There’s a long-running joke that property can be divided into three classes: prime, secondary and the stuff that Lloyds and RBS own. Like all good one-liners, it has the ring of truth.
What’s more, it hints, rightly, that the dividing lines within property need to be redrawn.
Observers line up in EG this week to heap disdain on these traditional terms of distinction. “Prime, secondary and tertiary are all generic terms and not really all that useful,” says PwC’s Simon Hardwick. Others draw lines between good and bad secondary. Legal & General’s Bill Hughes suggests viewing “secondary property with potential” as a distinct class.
All classifications are necessarily subjective, no matter how clear cut some will claim they are. But undeniably in sub-dividing secondary we are moving ever deeper into grey areas.
Last month IPD showed that certain types of good secondary outperformed prime in 2012.
And with more and more analysts and investors citing secondary as a major investment theme in 2012, care and consideration is vital. More thoughtful divisions, though imperfect, will be of value.
“For some reason,” Sir Terry Farrell tells EG this week, “the public see architects as good and developers as bad. I don’t think that’s fair.” The master masterplanner is right (p62): the industry still has an image problem. Blame Hollywood, blame reality TV, blame developers themselves.
A resi player made a similar point to me this week in explaining why institutional investors are yet to be persuaded to take a more active interest in the private rented sector.
“Institutional investors are boring,” he said. “And we are still seen as being a bit spivvy. We need to be more boring if we are going to pique their interest.”
There is no quick fix to this image problem. And it’s not necessarily an issue at a time when politicians, bankers and, ahem, journalists are held in even lower regard. But it is one to ponder as it could be a factor in a recovering economy. Answers on a postcard, an e-mail or a tweet (@DamianWild) at your convenience.
A telling line in Helical Bar’s interim management statement this week: “We have no exposure to HMV, Jessops, Comet or Republic and only one Blockbuster unit (£51,500 pa in Corby).” This could become standard disclosure over the coming months.
The line between tax avoidance (legitimate, legal) and tax evasion (abhorrent, illegal) has blurred in recent years as morality has become a live issue, fiscally speaking. Starbucks and Amazon have been the headline bad boys, with celebrities like Jimmy Carr not far behind. In many instances a swift mea culpa has followed, with a cheque larger than might previously have been the case sent to the taxman.
So far at least, empty rates avoidance has gone the other way. An increasing number of taxpayers have found ever more ingenious ways to dodge the tax. Figures covering all of England’s 326 councils show £2.7bn in rate relief is expected in 2013/14 up from £2bn in 2011/12 and £2.5bn this financial year. A high court ruling last year added legitimacy to the practice: Makro’s use of just 0.2% of the floorspace of a 140,000 sq ft shed in Rowleys Green, Coventry, was enough to trigger an empty rate grace period.
There are two things the government might do about this.
Ministers may shrug their shoulders, admit the policy is a brake on growth and raises little money for the exchequer once the public sector’s own empty rates bills are taken into consideration. As a result they may scrap the tax.
Or they may decide the situation is getting out of hand, a clampdown is what’s needed and avoiding all taxes artificially – empty rates included – is a Bad Thing That Needs to Stop.
We can hope for the former, but should prepare for the latter.
