NEXT AUCTIONS - 9TH FEBRUARY AND 22ND MARCH 2016

CITY & CITY FRINGE EAST & NORTH LONDON STRATFORD WEST END ESSEX & HERTS

January 2016 Issue: 80

www.strettons.co.uk

briefingNOTESWhat a year!

Industrial Agency transacted £81.4 million in 2015 (1.2 million ft2 ofreal estate) with a further £102 million in solicitors hands. This includedthe largest industrial letting in north and east London this year of187,000 ft2, as well as a 6.6 acre site for £6.5 million.

The Property Management department expanded to a team of 45with £1 billion in capital value under management. On average, 91%of rents were collected on the quarter day.

East London Agencywere instructed by Lidl to acquire 89 sites in Londonand Essex in 2016. They have also been appointed as consultants forSilvertown Reach in Canning Town to advise on 80,000 ft2 of commercialspace.

Auctions had a good year with the sale of 80% of all lots offered.Notable transactions included the sale of a vacant freehold house inSpitalfields, E1 for £1.75 million, almost double the guide price.A freehold shop and upper parts in Kingsland Road E2, guided at £1.1-£1.25 million, was sold to a media company for £2.4 million.

Receivership instructions were nationwide including a factory in Bowwith potential to develop 15,000 ft2 of commercial space and 73 flatsforming a residential portfolio in Great Ayton historic village in theNorth Yorkshire Moors, also the birthplace of Captain Cook.

City Fringe Agency completed a letting of 47,000 ft2 to WeWork withthe building being their first acquisition in the Shoreditch market. Theyalso sold a site in Holloway for £9.6 million. The same team claimed 3rdplace in the Estates Gazette Q3 leasing table for the number of officetransactions completed in the City Fringe market.

Development Consultancy doubled in 2015 and notable workincludes concluding negotiations by agreement on 49 out of 50 flatsprior to having to resort to CPO. This brought significant cost andreputational savings to the client. The team is now instructed to valueover 400 units on a potential development site in south London.

Our West End office was joined by a professional services team focusingon lease advisory, expert witness and compulsory purchase. Transactionsinclude acquiring the freehold of an industrial estate in Kings Cross forin excess of £6.5 million and the settlement of a rent review in prime W1on 24,000 ft2 of office space. Our leasehold reform extension team hasalso doubled in size over the year.

Two new Directors and four new Associate Directors were appointed.We are now well in excess of 110 staff based over 5 offices and achieveda 100% pass rate in our graduate programme in 2015.

Talking of milestones - 2016 marks our 85th anniversary and we look forwardto working with you and creating value through the year and beyond.

We have seen growth in all areas of the business and a risein the Estates Gazette UK ‘Top Agents’ ranking to 28th place.

Talking of milestones, 2016 marks our 85th yearin which we look forward to working together.

Rise in ‘TopAgents’ranking to28th place

City FringeAgency teamclaimed 3rdplace in the

Estates GazetteQ3 leasing

table

Auctionsaverage sales rate of80%

Development Consultancycontinues to grow and thedepartment doubled in 2015

Over 110staff basedin over 5officesAcquiring 89 new sites located in

London and Essex in 2016 for Lidl

2016 will beour 85th year

100% passrate in ourgraduateprogrammein 2015House in Spitalfields sold for £1.75 million,

(almost double the guide price)

Sold a 6.6acre site for£6.5 million

2 new Directors,4 new AssociateDirectors

East LondonAgency

advising on80,000 ft2

Our West End office doubled as ourWest End agency team were joinedby a professional services team

Developmentsite in

Hollowaysold for

£9.6 million

CITY & CITY FRINGE EAST & NORTH LONDON STRATFORD WEST END ESSEX & HERTS

The freeholder of an ACV must informthe Local Authority if they wish to sellthe asset. If a group wants to buy theasset they can trigger a moratorium forsix months to give them a chance toraise funds to purchase it.

Once listed as an ACV, permitteddevelopment rights are removed andthe property becomes a materialconsideration for any planning

application or development. As anexample local pubs have beenregistered as ACVs and there are nowover 860 pubs across the UK listed assuch.

We recently pitched to be consideredas an agent for the sale of a multi-letfreehold in Bethnal Green let as twoshops with other parts let to acommunity organisation. The tenant

made an application to list thebuilding as an ACV and was successfulin doing so. Clearly the listing as anACV has implications to value.

There are very few ways to prevent thissave for objecting to the application.A nominee does not need to have aninterest in land in order to make anapplication for a building to be listed.

Asset of Community ValueUnder the Localism Act voluntary and community organisations can nominate an asset tobe included on their Local Authority’s Register of Assets of Community Value.

These checks will need to be done on all occupiers over the age of 18 regardlessof whether they are named on the tenancy agreement. Each of the tenants andoccupiers (even if they are not named on the tenancy agreement) must comeinto the letting agents and produce the original of the documentation provingthat they have the right to rent. This cannot be done by email or post. Allcopies of documentation must be kept for the tenancy and at least 12 monthsafterwards. There are two groups of documents that are acceptable. Thoselisted in group A include passports and so forth and no further checks orrepeat checks are needed. Those on group B may require further checks ifthey have a limited shelf life. The penalties for not carrying out these checkscan be a fine of up to £3,000 per occupier.

This is yet another piece of legislation which adds a burden to a buy to letlandlord and which is why a professional letting agent is essential.

For further information please contact Sharon Brandelli.

Get your house in orderThe Immigration Act 2014 will require all landlords to ensure that prospective tenants havethe right to rent their property with effect from 1 February 2016.

Marks & Spencer paid rent for the relevant quarter and thenserved notice to break as required by the lease. Marks &Spencer then argued that the rent that fell after the breakdate should be returned by the landlord. It was ruled that thelandlord was entitled to keep all of the rent.

This reversed a previous High Court ruling which held wherethe judge ruled that the tenant was entitled to a refund.

The Supreme Court however upheld the Court of Appealjudgment that the tenant was not entitled to a refund.

Tenants would be well advised in negotiating clear wordingwithin any break clause stipulating how rent should be paid inconnection with a break. Landlords will be able to rely on nothaving to provide a refund if the break clause is silent in this respect.

M&S refused cash back M&S v BNP Paribas was decided by the Supreme Court and concerned the apportionment ofrent paid by a tenant in advance for a period after a break date.

www.strettons.co.uk

Ground rent success

See you in court2015 saw Strettons provide expert evidence in valuation litigationcases increase significantly as our reputation for providingcomprehensive advice to those unfortunate enough to findthemselves in litigation rose.

Flat – SE19Strettons acted for a bankwho lent on a two bedroom flat where thesecond bedroom was converted from a lean-toconservatory without planning consent.

The original valuer failed to take the lack ofplanning consent into consideration – the difference in value was circa £125,000.

In the past we were able to guideour vendor clients by using lowishyields to set reserves and guideprices but we have found that wecan no longer use such measuresas accurate indicators of value.

Where leases have relatively shortperiods to run ground rentinvestors are now willing to pay asignificant proportion of theanticipated lease extensionpremium as the purchase price inaddition to a ground rentmultiplied by a yield. We might

advise an owner of a freeholdproperty converted into two flatswhere the leasehold extensionpremium might be in the regionof £20,000 per unit to set a guideto the reserve in the order of£20,000 to £25,000 plus theground rent investment.

If you have ground rentinvestments and would likeadvice as to their value thenplease contact Ian Mann on 020 8520 8383.

For many years we have been selling a large number of ground rent investments by auction. Groundrent investments have always been popular but more recently the demand has increased significantly.

Evidence given in a case arising from an alleged undervaluation. The original valuation provided a figure of £4.8million and the property was sold shortly after for £7 million.

The issues included whether there wassufficient due diligence in assessing rental

values, a lack of sufficient comparables and anon-standard valuation technique. The wrong

valuation technique was also used andfew comparables were considered.

Shops in North LondonThis case involved action taken against receivers who sold three properties together by private treatyfor circa £2.2 million with a delayed completion during which time the purchaser onward sold theproperty for circa £2.4 million.

The borrower sued the receiver. The case revolved around whether the correct method of sale was chosen.

Our valuation team is instructed by litigation lawyers several times a week to provide advice where the value of property andthe conduct of parties is brought into question. If you require any help here please contact Mark Shaw on: 020 7907 7427

Industrial - NW10

CITY & CITY FRINGE1-3 Sun StreetLondon EC2A 2EPTel: 020 7375 1801

EAST & NORTH LONDONCentral House 189-203 Hoe StreetE17 3SZTel: 020 8520 9911

ESSEX & HERTSThe Forge, MulberryGreen, Old HarlowEssex CM17 0ETTel: 01279 451 835

STRATFORD63 Broadway Stratford, LondonE15 4BQ Tel: 020 8522 4666

WEST END7-10 Chandos StreetLondon W1G 9DQTel: 020 7637 8080

DIRECTORS

Benjamin Tobin BSc FRICS FNARA •Philip J. Waterfield BSc FRICSSimon E. D. Tilsiter BSc FRICS FNARA •Francis C. Hunter BSc FRICSMark R. Bolton BSc MRICSMark R. Iliffe BSc MRICS ACIArbChristopher J. M. CollinsMark Shaw BSc FRICSNeal Matthews BSc MRICS

Geneviève Mariner BSc (Hons) MRICS

FINANCIAL CONTROLLERKirit K. Jethwa

HEAD OF PROPERTY ACCOUNTSRichard Allen

INSURANCE MANAGER

Ram Bekir

• Registered Property Receiver+ Non Executive Directors

ASSOCIATE DIRECTORS

Ian Mann BSc MRICSGiles Owens MRICSChristopher CornhillNick Duck BSc (Hons) PG.Dip MRICSJon Cuthbert BSc MSc Peter Costello BSc MRICS IRRVPaul QuySimon Isaacs BA (Hons) PgDip MRICSJeremy Feingold BSc AssocRICSSuzanna Lewis

85 years and nothing’s changed2016 sees Strettons celebrate its 85th year but in its 60th year a young graduate surveyor,Simon Tilsiter, arrived in Walthamstow for an interview for his first job.

Detailed specialist advice should be obtained before taking or refraining from any action as a result of the comments made in this publication, whichare only intended as a brief introduction to the particular subjects. If you wish to discuss any of the issues referred to in this bulletin then you shouldconsult your normal contact in the firm or your legal advisors. Strettons cannot take any responsibility and will not accept liability for action taken orrefrained from on such general advice as contained within Briefing Notes.

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DIRECTORS

Philip Costa BSc MRICS ACIArbGary Powis BSc (Hons) MRICSJames Bacon BSc MRICS

CONSULTANTS

Peter G. Tobin BSc MPhil FRICS FCIArb +Philip P. Tobin FRICS MCIArb +Graham R. Slyper FRICS IRRV +

I don’t think I had ever heard ofWalthamstow and had certainly neverbeen to East London having spent myyouth growing up in North WestLondon but having applied for a jobas an auction assistant I found myselfdriving through suburbs that wouldbecome more familiar to me thanthose of my childhood. At the timeStrettons was celebrating its 60th year

and it employed 38 people out ofthree offices. To this day I am not surehow I got the job as Graham Slyper’sinterview technique mainly involvedasking me about football and EastLondon property values, subjectswhich I then knew nothing aboutalthough my knowledge in one has ofcourse improved!

At the time Strettons had a telexmachine but no fax. Emails, mobilephones, websites did not exist. As anauction assistant I had to take care notto waste valuable photographic filmand make a note of which exposurecorrelated to which property I hadinspected so that we could label thecorrect property in forthcomingcatalogues. The pace of work wasdifferent. Post came in, letters weredictated, photographs weredeveloped. One made appointmentsby letter, measured with a tape,photocopied details and carefullyindexed maps in chart cabinets. Thepace of work and communication has

changed and advice, securinginformation and communicating thesame has become faster, immediatelyavailable and altogether swifter. Thatsaid some things haven’t changed andI’m certain that considered advice,courtesy and a personal service are asvalued now as before in a worldwhere emails have no tone of voiceand more haste often leads to lessspeed and worse.

Simon Tilsiter joined Strettons inSeptember 1990 as a graduatesurveyor in the auction departmentfor two years, spent three years in thevaluation and professional team andthen moved to property management.He has seen the firm grow from 38 toover 110 staff becoming an equitydirector in 1998. The propertymanagement department has grownfrom 15 staff to over 45 with the rentand service charge roll now in excessof £100 million and over £1 billion ofassets under management.

Simon E. D. Tilsiter BSc FRICS FNARA

It’s all about MEE - Minimum Energy Efficiency standard

There are now two important dates afterwhich letting properties with an EPCrating of F or G becomes unlawful. As of1 April 2018 it will be an offence forlandlords to grant new leases and after 1April 2023 it will be an offence if

landlords continue to let under existingleases. After 1 April 2016 (under theEnergy Act 2011) tenants of residentialproperty will have the right to requestreasonable energy efficiencyimprovements from landlords.

The Energy Efficiency (Private Rented Property) Regulations 2015 come into law on 1 April 2016.