This Month's Articles: Charging for Care, Rate My Business, Hope for Hotels in 2010, Is there a better time to develop? |
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Charging for Care |
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MP for Cambridgeshire South and Shadow Secretary of State for Health, Andrew Lansley, recently highlighted the Conservatives' plans to reform the care system in a speech at the National Children and Adults Services Conference held at the end of October. |
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The main thrust of his speech, which could form part of Tory policy in advance of next year's general election, was that people over 65 could benefit from a 'home protection scheme' preventing them from being forced to sell their house to pay for residential care in old age. |
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With increasing numbers of dementia sufferers evident in our society, it has to be remembered that the majority of care needed by such individuals is provided by care staff, with funding from Social Services. The cost of this is means tested rather than being provided through the NHS, which is generally free of charge. Dementia is, of course, considered to be a physical disease of the brain. Is it fair, therefore, that sufferers are expected to pay from their own resources for essential care that is the result of such a debilitating, degenerative and distressing condition? |
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As the Alzheimer's Society pointed out in their response to the speech, 'any plan to protect the cash benefit Attendance Allowance will help many people with dementia, who are the hardest hit by the current system of charging for care'. |
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With ever-increasing numbers of dementia cases evident in our care homes, the next election may present an opportunity to see whether we value fairness in how some of the most vulnerable and dependent members of our society are cared for and how that care is funded. |
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| Article by Pinders Director Steve Marriott |
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Rate My Business
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The updated business rates revaluation comes into force as of 1 April 2010 (no joke) and many business operators are likely to see a substantial increase in their rates bills. The British Property Federation argues that the rates rise will affect the retail sector disproportionately, as retailers pay a quarter of all business rates, despite being responsible for 8% of GDP. The revaluation and subsequent rise in rates could not come at a worse time for an industry already suffering from the impact of the recession, increased employment costs and rising utility bills. |
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| Business rates are a major cost for retailers, which have a direct impact on their bottom line. Property costs are a significant barrier to growth investment and employment in the high street retail and local shop sector. The Association of Convenience Stores (ACS) is annoyed that business rates rose by 5% in 2009, despite the figure being calculated in September 2008 when inflation was at its height. As a result, by April 2009 the figure was outdated and unrealistic as inflation had fallen to 0.4%. |
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The ACS believes that now is the time for the Government to think creatively about how its policies can reduce the burden of rates on retailers. Suggested specific policies to be adopted include making small business rate relief automatic for all qualifying premises, and introducing greater flexibility for councils to extend rate relief to shops that are either under threat or absent from local communities. |
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The Business Centre Association (BCA) has also called on Alistair Darling to rethink plans to remove empty property rates relief for small businesses in the pre-Budget report. The BCA said the UK's economic recovery could be put at risk if empty properties with a rateable value of between £2,200 and £15,000 were again made liable for rates. In April, the Chancellor raised the threshold to £15,000, saving property owners an estimated £150m this year, but said the change would only last for 12 months. |
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| Article by Pinders Director Wendy Webber |
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Hope for Hotels in 2010 |
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The hotel sector has had a tough time lately, with a heavy crash in demand, bank funding, room rates, occupancy levels and, of course, values, having been experienced in 2008 and going into 2009. Looking ahead, however, there can be some optimism that the market could see some form of radical improvement, even if only from a declining to a static position, whilst some operators may see modest growth. |
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Corporate budget operators such as Travelodge and Premier Inn are still expanding, possibly taking advantage of cheaper sites and construction costs, whilst the increased popularity of holidaying in the UK has meant that some of the smaller units have also benefited. |
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Mid-market hotels are where the toughest battles have been fought, pitting the need for continual investment against pressure on room rates, with cheaper funding not materialising due to lenders' reluctance and falling loan-to-value levels. Whilst we have seen some receivership situations, it appears that banks may have learnt at least one lesson from recent history and are keener to help customers trade through the worst times, potentially taking a view as conditions pick up. It is to be hoped that banks do not attempt to force sales of a significant number of hotels at the same time, as this would wipe out any value growth and with it, any optimism. |
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At Pinders, over the past year, we have seen activity in the hotel sector increase, albeit from a very low start point. Private buyers are seeking both small guest houses, which are reporting generally strong demand and some growth in trade, and larger, formerly managed, town centre outlets which have been allowed to drift directionless, with limited maintenance, and now present an affordable opportunity for pro-active owners to recapture former reputations. |
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So enquiries are up; purchasers are out there; if the residential market continues its fragile improvement then new entrants will be seen. |
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Therefore, it remains up to bank funders to realise that opportunities are available for sanctioning and whilst it might be too early to break out the champagne from the hotel mini-bar, we confidently anticipate that 2010 offers hope for a positive trading year. |
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| Article by Pinders Director Malcolm Kidby |
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Is there a better time to develop? |
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The UK economy has been shrinking for 18 months now, the longest period of contraction since the 1950s. Construction is a sector of the economy at the forefront of this contraction. |
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The commercial construction sector has seen a reduction of new orders in the region of 40% this year compared to 2008. Unlike the rest of the world, the UK, with a huge public sector deficit and a looming general election, can expect cuts in the public spend on construction, with pundits suggesting a further 17%. |
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As a consequence of reduced workloads, tender returns for construction projects have seen a 15% reduction over the last year and some forecast a further 10% over the coming year. |
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However, with evidence that credit availability is improving, with a number of banks active in the healthcare market, money is starting to become available - for the right projects. |
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So, if you are thinking about a healthcare property development or extension, now would be a good time to review its viability, and take advantage of these market conditions before things start to pick up. |
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Click here to download Pinders' free guide, "Design to Delivery". |
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| Article by Pinders Director Simon Coats |
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