chester growth partnership: young professionals drinks

Manchester Young Property Professionals

29 November 2016

© 2016 Grant Thornton UK LLP. All rights reserved | Draft

Chester Residential Market

Charlie Kannreuther

Director

Chester Office


General

• Chester is an exciting and vibrant city with a thriving housing market.

• It has comfortably out performed rural areas of West Cheshire and North Wales in recent years - Prices 10-15% higher than the 2007 peak.

• Chester is home to a number of excellent schools, and the increase in out of school activities means many parents would rather live in the city.

• Increase in premium quality city centre development.


Housing Stock - Traditional

Wide variety.

Prime – Within city walls and overlooking

R Dee.

It includes Georgian Terraces on cobbled

streets in the city centre:


19th century / Edwardian

detached villas in Curzon

Park and Westminster

Avenue:




20th century housing in the

inner suburbs - Queens

Park ,Upton and Newton:

Also Victorian terraces in

many areas.


Housing Stock - New

Apartment development 21st century and mainly pre-2008.

Initially in secondary, central locations but latterly in riverside and other

prime locations:

HQ set the tone for premium apartments.

First phase overlooking the racecourse -

£500 per sq ft in 2006.

Post banking crisis - the last remaining units

£200 per sq ft in 2013.


Housing Stock - New

Stalling of new build projects during

recession.

2014 Heritage Court scheme on Lower Bridge

Street.

32 office to residential. Sales rates of up to

£400 per sq ft.


Housing Stock - New

2016 headline scheme - Dee Hills

Park, part new build, part office

conversion.

Off plan at £430-£600 per sq ft.

Luxury new houses on the river -

£400 per sq ft.


Housing Stock - New

Further exciting schemes in

the pipeline for 2017.

Including 62 apartments at

Shot Tower.

13 apartments at The

Warehouse in the Restaurant

Quarter.

10 apartments on Cuppin

Street near the city centre.


Demand - Downsizers

Demand for city centre living greater amongst

downsizers than the cosmopolitan young.

Lock up and leave.

Walking distance of shops etc.

Must have – 2 bed+, parking.

Strong preference – Outside space, lift

access


Demand - Families

Schools an important draw.

In particular independent schools such

as King’s and Queen’s.

Increasing trend of families moving from

London and the South East - quality of

life.

Must have – 4 bed, garden.

Preferred – walking distance of chosen

schools.

https://www.google.co.uk/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjKkcC598HQAhUJLhoKHaQlBQoQjRwIBw&url=https://en.wikipedia.org/wiki/King's_School,_Chester&bvm=bv.139782543,d.ZGg&psig=AFQjCNEjCMoE53V9NDAbNL-sDVJwKkHGJA&ust=1480095434862860

https://www.google.co.uk/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjX8OrL98HQAhWB1BoKHTAnAAUQjRwIBw&url=https://www.thequeensschool.co.uk/&bvm=bv.139782543,d.ZGg&psig=AFQjCNHJqKKgikb7uO3iGnG_w8pvlilY_w&ust=1480095501533920


Demand – (Young) Professionals

Attracted by the growing cafe/restaurant culture, the ease of access to the

countryside, and the transport network. Job creation on Business Park etc.

http://www.google.co.uk/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwimpcPD-sHQAhWC2xoKHdWoC-wQjRwIBw&url=http://www.chester360.co.uk/chester-gallery-illuminated-chester.htm&bvm=bv.139782543,d.ZGg&psig=AFQjCNFn5zAavSGPA4SDJRHhUUyokfXxfg&ust=1480096265137437


Pricing

£150k – 1-2 bed flat

£300k – 3 bed semi inner suburbs / premium 2 bed flat with parking

£500k – 4 bed semi inner suburbs or 3/4 bed terraced within the walls

£750k – 4 bed semi in central location with parking and outside space

£1m – Detached 5 bed townhouse in prime suburbs

£1.5m – Superior house or apartment in prime riverside location

£2m – Nothing...yet.


Outlook

Chester set to remain the location of choice in the region for those

wanting urban living.

Heritage Court and Dee Hills Park has reignited developers interest and

downsizer demand should be Brexit proof.

Performance of key independent schools will remain driver of demand in

prime suburbs.

Further gentrification in areas like Hoole (“Notting Hoole”) likely.

25% 5 year price growth (marginally outperforming rural areas).

Cheshire Residential Market Update

Andrew Thorpe

Associate Director

Wilmslow Office

http://www.google.co.uk/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjdndSG68vQAhXCMhoKHX14CAQQjRwIBw&url=http://www.oddfellowschester.com/neighbourhood/out-and-about-in-cheshire&bvm=bv.139782543,d.ZGg&psig=AFQjCNEkkEem36VtM80k1DJarEqXyiAGWw&ust=1480435693677612

Variations across the regionMainstream: mainstream property refers to the bulk of

the UK housing market.

Prime: typically it comprises properties in the top 5%

of the market by house price.

• Wide variations in the performance of local markets

• Mainstream market average values +4.2%

• Prime markets values +1.5%

• Mainstream values still 5.3% below 2007 peak on average

Prime Urban Locations Vs Rural• Prime urban locations such as Wilmslow and Chester city centre

are leading the recovery

• Values 10-15% above 2007 peak in some locations

• Aspirational upsizers competing with affluent downsizers

• Highest demand: period properties, high quality new-build and those within walking distance of amenities

• London buyers moving North

Rural Markets

• Rural locations have seen little recovery over the past couple of years

• Values over 10% below their 2007 peak in some locations across the region

• Land is not commanding the premium it once did

• Some buyers are now recognising the value for money

Stamp Duty

• Those buying a property below £937,500 are now paying less stamp duty

• 98% of buyers now paying less

• Extra 3% Stamp Duty for buyers who own more than one property

• Impacting the Buy-To-Let and Let-To-Buy market

• Refund can be claimed within 3 years

http://www.google.co.uk/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwj1nfXk5MvQAhWCWBQKHaQQAHcQjRwIBw&url=http://finestproperties.co.uk/stamp-duty-needs-to-be-addressed/&psig=AFQjCNGjkrZflW8PO4HQHjkIoSIlRcWTTA&ust=1480433978686462

Tax relief changes for landlords• Changes phased in between April 2017 – 2020

http://www.google.co.uk/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjQrpDB6MvQAhUHWRQKHZQXBXUQjRwIBw&url=http://uk.easyroommate.com/blog/responsibilities-landlord/&psig=AFQjCNGquloiGnt81ihatugQQl6McuHvhQ&ust=1480435033356490

SDLT and VAT

Katie Bailey and Amy Howse


Background – Cheshire Central Business Quarter

• £100m Central Business Quarter project

• 500,000 sq/ft of new office space, retail and residential accommodation

• Private sector led development with funding and investment from the Council and its partners

• Three key developments within the Quarter, each brought forward by separate developers

• Jointly co-ordinated through Chester Growth Partnership and the Council

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One City Place

• Muse Developments has completed the first of phase of commercial accommodation

• One City Place is a six story office building

• Further six phases of development planned (including 240 residential units on site)

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The SDLT issues

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Residential

Chargeable consideration Rate of SDLT

< £125,000 0%

£125,001 to £250,000 2%

£250,001 to £925,000 5%

£925,001 to £1,500,000 10%

The remainder 12%

Non-residential or mixed use

Chargeable consideration Rate of SDLT

< £150,000 0%

£150,001 to £250,000 2%

The remainder 5%


Considerations and reliefs

• Deeming a residential purchase to be non-residential

• Introduction of the 3% supplement

• Availability of any reliefs – as a multi-phase development, consider Multiple Dwellings Relief

• Linked transactions

• Structure of the acquisition

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Common mistakes / pitfalls

• Failure to file return within 30 days of 'effective date'

• Failure to identify and claim reliefs (even retrospectively)

• Failure to identify linked transactions

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The VAT issues

• Multiple transactions

• Option to tax

• Capital Goods Scheme (CGS)

• Partial exemption (shared ownership and market rents)

32


Considerations and reliefs

• Option to tax does not apply to dwellings

• Potential cashflow implications and contingencies

• Reliefs - zero-rated first grants (dwellings, use for a RRP/RCP)

• Reliefs - design and build arrangements

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Common mistakes / pitfalls

• Failure to notify the seller and/or HMRC of an option to tax

• Failure to obtain the relevant certificates (or evidence) for relief

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