London Update
Issue 40
Feature Article: London a City with 20:20 Vision
Economic and Market Roundup
Regeneration News
Latest Young Group News
About Young Group
Feature Article: London a City with 20:20 Vision
by Neil Young CEO, Young Group
One of the great things about London - and indeed one of the attributes that keeps us at the top of the world city leader board - is our ability to embrace change. As a city, London is constantly evolving, developing and reinventing itself. It's an ongoing process and much of what will shape our city for generations to come is already well underway as London becomes larger, better connected and greener.
A swell population
By 2020, just eleven years from now, London could be a very different place. The capital's population is expected to have grown by 9.8% between 2006 and 2020, to have reached 8.1 million (source: ONS); a natural growth in population numbers boosted by inward migration. The number of homes needed to accommodate the capital's larger population is expected to rise by an even greater proportion (source: Communities & Local Government), equating to 360,000 new houses and apartments, all as a result of us marrying later and living alone in greater numbers than ever before.
More people means more development; new homes, more office space, leisure facilities and shops. The shape of London's skyline will look very different by 2020 as more tall buildings than ever are underway in the capital.
A new set of skyscrapers will spring up next to Canary Wharf at Wood Wharf. One of the largest development projects in the capital, it will bring almost 5 million sq ft of office space to the Isle of Dogs site as well as 1700 new homes and a brand new high street full of shops, restaurants, cafes and bars. The sheer magnitude of the project means that by 2020, the development will just have completed.
Mind you, Wood Wharf's near neighbour Canary Wharf is still undergoing development and expansion, more than 20 years after ground was initially broken on the site. JP Morgan's new 2 million sq ft headquarters at Riverside South is progressing well and due for completion by 2013.
But large scale development is not confined to East London. One of the most striking changes to the capital's skyline is set to be The Shard of Glass. Already under construction at London Bridge at 310m tall it will be an unmissable addition. The stunning Renzo Piano designed structure will be visible from all over London and at 87 storeys, it will gain the title of the tallest building in the UK.
Waterloo is also in the developers' sights with plans for a cluster of tall buildings close to the station and South Bank. Victoria too will benefit from redevelopment of a 2.5 hectare site around the existing station. Known as the Victoria Transport Interchange project, all theexisting buildings on the site will be demolished - with the exception of the listed Victoria Palace Theatre and the Duke of York Pub - and replaced with modern structures designed by internationally acclaimed architectural firms: KPF, Benson & Forsyth and Lynch Architects.
Of course, these large, high profile projects represent just a handful of the new homes and workspaces that constantly change the face of the city.
Staying Connected
But an increasing population and increased building to accommodate them bring challenges of their own. Larger numbers of people need to move around the city, whether it be for work or leisure, and it's fair to say that in recent history London's transport infrastructure has struggled to keep pace with the pressure. But transport is a focus of London Mayor Boris Johnson and large capital infrastructure projects are set to ensure that by 2020, the capital's transportation network is stronger than ever.
Crossrail will be delivered in 2017 and ahead of that, the new East London Line extension will be operational before the 2012 Olympic Games.
Thanks to record investment of £40bn for its upgrade programme, the tube network is already reaping rewards; despite carrying more than 1 billion passengers for the third consecutive year, and the highest number in its 146 year history, London's underground is rated as the best in Europe (Metro Awards).
As London grows, pressure on international travel from business travellers, holiday makers and tourists increases. How to raise capacity to deal with this increasing demand has long been fiercely debated. Heathrow airport has already won Government approval for expansion and airport operator BAA is keen to press ahead in developing its £9billion plans for a sixth terminal and third runway which, if approved, could be operational by 2020. Such a scheme would increase flight capacity from 480,000 to 720,000 per year by 2030. However, the expansion is far from a foregone conclusion. Some industry insiders believe that Gatwick presents more appropriate options for expansion, while public consultation is already underway to assess BAA's intention to boost passenger numbers using Stansted Airport from 25 million to 35 million a year and to take full advantage of the runway capacity to increase the number of flights from 241,000 to 264,000 a year.
But one, less conventional, option currently being championed by Boris Johnson, is to build a new airport for London on a pair of artificial islands in the Thames Estuary. The idea isn't new. It was first mooted as a viable alternative to expansion of London's existing airports almost 20 years ago, but this is the first time that it's had such high profile support. Sited 2 miles off the Kent coast, the proposed airport would have four runways, linked to terminal buildings on the coast by high speed shuttle trains. The airport could have twice the capacity of Heathrow and proponents say that because all planes would take off and land over the sea, the new facility could operate around the clock without noise impacting London's population. However, the Mayor's favoured scheme has not won the support of his party with Theresa Villiers, Shadow Secretary of State for Transport pointing out, “It is not the Conservative policy to build an airport in the estuary.”
Even if an airport in the estuary doesn't come to fruition, the area will still be providing Londoners with great benefit by 2020 as the site of the worlds largest wind farm. Known as the Thames Array, the offshore turbines will cover an area of 90 square miles, 12 miles off the Kent and Essex coast in the outer Thames Estuary. The initial phase of the ambitious project will see 175 turbines providing power in time for the 2012 Olympic Games. The second phase will bring the total number up to more than 340, capable of producing enough electricity for 750,000 homes - around a quarter of the total in Greater London. The green power provider not only dramatically cuts the amount of carbon dioxide produced in generating electricity, but will also contribute a substantial amount towards the Government's target of providing 15% of all electricity from renewable sources by 2015; a target which will have risen to 20% of electricity production by 2020.
Green with Envy
The Mayor's Energy Strategy lays out London's ambition to create a clean, green city at the forefront of energy effi ciency. As well as working towards cleaner power generation, the strategy lays the framework for a move towards 'greening' the capital's existing buildings whilst ensuring that new developments do all they can to reduce their impact on the environment. The Greater London Authority now requires major developments to generate at least 10% of their energy needs from renewable sources. Whilst it's unlikely (and somewhat impractical), that we'll see a wind turbine on every corner, there is an increasing focus on biomass fuelled combined heat & power and small scale anaerobic digestion.
Since London's earliest Roman beginnings it's been a city of change and that's where the roots of the capital's resilience lie. London's a city that adapts quickly and rises to the challenges thrown its way. It's what keeps our capital vibrant, attractive and above all, a world class city.
Neil Young
CEO - Young Group
Base Rate Held at 0.5%
There was little surprise in May as the Bank of Enlgand's (BoE) Monetary Policy Committee (MPC) voted to hold UK base rate at its all time low of 0.5%. On the same day, the European Central Bank (ECB) intensified its efforts to combat recession by boosting lending and cutting its main interest rate by 0.25%, bringing it to an all time low of just 1.0%, whilst also announcing plans to buy £54 billion of covered bonds.
European Central Bank Confirms Downturn Easing
Claude Trichet, President of the European Central Bank signalled that the world economic downturn had bottomed out with some large economies already in a position to look forward to renewed growth. His comments came as the Organisation for Economic Co-operation and Development highlighted signs of a pause in the economic slowdown in the UK, France, Italy and China.
UK Set for Shorter Recession
The European Commission has forecast that the UK's recession will be shorter and shallower than for much of the rest of Europe. In revising its January predictions, which had the UK low down in the league table, the EC now predicts that the UK economy will contract by 3.8% this year, faring better than the EU average of 4%. However, the EC warns that the UK's public finances will be among the worst of any of the 27 member states.
Think Tank Blames Reckless Lending for Credit Crunch
It may come as no surprise that the Institute for Public Policy Research (IPPR) lays the blame for the credit crunch at the door of lenders. It argues that in order to avoid future house price bubbles, mortgage lenders should impose a limit on house price to income ratios, all home purchases should be made with at least 5% deposit (effectively banning 100% mortgages) and that self-certified mortgages should be banned.
Developers Predict Shortfall of Housing
A survey of 4,500 housebuilders by SmartNewHomes.com has revealed that 40% of developers are expecting a further fall in new home starts this year with 1 in 4 predicting that the level will be 50% lower than in 2008. 95% cited lack of mortgage finance as the main barrier to recovery and 70% thought that the governments measures to boost the industry were “entirely ineffective”.
House Sales Lift Spirits
The latest Royal Institution of Chartered Surveyors (RICS) property market data continues to show signs of recovery. Enquiries from new buyers rose in April for the sixth consecutive month, with agents selling an average of 10.6 properties over the last 3 months, up from 9.7. Meanwhile, Rightmove reported that asking prices rose 2.4% during May, from an increase of 1.8% in April. However, the headline figures may be misleading as the number of new sellers halved and many existing sellers were forced to lower their asking prices.
Buy-To-Let Lending Remains Low
The Council of Mortgage Lenders (CML) has revealed that 22,400 new buy-to-let mortgages were advanced in the first quarter of the year, bringing the total number of outstanding BTL loans to 1,155,200. Director General, Michael Coogan, said it was not surprising that the volume of buy-to-let loans was dropping year on year, but pointed out that BTL fulfils an important role in providing housing and is vital for the sector as a whole. BTL loans accounted for 6% of all lending during the first quarter of 2009, down from 12% in Q1 2008.
Buy-to-Let Choice Still Severely Constrained
Recent press headlines of a surge in availability of BTL mortgages (“product availability up by 58% since December 2008”) fail to point out the blow that BTL investors have been dealt since the start of the credit crunch. In the last two years, the number of mortgages available to landlords has dropped by 95% from 4,384 to just 213. The recent increase in BTL mortgage numbers is good news, but much more needs to be done to provide appropriate choice to landlords.
First Time Buyers Return to the Market
Latest analysis of First Time Buyer (FTB) activity from the CML shows that 12,500 FTBs climbed onto the property ladder during the month of March, up a staggering 36% on the previous month. However, the number of new homeowners is still 30% lower than in March 2008. The CML noted the emergence of two classes of home buyer with a sharp rise in the number of mortgages approved, but only to those able to provide substantial deposits.
House Price Decline Slowing Significantly
Monthly house price reports are increasingly showing conflicting data as sales volumes have reached an all time low, compounding the fact that different measures collate data in markedly different ways. Aggregated data from across a range of indices compiled by Chestertons and the Centre for Economic and Business Research (CEBR) attempts to mitigate these problems and present a truer picture. Their latest analysis puts the month on month national average house price decline at just 1% for April.
Homes & Communities Agency Targets Institutional Investors
The HCA has launched its Private Rented Sector Initiative (PRSI) to encourage greater institutional investment into the private rented sector. The HCA is currently in consultation with the industry to identify the hurdles to greater involvement by institutions and the most appropriate route forward. Neil Young, CEO of Young Group applauded the move, but warned that a lack of expertise in the sector could hamper the PRSI and called for “a new wave of asset managers that understands the commerciality of residential property”. The British Property Federation (BPF) has been championing the cause for some time and Chief Executive, Liz Peace points out; “[The PRSI] paves the way for a new kind of private renting that could support new development... and offer the public real quality and choice in private renting, at little or no cost to the taxpayer.”
London Regeneration Gets Government Boost
The Homes & Communities Agency (HCA) has committed to providing £16 million to kick start two London projects affected by the economic downturn. Clapham Park in Lambeth will receive £13 million towards housing development and £3 million has been allocated for a project at Hale Village in Harringey. The funding guarantees the next stage of development of both projects and accelerates plans to deliver quality new homes and public facilities.
South East Plan Announced
The Government has set a new target of constructing 32,000 new homes in the South East every year between now and 2026. Part of the new plan includes the review of green belt land in Surrey and Oxfordshire, which the Department for Communities and Local Government believes could accommodate an additional 6,000 homes.
New Design Standards Call for More Public Space
Hazel Blears, the embattled Communities Secretary, is set to publish new guidelines in a bid to improve the public realm. All new projects including schools, hospitals and housing will be subject to new design standards to improve the quality and amount of public space. It will be the first major report on urban regeneration in 10 years and aims to impose equal demands on both the public and private sector.
USA Comes to Battersea
The US Government has unveiled its initial plans for the new American Embassy, set to relocate to Battersea in 2016. The proposals envisage a building of up to 540,000 sq ft on the 5 acre site in Nine Elms and is on track to submit a detailed planning application next year after shortlisting four US architects to design the embassy.
Tesco Towers at Earls Court
Retail giant Tesco has received initial support from Kensington and Chelsea Borough Council for plans to build a mixed-use scheme at London's Earls Court. Eight years in the making, the plans include a 110m residential tower, supermarket, health centre and even a new town square, all in keeping with the council's masterplan for the site.
A Vision for London 2012
The first images have been revealed of the spectacular views to be afforded to visitors of The Shard tower at London Bridge when it completes in 2012. At 800m, the viewing gallery - spread over three floors near the top of The Shard - provides a vantage point virtually twice as high as the London Eye. When completed the development will boast a mix of offices, apartments, hotel and restaurants.
10 Trinity Square Hotel Development Under Starters Orders
The redevelopment of Grade II listed 10 Trinity Square in the Square Mile got the go ahead this month and developer Thomas Enterprises is confident of delivering the 6-star hotel project in time for the 2012 Olympic Games. Formerly the Port of London headquarters, the site overlooks the Tower of London (a World Heritage site), so the £150m redevelopment will retain the building's historic character whilst providing a 121 bedroom luxury hotel and 30 residential apartments.
Mayor & PM Mark Crossrail Commencement at Canary Wharf
Boris Johnson and Gordon Brown marked the official start of Crossrail construction as the foundation for Canary Wharf's station was laid.
Young Group Tax Return Service Launched
As part of the ongoing expansion of professional services that we offer, Young Group has launched a new self assessment tax return service in association with Felton Pumphrey Chartered Accountants. A constant stream of changes to tax legislation means that self assessment returns are becoming ever more cumbersome and taxpayers increasingly risk incurring penalties from failing to complete their returns correctly and can miss out on taking full advantage of their allowances. We are well into the 09/10 tax year, so now is the time to file last year's return.
Felton Pumphrey are a long established firm of Chartered Accountants who offer senior level advice on minimising your tax liability. They carry out all the necessary self assessment computations and complete your return, dealing directly with HMRC on your behalf. Additionally, should you require it, Felton Pumphrey advise on IHT, CGT and estate planning, all at competitive rates. Young Group's Premier Clients are encouraged to meet Felton Pumphrey on a no obligation basis at our Bond Street offices during June and July. Call +44 (0)845 356 1000 for more information or to arrange an appointment.
National Approved Lettings Scheme Welcomes Young London
Our estate agency, Young London, is the latest to secure accreditation from NALS after demonstrating our commitment to customer service. Neil Young, Young Group's CEO comments; “In adopting the UK-wide framework that NALS has established we make it clear to tenants and landlords that, in addition to our own strict professional code of practice, we now adhere to a set of standards put in place by an independent Government-supported scheme with the primary aim of raising standards in the private rented sector.”
Landmark Vouchers
The vouchers for eligable Landmark purchasers (who have already received notification) will be dispatched this summer. Confirmation that vouchers have been mailed will appear in a future issue of London Update, so watch this space for more news!
London Update Feedback and Comments
We'd very much like to hear your views and feedback regarding our monthly London Update newsletter. If you have any comments or suggestions for future themes, please feel free to email moakes@younggroup.co.uk. If would like to respond to any of the items, your comments could be featured in a future issue.
Young Group specialises in providing Property Portfolio Management services to private and institutional investors; offering complete asset management services and the best direct investment opportunities in London. Young Group manages the entire process from sourcing investments through to financing, furnishing, letting and management. Young Group is the principal in many transactions and also retains an extensive portfolio of its own. As the principal, Young Group does not realise any profits until completion and has transacted more than 1,700 apartments, with a retail value in excess of £700 million. The Group's estate agency, Young London, has around 350 property assets under management, across London. Young Group supports NORWOOD and CHILDREN with LEUKAEMIA, two charities that are particularly close to our heart, donating £50 per property exchange.
t: +44 (0)845 356 1000 e: info@younggroup.co.uk
