MEDIA CENTRE - Events

Legal BBQ, London (06.23)

Philip attended the annual legal barbeque jamboree and met with more friends and colleagues, and brought back the following take-away nuggets:

• ‘ICR is the new LTV’ (or LTC for developments presumably). [Note: ICR = Interest Cover Ratio, LTV = Loan To Value, and LTC = Loan To Cost]
• Investors appear to be active in acquiring development sites, especially in London, and happy to land-bank for a while until development/construction issues become more certain (impact on IRR?).
• As sites are selling, architects are busy with feasibility studies (how many rooms can one squeeze into a given structure?).
• Construction costs are still high.
• Consensus was that interest rates will have to increase further as the impact of recent increases is too slow on inflation (only 30% of households have a mortgage and many of these mortgages are fixed, so effect is diluted; over 30% of households have no mortgage, so no real effect; and the balance are renting, whereby landlords may have some debt and thus rents increasing, where landlords feel able to ask for more, which is not always the case, so further dilution).

Many thanks to the legal eagles for the lovely and varied food and drink, wonderful views and good company.