Yorkshire estate invests in rental property upgrades to safeguard future income
Published: 26 May 2016
With a strong commercial focus and an aptitude for planning for the long-term, George Winn-Darley has instigated an extensive programme of property renovations to ensure his Yorkshire estate’s rental properties comply with the impending Energy Performance Certificate regulations.
The Darley family has owned Aldby Park near York since 1557. Along with its sister estate at Spaunton in the North York Moors, the family estate comprises approximately 4,000 acres of in-hand and tenanted land, plus 53 rented dwellings and eight tenanted farmhouses.
Today the estate is owned and managed by George Winn-Darley who, with the support of AMC, is in the process of upgrading more than 20 residential properties to bring them in-line with the impending Energy Performance Certificate (EPC) legislation.
“The first EPC guidelines were issued in 2008,” George Winn-Darley explains. “Whilst that gave us the best part of 10 years to get our properties in order, we didn’t want to set ourselves unachievable deadlines, so we decided to take a very proactive approach from the outset.
“Almost as soon as the regulations were announced we commissioned a qualified EPC assessor to survey all of the estate’s rental properties so that we had a full and accurate picture of where we were and what the likely impact of the regulations would be for us.”
The rented properties on the estates range from one-bedroom bungalows and workers’ cottages, to substantial five-bedroom farmhouses. Many of these are period properties, approximately 20 of which don’t currently comply with the EPC rules.
“At first we saw the new EPC laws as a bit of an irritation, but in actual fact, they present an excellent opportunity for us to improve the estate’s assets,” George continues. “It makes sense to make domestic properties more thermally efficient as it not only makes them easier to let, but also means properties can attract higher rental incomes. Improved properties also attract better tenants and longer tenancies with fewer voids between rental agreements.
“That all contributes to a less transient, more cohesive community, which, in the long run, presents fewer headaches for the estate to deal with.”
In his role as the estate’s manager, George’s primary focus is to increase the estate’s annual income. “Over the last 30 years, our residential lettings have been a viable way of achieving this,” he describes. “Improving the number and quality of dwellings therefore not only improves our annual income, but also makes an improved contribution to the national need for more houses and solving the homelessness disgrace,” stressed George.
“In my opinion, the EPC regulations are only going to get tighter, especially as there is now cross-party support of the requirement for properties to be more energy efficient. It is therefore fair to assume the drive towards better thermal efficiency on all buildings is a trend which is going to continue. Therefore, taking a long-term approach to the investment needed to meet the regulations in the short-term appeared to be a wise approach.”
We use a Flexible Facility to ease the estate’s cash flow and have a selection of long-term fixed and variable rate loans which are used to fund ongoing capital projects.
George Winn-Darley Aldby Park
The EPC reports found that of the estate’s 61 rented dwellings, 22 failed to reach the required standard, with the level of work required to bring the properties within specification ranging from replacing boilers or dry-lining external walls, to full re-fits and complete modernisations.
“We had already taken steps to insulate each property’s loft space with modern materials as we knew that was a relatively easy way of improving energy efficiency,” George continues. “In fact, by approaching this in a structured and methodical manner, and by scrutinising the fine details of the work involved, we found that we could insulate the properties for less than it would cost if we had signed up to the Government’s subsidised loft insulation scheme.
“However, despite the loft insulation work, the EPC reports showed that we still had to make some significant investments to maintain the estate’s earning potential for the long-term.”
Each of the properties requiring an upgrade has been scheduled for renovation works to be carried out as they become empty, with those able to return a higher margin prioritised for completion ahead of other properties.
“We’ve already made good progress and have completed the renovation of a lot of the properties, but there’s still plenty left to do. Having said that, we’re well ahead of beating the 2018 and 2020 deadlines. That’s a key goal for us as failure to meet the deadline will render any under-performing properties incapable of earning an income.
“As well as the renovation and improvement works, the estate has also created 18 new dwellings – either as new builds or through the conversion of existing barns and outbuildings. As with the renovation project, the new buildings have been funded with the assistance of a range of AMC loans.
“We took out our first AMC loan in 1991 and have worked with them ever since,” George describes. “We use a Flexible Facility to ease the estate’s cash flow and have a selection of long-term fixed and variable rate loans which are used to fund ongoing capital projects.
“We don’t borrow from anyone other than AMC, simply because they understand our business model. We’ve got a good relationship with Adrian Cawood, our Regional Agricultural Manager, who has put a lot of thought and work into ensuring we’ve got the right finance products in place for our specific needs. Adrian has many years experience of supporting landed estates with funding applications and has a clear appreciation of what we are trying to achieve.
“Once a loan with AMC is in place, there is almost zero interference from them and, having recently asked a selection of banks to tender for our business, we are confident that the AMC interest rates are amongst the most competitive available. For us, AMC is the right company to work with.”
For more information on Energy Performance Certificates visit https://www.gov.uk/government/collections/energy-performance-certificates