Flexible Development Finance from BLG
Here at BLG we partner with property developers to provide development finance to best suit your individual schemes. Watch our video to find out how we help fund 1000s of new homes across the UK.
Update from BLG Chairman, Peter Wade
Take a look at our new video, featuring BLG’s Chairman, Peter Wade sharing some recent thoughts on the current development finance market during lockdown.
Let’s embrace a better way of building new homes
Looking beyond Brexit, the UK elections and recent international events, it is sobering to think about what the fires happening in Australia and the cost that its environment, wildlife and people are paying. The fortitude of the Australian people is remarkable when you consider that many have seen their houses and communities disappear.
The impact of housing on the environment
As a lender to the residential construction market, this has made us think about the impact housebuilding has on the environment. The Committee on Climate Change estimated that 18% of the UK carbon emissions came from buildings (mostly homes), with a further 15% from electricity consumed by buildings. The UK has a key target of reducing carbon emissions by 80% by 2050 so the Building industry has a role to play in helping meet this target.
Why aren’t more energy-efficient homes being built?
We are seeing some trends emerge: pre-fabrication, modular construction, new materials and some energy-efficient technology, and we are indeed currently funding a modular construction site up in Scotland, but these still are piecemeal. Why?
Cost remains an issue with some of the new technologies and technology itself is evolving rapidly making it difficult to see where standardisation can be achieved to achieve economies of scale. Local councils are very focused on reducing car usage in metropolitan environments but why would they not insist on electric car charging points as part of their planning approvals for example? They also seem to have quietly abandoned sustainability code levels in recent years.
Modular and off-site building methods are problematic for funders simply because the standard control mechanisms used by surveyors and lenders don’t apply in the same way. We mentioned that we are funding a scheme in Scotland – we have been able to get comfortable with a scheme built entirely off-site because the developer controls the process from end-to-end, i.e. they are manufacturing and storing the product in-house.
Our experience with new technologies (as a lender) has been poor to-date, not because the technology doesn’t work, but more because the specialised skills required to implement these techniques are lagging in the UK. The industry seems generally very reluctant to push progress and training in new directions but runs the risk of being leap-frogged by the more visionary ones, as buyers of new homes in both the private and public sectors start demanding higher levels of sustainability.
The cost of using energy-saving technology is coming down rapidly and it would be good to see more use being made of renewable energy systems. Estimates that the cost of achieving carbon-neutral new housing would add 1.5% to 2.5% to the end price tag but this is likely to come down and ought to be cheaper than having to retro-fit technology to houses being built now.
It’s up to all of us accelerate change
So, we could all do our bit to accelerate change as a funder – to be more open-minded about schemes involving new methods, as a consumer – about asking for better, and as a player in the industry – by challenging our borrowers and advisors to aim higher!
By Cécile Verroest, BLG’s Credit/Risk Director and advocate of sustainable living.
Rights to Light, a challenge for developers & funders
Rights to Light, a challenge for Developers and Funders
One of the aspects of property due diligence that I love is the continual opportunity to grow my knowledge on aspects of law and construction. Every development is unique and brings its own peculiarities but, a bit like buses, I do then see phases where a previously infrequent issue crops up on multiple cases at once. One such example is on ROL (Rights to Light) and following requests from a number of colleagues, I have agreed to focus the spotlight here for this blog.
Normally, we would start at the beginning but as that started with ‘the word’, let’s just skip forward the light bit…
What is ROL?
A right to light is an easement; in other words, it is an acquired benefit to the enjoyment of the light that passes over another’s land and enters via an aperture into a building. It is not an automatic entitlement and rarely documented in the deed (personally, I have only seen this twice – where someone has sold off a portion of their land and clarified ROL on titles at Land Registry).
How is ROL acquired?
Unless clearly stated in the deed, any ROL would need to be proven. However, ROL may be acquired by anyone who has had uninterrupted access and use of light to and for any dwelling house, workshop, or other building for a period of 20 years, openly and without threat, with no interruption for more than a year. The complication arises that if the aperture has moved at some time, if there have been historic agreements to receive light across the neighbouring land, if there has been an unchallenged interruption of more than a year to the light etc it is difficult to know whether there is still a case for ROL or as a Developer, whether or not you would infringe upon ROL.
I have planning permission – so this doesn’t affect me
A common misunderstanding that I see is the assumption that because someone has planning permission, a neighbour cannot make a claim to ROL. Unfortunately, this is not the case! Whilst planners consider questions of daylight and sunlight when assessing a planning proposal, ROL is a point of law and not planning. Therefore, pressing on with a development, even with approved planning, can leave you open to a dispute, claim and potential injunction from the court. Furthermore, it is worth noting that even where buildings have been completed, the court can require alterations to the building to remedy the offending parts and award damages to the offended parties. This is potentially a lengthy and costly process.
Can I insure against the risk?
Indemnity insurance is often our friend when it comes to issues of defective titles and easements. However, due to the complexity of ROL it is not recommended that insurance be viewed as a cure-all to the issue. One reason for this is that traditional indemnity policies often require that there be no disclosure of the problem, otherwise it invalidates the policy. However, in ROL cases, the courts will take into consideration the efforts to liaise with potentially affected neighbours and an injunction might be more likely in instances where there has been no contact at all. Appropriate insurance policies do exist, but they are not an ‘off the shelf’ product and can be very costly. For example, I know of one development where the cost of ROL insurance was circa 1% of the GDV. In that instance, expert third party opinions of the policy were also required from an independent insurance expert and quantity surveyor before all parties got comfortable.
What does this mean for a Developer?
ROL should be considered by any Developer that will build in the vicinity of existing buildings. Given the current trend to go up and the regeneration of brownfield sites, this is the case for most sites I see. Due to the complexity of the issue, a survey by an ROL specialist is always recommended and organisations such as RICS can help you find someone appropriately qualified in your area. It is always better to address the issue at the start and factor it into the costs of your development and the programme for construction: funders will always welcome pro-active Developers that present proposals addressing such issues. The courts are also likely to look more favourably on Developers that have taken the appropriate steps to avoid going to court in the first instance.
Blog written by our very own Credit Operations Manager, Alexandra Phillips BA (Hons), PgDip, ACMI
November 2019
What it’s like to intern at BLG
I have spent the past two weeks on a work experience placement at BLG, sampling the roles of employees across the board allowing me to gain an understanding of the work of the company.
On my first day my nerves were put at ease by Laura, who gave me a tour of the office and introduced me to everyone. I was treated as a new employee would be; given an information pack on the company and was welcomed in by all. I settled in quickly and looked forward to the coming days.
Over the past fortnight, I have spent time sitting with members of each different team in the office to learn about the work they do. The first of these was Paul, who talked me through his work in loan monitoring as well as introducing me to the some of the software used by the company, and patiently explained all the key terms to me so I wouldn’t feel lost in the very advanced process. I also shadowed Shabena, taking minutes in an Investment Committee meeting. Iram talked me through her work as an in-house senior surveyor, demonstrating how a development is valued using comparables. I was introduced to the accounts system by Jen and Abi, who have the very important job of controlling and monitoring all the money coming in and out of the company. Each of the members of the first Credit Operations team (Dyan, Laura, Lexie and Tom) also talked me through their roles, which involve a lot of communication, as I learned whilst sitting in on a call with one of the company’s lawyers. Finally, Michelle shared some of her Phoebus wisdom with me and let me have a go at inputting data into the system.
To understand in full the work done by BLG, I spent some of my time out of the office too. I visited Anna, Marketing and PR Director, who showed me through her working day routine, ranging from coordinating email marketing campaigns to organising intricate VIP events for clients and lenders. After discussing the redesign of the site, Anna tasked me with writing a report, identifying potential improvements that could be made to the current BLG webpage. Laura and I also joined Will on a site visit, kitted out with high-vis vests and helmets to be shown around one of the developments funded by the company. The purpose of this visit was to check up on project progress, a common occurrence in BLG’s hands-on approach to lending.
My spare time was filled with various office tasks, from filing and organising cupboards to typing up letters to clients, all of which furthered my understanding of working in an office.
The timing of my placement meant I was lucky enough to catch the annual rounders match, followed by an amazing BBQ, both of which were lots of fun, and captured the positive spirit of the company.
Overall, I have had an extremely enjoyable and informative past 2 weeks with the company and would like to thank everyone for all their efforts into giving me a great experience of working for BLG.
By Lillian our amazing Intern of Summer 2019
