London Update
Issue 43
Feature Article: Working with London's Boroughs
Economic and Market Roundup
Regeneration News
Young Group News
About Young Group
Feature Article: Working with London's Boroughs
Sir Simon Milton
London Deputy Mayor and Chief of Staff
We spend over £24 billion a year and every day millions of Londoners rely on us to clean the streets, educate their children and get them from A to B. Without the huge range of services run by the Mayor and London's local authorities the capital would literally grind to a halt.
Our city is incredibly complex, diverse and interconnected which means no part of London can exist in isolation. Tackling complex issues, such as the economic downturn or crime, requires close cooperation and continual dialogue between local and regional government in the capital.
Unfortunately the relationship between London's local authorities and the Mayor had grown increasingly dysfunctional under the previous administration at City Hall. I saw this at first hand as leader of Westminster Council from 2000 to 2008. On far too many occasions, the approach of the former Mayor was to condemn with inflammatory rhetoric, rather than seeking to persuade through reasoned discussion. All too often directives and dictates were preferred to dialogue.
So it was abundantly clear to Boris Johnson and I that in order to deliver the ambitious manifesto promises he had made during the election campaign it was essential we build a new relationship with the boroughs. We outlined this intention with the inclusion of a key pledge within the manifesto to, "work closely and cooperate with locally elected councillors instead of bullying and berating them".
To make good on this commitment, the Mayor met the leaders of every London borough in the first month of his administration. At the meeting he signed an agreement which set out how the boroughs and City Hall could work closer together.
The meeting was an important early statement by the Mayor of his commitment to repair the relationship between City Hall and London's boroughs. Over the following months we worked hard to strengthen the relationship with the capital's local authorities on issues from supporting businesses through the downturn to planting thousands more trees.
To firmly embed this new culture of cooperation, the Mayor undertook detailed discussions with the boroughs to establish the first ever City Charter for London. The purpose of the Charter is twofold. Firstly, it clearly signals a new era in the relationship between London's boroughs and City Hall. Secondly, it provides the first ever forum for local and regional government to develop long-term solutions to some of the biggest issues for the capital.
The City Charter is overseen by the Congress, a body which meets twice a year and consists of the Mayor, his senior officials and the leaders of the 32 boroughs and the City of London. The first Congress meeting was held at City Hall in April 2009 and agreed an ambitious programme of joint action on six issues. These include:
- Tackling the economic downturn
- Developing policing accountability
- Cutting youth crime
- Improving transport
- Climate change action
- Lobbying for funding for the capital
Though there has been great progress over the past 14 months, we cannot afford to be complacent about the future success of the City Charter. I believe there are two clear tests of our work which we must continually remind ourselves of.
We must demonstrate action as a result of the Charter. Congress meetings must not become a talking shop. It is essential that clear outcomes emerge from our discussions. It is vital that Londoners see the importance of the City Charter and our combined efforts to develop a constructive relationship.
It is also vital that the City Charter does not seek to duplicate the work of other bodies. Of course there are a plethora of issues, particularly current matters of concern, such as swine flu, that need our attention. However, there are existing forums which are far more equipped to deal with, and take action on, these issues. It is vital that we continue to focus on addressing the limited number of issues that we have committed ourselves to work together on.
Of course the City Charter will not resolve the many tensions and differences that will inevitably arise in the relationship between City Hall and the boroughs. It would be a truly remarkable achievement if it did! The sheer range of issues that local and regional government deal with is enormous.
However, I believe the Congress will ensure differences can be resolved in a culture of far greater respect and understanding than in previous years.
From the recession to the housing crisis, it is clear Londoners cannot afford a return to the bad old days and the acrimony which characterised the relationship between boroughs and the Mayor. The seven million Londoners we serve rightly expect us to get on and deliver a safer cleaner greener city regardless of the distinction between local and London-wide Government. The Mayor and I firmly believe the City Charter will play a crucial role in changing our great city for generations to come.
Sir Simon Milton
London Deputy Mayor and Chief of Staff
Base Rate Remains at 0.5% for 6th Month Running
The Monetary Policy Committee held the base rate again at the beginning of August, and increased the amount of quantitative easing by a further £50bn. Consumer Price Index (CPI) inflation held steady in July at an annual rate of 1.8%, but economists still expect large falls in the annual rate this year, heightening market assumptions that the MPC will not rush to increase the base rate in the near future.
June Gross Mortgage Lending
According to new data from the Council of Mortgage Lenders gross mortgage lending in June was an estimated £12.3 billion, a 17% increase from April but a 48% decline from the £24.8 billion of June 2008.
CML economist, Paul Samter said: “The effect of restricted mortgage funding is likely to hold back any significant and underlying improvement.”
UK Residential Property News
The past four months has seen a growing number of signs that the house price decline is beginning to moderate. Nationwide reported that in July house prices increased by an average of 1.3% nationally, the third consecutive monthly increase.
Buy-to-Let Lending Lagging in Mortgage Approvals
Although there was a slight pick up in lending during June, buy-to-let lending was less positive according to the latest figures from the Council of Mortgage Lenders (CML).
The number of buy-to-let mortgages approved in the first three months of the year totalled 22,400. This was 38,000 less than during the previous quarter.
Fitch Affirms UK AAA Status
The UK has had its AAA credit rating affirmed by Fitch Ratings. Fitch says “the UK's ratings remain supported by its high-value added and diversified economy along with its robust institutions and the sovereign's very strong financial flexibility”.
Fitch says UK economic growth should turn positive in the second half of 2009 as the pace of inventory decline slows and fiscal policy measures take effect.
Flooded Rental Market Begins to Normalise Once More
The latest Rental Index from findaproperty.com suggests that the UK rental market is returning to normality.
Between May 2008 and May 2009 the supply of rental properties more than doubled as people that could not sell looked for tenants instead. In the past two months an improving sales market has eased stock levels and the oversupply of homes is beginning to correct itself, which has prompted a slight increase in rents sought by landlords. The rise since May is slight, only £6 compared to a fall of £48pcm from May 08 to May 09, but it does perhaps suggest that the tide is turning.
House Price Aggregate Poll Shows Increase
The June Chesterton Humberts' Poll of Polls shows that the average house price is now £163,352, a decrease of 14.3% over the year to June 2009, but an increase from the downwardly revised level of £163,239 in May.
London is exhibiting a faster pace of price rise than the average for England and Wales. In London, house prices rose by 0.4% over the month to June, adding £1,088 to the value of a typical house in the capital.
Mortgage Woes Stymie One in Ten Home Sales
A survey by the Royal Institution of Chartered Surveyors (RICS) shows that almost one in ten home sales falls through because buyers cannot obtain finance calling into question the effectiveness of the Government's strategy to revitalize the housing market.
RICS Upgrades House Price Forecast
The latest RICS housing market update reports that house prices are likely to end the year higher than at the beginning of the year, but cautions that there are significant challenges ahead in 2010.
RICS senior economist Brigid O'Leary said: “There has been a clear change in the housing market over the past few months and it is unlikely that we will now see the kind of house price falls widely predicted at the start of the year. However, the outlook for 2010 is fairly uncertain and there is a risk that prices may slip back again.”
Think London Exceeds Targets Despite Downturn
Despite the challenging economic conditions the foreign direct investment agency for London, Think London, has exceeded it's targets. In doing so it has assisted 178 overseas owned companies to set up or expand business in the capital and helped create over 6,000 jobs.
Chief Executive Michael Charlton, who writes next month's London Update guest article, said “There has never been a better time to invest in London, with favourable exchange rates against most major currencies and lower property costs.”
NHBC: New Home Starts on The Rise
The National Housebuilding Council (NHBC) has reported that the number of new home starts has reached the highest point in almost a year. June 2009 saw 8,305 applications, the most since July 2008. However, the seasonally adjusted quarterly figure remains 28% below a year ago, and seasonal variations are wide; London's new starts remain 50% lower than this time last year. NHBC chief executive Imtiaz Farookhi, also a future London Update guest author, said: “Our figures show a significant improvement on the all-time low of December 2008 (4,259) as there has been a steady increase of applications in the first half of the year.”
IMF: Recovery Has Started but Could be Derailed
The world is beginning to emerge from recession, according to the International Monetary Fund's chief economist, Olivier Blanchard, but “The crisis has left deep scars which will affect both [global] supply and demand for many years to come.”
A Third of Residential Landlords Are 'Under-Insured'
Research carried out by The Paragon Group shows that many landlords do not have sufficient insurance. Only two-thirds have specialist buildings cover and just 12% have combined legal expenses and rent guarantee insurance, despite the fact that 71% of those questioned expected tenant arrears to increase during 2009.
Jane Reeves, head of Young Group's Young Finance division, commented; “Landlords may be unaware that normal homeowner policies are not applicable to rented property. I'd urge anyone renting out property to ensure that their cover is suitable.”
Shard Defies Credit Crisis as Qataris Elevate London Skyline
The building of the Renzo Piano designed 1,016ft (310m) £430 million tower at London Bridge is well underway. The project will include offices, a five star hotel, restaurants and apartments.
Stalled Developments to Get Kickstart
John Healey, Housing Minister has announced that the Kickstart programme has shortlisted 270 schemes for a share of £295m to help restart housing construction projects that had been stalled by the economic downturn.
Crossrail's First Visitor Centre at Tottenham Court Road
Crossrail's first visitor centre opened near Tottenham Court Road at the end of July. The centre is a one-stop shop for information about the project and London Underground's redevelopment of Tottenham Court Road Tube station. TfL Deputy Chairman, Daniel Moylan, wrote an insightful article about Crossrail in last month's London Update. If you missed it, a copy is available here www.younggroup.co.uk/londonupdate/issue43.htm.
ODA Unveils First Aerial Pictures of The Olympic Village
The Olympic Delivery Authority has released photos showing that work is underway on the Olympic Village. The ODA has said that alongside this work, construction has commencted to install electricity, gas, water, drainage and district heating services for the housing. Baroness Ford, Chair of The 2012 Legacy Company, will update on Olympic Legacy progress in a London Update guest article in early 2010.
More Revised Plans for Battersea Submitted
Another planning application for the £4bn redevelopment of Battersea Power Station has been informally submitted to Wandsworth Council, with hopes rising that the latest proposals could be given the green light by authorities. There are fears that the structure of the building would not survive the resulting delays if another proposal is rejected.
Helix Approved to Rise Next to Canary Wharf
Following a third planning submission, Tower Hamlets' Strategic Development Committee this month approved plans for Helix-London, a strikingly futuristic new twin tower development next to Canary Wharf. Situated at the intersection of Trafalgar Way and Aspen Way, on the site of the current MacDonald's restaurant, the linked towers will rise to 29 and 35 storeys and will comprise 414 new homes, retail space, a replacement MacDonald's, residents' creche and gym. Designed by Ken Shuttleworth's architect practice, Make, the eyecatching structure will complement the existing Canary Wharf skyline immediately to the South of the new development. The planning approval follows a commitment from the developer to provide almost £13million for new social housing within the borough.
Lend Lease Committed to Elephant & Castle Regeneration
Fears that the redevelopment of Elephant & Castle, one of the largest regeneration projects in Europe, was under threat have abated. The original £1.5billion development agreement between Southwark Council, Lend Lease and its partners First Base and Oakmayne expired at the beginning of July. However, a new exclusive agreement has been signed between the council and Lend Lease, committing the parties to a new development timetable.
Leader of Southwark Council, Cllr Nick Stanton, commented in Property Week: “Despite the effects of the worst national recession many of us will ever have experienced, we are very pleased to continue with Lend Lease to realise our joint ambition of transforming this historic part of south London. Although there remains a huge amount of work to do, Lend Lease has put forward a proposal that we believe will take us jointly to final negotiations that quantify the impact of the recession, resolve the outstanding issues and finalise an agreement which satisfies the financial and redevelopment requirements of the council and Lend Lease.”
Southwark Council confirmed that the new agreement means it can press on with groundworks, including clearing the Heygate Estate.
Transport for London Joins with Oakmayne in Woolwich Plans
TfL has entered into a joint venture agreement with Oakmayne Properties to develop two sites in Woolwich, SE18. The sites will total 165,000 sq ft of new residential and commercial space on 1.5 acres. TfL and Oakmayne are currently working on details of the schemes, one of which will be above the new DLR station, to be submitted to the London Borough of Greenwich for planning approval next year.
Ability Place - Successful Lettings in Canary Wharf, E14
We're pleased to report that despite the challenging market, our Young London estate agency has tenanted all properties that we were instructed on at Ability Place within an average of 10 days of completion. The feedback from tenants at Ability Place has been extremely positive; a reflection of the development's superb location and close proximity to Canary Wharf's transport and amenities as well as the quality and finish of the individual apartments themselves.
Young London Tenants Share the LowDowN
Young London has launched its very own monthly online e-zine, packed full of the best bits of London. www.younglondon.co.uk/lowdown also invites readers to share their recommendations and get involved in shaping the content. The first issue went live at the end of July and we've had some great feedback.
Neil Young, Young Group's CEO, summed up; “It's a great way to get the Young London brand in front of potential tenants. Even before they begin their property search we're providing them with useful information about London living and encouraging them to share their favourite aspects of the capital. And for those who are in the market for a new property, LowDowN lets them easily access details of properties close to readers' favourite recommended haunts.”
THE LANDMARK - MORTGAGES
Young Finance has already submitted a number of mortgage applications in respect of The Landmark and has been liaising with lenders and valuers for some time with regard to the development.
Changes to the financial landscape mean that lenders who are now part of the same banking group are subject to pooled exposure limits at any particular development. So purchasers are urged to ensure that they make an early application for mortgage finance to avoid falling foul of the resultant reduced availability. For more information, contact Young Finance on +44 (0)845 356 1000 and speak to Jane Reeves.
Young Group specialises in delivering Property Portfolio Management services to private and institutional investors. The Group’s activity spans the entire investment cycle from identifying opportunities and financing their acquisition, through to managing the asset (furnishing through Young Furnishing; tenanting through Young London; financing/refinancing through Young Finance), regularly reviewing the performance of the property holdings and advising on strategic direction, through to realising returns in the most tax efficient manner. Young Group supports NORWOOD and CHILDREN with LEUKAEMIA, charities doing valuable work which is particularly close to our hearts.
Visit us online at www.younggroup.co.uk, www.younglondon.co.uk, www.youngfinance.co.uk or www.youngfurnishing.co.uk to learn more.
t: +44 (0)845 356 1000 e: info@younggroup.co.uk
