Getting the right team around you makes all the difference to getting deals done quickly, limiting stress and protecting you from mistakes. Remember, you will be working with your key people on a daily basis over the years. You need problem-solvers who value your business and are progressive and supportive.
SOLICITORS
These are the most important professionals in your team. After nearly 30 years in the business, I cannot emphasise strongly enough how much a poor solicitor will affect your ability to progress deals in a timely and non-stressful manner. Your solicitor is the key partner.
Business on a daily basis is so much easier with the right solicitor. An uninterested solicitor can make your working life a misery and generate unnecessary stress, delays and frustration. If you find yourself continually chasing a solicitor, then I strongly encourage you to change solicitor, as a professional, proactive solicitor should be chasing you. Do not be tempted to deal with any volume conveyancing firms offering discounted rates, as they will be overburdened with clients and weighed down by higher staff turnover rates. Try to use one of the larger firms, if you can afford it (I would argue you cannot afford not to).
Solicitors working in larger firms tend to be less overworked and are able to communicate promptly and efficiently. My own rule is: if I do not get an email reply within 24 hours, then I will move on and find a solicitor who actually wants my business. Good solicitors also have the support of their own legal PA who is also actively working on client case files. Ask if this is the case, and ask what happens when the solicitor goes on holiday. I want to be assured that the PA is active and familiar with my files and able to deal with any matters should I be unable to contact my solicitor. This means that when the solicitor is away, you still have continuity of service and your business doesn’t grind to a halt.
Your solicitor will be working in tandem with your mortgage broker, so they should be introduced via an email thread, with both solicitor and mortgage broker copied in on any emails regarding finances. A final point: always ask for details of fees and payment schedules in advance of instructing.
FINDING THE RIGHT MORTGAGE BROKER
You need an experienced broker relevant to your type of loan. Unfortunately, many brokers pretend to have more experience than is actually the case, so you need to push them on the specifics of their experience. The best way to quiz an adviser is to ask them to talk about key parts of the project that you know about. For example, if you are applying for development finance, ask for the intricate details of deals they have completed: Who wrote the last development appraisal? Do the lenders have QS-sanctioned draw-downs or is it value uplift? and so on.
If you are applying for an HMO loan, ask how many HMO loans the broker has done in the last 12 months. Enquire about the number of rooms, the lender requirements for tenancies, etc. This is all basic stuff for an experienced advisor and it should easily roll off the tongue. If they throw in live examples, you know you are speaking with someone who knows what they are talking about.
Again, as with solicitors, if the broker does not communicate with you in a timely and efficient manner, then do not feel any loyalty. Move on until you find a keen broker who really wants and values your business. A good broker will also communicate directly with your solicitors and accountants during the conveyancing process to make things progress quickly. As part of your professional team, they should be trying to get ahead of issues like proof of income, settlement fees, or the tax implications of doing one thing over another.
The broker and solicitor should have already been introduced via email thread, and both should be copied in on any relevant emails, so that they can work together and be jointly aware of the details of deals going through. Many brokers like ‘uncomplicated’ and straightforward cases so they can get paid as quickly as possible, but what you really want is a problem-solver.
Now fees are not a bad thing, of course, and having an incentivised broker will keep them hungry and committed to you. However, a good advisor wants a client, not just a transaction, and they should be willing to see the value of the relationship over the commitment fee. Even between projects, a truly committed advisor will be happy to talk strategy without expecting to be paid because they value the relationship. If they do not, that is fine, but are they truly part of the team you want to create?
Get an APRC (Annual Percentage Rate of Charge) quote. It is used as a means of comparison for financial services products and takes into account the total amount of interest and any fees applied to your mortgage. And, as always, ask for details of fees in advance of instructing.
Lastly, let them in. The more they know about where you want to be, the easier it is to make sure they are always looking at the big picture on your behalf. Some loans can, on the face of it, seem unattractive (like a high-cost bridging loan), but if that provider has no exit fees and works without survey, and speed is key to you, your advisor will make sure you have this option presented to you.
Top tip: Use a broker within driving distance for more face-to-face meetings.
BUILDERS - THE FULL PICTURE
It is pretty straightforward to give advice on dealing with the builder, but that is not the full picture. Due to Health and Safety updates, particularly the legal implications of recent and very onerous legislation updates from 2015 onwards, there is a lot more to consider before you allow anyone on site, never mind a builder. The Construction Design and Management Regulations have been around since 2007. However, in their previous issue, a “domestic” client (i.e. someone like you, an RLA landlord building or refurbishing a house) had no legal duties. Some still wrongly believe CDM does not apply to small private domestic refurbishments, but in reality it has applied since 2015! Under the Construction Design and Management Regulations 2015 (CDM 2015), you are now classed as a client, just the same as any other type of large, more professionally run construction projects. With the amended regulations, you and your builder have serious legal responsibilities on sites both large and small. Many people still underestimate the legal and safety implications of running even a small project, typically carried out by many RLA members.
Basically, these regulations make it a lot easier and likelier for you to attract enforcement from the Health and Safety 40 Executive. From a legal perspective, these regulations can get you into real trouble, especially if things go wrong. These regulations need to be taken seriously because, in the event of any breach or accident on site, Health and Safety will seek enforcement on the ultimate ‘bill payer’ — you. Accidents happen more frequently than you might think. According to a recent report by the Health and Safety Executive, Workplace fatal injuries in Great Britain, 2019, 36 people died in 2018/19, working on construction sites. Falling from a height and being struck by a moving vehicle were the biggest killers.
The CDM regulations are designed to encourage better planning so that the risks involved are managed from start to finish. It applies to all works, but you effectively have two types of CDM: the notifiable type and the non-notifiable type. For notifiable jobs, you must complete a form (F10) ‘Notification of Construction Project’ on the HSE website. Smaller private jobs are not notifiable to the Health and Safety Executive, but they still fall under the normal CDM rules. A recent article in a trade magazine said that the HSE are currently focussing 70% of their resources on this type of smaller project, so an unannounced visit is a lot more likely on these smaller jobs. Whether you employ workmen directly or not, you still have personal legal responsibilities under the CDM regulations.
For example, you have an obligation to share any information which impacts the safety of your team, including information relating to asbestos or contamination, prior to any site investigations taking place. You also have a legal responsibility to ensure that your builder is fully compliant with current safety regulations, and that they do not have any outstanding enforcement notices (this can be checked online with the HSE). If you find your builder has enforcement notices, be wary – an unsafe contractor may be cheap, but if they cause an accident on your site, you may find yourself personally subject to HSE action as the client. You may wish to ask your builder and their team for their Construction Skills Certification Scheme (CSCS) cards, which will show that they are certified to work safely on site.
If you have more than one contractor on site, one should be appointed as the “principal contractor”. They will have an obligation to manage and coordinate all other trades on site in relation to safe working, including how risks need to be managed on site. The best way to avoid disputes with your builder is to employ a Quantity Surveyor (QS), even on smaller jobs. When it comes to money, most disputes between builder and client arise out of poor communication and because you haven’t employed a QS as a professional middle man between yourself and the builder. If you employ a QS, he will also ensure the builder has the necessary insurance, Schedule of Works, and Bill of Quantities, which helps to protect you from cost overruns.
I could have written a full chapter on my experience with builders; unfortunately, most of my challenges have been as a result of disputes with builders in my earlier career. This improved for the better when I started employing a Quantity Surveyor and doing a Bill of Quantities, which makes dealing with your builder a lot less risky and less prone to disputes. If you can’t afford a QS, then do your own Schedule of Works beforehand, so you can get accurate and comparable quotes from each builder. Take the time to write down every single individual job you want in each room or, even better, break it down to each trade. Otherwise, you will get vastly different quotes for the same job from builders because they will have interpreted your 41 requirements differently, based on a loose conversation.
Try to find a builder who is a member of The Contractors’ Health and Safety Assessment Scheme (CHAS) and/or the Federation of Master Builders. If dealing with electrics, look for and check National Inspection Council for Electrical Installation Contracting (NICEIC) accreditation and, for any gas works, check them against the Gas Safe register. These registers are available online and a reputable builder will provide you with their registration number to check. If they are not registered, do not use them, no matter how experienced they are!
Agree who will manage the construction process and act as the first point of contact for your builder – you, your architect or your QS – and ensure that these lines of communication are respected so that all information is captured throughout the process. This will include documenting and agreeing any design changes which may impact your cost. Choose builders who have been in your area for many years and are long-established, as they must be doing something right. Obviously, a personal recommendation is a good idea if you can get one. Avoid the “one-man band”, as they will not have the relevant experience of managing a team, which is essential for your legal responsibilities under CDM.
The most important financial advice is to make sure you are not paying anything in advance. If the builder does not have enough cash to forward-fund the job, even for a few weeks, then walk away. Agree any material costs or purchase costs upfront with your QS and builder, and agree a staged or interim payment schedule for the duration of the works. Failure to pay a small contractor can quickly cause cash-flow issues and damage your relationship. It is easier to make smaller payments more often, which reduces your exposure and the contractor’s risk. Common practice is to negotiate a small discount as part of your tender (2-3%) for early payment or regular payments.
Final point: As well as a principal contractor, the client also needs to appoint a “principal designer”. This is usually just the architect, but it is worth noting that you should make these appointments officially in writing.
Top tip: Employ a QS before speaking to your builder. If you can’t afford a QS, then do your own detailed Schedule of Works before meeting the builder.
An additional word of caution: If you have a dispute with any contractors on site, they may be inclined to report you to the Health and Safety Executive for any breaches of CDM.
STRUCTURAL ENGINEERS - SAFETY FIRST
I am not necessarily put off by structural issues, as long as I have taken the right advice and any remedial work costs are reflected in my purchase price.
With a ‘suspect’ building, it is critical to obtain a structural survey well before you exchange. I usually do this as soon as I agree the deal, as it takes time to run through your options. A structural report explores the problems and identifies the causes of any issues with detailed drawings and structural specifications, which are key for your builder. When done prior to exchange, a detailed report and quote may allow for the works cost to be deducted from the sale price during exchange and completion, excluding an auction purchase.
A Structural Engineer will work closely with your builder to implement the work. With structural issues being a major safety factor, any structural engineer should be suitably qualified (a member of MICE, MCABE or MIStructE, for example) and should also have personal indemnity insurance. I am no expert in structural matters and have no qualifications in the field, but I have found from personal experience that the more refurbishments I complete, the easier it is to understand structural issues.
These are not dealbreakers or as difficult or as costly to resolve as you may think. I once feared taking on any building with structural issues, but now the opposite is the case; as long as my purchase price reflects the costs of any works to remedy, I have no issues, even if a building has significant structural issues. If you get a structural report and you have an engineer attend, do not be afraid to knock plaster off the wall or to take up floorboards before they arrive so that they can get a better look. Otherwise, if they miss something, they will say they were unable to view those hidden issues which, in their terms and conditions, will absolve them of any liability.
Structural issues can be the result of many different factors. It is important to understand that these can sometimes be historic in nature and may actually be no longer active or a result of natural thermal movement throughout the year. If you break the building down to its simplest elements, you can start to understand how and why issues occur.
This is not an exhaustive list, but a starting point of the more common issues that you can apply to most buildings:
Has something affected the foundations to cause structural issues?
Primarily, poor or damaged underground drainage is often the cause of structural movement about the base. This can be checked by a simple CCTV survey report. Another simple check you can undertake is to establish whether any large trees are in close proximity or if any have been removed recently. Tree root action can have minor to severe effects on the foundations. If the drainage and trees check out okay, then a simple trial dig to establish the type and adequacy of the foundations and surrounding soils can be done.
Has something affected the above-ground structure (walls and floors) to cause structural issues?
Often, poor-quality workmanship or works not carried out in accordance with building regulations can manifest as issues within the building fabric. If you think modification or refurbishment works have been carried out, enquire to see if they have been done with building control approval.
Has something affected the roof to cause structural issues?
Although not as common, it is not unheard of for a defect in the roof to cause structural movement of the building fabric below. If loft access is available, then take the opportunity to investigate the inside, checking for anything obvious, such as damaged timbers or signs of water ingress, which could contribute to structural defects. Again, externally have a look at the roof to ensure no significant sagging has occurred. From the above, if you see cracks within the walls then you may be concerned about the structural integrity. There is no need to panic, as some of these cracks may be relatively easily repaired with a ‘crack stitching kit’, a common remedy which can repair vertical and stepped cracks. If it is more serious, then it may need to be underpinned, which is more costly. It is important to establish the root cause and to then take professional advice. Generally speaking - and this a general comment based on my individual experience only - I find the wider the crack or the bigger the bulge on the wall, the more they cost to repair, and the more serious the issue will be. I find common, smaller cracks in walls are actually less costly to repair than large bulges, assuming you do not have an underlying issue with subsidence which needs attention.
Obviously all buildings are different, and please note that this is not any attempt to give structural advice. The comments above are based on my experience only and may not relate to any structural issues you may encounter, so you will need to seek your own independent, qualified and insured structural engineer. Always ask for details of fees and any payment schedules in advance of instructing.
Top tip: For a more accurate structural report, remove floorboards, plaster and anything impacting the surveyor seeing any defects. Otherwise, if further structural issues are discovered later (which has happened to me) the engineer won’t take responsibility because they “didn’t have proper viewing access.”
ARCHITECTS - FIND THE RIGHT SPECIALIST FOR YOUR PROJECT
As with mortgage brokers, I like to find experienced specialists who have a lot of experience in the particular sector or style that I am after. I often surf planning applications from my local council to see the standard and style of architects, and it is a good place to view real applications and find the right architect.
Most disputes between architect and client arise out of poor communication, so make sure the budget and your architect’s responsibilities are set out in writing. Be clear on what you want the architect to do, providing clear instructions on whether you want them to produce designs and/or working drawings, apply for planning and/or undertake project management. If you want the latter, ask the architect to explain what they mean by project management. A good architect will know and stick to your budget and will think carefully about the cost implications of their designs, rather than hitting you with an unrealistic scheme that is too expensive to build.
Before instructing, ask for details of fees and any payment schedules and get a detailed quote that outlines the scope of work in writing.
Top tip: Check out architects’ previous work on your local council planning portal.
QUANTITY SURVEYORS – THE “RISK REDUCERS’’ AND “FEASIBILITY EXPERTS”
Imagine you could meet someone who could teach you everything you ever needed to know about most aspects of construction. Well, that’s exactly what your QS can do. For any work over £15,000, I never start any project without the services of a QS. They are the accountants, project managers and risk managers, material and regulations experts, and procurement experts, all rolled into one person. You will learn so much about construction from your QS, and it’s worth the education alone to instruct one!
Like a good solicitor, a good QS can make a big difference to your approach and success. These key professionals are experts in costing projects and construction management. They are trained to study drawings and specifications to provide surprisingly accurate local labour and work costs, and more importantly, to accurately calculate the quantities of materials for the build. This is commonly known as the Schedule of Works, which incorporates the Bill of Quantities, and I strongly urge you not to start any project without a BOQ.
A good QS adds value by ensuring you pay a fair and reasonable cost for the quality (the going rate), which they will correctly estimate and specify. They will reduce construction risks and will often save you far in excess of their fee by keeping tight control of costs and significantly reducing the risk of cost overruns and disputes between you and your builder. They will help you with contract drafting, usually from the Joint Contracts Tribunal (JCT), and feasibility and help you to complete on time and on budget. They will benchmark project costs from the Building Cost Information Service to ensure you pay the going local rate and no more. With a thorough understanding of Building Regulations, they will also ensure that the project passes Building Control.
The QS can be the difference between a successful project and a disaster. They significantly reduce the risk element and reduce the chances of contractual disagreements. Within any design, a good QS will be able to offer cost savings; this could be from a design change or a specification change. Depending on the size of the project, the QS can produce a tender document, which will allow for a competitive tender to achieve best cost, complete with quality weighing. Tender documents allow for tenders to be reviewed and for differences between prices to be compared.
It never ceases to amaze me how many projects I get offered to partner or invest in by others, but they have not professionally costed the works. Investing or getting involved in projects without a QS is effectively gambling and this lack of detail paints a picture of the credibility of the persons offering any opportunity, so beware. Do not partner or invest in any joint venture which has not been costed by a QS. In my view, the mere fact it has not been done is a sign you should walk away.
To summarise, the QS is a key player in your team and will be the difference between a successful project and a disaster. They significantly reduce the risk element and the chances of any contractual disagreements. Always ask for details of fees and any payment schedules in advance of instructing.
Top tip: Employ a QS before a meeting with, or speaking to, any builder or even buying the property, as they can provide accurate feasibility costs. I strongly advise not to consider any development work until you’ve spoken to a QS.
PLANNING CONSULTANTS
Do not rely on your architect for planning advice! I always discuss even minor projects with a planning consultant, just to be sure I am doing the right thing regarding planning legislation, and to confirm my options regarding Permitted Development rights in my particular case. Securing permission is not just about the technicalities of an application; you will also need to know how to navigate the politics of planning and see the bigger picture.
Consultants have an expert knowledge of regulations and an understanding of the intricate rules, and they will help you through the red tape of the planning process. Many planners have a specialism, so it is always good to ask what experience they have. Ideally, they should have good local knowledge.
Your local planning portal will show you real applications, so you can see who the main planners are in your area and get a view of their work. Many applications contain a ‘Planning Statement’ done on behalf of the client and I always look at the details in this statement because it gives you an idea of how much effort they put into their applications. Always ask for details of fees and any payment schedules in advance of instructing.
Top tip: Attend public local planning committee meetings for a real insight and free education into your local planning world and the key players involved.
BUILDING CONTROL OFFICERS
Building Control is separate to any planning matters. You need BC certificates for lenders or for selling. Building regulation approval makes sure you reach certain safety and energy efficiency standards and gives you the certificates of compliance you need when you want to raise finance or to sell your building. Minor work will not require a BC certification unless there are: structural alterations to a building; alteration to the means of escape; underpinning of foundations; alterations to the drainage system; or alterations to cavity walls.
Building control officers work closely with architects, designers, builders and engineers. They ensure new buildings, alterations, installations and extensions meet the standards of safety, sustainability, accessibility and design. They have final sign-off on any dangerous structures and will advise on how to make them safe and compliant with building regulations. You can employ a building control officer privately, or you can nominate a planning officer from your local planning department. I have used both in the past and I have had no issues or bad experiences with the local council officer, although more recently, I have been using the building control officer who works with my builder. Always ask for details of fees and any payment schedules in advance of instructing.
Top tip: Builders often have an existing relationship with a building control company. I either tend to go with their choice or I use someone recommended by my QS.
FIRE RISK ASSESSORS
From 1st October 2006, The Regulatory Reform (Fire Safety) Order 2005 requires the Responsible Person (RP) of any non-domestic premises to carry out a fire risk assessment, including measures to reduce or eliminate the risk of fire, and to identify persons at risk.
Lenders are increasingly asking for a fire safety assessment to be carried out. I was asked for this by Hampshire Trust Bank recently for a remortgage from bridging finance, although other lenders did not require this. I employed a Fire Risk Assessor, but you can do it yourself with the RLA template:
https://www.rla.org.uk/landlord/documents/fire_risk_assessment/fra_form.shtml
Where there are five or more employees, a record must be kept of significant findings. The definition of a Responsible Person is contained in the above Order.
This is a useful guide:
https://www.dsfire.gov.uk/YourSafety/SafetyAtWorkandotherplaces/Adviceforlandlordsandlettingagents/documents/Firesafetyadvicetolandlords.pdf
Top tip: You can do your own assessment with the RLA Fire Risk Assessment template, found in the ‘Documents and Guides’ section on the RLA website.
ACCOUNTANTS AND TAX
The most important point about tax is to always file your personal and company tax returns on time and never, ever be late. If it’s a company, then file your tax return and also your confirmation statement on time. If you are late with any of these, especially more than once, you are more likely to attract attention. Companies House introduced the annual confirmation statement in 2016. This statement exists to make sure the details Companies House have about your company are up to date.
With regards to finding the right professionals, I advise you to find a property specialist who has many clients in the property business. Do not file your own tax return, but always use an accountant, as using an accredited service helps boost your trustworthiness in the eyes of HMRC. For a larger business or more complicated structures, you may need a separate tax advisor and your accountant will usually put you in contact with such a person. If not, don’t be afraid to seek separate tax advice from your own accountant, as they may not have the right specialist property experience. It’s not enough to just make an accurate tax return; you need to be aware of the potential consequences of being late, so take your tax and filing deadline responsibilities seriously.
Your figures should be consistent and in line with industry standards. A company with below average or inconsistent margins and years of unprofitability can attract attention. The new digitised system is designed to help businesses in being more accurate in reporting sales and expenses, but this increased computing power can better analyse anomalies and easily compare a company’s financial results and key metrics with others in the same industry.
Some of the common reasons for a tax investigation are listed in the articles below:
https://www.georgehay.co.uk/blogs/2018/0 8/triggers-tax-investigation/
https://www.ft.com/content/0640f6ac5ce9-11e7-9bc8-8055f264aa8b
Top tip: Make sure HMRC have your current address and sign up for their ‘reminder service’ so you don’t miss confirmation statement and tax return deadlines. Don’t leave this job to your accountant, as they won’t care less if you file late.
MAINTENANCE TEAM AND PAYING PEOPLE
If your existing workmen or contractors seem uninterested or difficult to contact, have you ever wondered why? When you have an emergency call-out over a bank holiday or late at night, you need the goodwill of your contractors, and the easiest way to achieve this is to treat them well and pay them promptly. This may sound obvious to some, but it always surprises me how many feel it is okay to delay paying suppliers, and some even think this is normal practice. And then they wonder why the suppliers do not answer their phone when they need them.
By far the best way to encourage great service and to build positive working relationships is to pay suppliers promptly. This has served me well and allows me to get speedy replies to queries, and it often leads to my professional team going “above and beyond” as a result of a good working relationship. I find the whole dynamic between you and your professional changes for the better when you pay even sooner than the payment due date. I always pay invoices in a matter of a few days, not weeks.
This is an article written on 20th February 2019 by HASpod regarding CDM:
When Does CDM 2015 Apply?
The CDM regulations apply to every construction project. Yes, every construction project. Even construction work that you might not consider to be a project, like maintenance activities. It doesn’t matter how long (or short) the duration of the work is. How big (or small) the task. If it is construction work, then CDM applies.
And the term construction project is far-reaching. The definition of construction work under CDM covers every type of construction activity you could think of. It includes preparation for a structure, including site clearance and ground works, the construction, alteration, conversion, fitting out, commissioning, renovation, repair, upkeep, redecoration or other maintenance, installation of services, and demolition and dismantling of a structure.
The CDM regulations have gone through several revisions since they were first introduced in 1994.
The current version (CDM 2015) introduced some changes. We no longer have a CDM coordinator, and you now need to appoint a principal designer (in addition to the principal contractor).
CDM 2015 applies to all construction projects, just like CDM 2007 did.
That’s right, every construction project. It’s been mentioned already, but I’m really emphasising this point because it’s true even more so under CDM 2015.
Although under CDM 2007, duties applied to every project, some projects (non-notifiable and domestic) were exempt from many of the CDM requirements. However, this is no longer the case under CDM 2015.
Under CDM 2015, even if your project is non-notifiable, you must still comply with all the CDM duties (other than the duty to notify the HSE). Although every construction project needs to comply with CDM, not every project needs to be notified to the HSE.
HASpod (2019)
