We would like to share the Q3 edition of Landmark’s Property Trends Report, which provides a complete summary of the 2021 property transaction pipeline from listings through SSTC, search and finally completion milestones, compared to 2019.
The data this quarter captures the end of the SDLT holiday and observes the market as it tries to find equilibrium.
Property search order-volumes were consistent across the quarter, with volumes marginally higher than 2019 figures: +3% in July, +4% in August and +2% in September.
Other insights include:
- Listings were down by an average of 9% compared to 2019 levels
- Completions in September rose 44% above September 2019 levels, driven by the need to beat the Stamp Duty holiday deadline.
This month’s edition of the Property Trends report will also include Landmark’s Demand/ Supply Variance (DSV) report, to provide deeper insights into how demand continues to outpace supply, where July was the only month where listings were marginally higher than SSTC – the first month since October 2020.
We hope you find our trend reports useful. Please CLICK HERE to access a copy of the Property Trends report.
We’ve made it to the final instalment in our Risk Series, a series in which we have examined the top five conveyancing risks in more detail.
Over the past few months we have taken a deep dive into a different risk, be it flood, ground stability, planning or coal. Today our focus is on Energy & Infrastructure, written by Mark Taylor, Channel Manager at Landmark Information and environmental auditor with the Institute of Environmental Management and Assessment.
The rebirth of infrastructure
Whilst other topics have been at the forefront of UK politics since 2016, one issue that has remained in the background – recently moving back into the spotlight – is large scale infrastructure projects. It isn’t just topical in the UK; in the United States, President Biden is also targeting massive national investment into its infrastructure.
Whilst not on the financial scale of the US, the UK Government is planning significant expenditure into infrastructure and the creation of a new National Infrastructure Bank. The hope is to not just improve travel services and access; the investment principles look to support wider objectives including regional and local economic growth and helping tackle climate change through clean energy projects (HM Treasury, 2021).
Infrastructure and Property
With most infrastructure plans, especially those of national significance and size, there are always likely to be two sides to the discussion.
Constructed over three phases, High Speed 2 will initially connect London to the West Midlands, the West Midlands to Crewe and finally to the north-west and north-east. Throughout the network, HS2 is expected to increase access and speed up commuter times while increasing the overall rail networks capacity. HS2 report that once fully operational, it is expected that 300,000 passengers will use the network daily (HS2, 2021).
Given the scale of the project across the country, inevitably some communities will be negatively impacted, with links to the potential reduction in some house prices. In response, HS2 have set up several schemes including rural support zones, homeowner payment zones as well as a ‘Need to Sell Scheme’ to compensate those affected. While these schemes look to help those affected by the proximity of the rail link route, they also acknowledge that infrastructure projects can have an impact on property value.
It is important to highlight that improved, modern and faster public infrastructure is also an enabler. It can improve social mobility, increase access to green open spaces and other amenities, but also speed up commutes allowing people to spend more time on the important things in life.
Crossrail 2 is an example where house prices have prospered. According to a 2017 report by Knight Frank, house prices along the route within in a 10-15min walk to a station from the period of 2008-2016 out-performed the market by 7% (Knight Frank, 2017).
Green Investment
One of the key elements of infrastructure spending across the next decade will likely be on sources of renewable energy.
The Paris Agreement, a legally binding international treaty on climate change was adopted by 196 Parties at COP 21 in 2015 (UNCC, 2021). Coming into force in 2016, the Agreement’s central aim is to strengthen the global response to the threat of climate change by keeping a global temperature rise this century well below 2 degrees Celsius above pre-industrial levels.
On the 27th June 2019, the UK became the first major economy in the world to pass laws to end its contribution to global warming by 2050. The target will require the UK to bring all greenhouse gas emissions to net zero by 2050, compared with the previous target of at least 80% reduction from 1990 levels (Gov.uk, 2019). To reach net zero by 2050 significant action will be required across a whole range of industries from construction to food waste, transport to energy production.
At the end of last year, the government announced its ten-point plan for a green industrial revolution, totalling a £12billion public investment (Gov.uk, 2020). A large focus of this will be on wind energy generation as the Government hopes to quadruple the output of offshore wind. However, the expansion of the wider renewable energy sector will likely be inevitable to meet the legally binding target.
Whilst some would argue as fickle, what a potential property purchaser sees as ‘value’ can vary from person to person. There is precedent for linking wind turbines to a reduction in property value; in 2014, research undertaken by the London School of Economics concluded that large windfarms can impact property prices by up to 12% (Guardian, 2014).
Our value of space
Whether you agree or not, it does prove the value in providing full transparency into the potential changes in the property surroundings during a property transaction, especially if that value is being based on a view that could be fragile and changeable. Our value of local green space has increased as a result of lockdown and the restrictions placed on movement. Lockdown has made us appreciate and reengage with the green spaces near to us and the value they bring to the places we live. If we don’t have it, one property trend suggests we’re now more willing to move for it.
Whether it’s a short-term response to the pandemic is yet to be seen, however, fuelled by the stamp duty holiday, it has been reported that homeowners have started leaving our urban centres in search of individual open space and the rural idyll. The last 18 months has left many rethinking what is important to us and the value we hold for having access to more space, the countryside and nature.
What is being reported and is it reasonable?
Whether looking at energy or infrastructure projects, during conveyancing what is reported should be grounded and reasonable. Therefore, if something is going to be identified or alerted during a transaction, it needs to be for a good reason.
Crucially, Landmark environmental reports have fine-tuned the search radius of what they identify in the property surrounds for a conveyancer to raise to their clients. Intelligently, an alert is not just based on the potential physical impact of a feature on an area, but also the subject property’s location. For instance, as rural properties are likely to be more sensitive to changes in the surrounding environment when compared to urban (especially as there may be perceived value in a view or open space), we treat these differently.
From a conveyancer standpoint, there is a lot of value in this as you will have confidence that projects are not being identified in environmental reports over cautiously, while also providing robust information for your client.
Both Landmark’s Energy & Infrastructure report and their market leading All-in-One environmental report, RiskView Residential reacts to this, searching to a shorter radius in urban centres so not to identify an unlikely issue.
References
(CNN, 2021) https://edition.cnn.com/2021/03/31/politics/infrastructure-proposal-biden-explainer/index.html
(HM Treasury, 2021) https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/994437/UK_Infrastructure_Bank_Framework_Document.pdf
(City AM, 2021) https://www.cityam.com/budget-2021-sunak-pledges-22bn-for-new-infrastructure-bank/
(HS2, 2021) https://www.hs2.org.uk/why/capacity/
(Guardian, 2020) https://www.theguardian.com/uk-news/2020/aug/21/crossrail-delayed-again-until-2022-and-another-450m-over-budget-tfl-covid-19
(Knight Frank, 2017) https://content.knightfrank.com/research/520/documents/en/2017-4695.pdf
(GOV.UK, 2021) https://www.gov.uk/claim-compensation-if-affected-by-hs2
(UN, 2019) https://www.un.org/press/en/2019/ga12131.doc.htm
(Gov.uk, 2019) https://www.gov.uk/government/news/uk-becomes-first-major-economy-to-pass-net-zero-emissions-law
(Gov.uk, 2020) https://www.gov.uk/government/news/pm-outlines-his-ten-point-plan-for-a-green-industrial-revolution-for-250000-jobs
We are delighted to introduce a new improved NSR Chancel policy with improved cover, which came into effect on 1st August 2021.
The Combined Residential and Commercial NSR Chancel Insurance (up to 2 million pounds) (Successor – Perpetuity) is only £19.86 including VAT and will replace the following products:
- NSR Chancel Insurance (up to 1 million pounds)
- Commercial NSR Chancel Insurance (up to 500 thousand pounds)
- Commercial NSR Chancel Insurance (up to 1 million pounds)
Your account manager will have already been in touch if you’ve been affected by this product change, but if you have any questions or comments, please email intro@onesearchdirect.co.uk or call us on 0800 052 0117 and we will be more than happy to assist you.
Thank you to those who’ve been in touch about our Risk Series, where we examine the top five conveyancing risks in more detail. We’re thrilled you’re enjoying it, and if you’d like us to cover a particular topic, please let us know.
Each week we analyse a different risk, and will discuss further in the Q&A session of our upcoming webinar. Today our focus is on Coal, written by Philip Huddleston MRICS, Director of PinPoint Coal Ltd.
With changed economic and political influences, coal mining has now virtually ceased in the UK. Although there are a few proposals for underground mines in the pipeline (such as the proposal to mine Coking coal in Cumbria), this seems unlikely to change in the near future. Equally, the likelihood of any new quarried coal mining obtaining planning consent is remote. One of the largest operators, Hargeaves, recently announced their intention to wind down operations. Given this, we could be forgiven for asking why a coal search is still necessary? We’ll attempt in this article to explain why.
Mining Types
- Underground Mining. Mining coal below ground causes subsidence. With deep mining this lowering of the surface takes place over a relatively short period of time. This can manifest itself as tension or compression strains resulting in damage to buildings or, quite simply, a lowering of the surface and no damage at all. Shallower workings do not consolidate in the same way and the impact of these can continue for much longer, representing a continued present-day risk. If settlement from shallow workings occurs, it is most likely to manifest itself as a crown hole or sink hole at the surface. In most cases the 1991 Coal Mining Subsidence Act would provide some protection to the landowner. More information here.
- Opencast Mining (quarrying).With the planning system favouring development on brownfield sites, many houses are now being developed on such land. Coal Mining Subsidence legislation is unlikely to cover damage from this source. Any new sites can have an environmental impact.
- Mine Entries (shafts and adits). A past report cannot be relied upon. Following the Lofthouse disasterand the introduction of the Mines (Precautions Against Inrushes) Regulations 1979, a huge number of shafts and adits were researched and added to records. This continues today, with new entries constantly being added or adjusted.
- Coal Mining Geology. Under certain conditions mining can cause rocks near to the surface to have cracked open, leaving open fissures. These can be hidden below the surface deposits, which can fail and fall into the void.
- Subsidence claims. These are a valuable indicator of past damage from all the above sources and may also point to whether remediation has taken place or not.
- Mine gas. Rarely, there can also be issues caused by gas. Mine gas issues take two main forms.
Carbon dioxide and nitrogen combined, known as blackdamp, is produced from coal. This gas is heavier than air and although not poisonous it can cause death by displacing any oxygen. Under certain atmospheric conditions, this gas can rise towards the surface. Any entry to disused workings would be very dangerous and there have been examples of this in the past where people have entered these and suffered the consequences. Thankfully, now all known adits (the main problem) have been secured to prevent accidental access, but this can be as little as placement of a grill at the entrance, and is therefore capable of being removed.
The other more problematical gas is methane. This gas is lighter than air and finds its way to the surface very easily via any conduits present. These can be shafts, adits and crack or fissures in the rock. Again, where any such risks have been identified, remediation work is undertaken by the Coal Authority very often by venting the gas through a flue and in some instances commercially extracted.
Gas issues are reported in coal reports where they are known. It is not possible to predict otherwise where they might occur but properties that are near to shafts or adits, particularly those that have no recorded treatment, are the more likely locations.
The need to have good coal risk information
Coal reports are designed to make a purchaser aware of any risks from coal mining. They are structured around agreed reporting criteria. The criteria we use was designed and agreed by a committee comprising of the Coal Authority, the Law Society, the RICS and the Council of Mortgage Lenders. Their aim being to bring consistency in reporting which prior to the agreement was poor, being left up to the individual surveyor making the report. This had led to inconsistency, error, bad press and of course litigation. The result was the CON29M questions mandated by the Law Society for use where a property transaction was happening in a defined coal mining area.
Quite apart from the recommendation from the Law Society to always make a search it is quite simply a necessity. Past reports cannot be relied upon because even today new information is being added – shafts being a good example of this.
When shafts or adits are recorded as being within 20M of a property, Landmarks Coal Reports include an additional free appendix that looks more closely at the risk and provides an assessment of whether the mine entry can affect the property.
With underground workings the area at the surface affected by subsidence is much greater than the area of worked coal. Predicting the zone of influence is a complex three-dimensional calculation based upon the depth and slope of the workings together with the surface terrain. To the best of our knowledge, only the Coal Authority and PinPoint Coal have been able to produce these which in turn enable them to produce their reports in seconds and always to the same high accuracy.
Landmark Coal Reportsare powered by PinPoint and provide all the standard answers required by the Law Society together with (as appendices) additional information about mine entries and claims when they are reported. The reports are supported by professional opinion from a Chartered Minerals Surveyor.
Obtaining a coal mining report enables the prospective purchaser to be made aware of the risks from coal mining and to see whether there is any history of damage – in other words, where a claim has been made.
If a claim has been made or rejected we can assume that there has been some damage. If the claim was accepted and repairs were carried out then you might want to commission a survey to check if the repairs are of an adequate standard. If compensation was paid instead of repairs you need to know why and what, if anything, was done in relation to the damage. Again, if claims are reported an inclusion of a free additional appendix details the individual claims in the area of the property and provides an opinion of the risk they present.
All Landmark Coal Reports benefit from eye-catching red/green summary providing instant clarity on report’s findings and are driven by Intelligent Algorithms that automatically calculate Zones of Influence to determine risk. In addition they include:
- Informative sections to explain, in an accessible manner, the nature of any risk
- Accurate reporting of risks, even in areas known by The Coal Authority to be problematic
- Technical queries are handled by industry professionals and experts
- Thorough industry knowledge of mining information, its complexities and limitations
- Includes a Professional Opinion on next steps if issues are identified
FREE WEBINAR
How do we achieve more efficient conveyancing?
Efficient and compliant due diligence has never been more vital to a property transaction. How can we obtain and communicate the key information and risks relevant to the transaction in a faster, more concise manner?
Join us for one of two 30-45 minute sessions to discuss how we can help reduce time spent obtaining and reviewing searches, whilst providing greater risk transparency and saving your client money.
We’d be delighted answer any questions you may have. Please email your questions to intro@onesearchdirect.co.uk in advance and they will be answered during the webinar.
If you cannot make either date, and would like to receive a webinar recording, please click here.
Wednesday Aug 11, 2021 11:00 AM BST
Wednesday Aug 18, 2021 11:00 AM BST
Key References:
We would like to share the Q2 edition of Landmark’s Property Trends Report, which provides a complete summary of the 2021 property transaction pipeline from listings through SSTC, search and finally completion milestones, compared to 2019.
Surges and slowdowns in activity have aligned to major government announcements and deadlines.
Property search orders were up 43% in April 2021, compared to the same month in 2019, as buyers rushed to benefit from the Stamp Duty Land Tax holiday.
Other insights include:
- Listings were down on average by 5% at the half year point
- SSTC activity was 22% higher in April 2021 vs April 2019
- Completions in June were 85% higher compared to the same month in 2019
On this occasion, we are also adding our Completions to Instructions Ratio (CIR) report, which is an indication of overall workload, where we are reporting:
- A ratio of 115%, which demonstrates the extraordinary pressure conveyancing lawyers were under and the incredible way they delivered results for clients.
We hope you find our trend reports useful. Please CLICK HERE to access a copy of the Property Trends report.
Welcome to week two of our Risk Series, where we examine the top five conveyancing risks in more detail.
Each week we will analyse a different risk, and will discuss further in the Q&A session of our upcoming webinar. Today our focus is on Flood Risk, written by Mark Taylor, Channel Manager at Landmark Information and environmental auditor with the Institute of Environmental Management and Assessment.
Flood Risk: Are we doing enough to protect ourselves and our assets?
A flood is the most effective and indiscriminate ‘burglar’ there is. It will take everything you have, including items of no value to anyone else.
I’ve not been the victim of a flood myself. My experience of flooding fortunately has been from an armchair. However, as we move to a more hostile and unpredictable climate, it’s impossible to ignore. You only need to look back to last year to see several records broken.
- Feb 2020: wettest February on record dating back to 1862, with 3 storms hitting the UK (Ciara, Dennis, Jorge). Previous record from 1990.
- May 2020: driest May on record (Carbon Brief Ltd, 2021).
- October 2020: 3rd October became the wettest day on record for the UK (Met Office, 2021).
Flooding is not a recent phenomenon. It’s a natural event that would have occurred since rivers graced the landscape. Unfortunately, it’s now something that is ingrained into life for some of us. Its impact on our society in areas of the UK are significant. The causation is simply what would be considered now as poorly planned development, in areas at risk without suitable, sustainable mitigation. Development took precedent over understanding risk and if appropriate, risk management.
It’s not just the location of the development which has been key in increasing flood risk. Settlements characterised by concrete and tarmac have broken the natural hydrological cycle, increasing run-off and preventing infiltration. Watercourse have been over engineered, straightened and diverted into shorter, man-made channels resulting in less volume, higher erosion and higher discharge rates.
The result of this is millions of people and businesses at risk in any given year
Our causation of this issue has left us in a place where flood risk can’t be unacceptable. That stance is now impossible, albeit it could be applied to planning and new developments if we wanted to take a very firm stance. This would be difficult especially with a necessary focus on brownfield development and urban regeneration. Flooding now has to be seen as a scale of risk. What is an acceptable frequency of risk for us to be exposed to?
In reality, this will vary person to person however regulators need to take a stance. Given over 5 million properties are at risk it’s impossible to be so black and white.
In some areas of the country, risk can be argued as being unavoidable. For example, in Boston Borough Council, over 90% of properties located in the borough are deemed to be within a Flood Zone 3 area. This is followed by properties in Kingston upon Hull City Council, South Holland District Council, London Borough of Hammersmith and Fulham, at c. 90%, 77% and 62% respectively.
It’s important to note that this data only shows the percentage of properties located in a Flood Zone 3 area. It does not comment on any additional precautions taken to mitigate such risks. However, on the counter side of this argument, it also only assesses risk from two mechanisms, fluvial and tidal and omits pluvial (surface water) and groundwater risk areas.
Given both the impact and cost of flooding, are we:
- Taking it seriously enough during the homebuying process?
- Doing enough to protect ourselves from risk where it exists?
Are we taking risk seriously enough?
The scale of risk across the UK is quite a well understood entity. We know that over 5 million properties are at risk of flooding. Less known is that because of the impacts of climate change, some suggest this could increase to 1 in 3 (RIBA, 2021).
Climate change is going to result in increased risk from both a storm ferocity and regularity standpoint and whilst climate change is expected to bring longer, dryer summers, it’s also predicted to result in longer, wetter winters.
Despite this, even considering the scale of risk now, the frequency of events and how they are reported in the media, at the point of buying a home or investment, there is a strong position to argue that the answer to the above question is “No”.
According to the Law Society’s website: Practice notes give you guidance on a range of important legal topics, helping you give your clients the best possible advice. They set out our view of good practice for our members.
The Law Society Practice Note on flood risk has been around since 2013. Despite this, is there still a barrier to understanding flood risk as part of pre-acquisition due diligence?
With less than 30% of residential transactions annually carrying out a proper flood assessment, it seems there might be.
Given the significance of flood risk and the impact it can have on property value, insurance terms and (often overlooked) mental well-being, surely if this was a valued risk the percentage would be a lot higher than 30%? If we look at the commercial market, flood risk is taken a lot more seriously with the percentage of transactions with a full flood assessment closer to 60%. Furthermore, the impact on climate change on flooding is already becoming a talking point amongst the investor community as environmental, social and corporate governance (ESG) and sustainability move up the agenda within the industry.
The price of conveyancing inevitably has an impact on the take up of flood reports, due to what is an ever-increasingly competitive market.
To account for this, flood reports that screen risks and are purely based on data dominate the residential market, whereas in the commercial space, combined environmental reports do. While these types of reports, like Landmark’s Envirosearch provide excellent insight into risk, when a risk is identified it’s important that flood risk is assessed and reported in more detail beyond that of basic and limited automation.
However, where I think we need to get to is the view that the small added cost at the beginning shouldn’t be a barrier. A flood report should be an enabler to the transaction especially as its cost will be negligible in comparison to any excess paid on a flood claim, and the disruption to someone’s life.
Are we doing enough to protect ourselves from risk where it exists?
Answering this question is tricky, especially from a legal due diligence standpoint as its remit is providing information on risk to in effect, inform someone else’s decision. Again, people’s appetite to risk will always be intrinsic and balanced against what they perceive the value to be and what is important to them.
One issue skewing this, though, is how risk is often portrayed. For speed and ease of interpretation, too much focus is on providing a simple answer rather than explaining risk. This can be highlighted by what we often assume low risk is. We assume low risk pretty much means no risk and when reported we don’t bother reading further. In fact, low risk maybe as a result of defences and without them, a high risk could exist. As we know all too well in the UK, defences aren’t perfect and low risk areas can and do still flood if they’re reliant on physical barriers holding flood water back.
However, focussing on the question at hand, given the UK’s position on flood risk and that it’s a property owner’s responsibility to protect their property from flooding, do we acknowledge and subsequently act on this?
Yes, the government plays an integral role in managing and reducing risk, the Department of Environment and Rural Affairs (Defra) having overall national responsibility for policy. But do we truly accept responsibility for this issue, and if not, why not?
Within this space I think more can be done by flood risk report providers. However, search providers do need to walk along the fine line, ensuring the needs of the industry are met (short, concise and clear), as well as discussing the key mechanisms for managing risk set out in the Law Society Practice Note, and insurance.
Insurance is vital in managing flood risk. It plays an intricate part in flood risk management, even more so since Flood Re was established to provide cover for those at greatest risk. However, insurance is still only reactive, only relevant once the impact and disruption of flooding has already happened. Really, more proactive measures need to be taken to aid insurance to not just manage risk exposure, but to reduce its overall economic and human impact.
Many of us happily invest in smoke alarms and security locks to protect ourselves against fires or thefts; but if you live in a floodplain, you’re far more likely to be flooded than have your belongings lost in a fire. Yet, when it comes to flooding, we don’t seem to value the risk in the same way and as a result, prepare.
What is within the Conveyancer’s control?
There’s more within our control than perhaps we think. Not all environmental or flood risk searches provide the same level of quality to the conveyancer. This fact is often overlooked, which is understandable if you’ve ever held two searches up together and tried to understand the differences.
Flood data itself has come on leaps and bounds from where it was only a decade ago. However more importantly, the interpretation of data in flood risk reports provided by the likes of Landmark and Argyll Environmental have also evolved dramatically.
One thing a conveyancer can do before affirming a policy on searches, especially in regard to flood risk is ask the question: Where has this assessment come from?
Yes, data plays an integral part and is the foundation of environmental reports. However, an assessment and the advice within should come from interpretation. From a consultant. This is what is unique to Landmark residential flood reports. This is the real value in an assessment at any level.
As standard, Landmark flood reports offer a manual review of data by a consultant where a high risk may exist, at no extra cost. This is within both the Landmark Flood report and the market leading All-in-One environmental report, RiskView Residential.
This ensures that, as a conveyancer, you’re only ever providing property specific and accurate flood assessments to your clients, provided by experts in flood risk data.
FREE WEBINAR
RiskView Residential: Efficient environmental due diligence
The stamp duty holiday created huge, unsustainable pressure on the conveyancing industry.
One key topic that has arisen from it is: how do we achieve more efficient conveyancing? How can we obtain and communicate the key information and risks relevant to the transaction in a faster, more concise manner?
Join OneSearch and Landmark for one of two 30-45 minute sessions to discuss how we can help reduce time spent obtaining and reviewing searches, whilst providing greater risk transparency and saving your client money.
We’d be delighted answer any questions you may have. Please email your questions to intro@onesearchdirect.co.ukin advance and they will be answered during the webinar.
Wednesday Aug 11, 2021 11:00 AM BST
Wednesday Aug 18, 2021 11:00 AM BST
If you cannot make either date, and would like to receive a webinar recording, please click here.
Key References:
- https://www.carbonbrief.org/met-office-why-the-uk-saw-record-breaking-rainfall-in-february-2020
- https://blog.metoffice.gov.uk/2020/10/16/rainfall-on-uks-wettest-day-on-record-could-have-more-than-filled-loch-ness/#:~:text=Office%20news%20team-,Rainfall%20on%20UK’s%20wettest%20day%20on%20record,more%20than%20filled%20Loch%20Ness&text=Saturday%203%20October%202020%20is,on%20the%2025%20August%201986.
- https://www.architecture.com/knowledge-and-resources/knowledge-landing-page/uk-must-build-flood-resilient-homes-says-riba