Download Why Property? - Property Litigation Association

Commercial Property
A New Industry for a New Century
Property Litigation Association Conference
Liz Peace, Chief Executive
British Property Federation
8 April 2005 – Keble College, Oxford
An old industry with a bad reputation
“Property is theft”
Proudhon 1860
Sharks!
Government perceptions
Threat of lease
legislation
Stamp Duty up to
4%
Closure of tax
loopholes
Development Land
Tax
Planning
Regulation
The Customers’ View
I am the LORD in landlord
You are the ANT in tenant
Anon
Occupiers remain frustrated by the adversarial nature of the
property industry
Occupiers see the industry as ‘self-serving’ rather than customer
serving
BCO survey 2005
‘On a day to day basis, UK landlords are typically uncomfortable to work
with. Communication with landlords (which can be via the managing
agent) tends to be very formal and invariably in writing’
RICS Tenant Satisfaction Index (39/100) Feb 2005
Investor Perspective
Asset Performance 1994-2004
14
% per aunnum
Why
Property?
11.1
12
7.6
10
6.2
8
6
4
2
0
PROPERTY
BUT
 Cost of entry too high
 Too complex/too lumpy
 No retail products
 The preserve of the wealthy
 Go for the easy BTL option
UK EQUITIES
GILTS
Source: IPD
But the industry is changing
Provider of occupier
flexibility
Partner in urban and social
renewal
Servant of the customer
Investors’ friend
Supporter of environmental sustainability
Customers
 flexible lease lengths






flexible lease terms
different types of tenure
sub-letting/assignment
speed and simplicity
a range of services
Landlord and Tenant Act Reform?
simplified lease
documentation
reduced
intermediary
involvement
basic business
advice
Investors
 £35 billion of potential retail investment
 a BTL industry worth £40bn
 Real Estate Investment Trusts
 Authorised Investment Funds
simple structures/
speedy transaction
transparency and
information
consumer
protection
Government and Society
 promotion of BIDs
 participation in neighbourhood/underserved markets programme
 partner in major regeneration schemes
 funding infrastructure through S.106 agreements
novel forms of
partnering and
funding
faster, better
planning
simplified S.106
negotiations
Environment
 energy and utility efficiency – EPBD
 waste management
 security
 accessibility
 safe, sustainable construction
modern forms
of contract
compliance with
spirit & letter of
environmental
legislation
better, more
comprehensible
information
Government
The commercial property industry is:-
 a major contributor to economic growth - 6% of GDP
 a significant source of taxation - £30.5bn or 7.7% of total tax take
 a creator of capital - £46bn per annum (30% of UK total)
 provider of £85bn of investment for pension funds/savers
sound/swift
transaction
support
tax avoidance,
tax planning or
simply pay up!
corporate
governance
In conclusion
?
 the industry is changing
 the customer is becoming king
 part of sophisticated capital market
 a retail investment option
 an urban regenerator
 environmentally sympathetic
How do lawyers support this change?
 providing solutions that are quick, simple and certain
 managing expectations in an increasingly litigious society
 avoiding litigation
 taking a holistic view