Real Estate Concepts: A Handbook

521 Pages·2014·5.52 MB·English

by  Ernie Jowsey

Real Estate Concepts
The essential reference tool for all real estate, property, planning and construction students.
Edited by Professor Ernie Jowsey of Northumbria University, Real Estate Concepts provides built
environment students with an easy-to-use guide to the essential concepts they need to understand in
order to succeed in their university courses and future professional careers.
Key concepts are arranged, defined and explained by experts in the field to provide the student
with a quick and reliable reference throughout their university studies. The subjects are conveniently
divided to reflect the key modules studied in most property, real estate, planning and construction
courses.
Subject areas covered include:
(cid:129) Planning
(cid:129) Building surveying
(cid:129) Valuation
(cid:129) Law
(cid:129) Economics, investment and finance
(cid:129) Quantity surveying
(cid:129) Construction and regeneration
(cid:129) Sustainability
(cid:129) Property management
Over the 18 alphabetically arranged subject specific chapters, the expert contributors explain and
illustrate more than 250 fully cross-referenced concepts. The book is packed full of relevant examples
and illustrations and after each concept further reading is suggested to encourage a deeper understanding.
This book is an ideal reference when writing essays and assignments, and revising for exams.
Ernie Jowsey is Professor of Property and Real Estate at Northumbria University. He is the author of
a number of books including Real Estate Economics and Modern Economics with Jack Harvey.
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Real Estate Concepts
A handbook
Edited by Ernie Jowsey
with contributions from staff at
Northumbria University
First published 2015
by Routledge
2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
Simultaneously published in the USA and Canada
by Routledge
711 Third Avenue, New York, NY 10017
Routledge is an imprint of the Taylor & Francis Group, an informa business
© 2015 Ernie Jowsey, selection and editorial material, individual chapters, the contributors
The right of the editor to be identified as the author of the editorial material, and of the
authors for their individual chapters, has been asserted in accordance with sections 77 and
78 of the Copyright, Designs and Patents Act 1988.
All rights reserved. No part of this book may be reprinted or reproduced or utilised in any
form or by any electronic, mechanical, or other means, now known or hereafter invented,
including photocopying and recording, or in any information storage or retrieval system,
without permission in writing from the publishers.
Trademark notice: Product or corporate names may be trademarks or registered
trademarks, and are used only for identification and explanation without intent to infringe.
British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging-in-Publication Data
Real estate concepts : a handbook / edited by Ernie Jowsey with contributions from staff
at Northumbria University.
pages cm
Includes bibliographical references and index.
1. Real estate business--Great Britain . 2. Real property--Great Britain. 3. Real estate
development--Great Britain. 4. Commercial real estate--Great Britain. I. Jowsey, Ernie.
HD596.R43 2014
333.330941--dc23
2013050184
ISBN: 978-0-415-85741-3 (hbk)
ISBN: 978-0-415-85742-0 (pbk)
ISBN: 978-0-203-79764-8 (ebk)
Typeset in Bembo
by GreenGate Publishing Services, Tonbridge, Kent
Contents
List of figures xiv
List of tables xvi
List of contributors xviii
Preface xx
List of abbreviations xxi
1 Agency 1
ANDY DUNHILL, JANE STONEHOUSE AND RACHEL WILLIAMS
1.1 The inspection 1
1.2 Reporting to the client 2
1.3 Terms of engagement 5
1.4 Types of agency – the basis of instruction for disposal 6
1.5 The marketing plan 8
1.6 The marketing brochure 12
1.7 Information technology in marketing 14
1.8 Energy performance certificates 16
1.9 Methods of disposal – private treaty 18
1.10 Methods of disposal – tender 21
1.11 Methods of disposal – auction 22
1.12 Marketing a property – freehold sale 25
1.13 Marketing a property by way of an assignment 26
1.14 Marketing a property by assignment of a long ground lease 28
1.15 Marketing a property to let on a new lease 31
1.16 Marketing a property by way of a sublease 35
1.17 The marketing process 38
1.18 Negotiating 40
1.19 Occupation costs 41
1.20 Heads of terms 43
1.21 Money laundering 45
1.22 Safety and security in agency 48
vi Contents
2 Building surveying 51
STUART EVE, MINNIE FRASER AND CARA HATCHER
2.1 Building surveying in an estate management context 51
2.2 Building pathology 53
2.3 Building surveys 57
2.4 Dampness in buildings 60
2.5 Timber defects 62
2.6 Movement in buildings 64
2.7 Concrete defects 67
2.8 Structural frames and floors 69
2.9 Roofs and cladding 72
2.10 Asbestos in buildings 75
3 Commercial property 79
ANDY DUNHILL, DOM FEARON, JOHN HOLMES AND BECKY THOMSON
3.1 Commercial property 79
3.2 Private investors 80
3.3 Private finance initiatives 81
3.4 Office market 84
3.5 Industrial market 86
3.6 Retail market 88
3.7 Leisure market 90
3.8 The health care market 91
3.9 Student accommodation 93
3.10 Building information modelling and commercial property 95
4 Construction 97
GRAHAM CAPPER, BARRY GLEDSON, RICHARD HUMPHREY, ERIC JOHANSEN, ERNIE JOWSEY,
MARK KIRK, CARA HATCHER AND JOHN WEIRS
4.1 Building Cost Information Service 97
4.2 Building control in England and Wales 99
4.3 Construction firms 102
4.4 Competitive tendering 103
4.5 Design and build 105
4.6 Modern methods of construction (off-site manufacture) 106
4.7 Managing construction 108
4.8 Planning and organising construction 109
4.9 Managing building services 111
4.10 Sick building syndrome 112
4.11 Sustainable construction 114
4.12 Fraud in construction 117
Contents vii
5 Development 119
HANNAH FURNESS, ERNIE JOWSEY AND SIMON ROBSON
5.1 Developers 119
5.2 Development 120
5.3 Development costs 122
5.4 Development finance and funding 125
5.5 Site assembly and acquisition 127
5.6 Evaluation and appraisal methods 129
5.7 Intensity of site use 132
5.8 Public sector development 134
5.9 Redevelopment 134
5.10 Refurbishment 136
5.11 Residual value 138
5.12 Local asset-backed vehicles 139
6 Economics 141
ERNIE JOWSEY
6.1 Allocation of resources 141
6.2 Supply and demand 142
6.3 Pareto optimality 144
6.4 Economic efficiency 145
6.5 Market, command and mixed economies 147
6.6 Externalities 148
6.7 Market failure 150
6.8 Cost–benefit analysis 51
6.9 Perfect competition 153
6.10 Imperfect competition 154
6.11 Oligopoly 155
6.12 Monopoly 156
6.13 Economies of scale 158
6.14 Mobility of labour 159
6.15 Property rights 160
6.16 Economic rent 161
6.17 Gross domestic product 162
6.18 Economic growth 163
6.19 The multiplier 165
6.20 Fiscal policy 166
6.21 Property cycles 167
6.22 Globalisation 169
6.23 The credit crunch 170
6.24 Currencies and exchange rates 171
viii Contents
7 Finance 173
ERNIE JOWSEY AND HANNAH FURNESS
7.1 Banks 173
7.2 Bridging loan 174
7.3 Company accounts 174
7.4 Debentures 176
7.5 Depreciation 177
7.6 Financial gearing 177
7.7 Liquidity 179
7.8 Freehold ground rent 179
7.9 Reverse yield gap 180
7.10 Sale and leaseback 181
7.11 Mortgages 182
7.12 Sources of finance 183
8 Investment 185
ERNIE JOWSEY AND HANNAH FURNESS
8.1 Investors 185
8.2 The property investment market 186
8.3 Commercial property investment 187
8.4 Portfolio strategy 189
8.5 Modern portfolio theory 190
8.6 Capital asset pricing model 193
8.7 Risk and return 194
8.8 Real estate investment trusts 196
8.9 Property unit trusts 196
8.10 Active fund management 197
8.11 Residential property investment and buy-to-let 199
8.12 Mortgage-backed securities 200
8.13 Land banking 201
8.14 Property indices 202
8.15 Discounting and discount rates 204
8.16 International property investment 206
8.17 Transparency index 207
8.18 Corporate real estate asset management 208
9 Land management 211
DOM FEARON AND ERNIE JOWSEY
9.1 Archaeological sites 211
9.2 Coastal and marine heritage 212
9.3 Farm buildings 213
9.4 Fishing and fishing rights 215
9.5 Trees and forestry 216
Contents ix
9.6 Historic parkland 218
9.7 Protected landscapes 219
9.8 Religious buildings 220
9.9 Waste disposal sites 222
9.10 UK National Parks 225
10 Law 227

RACHEL WILLIAMS AND SIMON ROBSON
10.1 Contracts 227
10.2 Legal definition of land 228
10.3 Fixtures and chattels 229
10.4 Ownership of land 230
10.5 Trusts and co-ownership of land 232
10.6 The lease/licence distinction 234
10.7 Land registration 235
10.8 Freehold covenants 236
10.9 Easements and profits à prendre 238
10.10 Easements – rights to light 240
10.11 Manorial land and chancel repair liability 242
10.12 Wayleaves 242
10.13 Common land and town and village greens 243
10.14 Highways 244
10.15 Option agreements 245
10.16 Conditional contracts 246
10.17 Promotion agreements 247
10.18 Overage/clawback 248
10.19 Pre-emption rights 249
10.20 False statements and misleading omissions 250
11 Planning 252

ANDY DUNHILL, HANNAH FURNESS, PAUL GREENHALGH, CAROL LUDWIG, DAVID MCGUINNESS
AND RACHEL WILLIAMS
11.1 Legislation and planning policy 252
11.2 Strategic planning 257
11.3 Green belt 258
11.4 Planning decision making 259
11.5 Listed buildings and conservation areas 264
11.6 Neighbourhood planning 267
11.7 Transport and infrastructure planning 269
11.8 Minerals planning 270
11.9 Settlement hierarchy 273
11.10 Planning obligations 275
11.11 Community infrastructure levy 276
11.12 Planning appeals 278