can go to Tribunal and have the value and mast site protected and withheld.

Loss of control is much greater, although, there is no right to “add” equipment, which may give landlords room to negotiate for more negligible rent. However, new rights include, to connect to a power supply; interfere with or obstruct an access route; and to lop trees have been added as well as right to keep the site, so land value could be potentially affected.

So, what’s actually happened since the new code came in? Mutual new mast agreements have now crawled to a standstill and there are cases now going to court to test the legislation, which surely needs significant amendment.

In the code there is scope for compensation in addition to rent for:

Faced with the prospects of a lower consideration, landowners are likely to claim compensation for their loss, as they can be entitled to do. Typical heads of claim will be:

• Land taken – this will vary between each site (such as between farmland/woodland, farmyard/car park etc);
• Injurious affection – this allows a landowner to claim for any drop-in value to his retained property (say to a house within sight of the mast);
• Disturbance – this ought to cover the landowner’s time and trouble in dealing with access requests, which at say five requests a year per operator could equate to well over £2,500 per annum; and
• Fees

If approached, where until recently a new mast was a potential positive for land, we understand is don’t agree any offer for a mast offer without proper advice first.

While British politics remains mired in continual and it seems perpetual uncertainty or lack of resolution; there still remain such absolute certainties; the British weather has kicked in, there is a new season of Strictly Come Dancing, Labour and Conservatives MP’s don’t get on, new political parties don’t seem to last very long, the tube goes wrong,  and every Monday morning in the Magnet Capital office the dynamics begins with critical analysis of whoever’s footie team is (temporarily) in the ascendancy before analysis of the new episode of Peaky Blinders and onto the day’s loans business…

Some things do change though; England finally won a Cricket World Cup this glorious Summer; opening a bank account does take just a bit longer than 5 years ago,  and the government might be looking at reforming the stamp duty system that from 2015 that along with other issues brought to an end the UK’s 20 year property boom

For all the political unknowns, and threats of tax changes and economic slowdown the UK economy remains the 6^th biggest in the world and economic growth in Britain in the current year for all the talk, growth is the same as the average in the Euro zone (1), and we are way ahead of Germany and Italy this year, the Government is (so far) in control of the Budget deficit, and with historic low interest rates, and a lot of money waiting to be deployed (liquidity) the ability to re-bound with confidence can be quick – should certainty in the market return

Making predictions in current times on Brexit, the property market, Manchester United’s next score and what happens to Stamp Duty may appear a mugs game at the moment, is an election coming? We seem in a waiting period.

Stamp duty changes proposed have included the seller paying, instead of the buyer, which we think is impractical, sharing the payment (also difficult), raising the minimum charge, cutting the rates at the top (obvious, but looks like it is helping rich people), but something will have to move eventually, as like in all taxes if the take drops then a rethink is needed.

Property business issues may be the same, interest rates, stamp duty, the costs of build changing, but the fundamentals of build haven’t – Most developers just want to get on and build, find the next project and move on…

However, here at Magnet Capital we operate in the engine room of the property world, deals still happen, so we don’t feel the slowdown as some have on higher unit prices, particularly in parts of the South East – and a year in since we started we are very proud the map of England and Wales in our office, is now ablaze with green dots of ongoing projects we have signed up and after 12 months showing our first 6 yellow redemptions where we have lent which have successfully completed.

The team has grown with two new starters this month and a bigger office, roll on Year 2….