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Cleaning up the corporate act
Tyser

It is a near certainty that companies in Europe will face an eventougher regime over the next decade as regards their environmental liabilities. Mathew Hussey looks at what may lie ahead.

Please Click Here to read this article.

Author: Mathew Hussey Associate Director Tyser UK

11/09

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Less is More
Searchwells

When it comes to buying a new home, size isn't always everything. Leonora Wollner reveals why downgrading your square footage could help you to substantially upgrade your lifestyle.

For many people, a house purchase is driven by a life change - whether that might be a new job, new baby, or simply a change in direction. While it's generally accepted that we all want to climb the housing ladder, there may be a time when actually stepping back a couple of rungs makes more sense. That's not to say that downsizing should be thought of as a backwards movement; it's actually a chance to fulfill your heart's desires by ensuring that your home suits your current and future lifestyle.

Scale Model
The desire to downsize is most common among empty-nesters and the older generations, since they're most likely to be living in a home that exceeds their actual need for space. At such stages in our lives, we may well want to re-evaluate what makes the perfect home in order to better enjoy the fruits of our labours. But you might also want to consider moving to a smaller home if you're planning a new business venture and need to release some capital, have separated from your partner, suffered a bereavement, or simply want to move closer to other friends and family members.

If you've lived in your home for some time, it's value will probably have increased significantly over the years. By downsizing, you can unlock this equity and use the capital either to fund your dream or save for a rainy day. Alternatively, you could purchase a smaller house for the same value as your current property, giving you the option to choose an abode that's either in a more desirable area or that simply looks better.

The good news is that a smaller home doesn't have to be a compromise. There's no need to skimp on the size of your principal rooms - you simply opt for fewer of them. You should find a petite place easier to manage and maintain too. No longer will you have to dust and vacuum bedrooms that only see guests once or twice a year, or dining rooms that only get used at Christmas. Heating bills, too, will be cut down to size. You can also take the opportunity to choose a property to suit the way you want to live your life now. For example, if you were once a keen horticulturalist, but no longer want the responsibility of tending a large garden, you could opt for a house with a smaller plot. If you're a more mature downsizer, you might want to select a property which that will help you to maintain your independence - for example, one without a staircase, or something that's close to family, shops and the doctor's surgery.

Heads Up
So, could downsizing be a smart choice for you You'll need to think carefully and appraise your lifestyle honestly before you plan ahead. Ask yourself whether you'll be happy with less space and, critically, whether you will be able to streamline your cherished belongings to fit into a smaller property. Next draw up a wish-list for your new home, as well as a corresponding manifest of absolute no-goes. This will help you to sort through all the property particulars that come your way and create a shortlist of possible for viewings.

Before you get too carried away with your dream, get at least three valuations of your home from experienced local agents. And be sure to find out if there are any improvements you could carry out to maximize its market price. Knowing exactly the amount of money you have to play with will make planning your future considerably easier. It may sound obvious, but amid all the excitement don't forget to keep family and friends up to speed with your plans! This is particularly important if you live in a home that holds childhood memories for your relations - you don't want to add extra stress to your move by creating friction in the family. Of course some of you may specifically be looking for properties that can be sub-divided to suit several generations, allowing you to downsize whilst simultaneously giving your children a foothold on the property ladder.

Prior to starting your house hunt in earnest, try to ensure you've got an offer on the table for your existing home. It may sound odd to virtually render yourself homeless, but by doing this you'll be putting yourself in a strong position to make a move on your dream property. There are plenty of characterful period homes of a suitable size on the market - from cosy chocolate-box cottages to elegant city apartments, quaint gatehouses to stunning stable conversions. They're all highly desirable, so if you want to secure your ideal property, it pay's to be able to exchange quickly.

Personally, I'm a big fan of what I call 'little big houses' - basically properties that were built as grand edifices on a small scale for second and third sons or dowager aunts. With some disciplined searching it's possible to find some wonderful Georgian, Victorian and Edwardian examples. I'd also recommend considering a barn conversion, as they're often developed in groups and are therefore fantastic if you're after a rural home set within a small community.

Lodge house living
After more than four decades in the family home, 80 year-old Rose Wright decide it was time to downsize. "The five bedrooms and steep stairs were proving too much, but I didn't want to change my way of life," she says. "Top of the list for a new home was for it to be on one level, but big enough to cater for family gatherings - without giving them the opportunity to stay overnight!"
Rose came to Searchwells to talk things over. The first step was to get her current property under offer, before concentrating on finding her dream home. "She had set her heart on a particular street on the outskirts of Oxford," explains Leonora." We sent a letter to the occupants of single-storey houses on that road and, luckily, received a positive response." The Victorian gate lodge they'd found needed a complete refurbishment, so Searchwells arranged for Rose to rent whilst the work was carried out.
"I hadn't lived in a period property since childhood, so I was delighted with the lodge," she reveals. "It even had a charming old apple orchard out the back - because I've downsized, I can afford to employ a gardener to help me out." As Rose wanted to hold on to the majority of her belongings, maximizing storage was a priority. "The kitchen was designed aroung my needs, and I've even got an additional shed in the garden to keep extra chairs for entertaining," she smiles. "I've also been able to put aside a financial nest egg that's secured my future quality of life.

Leonora Wollner was possibly one of the original property finders, as in the mid 1980s she advised members of the Kuwaiti royal family on purchasing their London homes and English country houses and estates. Having been involved in the purchase and sale of a variety of houses (including unusual and listed ones) and because she has a rental property portfolio of her own, she has the experience to understand exactly what it is her clients need. She has also renovated and restored a number of properties herself over the years.

Leonora and her husband, Mark, run Searchwells from their 18th century Grade II listed mill in central Chelmsford. Leonora searches proactively for the very best properties available (both on and off market) for private clients who wish to find their next home across East Anglia, the South East and the Home Counties. For further information Click Here.

Author: Searchwells

04/09

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Is now a good time to buy property in Essex?
Searchwells

As property finders this is a question we are always asked as soon as we meet anyone new! Due to feverish and rather glum reporting on the property market for many months now, many are genuinely surprised when we answer 'Yes!'

Let me explain:
The national property market is fragile, it does lack confidence and is definitely slower than this time last year. Good mortgages are more difficult to find, there are fewer buyers and the media does keep saying that home values are likely to go down even further.

Yes, the Essex property market is also relatively fragile, but the best located, well appointed homes are holding their values well due to our proximity to London, the quality of local schools and the high standards of living we enjoy.

But from these negatives, come the following real positives for house purchasers:

  • There is a good choice of quality properties available NOW to purchase. Many more than this time last year. Choice is vital when you are searching for a new home. Please note however, that not all properties will be openly available for sale.
  • Vendors who need to sell will be willing to consider a fair offer for their property. In the recent past most vendors would expect you to offer more than the asking price to secure the very best property.
  • Good Estate Agents are advising their clients that to achieve a sale, they have to offer their properties at fair and realistic market values, not at inflated prices. Therefore many properties are offered at a great deal less compared to this time last year. However, please don't automatically think that all property prices can be reduced by up to 25% - it depends on when they were valued, where they are, their condition and the vendor's circumstances etc.
  • Because it is a buyer's market and there are fewer buyer's around now, it is less likely that you will be in a race to purchase a property, so your ideal home may become yours at a good price, with careful negotiation. A rare opportunity indeed.
  • Thankfully, and at long last, better mortgage products are being marketed by lenders. Literally in the last few days we have become aware of improved rates; simply do your research to ensure you get the best offers for you.

Our advice, in summary, is 'do your homework and be prepared.' Obtain independent advice to ensure that you minimise your risks and maximise your opportunities. Make sure that you are a 'good buyer.' By this we mean that you can move quickly to exchange once you find your ideal home.

And finally, don't panic about the market dropping too much more. On the whole, unless you are a property speculator, you will stay in your next home for at least five years. Therefore if you buy well now, you will be well placed to maximise your investment when you choose to move next time round.

Searchwells Independent Property Finders work on behalf of the purchasers to take away a lot of the hassle and stress of moving home as well as provide good, up to the minute advice on the market in the area you want to move too. Additionally, Searchwells can also manage the sale of an existing property. Their service is about saving client's time and making sure they get to view and acquire the best properties available, in their timescale and at the best possible prices.

Author: Searchwells

09/08

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Is now a good time to sell property in Essex?
Searchwells

Every morning (yes including Sunday's!) when I turn on my computer I have at least five messages from local East Anglia estate agents advising me of new, quality properties for sale (both on and off markets). So properties are coming to market, even in this current marketplace of property doom and gloom.

Perhaps the market isn't that bad then, or are those selling now selling because they have to?

The answer lies somewhere in between! The Essex property marketplace, especially at the mid to top end, is faring OK when compared to some other regions in the UK. Our close proximity to London and the good travel connections, make Essex a 'more house for your money' option for those who work in London (and especially those who work in Canary Wharf and the City). Add to that the good local schools and amenities in Essex, plus its proximity to countryside and even the coast, and it's a good place to live.

Also add to that the booming local economy and the history of house price increases over the last 10 years or so - and Essex remains a good property investment opportunity over the longer term.

Additionally, selling your home is usually as a result of you wishing to change your lifestyle. There are relatively few of us who are property speculators! You may want to downsize as the children have now flown the nest, you may be relocating due to work or you simply need a larger home for your growing family. Sadly, society views property as simply an investment opportunity, when our home, in essence is at the very heart of our day to day lives.

If you want to sell because you want to 'trade up or upsize' then, whilst you'll get less (probably) now than you would of last year for your current home, you'll win because the property you want to buy will cost less to purchase. Proportionately, you'll gain.

If you are looking to downsize (and most larger, quality homeowners/vendors are) then, again, you'll probably get less now for your home than you may have last year. But, you probably bought your home many years ago and will be able to invest the 'nest egg gain' and benefit for the high interest rates currently available. And, do you want to wait possibly years for the prices to hit the same level as at the top of the market, or do you want to make your desired lifestyle change now and move forward with your life?

The question of selling now in a so-called 'falling market' could also be asked of people who decide to sell their home in a 'rising market.' In times of good property prices, why should people sell, if they could perhaps make more the following year? Likewise, now, why sell in a falling market? Why not wait until the market picks up? The answer is generally an emotional one. Your life has changed or needs to change. You want something different. So why wait? And, don't forget, interest on savings is extremely good at present!

In the current market, to sell your house 'well' you need to be prepared to offer it at a fair market price. Talk to your agent, gather opinions and look up local house sale values on the web. Be realistic. There are very, very few houses that currently sell in excess of their offer price. But they do exist! These properties are 'prime properties' and are the best located quality properties. They are always in a desirable area and generally are well and tastefully appointed. They are rare gems and will always sell well and quickly.

When you've set a fair market price, then make sure that all viewers see your home at its best. That doesn't mean a new kitchen, bathrooms, carpets etc. It simply means a clear, uncluttered and clean home that has a 'good feel' about it when it's approached from the outside and viewed from the inside.

When selling, research and plan thoroughly, ensure your home views well and is seen by committed purchasers and ensure you have the best advice about how best to market your home. When a buyer comes forward, then make sure they are a 'good' buyer and that they are committed to proceeding forward to exchange.

Author: Searchwells

09/08

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Tax Aspects of Property Investment.
BirdLuckin

Income arising from land and buildings is generally treated as investment income unless it is from furnished holiday lettings or from property development or provision of services such as hotels and guest houses, in which case it would be classified as trading income.

From an accounting and tax point of view, all rental income (except furnished holiday lettings) is treated together as from one Schedule A business, regardless of the terms of letting. Profits and losses are calculated using the same general accounting rules as for trading, including accruals to cover the timing differences of rent or expenses in advance or arrears. A cash basis is allowable for total annual rents under £15,000.

Allowable expenses
Expenses allowable in calculating income include interest incurred on loans used towards the purchase of the property (adjusted for any part private use), business rates or council tax, rent payable to a higher landlord, insurance and management expenses including advertising for tenants, and maintenance, repairs and redecorations. Management expenses can also include costs of travelling exclusively for property letting purposes.

Expenses on improving the property (such as extensions or installing central heating) and those which were necessary to bring newly acquired property to a state where it could actually be brought into use all form part of the capital cost of the property.

Allowances for equipment
In general it is not possible to claim capital allowances for plant and machinery in a dwelling house. By concession, an allowance is available to cover the wear and tear on items such as suites, beds, carpets, curtains, linen, crockery, cutlery, cookers, washing machines and dishwashers. For such items it is possible to claim either the cost of replacement (but not the original purchase) or instead to claim a global annual wear and tear allowance of 10% of the rents received on furnished lettings (excluding items such as council tax and water rates which would normally be payable by the tenant). In addition to this 10% allowance it is also possible to claim a deduction for the cost of renewal of fixtures such as baths, washbasins and toilets.

For commercial properties, capital allowances may be claimed in respect of plant and machinery supplied by the landlord. The landlord may also claim industrial or agricultural buildings allowance, where appropriate for the business of the tenant. The allowances are calculated in the same way as for trades, and are deducted as an expense.

Rent a Room relief
Owner occupiers and tenants who let furnished rooms in their only or main residence may claim rent-a-room relief. This is available both for Schedule A businesses and where substantial services are also provided, for instance guest houses and bed and breakfast businesses where the rent would be chargeable as trading income. No tax is payable for gross annual rents (for accommodation and related goods and services) up to £4,250 (£2,125 each for a couple). Where rents exceed £4,250 you can choose to pay tax on the excess, or on the total rent less expenses in the normal way.

Furnished holiday lettings
Schedule A businesses which comply with the relevant conditions can qualify for some very important tax concessions. Furnished holiday lettings are treated for tax purposes as if they were trades. Unlike other domestic lettings, the expenses can include capital allowances on furniture and kitchen equipment. The income counts as relevant earnings for pension contribution purposes, and there are other advantages relating to the disposal of such properties (see below).

Other considerations
Where there is mixed use of property, business rates may well be payable as well as council tax, unless the business use does not materially detract from the private use. Non-domestic properties, such as commercial premises and boarding houses, are in any event subject to business rates. Provision of bed and breakfast in your own house is not caught if there are no more than six guests. Staff accommodation is counted as domestic and therefore subject to council tax.

Value Added Tax on land and buildings is a complicated area. Generally sales of commercial buildings less than three years old are standard rated, sales of new residential properties are zero rated and most other sales or leases are exempt. The VAT provisions on property letting are particularly complex.

There is no charge to Stamp Duty Land Tax if residential property is purchased for £125,000 (£150,000 in disadvantaged areas) or less, or on non residential property for £150,000 or less. Any excess is charged at 1%, 3% or 4%, as appropriate.

Special incentives
Support for disadvantaged areas is actively being encouraged, and investment in Enterprise Zone properties can be extremely tax efficient, so long as the prices are not artificially inflated.
Landlords installing loft insulation, floor insulation, cavity wall insulation, hot water system insulation and draught proofing up to 5 April 2015 may claim an income tax deduction of up to £1,500 per property (Landlord's Energy Saving Allowance).

Initial allowances of up to 100% are available for expenditure by property owners and occupiers on the renovation or conversion of empty or underused space above qualifying shops and other commercial premises to provide residential flats for leases of not more than five years.

Disposal of properties
If the purchase and sale of properties amounts to a trade then, of course, property disposals will be taxed as income in the normal way.

In all other cases, disposals will be subject to the normal rules for the calculation of capital gains. Most let properties will count as non-business assets for taper relief purposes. However, business asset taper relief is available in respect of furnished holiday lettings and properties where the tenant carries on a qualifying trade (even though there is no connection with the landlord).

The situation may be complicated where a principal private residence has been let other than during the last three years of ownership or during a period of allowable absence. In these circumstances, the associated lettings relief of up to £40,000 could be brought into play.

Furnished holiday lettings may also qualify for rollover relief or gifts relief. In some circumstances they may also trigger inheritance tax business property relief, in which case they would pass free of any inheritance tax charge.

Whilst some of the principles of property taxation may seem relatively straightforward, there are many traps for the unwary, and professional help is definitely advisable. Please contact us for more information.

Author: BirdLuckin

08/07

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Buy-to-Let Properties.
BirdLuckin

At one time, investing in the Stock Market was looked upon as the sure-fire way to achieve long-term growth, but the ups and downs of the Market over the last 20 years have caused many people to look at alternative forms of investment.

The property market has also had its ups and downs, but the public perception is that these are less extreme than has been witnessed with the Stock Market.

This perception has spawned a significant expansion in the Buy-to-Let sector. Basically this involves investing in property in the expectation of capital growth, and in the meantime earning rent which can be applied to cover the costs of ownership.

Many investors were encouraged by soaring house prices, but it must be recognised that prices cannot continue upwards at such a rate, nor can rent levels always be sustained, and there could well come a stage where it may not be possible to cover mortgage repayments out of rents.

Typically a rental yield of about 6% is required to cover mortgage interest of about 5% and any additional costs such as letting agents' fees, but yields can be as low as 3% (and as high as 9%). Please remember that the greater the borrowing, the greater the risk.

However, experts believe that Buy-to-Let investors can expect a reasonable rate of return on their capital if they take a long term view of at least seven years. Properties should be chosen with care, in areas where tenant demand is high. The cautious investor will build up a cash reserve to be able to cut rents or go without a tenant for a couple of months, if necessary.

The Student Scene
One special area where Buy-to-Let makes very good sense is in the provision of accommodation for student members of the family. Traditionally, this has involved paying out fairly high rents over a period of three or four years and seeing nothing in return (except perhaps a sizeable student loan).

By buying a house in the university area, your children can be assured of somewhere decent to live and should be able to cover most of the costs by renting rooms to other students.

The situation presents significant tax saving opportunities, but the correct formalities need to be observed. One of the most important is that the property should be bought by the student, not the parent. Lenders are normally happy to offer a mortgage to a student if the parents act as guarantors, and good rates should be available to the student first time buyer.

The property should then qualify as the student's principal private residence and so capital gains tax (CGT) exemption will be available on any profits from the eventual sale.
The rental income is potentially subject to income tax under the Schedule A business rules, which allow a proportion of the running costs (including mortgage interest) to be claimed against the rent. Alternatively, the provisions of the Rent a Room scheme allow the first £4,250 of rent in each tax year to escape tax, with any excess rent over £4,250 being taxed in full.

Furnished Holiday Lettings
The purchase of a dwelling with a view to short term letting for at least part of each year can give rise to some quite striking tax concessions.

The qualifying conditions are that the accommodation must be let on a commercial basis (ie not merely to offset the costs of ownership). It must be available as holiday accommodation for at least 140 days in the tax year and actually let as such for at least 70 of those days. It must not normally be in the same occupation for a continuous period of more than 31 days during at least seven months of the year, which need not be continuous but includes any months containing any of the 70 let days.

If these conditions are met, then the income is broadly treated as trading income, even though it is strictly a notional Schedule A business. Interest paid on a loan to purchase or improve the property is allowed as a trading expense (restricted if necessary by any private use proportion). Capital allowances and loss relief may be claimed and the income qualifies as relevant earnings for personal pension purposes. This last point has become of less significance since the personal pension contribution regime was relaxed.

Properties used for qualifying furnished holiday lettings count as business assets for the purpose of CGT taper relief, though it is very unlikely that they would attract business property relief for inheritance tax. Such properties are eligible for CGT rollover relief and business gifts relief.

Main residence
If a property has, at any time, been your main residence for CGT, it may also be possible to claim the residential lettings exemption as well as exemption for the period of occupation as your main residence and the final 36 months exemption

A significant CGT saving can result from occupying a property as your main residence for a relatively short time - consult us about this, and any queries you have about residential letting.

Author: BirdLuckin

08/07

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Brownfield Briefing - Developers Guide to Brownfield February 2006
The Brownfield Risk Jungle. Don't Fall into the Trap

Tyser & Co Limited - UK Division

In 1996 I spoke at a conference about partnering in the construction industry. There was to be a new atmosphere of collaboration in an integrated fashion; the old adversarial ways didn't work and the industry was wasting a fortune as a result. Last year I spoke at another conference where the topic was, yes you guessed it…….partnering. Some speakers enthused as though it was a great new idea but, in reality, almost a decade later, nothing had changed. For most, partnering remains a myth, the confrontational approach continues, unabated.

The major problem, I believe, is the traditional structure of construction contracts. Take the most common, JCT, for example. JCT is all about what will go wrong. It perpetuates an acutely defensive approach. On the one hand, you have the client who wants a "Rolls Royce" job at a "Mondeo" price. On the other you have the poor contractor who, to win the tender, has had to cut cost to a suicidal price to hang on to his miserly 1% margin. No wonder the trouble starts!

About 20 years ago, the industry created a wonderful new concept "design and build". Instead of suing the entire professional team when a defect manifested itself, you just sued the contractor to whom all the professional skills had been novated. A classic case of risk being passed down to the entity least able to embrace it. Is it any wonder, therefore, that today 80% of all construction insurance claims consist of legal and forensic costs only. It doesn't take much to figure who takes the real margins out of the industry.

So many of today's construction professionals have been brought up in this adversarial culture and they just can't see that, when it comes to risk, the traditional procurement route is utterly flawed. So, chances are when clients say "I'm risk averse: I pass all risk to clients and consultants", they are probably being advised by the "luddite" project managers and quantity surveyors and perhaps lawyers who have a vested interest or perhaps, don't know any better. Even worse, many of the banks who provide the project financing, are often paying a lot of money for this suspect advice.

Traditionally procured insurance mirrors the construction industries fault lines. It protects individual firms, not integrated teams and the "blame culture" perpetuates a protectionist approach. There are various mechanisms which underpin the client's false sense of security; the most common being professional indemnity insurance (PI).

Many clients possess a kind of "machismo" when it comes to PI. One will say "I've got £5,000,000 PI from the contractor" while the other upstages him with "I've got £10,000,000 from the consultants". The sad thing is they don't why they want £5,000,000 or £10,000,000. Even worse, they don't know what it covers.

It is likely that a huge amount of potential remediation work will be undertaken in the next few years; the Thames Gateway area is the largest regeneration opportunity in Europe and the winning of the 2012 Olympics has had the construction industry generating a fervour of anticipation. Chances are, much of the work will be inappropriately insured or not insured at all, with potentially disastrous consequences.

Once I was amazed (now I just shrug my shoulders) that remediation contractors, tasked with the actual work of cleaning up contamination, are being asked for high levels of PI cover which is of no value to anyone. PI essentially protects consultants against negligent professional advice. The principal risk associated with a remediation contractor's work is that its activities mobilise residual contamination to create a pollutant linkage. In such circumstances, a site can be brought into Part llA of the Environmental Protection Act 1990. If sued as a result, the client will have no remedy under a PI policy. This is a Public Liability (PL) risk but crazily, most remediation contractors have "pollution" exclusions under their PL policies.

Within the construction industry, there is an institutional obsession with collateral warranties. To have any effect whatsoever, they have to be backed by PI. Even in circumstances where a PI policy may respond, clients should be reminded that PI is no benefit to them; it is a defence mechanism for the consultant. The chances of proving negligence under someone's PI policy, within 5 years, if at all, are remote. In my view, collateral warranties are a complete waste of time and money. In over 20 years I never known a client, a tenant or a third party successfully seek redress under a collateral warranty.

Why are they getting it so wrong? Well, many professionals believe they know better than the few specialist insurance brokers in the market who are often not consulted until it is too late. We are better placed than anyone to understand how risk should be managed, mitigated or transferred. We should be seen as a member of the professional team; not as a bunch of used endowment salesmen.

The client, with the assistance of the professional broker, is best placed to handle risk, not the contractor or consultants. There are too many prevailing uncertainties to pass the liability parcel. Many of these uncertainties can be removed with controlled risk transfer through the use of specialist environmental insurance. This market has developed dramatically during the past few years and now provides cost effective solutions to the technical, legal and financial uncertainties associated with brownfield development. Much of this insurance is triggered by funders and institutional investors who are not prepared to expose their investment to such risk. The Law Society's "warning card" focusing on the importance of environmental due diligence has resulted in increasing numbers of law firms recognising the value of insurance. We collaborate with many in designing and delivering bespoke insurance solutions, which make a solid contribution to real risk transfer.

Author: Graham De Roy, Director Tysers

02/04/06

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Contaminated Land Redevelopment - Safe, Secure and Sustainable?

Tyser & Co Limited - UK Division

With the multitude of committees, working groups, brownfield targets and billions spent on regeneration you would expect most people to be thinking along the same lines ('joined up thinking') and the future of England's regeneration safe, secure and sustainable. However the fundamentals of science, law and policy, in the realm of contaminated land redevelopment, are increasingly complex and one could argue increasingly divergent.

A key issue is a lack of clarity and uncertainty that prevails with both the regulators and private sectors - mainly due to the fact that the science, specifically Soil Guideline Values (SGV's) or lack of them, that is supposed to underpin the whole process has yet to arrive to a significant degree.

To further exacerbate problems the first case under the contaminated land regime (Circular Facilities (London) Ltd v Sevenoaks District Council) has raised more issues rather than brought clarity. As a result local authority progress in the enforcement of contaminated land legislation is likely to slow.

What is 'safe and secure' is still in reality yet to be resolved to any degree of confidence in either the legal or scientific fields and it is prehaps not surprising then that environmental consultants professional indemnity insurance (PI) is coming under increased pressure as clients seek protection.

In response to market pressures on PI both the Association of Geotechnical Specialists (AGS) and Environmental Industries Commission (EIC), through the working group on contaminated land, have at the end of 2005 started initiatives to promote standardisation of terms and agreements in place for consultants and their clients.

Consultants PI - Safe, Secure and Sustainable?
Clients seek consultants PI as a safeguard against historical contamination problems often under the misapprehension that PI offers them a benefit, in the form of environmental insurance. There is an increasing awareness of the limitations of this approach, a brief summary of some of these is provided below:

  • PI is negligence based cover, incepted primarily for the protection of the consultant against claims that they have been negligent in their work or professional duties. The burden of proof for negligence is extremely onerous.
  • Collateral Warranties are usually non-transferable, so persons outside of the original client will not receive any benefits from the warranty. If the collateral warranty is in breach of the terms of the PI policy then the policy is invalidated and the contractor or consultant will be left to defend and settle the claim themselves.
  • Collateral Warranties require PI insurance to be renewed annually for a period of 12 years provided it remains "available at economic cost". Many consultants and contractors have relied on this "concession" in recent years to reduce cost and consequently, quality of cover.
  • PI cover is usually placed as annual cover rather than a 'one-off' cover for the period of the contract, and the basis of the policy is 'claims made'. This means that any claims have to be made during the policy period.
  • The majority of environmental PI policies are placed on an "aggregate basis" thus if the consultant has offered an identical limit of indemnity backing collateral warranties for a number of contracts over the policy period and suffered a claim or claims, there is a possibility that the aggregate limit of indemnity has been exhausted.
  • Many contractors and consultants have exclusions under their PI policies for claims arising from "gradual pollution" - the most likely cause of claims associated with intrusive site investigations or remediation activities.

Tysers have responded to PI market needs by initiating in 2006 the first known market wide survey of environmental consultants PI with the objective of providing some clarity to market standards, patterns in claims etc. A summary of the survey results is expected to be available to the industry by April 2006.

Contaminated land insurance - Secure and Sustainable?
Increasingly contaminated land insurance is being used to 'take the risk' rather than put it onto another party or retaining the risk. The risk is transferred to an insurance company that is strictly controlled by the Financial Services Authority with a suitable credit rating. The insurance industry is the most regulated industry for the transfer of liability and risks. Most other companies have very limited requirements to keep long term financial reserves in place for potential environmental liabilities.

Policies can provide cover for 10 year duration that includes protection against change in either UK or EU law. Polices can cover for third party and regulatory claims and can include consequential loss, property damage, bodily injury and remediation costs, technical and legal defence costs. Cover can be extended to both the vendor and the purchaser, funders and tenants with relative ease.

In addition commercial benefits can be gained by the client with an insurance policy which may include:

  • Achieving maximum asset value for sales;
  • Long term policies that can be transferred with site ownership;
  • FRS12 provisions, insurance cover for a potential liability can improve the companies profit/loss sheet;
  • High credit rating and protection can secure funders and in some instance; reduce level of the funders risk rating and therefore loan interest rates;
  • Long term and sustainable approach. Insurance remains intact even if member of the project becomes insolvent.

Currently a number of government and corporate contracts ask for unlimited transfer of liability in terms of time and duration. This approach has flaws, it is not sustainable business practice and arguably not secure. 'Blue chip' companies (Enron, Marconi) have spectacularly hit the wall and few companies can sustain large claims.

In lieu of sufficient science, guidelines or provision of environmental security clients should consider environmental insurance as a method of protection. Indeed to protect against the risks presented by contaminated land redevelopment councils should consider as a policy the mandatory purchase of insurance for contaminated land redevelopments at least where housing is involved. This could be argued as the only real way of providing long term protection to the community on a sustainable basis.

Author: Mathew Hussey, Associate Director, Tyser

23/03/06

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BUSINESS CONTINUITY "What will they think?"

ClientAct

TIPS: - Internal & External Public Relations
A crisis - what crisis? A fire in a neighbouring building, a flood from tenants in the block, delay in completing a new building or other disaster may interrupt your business may cause loss of earnings, dissatisfied customers, bad press. Tips that could help your business:

  • Be prepared for the unusual, unexpected, the unwanted and the unbelievable; plan your business continuity strategy, test the plan and review it..
  • Listen and learn from the experts, there are a number of specialist Crisis Management companies offering advice or select your own experts to fill your knowledge gap.
  • Identify target audience - who needs to know: everything, the essentials
  • Belt & Bracers: take a hard copy of essential information off site as well as electronic backups: staff contact numbers (next of kin), media contacts, top clients/customers, stockists, suppliers, banks, transport, payroll, builders, electricians, engineers, staff agencies, caterers
  • Staff - need to be kept informed - they need to know that you care about their safety - what will happen to them, their job, their personal possessions lost in the building.
  • Customers - need reassurance that their business will not suffer as a result of your problems - effective communications is essential.
  • Be as accurate and as honest as the circumstances permit
  • Do not give people false hope - telling them the restaurant will be open at 6 p.m. or the factory will be producing goods by 2 p.m. when you know this is not possible, creates mistrust, frustration and could result in lack of future loyalty.
  • Use the media to your advantage. Talk to the press, when it is appropriate,. Avoid "no comment". Seek professional P.R. advice before the crisis.
  • Set up a strict procedures for dealing with the media:

For detailed advice on working with the media contact ClientAct PR

25/02/06

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Thames gateway reaches out to South Essex
Lambert Smith Hampton

Although still in its embryonic stage in South Essex, new research into the investment potential of the Thames Gateway has outlined a number of industrial and business space developments which will transform the region.

The 'Thames Gateway Report', published by commercial property consultant, Lambert Smith Hampton (LSH), highlights the regions proposed developments.

Stuart Mowle, director at LSH's Chelmsford office, said: "The extension of the Thames Gateway into South Essex will provide opportunities for growth in the large sub-regional centres of Basildon, Castle Point, Southend-on-Sea and Rochford."

"The Thames Gateway transformation is still in its early stages in South Essex. The proposed developments will create business hubs with improved economic growth complimented by appropriate transport, business and community infrastructure."

At Castle Point, one of the key objectives is to reduce the necessity for people to travel out of the Borough for work purposes. To that end 50 acres of land has been allocated for industrial and business development to the south of Northwick Rd, Canvey Island.

One of the biggest sites at Gardiners Lane South in Basildon, predominantly owned by English Partnerships, is earmarked for residential, headquarter development, office and light industry and hotels and leisure space. A further site at Courtauld Road is also being considered for development.

Mowle comments: "The Gardiners Lane South development will provide 1.2m sq/ft of new business space in Basildon alone. We have yet to see whether this space will satisfy customer requirements. At LSH we are experiencing more demand for freehold self-contained property rather than the leasing of mid-terrace properties with absentee landlords."

This consideration holds true for the development of the Rochford Business Park 10 acre site adjacent to London Southend Airport. Once complete the business park will provide a further 38,000 sq m of commercial floorspace.

Mowle continues: "Whilst the demand for commercial properties continues to outstrip supply, it is likely that, despite investor and lessor preferences for freehold units, these new developments will be acquired."

13/03/04

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FLOOD RISK - Resident demands satisfaction!

Ducks swimming past the front door were one of the photographs used to illustrate the reality of coping with floods, during the Essex Property Forum's Debate on Flood Risk & Development in Essex held in Chelmsford last week. Speakers from the Environment Agency, a flood victim from the National Flood Forum and a representative of the insurance industry joined chairman Maurice Rozario from MDR Developments Ltd in a lively debate.


Left to right - Maurice Rozario, Aaron Dixey, Gillian Holland &Simon Barlow

Simon Barlow and Aaron Dixey (from Development Control and Planning Liaison) at the Environment Agency set out their reasons for flooding discussed the assessment of risk and gave hints to developers. They reported that flooding could be related to:

  • historic development with more building on flood plains,
  • regeneration of brown field sites,
  • reducing land availability
  • the ever increasing need for new housing stock.

They reported that the dramatic influence of climate change with increased winter rainfall draining onto fewer flood plains had had a devastating affect in certain areas of the country and this was illustrated by flood victims.

Simon and Aaron discussed the need for sustainable development and explained that the onus was with developers to prove land was safe. Developers must:

  1. assess risk of flooding
  2. inform planners of that risk
  3. demonstrate how minimum standards of safety will be put in place.

"If you don't prove it's going to be OK (to build)" warned Aaron, "It must be assumed it is not." He then gave hints to developers to consider:

  • Will the development be at risk of flooding or will there be a risk of flooding elsewhere?
  • Could the risk be overcome?
  • How much will it cost and how does this affect the land value?

Gillian Holland, Operations Director, National Flood Forum presented her first hand experience of flooding as the ducks had drifted down her street in the floods of 2000 at Bewdley. Gillian has used her knowledge and practical experience to liaise with a network of groups seeking advice and information on flooding and practical ways to assist the less mobile. The media coverage of the Bewdley floods ensured their constant high profile resulting in the installation of flood defences.

Facing floods from river, salt water or over stretched drains each householder or business faces their own personal trauma of lost property, polluted homes or factories due to overflowing sewers or fuel or chemical leaks. Gillian reported that it has been

deemed that it is the householder's duty to protect their home. "How?" she asked, "Can any individual protect their home from invasion by a fast flowing flooded river."

"We think that the only way forward is for all the agencies to sit down together to assess the problem. Without Multi Agency Partnerships everyone will pass the buck and no one takes responsibility," concluded Gillian Holland.

Louise Warren, Area Underwriting Manager, Axa Insurance briefed the audience on factors considered during the underwriting process and reported that 1.8 million residential and 130,000 commercial properties were at risk from inland or coastal flooding. Louise reported that insurance companies in general used the following solutions to manage the risk of flood risk properties:

  • limit the risk through deductibles
  • physical risk management - flood defences
  • control damage - claims management procedures
  • transfer of risk - through reinsurance or a government fronted scheme
  • quoting the right price for the risk.

The new ABI statement of the Principle of Flood Insurance referred to the following:

  1. In future Environment Agency maps would be used to identify flood risk areas
  2. Individual consideration of risks would be undertaken by underwriters
  3. Insurers would continue to write flood cover
  4. Insurers would work with the government in improving defences.

A lively debate followed the formal presentations. Concern was expressed that Planning Authorities were going against the recommendations of the Environment Agency and it was suggested that the Agency needed to be more forceful and gain greater public support. Despite assurances that properties that had been flooded could be covered by insurance, the additional costs were sometime excessive; a frustrated speaker from Coggeshall reported that his home had been flooded for the first time and that he was now liable for a £5,000 excess - and he found the current insurance system, less than helpful.

During the wide ranging discussions, it was suggested that selling a house that is on the "at risk of flooding register" is becoming a major problem for some home-owners. Details of the environment agency maps can be seen on www.environment-agency.gov.uk - your environment - my back yard - insert post-code.

Maurice Rozario closed the meeting by inviting members of the audience to join the Essex Property Forum and strengthen its voice in Essex.

For Details about the next debate or to reserve a place please Click Here.

21/05/03

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Networking Tips!

by Sally Carpenter, ClientAct

  1. SELECT - be Selective - choose the right event for you and your business -
    2 hours at the wrong event can be a waste of time and money
  2. PLAN - know your objectives - set a target e.g. 2 new contacts, leads, info etc
  3. PREPARE - check that you have: cash, and sufficient cards. Check venue location, speakers' background, what to wear (to some people: "formal dress" can mean lounge suit or black tie)
  4. WEAR - check your name badge or take your own quality badge (print should be large enough to read without a specs)
  5. MARK - look at the guest list and identify "who" you really want to meet
  6. WHAT to say - listen & learn - opening line - read badges - ask questions
  7. USE your body language - eyes - hands - feet. Learn to read other people's body language.
  8. GIVE - 2 cards if they suggest passing it to a colleague and read their card
  9. DON'T GET CORNERED - if you are stuck with someone - learn how to escape and leave the other person feeling good.
  10. ACTION - Follow-up - make your first impression - a good lasting impression

29/04/03

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