The Data behind the Commonwealth Games

The Commonwealth Games is now well underway in Glasgow with 4,500 athletes taking part and many thousands of anticipated visitors and spectators.  In the build-up to the Games, the significant investment, redevelopment and regeneration of the city has been particularly interesting to monitor. 

The impressive Athletes Village has been built over 35 hectares, which is alongside the Emirates Stadium – a state of the art facility that opened in 2012, with a seating capacity of over 5,000 spectators.  The Sir Chris Hoy Velodrome has also been developed alongside the stadium, while the SECC Precinct, which is just short of 2 miles from Glasgow’s centre, forms the largest single venue of the Glasgow 2014 Commonwealth Games.

Having run some analysis through our Promap and Envirocheck systems, it has provided us with some great insight into the history of Glasgow and, in particular, the areas that have been subject to recent redevelopment in readiness for the Games.  

When looking at all of Glasgow’s venues, the first thing that we quickly identified is that there are over 4,800 instances of historic land use within the immediate vicinities.

The SECC Precinct has 36 instances of potentially contaminative historic land use within a mile of the site just from the earliest map alone, all of which are of a diverse nature: from transport manufacturing & repair, saw-milling, metal casting, through to cargo handling, railways and even the site of a former cemetery.

Historic maps also show that the SECC Precinct has been built on the site of the old Queen’s Dock. With the decline in shipping traffic, the dock became redundant and was filled in with rubble from the demolition of St Enoch station in the late 1970’s.

The redevelopment of the various sites in and around Glasgow really goes to show that past land use shouldn't limit or restrict future use or development.  By accessing the right data, it provides a detailed picture into the past use of the land, meaning the correct remediation can take place to enable future progress. 

With a current emphasis on building more residential properties across the UK – including re-purposing and utilising unused brownfield land or sites – it just goes to show that understanding the past use of the land can help transform an area for today and also for future generations to come. 

Mandatory energy surveys for all large businesses

The Government has recently issued its response to last year's consultation on the Energy Savings Opportunity Scheme (ESOS), together with regulations to enact the scheme and guidance for participants.  ESOS is being introduced as a result of Article 8(4) of the EU Energy Efficiency Directive which requires all non-SMEs to conduct energy audits by 5 December 2015 and every four years thereafter.  The official estimate, based on affected businesses reducing their energy consumption by a modest 0.7%, is that the net benefit to the UK over 16 years will be £1.6 billion.

Who is affected

ESOS applies to the private sector only.  Your business will have to comply if it is an undertaking carrying out business activity in the UK and at least one of the following applies:

•       It has 250 or more staff;
•       It has fewer than 250 staff but has an annual turnover exceeding €50m and a balance sheet exceeding €43m; or
•       It is part of a corporate group which includes an undertaking that meets either of the above criteria.

The timetable

ESOS runs in four year phases - any business/group that meets the above criteria on the qualification date for each phase has to participate in that phase.  The qualification date for Phase 1 is 31 December this year and participants have until fulfil their obligations by 5 December 2015.   All private sector organisations should therefore consider their size and group structure as at the end of this year and then, if they fall within the scope of ESOS, take steps to comply with the new requirements by the deadline.

ESOS obligations

There are four main obligations.  In each phase ESOS participants must:

• ·         Measure all their energy use for a continuous twelve month period;
• ·         Conduct audits covering all their main areas of energy consumption;
• ·         Report the fact that they have complied with the above by the compliance date; and
• ·         Maintain an ESOS evidence pack providing a full record of their compliance.

So far as it is reasonably practicable, an energy audit report must provide recommendations for any cost-effective energy efficiency measures that can be undertaken, and quantify the estimated costs

  

and benefits. There is no compulsion on the business to implement the recommendations but a director or equivalent has to confirm that they have been considered.

ESOS audits have to be (at the least) reviewed by a lead assessor whose name appears on an approved register indicating that he/she is suitably qualified and experienced.  An in-house lead assessor can be used, if available.  The BSI has just published a Publicly Available Specification on the competence of lead energy assessors.

There are alternative routes to compliance which will be relevant, in some circumstances, for businesses that operate certified energy management systems, or have had Green Deal assessments carried out, or Display Energy Certificates issued.  Also, ESOS-compliant audits that have been conducted since 6 December 2011 will count towards the Phase 1 requirements, so it may not be necessary to audit all of a business's main areas of energy consumption between now and December 2015.

Similarities with CRC

Many of the rules of ESOS bear some similarity with the CRC Energy Efficiency Scheme, which also runs in phases with a qualification date for each phase, but there are important differences.  This is particularly the case in the detailed rules concerning joint ventures, trusts, foreign-owned companies and group disaggregation.  Two important differences that will affect many ESOS participants are that transport energy usage has to be included, but landlords will be pleased to hear that they are not responsible under ESOS for metered supplies to their tenants. 

What this means

The Government expects that 9,400 large enterprises will have to comply with ESOS.  Many of these will already be carrying out regular energy audits across the key areas of their business, recognising that improving energy efficiency makes financial sense even in sectors that are not energy-intensive.  For these companies, the burden of compliance should not be too great.  The remainder have until early December next year to do what is necessary.  A good first step is to determine the boundary of the ESOS participant organisation by examining its corporate structure and then gather energy data for a 12 month period, remembering that the rules are different from those applying to the CRC scheme.  A tool such as Sustainability Sure is invaluable for such a task, and it will facilitate sharing the data with the ESOS assessor when the time comes too. 

Find out more about Sustainability Sure by contacting 

+44 (0)844 245 9958 or email sustainabilitysure@landmark.co.uk.

Landmark provides Oxford Brookes’ students with free access to Property, Land and Environmental Risk data and systems

Free access provided to MSc Real Estate students for final year project

We're supporting MSc Real Estate students from Oxford Brookes University, by providing free access to our Promap and Envirocheck digital mapping, environmental due diligence and data intelligence tools. Free access has been provided for students’ final development project of their Masters’ degree course.

The capstone project requires the students to complete a 14,000-word project that proves their knowledge of the investment, development and construction processes of commercial land and buildings. A major element of the Masters’ degree project is to produce a detailed feasibility study for a development in an actual location of the student’s choosing.

Twelve students have chosen to focus on development and have selected areas including London, Oxford, Aylesbury and Bristol.  They will use the Promap and Envirocheck services to support their research into the area in question: analysing historical mapping data, as well as a range of other datasets to determine potential risks such as flooding or land contamination, through to geological factors and past land use.

Nick French, Professor in Real Estate at Oxford Brookes University commented: “Providing our MSc students with access to Landmark’s Promap and Envirocheck offers them the opportunity to use tools that are widely adopted in the commercial sector to undertake feasibility and related environmental, land and property development studies.  It’s been great to have the support of Landmark in providing students with access to these services, which will ultimately enable them to prepare highly detailed feasibility reports as part of their final project.”

Carole Ankers, Product Development Director at Landmark Information Group, added: “Our team has provided the students with detailed tuition for Promap and Envirocheck so they are fully prepared in how to make the most from the services.   Landmark has also provided each student with a financial ‘data’ allocation, which can be used to purchase more detailed, in-depth data from both services.   We are proud to be supporting the students as they complete their Masters degrees, and believe it will also help them as they move into their future professions.”

Planning - positive or negative?

Planning can sometimes seem to be a subjective topic, but changes to your local environment could positively or negatively impact your quality of life and value of your property.

The planning system in this country is in a constant state of flux and the current government introduced the Localism Act in November 2011 with the aim of devolving more decision making powers from Central Government back into the hands of individuals, communities and councils.  The Act covers a wide range of issues, but has had the effect of introducing a number of new concepts and procedures into the planning system which prospective purchasers and developers of land need to be aware of.  Equally, lenders and financial institutions will want to see a good and marketable title to property in case they need to enforce their security.  Where there is any planning risk and potential liabilities, the current market conditions mean that lenders tend towards cautiousness. 

Simultaneously there are regional issues in some parts of the country relating to energy and infrastructure.  For example, the proposed High Speed 2 (HS2) rail project would travel through the countryside affecting a number of properties and raising queries about compulsory purchase and potential impacts on value.  Similarly, there have been contentious renewable energy projects, such as solar farms, wind turbines and the possibility of “fracking” development which all prove controversial to local communities. 

Every transaction is different and the requirement of purchasers and their solicitors will also vary according to the circumstances and local planning policies.  The Government has used these initiatives to streamline planning policy in an attempt to stimulate growth.  There have also been changes to legislation, not only via the Localism Act but also the Growth and Infrastructure Act 2013 and various changes to regulations to allow more flexibility within the planning system.  For example, developers can now seek the re-negotiation or discharge of affordable housing planning obligations in Section 106 Agreements in order to make development viable.  Under the previous legislation, five years needed to pass before a formal request to vary planning obligations could be made.

There are also regulations which affect permitted development rights which now circumvent the need to seek specific planning consent for certain changes, although sometimes the fine print will still need to be scrutinised to examine effects on issues including highways, flooding and contaminated land. 

The keystone of the Government’s current planning policy guidance is the National Planning Policy Framework (NPPF) which was published in March 2012 and supplemented recently by an online resource known as the Planning Practice Guidance (PPG). 

The law and guidance is now underwritten by an “inherent presumption in favour of sustainable development” but taken together all of the above changes mean that there may be radical differences to communities brought about by the planning system which can impact on residents very swiftly, affecting quality of life and the value of property.  It is therefore imperative to make the appropriate searches to understand the impact of planning applications on a local area, in conjunction with the local planning policies and the changes to national law and guidance. Taking one specific example, the number of new homes that have been granted planning permission increased by 25% in England in the 12 months following the publication of the NPPF.

Potential purchasers therefore need to consider not only what development has been granted approval, but what applications may also be pending and the prospect of future development as allocated in local planning policy documents. Many local plans are still in the draft stage and the Government has been clear that the NPPF and the presumption in favour of sustainable development takes precedence until councils have finalised these plans. 

Making clients aware of local planning activity must be a fundamental and essential part of every due diligence process, whether this is conducted on behalf of a potential developer, prospective purchaser or a lending institution.  The subtleties of the planning system are such that, notwithstanding the fact that there is an increasing amount of information available freely on the internet and online, expert knowledge is needed to assess and to identify the relevant issues.  Local information about amenities and demographic trends may also be essential to ensure that property purchasers are buying in full knowledge of the property, likely development in the area and any existing planning constraints.

Although the above is intended as an overview of the issues which surround the planning system in this country it is clear that specific and detailed advice may be required where there is any doubt about the issues which may arise or the means of identifying potential issues.  

Author: David Brammer, Partner and Head of Planning at SGH Martineau LLP

Managing Climate Risks to Wellbeing and the Economy

The Committee on Climate Change (CCC), which is the statutory adviser to the government regarding the effects of global warming on the UK, has released a detailed report that looks at the current approach to flood defences and protection.

The “Managing Climate Risks to Wellbeing and the Economy” report provides a range of recommendations and views, which the government is likely to respond to over the coming weeks.

Some of the findings in the report include:

·         Floods such as those witnessed last winter in England are likely to be repeated as houses continue to be built on flood plains, which creates additional risks

·      Three-quarters of the UK’s flood defences are being inadequately maintained due to budget cuts

·      The chance of a catastrophic flood happening in England within the next two decades, causing in excess of £10 billion in damage is around 10%

·      Planning authorities are responsible for enforcing planning conditions, but there is no systematic approach to recording checks and enforcement where it takes place.

·      The standard conveyancing searches conducted as part of a house purchase would not ordinarily establish whether a home in a flood risk area was built against the Environment Agency’s advice

·      Many new housing developments are connected to existing sewerage systems, without analysing the impact this may have, creating further risk of surface water flooding if sewerage systems become overwhelmed

·      The UK’s infrastructure providers, such as rail, energy, water and other similar organisations, were often not thoroughly prepared for the impact severe weather may have on their services. Climate change must be accounted for in their forward planning

·      The proportion of infrastructure exposed to flooding from rivers and the sea is projected to increase for all sectors by the 2050s. For some sectors there could potentially be a near doubling of the number of assets exposed from current levels

·       For every £1 spent on flood defences, an estimated £8 is saved (from insurance and the overall damage costs to homes and businesses).

Here at Landmark, we can provide detailed analysis on all forms of flood risk: fluvial (river), pluvial (surface water), coastal or tidal and groundwater.  We work in partnership with infrastructure providers, conveyancers, developers, town planners, surveyors, Local Authorities and more to provide bespoke flood analysis and maps that help assess the overall risk posed at a given location, site or postcode.

With extreme weather conditions threatening to become ever more prevalent, plus

Environment Agency data illustrating that overall flood risk has increased over the last decade, the ability to accurately assess associated risk is increasingly important in first stage prevention.

It’s green week at Landmark!

As a group we are being encouraged to raise awareness of green topics to help improve our approach to sustainability and the environment.

Landmark’s Exeter offices are located on an Industrial Estate, not the first place you’d think of as being particularly green. However, a quick walk around will have you running into all sorts of wildlife hiding among the verdant roadsides, dotted between warehouses and office blocks.

This time of year is a prime period for native and migratory butterfly and moth species, the hedgerows around Landmark’s offices are full of bramble flowers, thistles and flowering buddleia and the balmy temperatures are ideal for emerging butterflies.

As part of a concerted effort to conserve and preserve UK butterflies we can all contribute by signing up to the big butterfly count.

http://www.bigbutterflycount.org/

This kicks off this Friday (18^th July) and runs for just over a month.

Last year’s count has provided the projects most successful results to date and mobile technology means that each year’s survey is more and more accessible.

It’s a good excuse to get out in the sun and spend 15 minutes chasing butterflies, just ignore the strange looks you may receive as you peer into a hedge, it’s worth it if you catch a glimpse of a rare or endangered species.

You don’t need a reason to do this beyond the simple pleasure of interacting with your environment but the count itself is hugely important as a conservation project and, much to our pleasure, emphasises the need for good data.

For more information on butterfly conservation please visit http://butterfly-conservation.org/

And if you want to find out where to go to spot some butterflies Landmark can provide details of….

• 24 butterfly farms from our Points of Interest dataset.
• Over 6,000 sites of special scientific interest, many of which are home to rare and protected butterfly and moth species.

A newly emerged Peacock butterfly taking a breather

A large White, snapped on the Exe estuary

Daniel Lewis Carter

Data Information Co-Ordinator

Landmark Information Group

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Recycling old football pitches

In honour of the 2014 World Cup final, BBC’s Countryfile team recently met the locals who have turned the old Swansea football pitch, Vetch Field, into a haven of growing and community spirit.

A year long project that started in September 2011, commissioned by Adain Avion, Cultural Olympiad Wales, Vetch Field was a defunct sports and music venue has been converted into a community garden/allotment. 

Over 100 Beds fill the 2,500 metre sq. site, where members of the community, families, organisations, churches, retirement centres and charities can grow their own food. The site also contains a kitchen, numerous communal beds and polytunnels. The gardeners care for the site, learn bee keeping, and cob oven building skills as well as keeping chickens and preparing food in the kitchen.

The garden has become a centre of community, where cultures, neighbours and families meet and tend their plots, swap recipes and share meals.

As part of our DMGT Green Week, we took this opportunity to look into our data. Did you know…

• We hold over 300 planning application features relating to the development of allotments
• Our local plan data identifies over 2,100 land allocations for allotments, existing and proposed
• OS Mastermaps identify almost 18,000 allotments across Great Britain
• Our Points of Interest Data shows:
• Over 2,500 points of interest that detail horticultural services
• Over 7,800 points of interest that detail gardening, landscaping and tree surgery services
• Over 1,800 community projects and networks

Sunshine Saturday: Farming at Landmark

It turns out that only having five days in DMGT Green Week is just not enough so we had to create an extra day called Sunshine Saturday where we can take a look at the Farmers in our group - the Product Managers.

There are many dimensions to the life of our Farmer: the first of which is the shepherd. Like many organisations we have a flock of existing products out there in the field; some of them are young and need to be watched over to ensure they don't get into difficulties and some are older and may be in need of TLC. The shepherd's job is to keep an eye on all the livestock; protected from extreme weather and keep safe from predators. Our existing products need a looking after too to ensure they are kept healthy and ahead of the competition.

As well as looking after existing animals, farmers also need to ensure that future demand can be met. This involves sowing the seeds of next year's crops; nurturing them to ensure that they are properly watered, kept free from weeds and pests and given adequate nutrition. Product Managers have a similar job to ensure that we have new products that may start off as unpromising seedlings but can grow into healthy new and profitable products that provide new value to our customers.

Many farmers now make use of Farmers' Markets where they can sell their produce directly to the consumers. There are benefits to this on both sides as for the consumer, products are fresher and often sourced locally and for the farmer there is the opportunity to make a higher margin by having fewer intermediaries between them and the consumer. Product Managers seek out opportunities in markets adjacent to our existing ones and those where we can provide opportunities further along the workflow than our traditional products take us.

Like all successful farmers a Product Manager needs to look for ways to diversify. Farmers will look to exploit opportunities in new markets, for example, crops suitable for bio-fuels; organic crops or non-native animals such as Ostrich and Alpaca. Many farmers have turned to the tourist trade to offer farm holidays, Bed and Breakfast or campsite as new ways to maximise the resources they have available. Identifying opportunities in related areas can provide excellent new sources of revenue.

 

Jonathan Eversett
Senior Business Analyst

Landmark Information Group supports The Royal National Lifeboat Institution

Landmark Information Group entered two teams in to The Royal National Lifeboat Institution’s, Northampton branch, annual golf day on Tuesday 17th June at Northampton Golf Club.

Team ‘Landmark/NLS’ was made up of members of Northampton Law Society (NLS), Tom Kings (Tollers Solicitors), Bryan Hardman (Stetmans Solicitors), David Browne, (Hewitsons) and Phil Smith (Administrator – NLS)

Team ‘Landmark 1’, comprised of Paul Moyses and Stuart Whalley (IndexPI), Martin John (PIE) and the intrepid and talented Rob Phillipson (Head of Sales – Landmark Information Group).

In total there were seventeen 4-ball teams that took part, both Onesearch Direct and Shoosmiths Solicitors also entered teams, with players coming from as far afield as Ely, Birmingham and Bristol, as well as more locally from Kettering and Northampton.

The weather was fantastic and the teams were able to complete their rounds of the Harlestone course in glorious sunshine before gathering in the clubhouse for dinner and prize-giving.

The winning team was Landmark NLS with a score of 82 points which was achieved after a slow start and a points haul of 16 points on the final four holes.

The winning team members each received a Lifeboats medal and their prize from RNLI regional fundraising manager Terry James.

In addition, Tom Kings also picked up the prize for being nearest to the pin on the 9^th hole.

Jeff Sutherland-Kay, chair of the RNLI’s Northampton branch, said “We have been running an annual golf day since 2006 and the wonderful support of a number of commercial sponsors makes it all possible. The golfers have a great day out playing this lovely course and support the RNLI at the same time. So everyone is a winner.”

The RNLI is a charity and is funded by voluntary donations, with approximately a third coming from fundraising activities such as this years’ Golf Day which raised over £2100.

e-billing by numbers (and saving the planet!)

As part of our Corporate Responsibility programme and to support our DMGT Group goal to reduce our carbon footprint by 10% by 2015, this week (14^th to 18^th July 2014) sees the launch of ‘Green Week’.  The aim is to raise awareness of sustainability and climate change related topics, as well as to educate us all on how we can ‘be green’.

DMGT has successfully cut its carbon footprint by 25% over the last six years and we at Landmark have played an important part in this.  Initiatives such as installing solar panels on our roof, our car share scheme, travel plan and cycle-to-work policies, plus using video conferencing facilities have all worked towards reducing our CO₂ emissions and environmental impact. 

Here, Jenny Millman, Credit Control Manager at Landmark, talks about the recent programme of work that saw the transfer of our customer invoicing to e-billing.

“Our Promap team got the ball rolling.  A dedicated project team (spread throughout the business including sales and marketing, IT Dev, customer services and finance) was assembled and tasked with the implementation of electronic billing for Promap customers.

The following six months involved the gathering of customer requirements, project planning, data cleansing and a “Go Green” campaign promoting sign-up. On average, we now send a total of 18,000 Promap invoices and statements per month by email.

90% of all billing is paperless, which means prompt delivery of invoices to customers on day one, instead of second class mail delays, resulting in quicker payment for us and an improved service for our customers. We include a Worldpay link with our invoices, so that customers can pay on-line, without having to post cheques or remittance details to us, thus making an even greater resource saving.

Following on from the success with Promap, and in response to customer feedback, we released Landmark e-billing for Legal and Environmental reports in October 2012. We now send a further 7,000 invoices and statements electronically each month.

 

In October 2013, e-billing also went live for our sister company Argyll Environmental Ltd.

This project means that we now print and despatch around 400,000 fewer pieces of paper every year and the cost savings so far total more than £0.5million.  e-billing is a great example of saving money and saving the planet!”

OS Terrain® 5 and Terrain® 50 data now available on Promap

Data provides small and mid-scale height data for landscape and infrastructure

We've introduced Ordnance Survey’s Terrain® 5 and Terrain® 50 height datasets in our Promap digital mapping and data tool.  The datasets provide national coverage and enable land, property and environmental professionals to access detailed modelling of significant landscape and infrastructure features.

The OS Terrain® data is available in a range of 2D and 3D formats to suit different GIS and CAD applications. It is ideal for a range of uses including Line of Sight planning, Right to Light analysis, landscape visualisation and fly-through sequences, planning and development applications, wind/solar farm location planning, environmental and geological analysis and flood/weather modelling and associated risk assessment.

The Terrain® 5 and Terrain® 50 products are captured from the same source data that is used to produce other OS mapping and data products.  OS Terrain® 5 is a mid-scale height dataset that includes detailed modelling of significant landscape and infrastructure features such as road, rail, quarries and lakes.  OS Terrain® 50 is a small-scale height dataset that is ideally suited to landscape visualisation and analysis over large areas. Both are designed to be interoperable with other OS digital datasets such as MasterMap® Topography Layer and VectorMap® Local.

Carole Ankers, Product Development Director at Landmark Information Group said: “Introducing the OS Terrain® 5 and Terrain® 50 height datasets on Promap provides our customers with the ability to analyse height and contours of the UK’s contours, landscape and infrastructure.  It is ideal for a wide range of uses, from planning applications through to environmental analysis and much more, and is available for rapid data delivery and in a wide range of ready-to-use formats.”

Both datasets are available as a set of contours, along with spot heights and mean high and low watermarks, as well as a gridded Digital Terrain Model (DTM) representing the bare ground surface. The DTM product is also available as a 3D PDF that allows visualisation of the bare earth model without the need for additional processing or specialist software.

For more information visit:  http://www.promap.co.uk/maps-and-data/height-data/os-terrain

DMGT Green Week: 14-18 July 2014

This week sees the launch of DMGT Green Week, which aims to support our Group goal to reduce carbon footprint by 10% by 2015.  The week is a group-wide initiative and is a reminder to us all of the smaller initiatives we can all do on a daily basis to ensure we operate in a sustainable and environmentally friendly manner.

The aim is to raise awareness of sustainability and climate change related topics, as well as to educate us all on how we can ‘be green’.

Green Week runs from 14^th to 18^th July and we at Landmark are embracing the week with a variety of green activities, all of which follow these daily themes:

 

The week is a great way for us all to participate in a wide-range of initiatives, and activities will include: "The Great Green Bake-off", a Green Tea Party, British Red Cross donation points to donate old or unused items, visits from Organic greengrocers & Growers Co-operatives, a Wear Green to Work Day & Wear your Wellies to Work Day, plus being mindful about switching off lights or electric points and more. 

Wish us luck in our endeavours - we will be sharing photos and updates from Green Week on our blog and Twitter feeds.

Landmark’s commitment to environmental awareness and reducing our carbon footprint has grown over the years.  It has been recognised in achieving and maintaining the ISO14001 accreditation which is well respected. Our continued pledge to reduce waste, reduce consumption and re-use or recycle is ongoing and it is thanks to our team of Landmarker’s that we have been so successful to date.

Fluvial, pluvial, tidal, or groundwater: Landmark maps all flood risk

This month, Landmark featured in a prominent Sunday Telegraph supplement that focused on flood risk and protection.

The article focused on Landmark’s introduction of the ESI National Groundwater Flood Risk Map data, which has been integrated into the flood risk reports.  This means that detailed analysis on all forms of flood – fluvial (river), pluvial (surface water), coastal or tidal and now groundwater – can now be analysed to assess the risk posed at a given property or location.

With extreme weather conditions threatening to become ever more prevalent, plus Environment Agency data illustrating that overall flood risk has increased over the last decade, the ability to accurately assess associated risk is increasingly important in first stage prevention.

At Landmark, we provide access to specialist flood data from a range of expert sources and produce bespoke flood analysis reports to clarify what level of risk is posed to a particular area of land, building site or property.

Our environmental data is exhaustive and by analysing risk rather than susceptibility, our reports provide accurate due diligence, so preventative measures or an appropriate action plan can be put in place, as needed.

To read a copy of the full supplement – click here.

All properties are equal - but some are more equal than others...

Peter Stimson, managing director – financial risk at Landmark Information Group, has written the cover article for Mortgage Finance Gazette's July edition, which suggests that lenders should look forward and review some of the new emerging risks that may impact on lending in the future. He advocates the use of a property risk score:

"With all the news around property price increases, the outlook for the mortgage industry would appear to be bright. The recession is now over and the longer-term economic outlook appears rosy. However, as we emerge from a prolonged property slump it is worth a fresh view on not only what went wrong pre-2008 but also how the market has changed since this period. Whilst a lot of the lessons of the ‘noughties’ appear to have been taken on board, we don’t believe it is simply enough to look back to past mistakes; we also need to look forward and review some of the new emerging risks, which may have a profound impact on lending in the coming years.

Inflation: The pros and cons
Historically, one of the biggest issues the UK has faced is inflation. High inflation has a lot of negative issues associated with it: it impacts productivity and competitiveness, discourages savers, and can lead to increased wage/price spirals. However, it does have one ‘positive’ particularly with regards to risk: it reduces relative debt.

In simplistic terms, if inflation is at 10 per cent and goods, services, property and wages are increasing at the same level, a 95 per cent loan-to-value will in the course of three years reduce to less than 70 per cent. For those of you who remember the house price crash of the early 1990s (post MIRAS) the reason it was so short and there was ultimately such a strong bounce back was inflation approaching 20 per cent. Great news if you are a risk manager!

A new economic reality
Inflation however, is now no longer viewed as the main issue facing the UK in at least the medium term. Whilst we now have positive economic growth, there is still a lot of spare capacity in the UK economy and ‘stagflation’ (stagnation, low inflation) is viewed by many as a far greater threat.

With wage rises (averaging currently less than 1 per cent) still falling behind very low inflation (at now under 2 per cent), there is no reason to assume that the property rises we have seen in some parts of the UK will continue for much longer.

Arguably the current rises, particularly in London and the South East, are a supply/demand rebalancing post-2008 and once this has settled down, property inflation will come back to a level linked to broad affordability. This is even more likely to occur given the recent Mortgage Market Review changes and a determination by the Bank of England to ensure that property prices aren't fuelled by increased borrowing.

The message is clear. The old economic reality is being replaced by a new economic reality and this means that from a risk perspective, you can no longer count on inflation to at least solve part of the longer-term risk equation.

The current risk and lending dilemma Stagflation presents a particular problem for mortgage lenders. Not only does it mean that asset appreciation is uncertain, it also means capital requirements (which have increased several fold for higher LTV loans in recent years) remain higher for longer. This makes higher LTV lending (anything above 75 per cent but especially 85 per cent +) very costly and therefore unattractive.
There is also the question of default and losses.

All things being equal, (based on some analysis I undertook a few years ago in a previous life), a 95 per cent loan is seven times more likely to default than a 75 per cent LTV loan. This situation is dramatically exacerbated if a property isn't appreciating or, more worryingly, is depreciating.

In short, consumer equity or more crudely, ‘skin in the game’ really matters.Given all of the above, it is hardly surprising that lenders have been reluctant to offer high LTV loans and it has taken direct ‘encouragement’ from the government to get the market moving here - much of which is arguably counter to the message they have been giving banks to manage risks more carefully.

The past is a foreign country: they do things differently there The risk approach banks have historically used (and by this I do mean risk as opposed to fraud prevention) has focused on three key strands: loan-to-value, consumer willingness to pay (credit history); and consumer ability to repay (affordability). Of the three, affordability is perhaps the most over-hyped risk in that from experience, unless a lender has clearly lent a consumer an unaffordable amount, it has a relatively low impact.

There is, however, a fourth factor now clearly coming into play in this new environment and that is individual property risk. Surely I hear you say, the banks look at this already? What about the mortgage valuation? Well, the answer to this is a partial yes, but I am referring to a fundamental revision of the way banks assess the security of a property.

If you look at the current process, the banks instruct a qualified surveyor who in nearly all cases does a good job of assessing current condition, value and providing property specific data. Based on this and the other risk factors a bank will make a lending decision. However, the lending decision is invariably a largely ‘point in time decision’ for a loan, which is typically 25 years in length.

With no real certainty around asset appreciation, it is my view that assessing a property should preferably look at a wider range of factors to ensure that the property itself has a good long-term outlook. This means assessing things such as socio-economic conditions, environmental information such as flood and subsidence data, past sales history and historical price appreciation, local area demand now and in the future, and other long-term trend data. In other words, a robust holistic view of the property and environment in which it sits.

Some properties are more equal than others
As we are now firmly in the digital age, there exists a huge amount of data on UK properties, both at a macro and individual level. As well as historical sales and marketing data, there also exists huge amounts of environmental data ranging from typical concerns such as flood to more current issues like fracking. There is also the influence property type and location has on an asset’s long-term value.

This isn't a London and the South East versus the rest of the country argument. Property disparity is easily evidenced across all UK locations where certain properties and specific locations have performed Significantly better than others that may be close by. The UK has a very heterogeneousness property mix and this, together with the physical and built environment, makes property a very mixed long-term outlook and a very specific risk.

‘Buy land, they’re not making it anymore’
Property used to be seen as a one way bet. The events of 2008 and the inflationary outlook should start to change this view. This also shouldn't be just a concern to lenders but also to property purchasers.

Landmark recently undertook a survey which showed that while 80 per cent of homeowners said they would not buy a house that was at risk of flood, only 42 per cent of people actually investigated flood risk before purchasing their home. The survey also found that 55 per cent of buyers expect their legal representative to inspect a property’s flood risk automatically as part of the conveyancing process. The phrase, ‘too little, too late’ springs to mind.

A conjoined approach
One problem with property and environmental data is how to use it in a meaningful assessment. Often data is looked at in an individual, ‘binary’ way. For example, is there a flood risk, yes or no?

Whilst it can be argued that events such as flooding or subsidence may be considered ‘low probability’ events, by analysing this level of data upfront together with other specific property and environmental data, it is possible to provide each property with a ‘risk score’. In much the same way that a lender evaluates an individual’s credit worthiness using a credit score, the data that exists around asset risk can equally be transformed into a property risk score.

Higher LTV lending
Currently LTV limits are non-specific. If a property is deemed in an acceptable condition and the current value is in line with the market, there is generally no discrimination in terms of LTV based on property or location.

However, if, by using the data available as a whole on the property, it should be possible to determine which properties represent a lower long-term risk and therefore allow LTV limits to become more flexible and based on specific rather than general risk. A holistic property risk approach would allow both lenders and consumers to be more informed as to the longer-term risks. It would also assist lenders in managing longer-term capital requirements by focusing the front end of a bank’s operations either towards properties with a better longer-term outlook or to accurately assess the level of long-term capital likely to be required

By doing so, lenders (and also insurers) will have greater peace of mind and security if environmental and property related information is automatically fed into the process – perhaps as part of the mortgage valuation
process.

Electronic desktop reports could be fed directly into the existing process and could include everything from flooding reports and contaminated land studies, through to bespoke data extracts that trigger enhanced due-diligence workflow.

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