“We pride ourselves on our broad range of expertise”

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Those who attended this year’s ILM Conference may remember George Densham’s enthusiastic presentation The Stick or Twist of Holding Property Assets, where he quizzed the audience on how best to deal with a property left as a gift in a Will.

As part of our new Corporate Spotlight newsletter feature, we recently put George, a partner at Carter Jonas, in the hotseat and asked him how the firm can support charity legacy officers, as well as and the latest issues in the property market.

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ILM: George, tell us more about Carter Jonas and the services it offers

GD: As a property consultancy and estate agency, we can offer expert advice across commercial, residential, rural, planning, development, and infrastructure sectors. That broad range of expertise sets us apart – the fact we can get heads together from different parts of the business to look at the best options for each scenario is something we pride ourselves on.

ILM: How do you support charities?

GD: We have an excellent track record of supporting both charitable organisations and the wider Third Sector across the UK. That can be from real estate solutions, strategic advice and acquisition, to ongoing management and disposals, and advising on the effective use of charitable assets.

Examples of projects we’ve completed for charities include standard Designated Advisor Reports for St John’s Foundation; a valuation of operational assets for Young Lives v Cancer in Bristol, Manchester and London; providing acquisition and disposal support for Scope, RSPCA and St Peter’s Hospice; and an occupational property options appraisal for Girlguiding.

Following the talk at the conference, I have been arranging to meet the teams at various charities to discuss hot topics, answer any questions and generally get to know them. It means they have a point of contact to call upon for any of their property queries and, if any other charities would like me to do this, please get in touch.

In the wake of the significant impact of VAT on private school fees, we’re also working with several private schools (which are charities), providing both strategic and sales advice. What we are seeing is a trend for some Special Educational Needs (SEN) providers to purchase private schools, particularly where those properties have capacity for SEN needs.

ILM: If a charity has been left a property as part of a legacy, how can you help them decide on the best course of action?

GD: Legacy officers are generally tuned in to when it is best to use auction vs traditional private treaty (normally via estate agents). The general consensus that properties in need of significant work or which would fail to get a mortgage, tend to be better within an auction still rings true.

However, it often depends on the type of property and the location as well as the condition – that’s where our advisors can help and they are always happy to have that discussion. As discussed at the conference, it can sometimes pay to invest a little to elevate a property prior to going to market, but there are lots of things you can spend money on and not all of them will add value. We can help you to ensure that money is spent in the right places.

For example, if a property has had its kitchen stripped out, then spending on a basic kitchen can open up the market from cash only buyers (a relatively limited pool) to mortgagees, as high street lenders don’t typically lend against properties that are not considered habitable.

Right now, the property investor market is really suffering because of all the changes with stamp duty, generally higher interest rates (albeit recent rate cuts are beneficial) and increased legislative burdens mean that if you can open the potential buyers up to owner occupiers, it is money well spent.

ILM: What are some things that might make a property more difficult to sell?

GD: Getting the balance of accommodation right is important. For houses which have been over developed, ie extensions to create more bedrooms, but without increased reception space; or a significantly reduced garden for a house that is intended to support a family, is something we see frequently.

Vendor (seller) expectations is another delicate subject. Of course vendors want to gain as much as possible for their property, and some have a legal duty so to do, however launching to the market at too high a guide price, can spook the potential pool of buyers, with the ensuing stagnation on the market and inevitable price reductions. Particularly at the moment, we are finding buyers are even more cautious than normal about properties that have been on the market for extended periods.

ILM: What would you say to a charity that wants to earn an income by renting out a property rather than selling?

GD: Again, it would depend on the property and the location, if it is in an area where it is worth holding onto as an investment, then renting could be an option.

Cities are doing better than the countryside right now for rentals and I usually work off 10-month rent rather than 12 months’ income when modelling, to allow time for void periods, agency fees etc., when it can be difficult to find a tenant.

Also, be aware that while a property may be ready to go from a rental point of view, there may be other things to do, such as making sure there is an Energy Performance Certificate (EPC) in place and gas safety checks etc., all of which can become a legislative burden to manage. This can be outsourced to an agent, but needs to be taken into account.

There is a lot of discussion at the moment about the new Renters Rights Bill coming in later this year, which will particularly impact residential investment property.

Under Ground 1a landlords can regain vacant possession in order to sell a property, but they must give four months’ notice during the initial 12 month protected period, ie serve notice at month eight for possession at month 12. This could result in a delay in hitting the market for sale.

Considering the usual cyclical nature of the housing market, legacy managers will need to co-ordinate the service of this notice to ensure it is launched to market at the right time of year to maximise the chances of gaining a full price for the property.

Other changes include Section 21, which will be the abolition of ‘no-fault’ evictions; and there will be measures introduced that allow tenants to have pets.

You could have a rental property handed back in worse condition and you should ask yourself if you are then likely to get the same amount for the property if you sell it in the future. More about this in an upcoming webinar later in the year.

One area where it would be worth holding onto a property, letting it out and then investing is for enfranchising a leasehold property – if a legacy property is held on a leasehold basis and there is less than 80 years left on the lease, it may be worth enfranchising the lease in order to maintain value before selling it.

The issue is that you have to have owned the property for two years prior to commencing the process, so during that period it makes sense to let it out, gather the income and then enfranchise the lease. This is a technical area with specific timeframes for service of notices etc., and we have a leasehold enfranchisement team who can do this work.

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To find out more about Carter Jonas, please visit www.carterjonas.co.uk

Carter Jonas will shortly be launching a new website entitled Supporting Charities with their Property Needs demonstrating the firm’s cradle to grave approach for the charity sector.

Join Carter Jonas for a joint webinar on the Renters Rights Bill alongside Berrys and Foot Anstey in October.