There has never been a more important time to take a clear view of property assets, to plan forward action and to target opportunities.
Accepting the status quo is not an option – actions can and should be pursued, both as preparation and for future advantage.
The landscape at the final quarter, viewed by property professionals, is complex.
Beyond the continuing effects of Covid-19, changes in legislation, the demands of the natural business cycle and developments in technology, all interact.
Anyone holding, trading or developing property assets must be fully informed of the new landscape. And, must consider carefully how to form progressive plans and to react to situations that are likely to arise.
At the forefront of investors’ / managers’ minds is the need to deal with the ongoing fallout of the pandemic and the need to agree terms with tenants, including measures to help them through the crisis, with a view to re-establishing the value of investments with healthy, secure income flows.
Rental holidays, deferred rentals, turnover rentals, turnover rentals with minimum guarantees are all in play.
There may yet be a wave of CVA’s or liquidations, and tenants coming towards the end of their lease terms may decide not to reopen and not to renew.
Landlords may need to decide whether and when to accept early surrender and on what terms, and, in doing so, to consider the matter of dilapidations, the direction of the market and the likelihood of finding alternative tenants.
New leases may need to include many of the variations noted above and solicitors are likely to be pressed into inserting “Covid-19” clauses to release tenants from paying rent in the event of defined forward pandemic effects and which may even permit early surrender.
1st September marked the introduction of the new Use Classes Order, which permits properties to change use without planning consent between far broader categories. In particular, freedom to move, for example, between office, retail and health/clinic uses is likely to be extremely helpful in the reletting of vacant properties.
The interpretation of user clauses in existing leases will need to be considered carefully and there may be conflict between tenants wishing to assign or sub-let leases within the new flexible rules, but which fall foul with landlords who wish to maintain a balanced user approach to their developments and who believe that leases are so worded as to allow them to refuse consent.
Of greater interest to developers is the Government white paper on changes to the planning system, the effects of which will take longer to reach implementation. Nevertheless, the stated goal is to make the planning system easier, quicker and to establish a system with speed and quality at its heart.
Opportunities will be created, with obvious effects for the logistics / internet delivery sector, roadside takeaway and residential in both new build out-of-town or urban apartment dwelling. Repurposing and refitting of redundant retail space will also be enhanced across a wider range of uses.
Property owners with telecommunications investments will be aware of the blizzard of cases heard at tribunal to bring clarity to the new legislation, with, we understand, many more to come.
There does not appear to be much good news from the code for investor landlords and the effects of reducing rental income / values has had the opposite result of that intended, i.e. the rollout of fast digital services. Those dealing with the operators under the new code must proceed with care.
The immediate future promises to be one of exciting change, providing opportunities for those who seek them and pitfalls for the unwary.
In all, there is no time to be lost in planning forward strategy on property assets.
It is, also, clearly a time to be armed with the best possible property advice to assist the key judgement calls.
© Bob Hyatt, B.Sc. FRICS, Managing Director, Hyatt on Property