Industry Related News
Industry Related News and Opinions... |
December 2009Feature - Kitchensynch, luxury kitchens without the luxury price tag. Read full story
November 2009
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| Net contract value |
Current VAT payable |
Saving |
| £25,000.00 | £3,750.00 | £625.00 |
| £50,000.00 | £7,500.00 | £1,250.00 |
| £75,000.00 | £11,250.00 | £1,875.00 |
| £100,000.00 | £15,000.00 | £2,500.00 |
| £125,000.00 | £18,750.00 | £3,125.00 |
| £150,000.00 | £22,500.00 | £3,750.00 |
| £200,000.00 | £30,000.00 | £5,000.00 |
| £250,000.00 | £37,500.00 | £6,250.00 |
| £500,000.00 | £75,000.00 | £12,500.00 |
So if you want to have a bigger stocking this Christmas please contact us today on 0800 840 4028 and let us help make your home refurbishment easier (and cheaper). Back to top
(C) Onis Living 2009
By Robert A Sliwinski BSc, LLB (Hons), DipIntArb, FRICS, FCIArb, FRSA, Barrister, Solicitor, Attorney (New York)
If you have ever refurbished or extended your home or been the contractor carrying out work in a client’s home you will no doubt be aware of the trouble a change order can cause. They can arise for any number of reasons and are in most part unpredictable. They can be caused by, for example, the discovery of some rotten timber or the introduction of a more desirable bathroom fitting coming onto the market that soon becomes a “must have” item for the client. Either way, the process historically for dealing with these change orders has been somewhat random and troublesome for all those involved.
Take the example of rotten timber being discovered in a floor joist requiring that the entire joist is taken out and replaced with a new one. The project manager on site contacts the client and explains the problem. The natural response from the client is likely to be “OK, fine, but how much will it cost to replace the joist and what will be the delay to the works?”
The process for obtaining this information, i.e. how much and how long, which is of critical importance to all parties, typically is as follows: The site manager contacts the contractor’s quantity surveyor (this is the person who deals with the pricing of quantities of materials, etc needed for the project and is referred to as the QS) and explains the problem. The QS then puts the information on a Change Order form that details what if any impact the change will have on the programme, the estimated cost associated with any programme changes, the cost of the variation itself and maybe an estimate for additional fees of the architect or engineer. This form then needs to be sent to the client for approval and signature before sending it back so the site manager to carry out the change order. As you can imagine this process can take several days assuming everyone deals with the matter quickly.
Therefore what normally happens is the site manager “guestimates” the cost of the change so as to not waste time, the client negotiates a little and then accepts the “guestimate” and the change order is instructed. The problem here is that more often than not the change order costs either more or less than the guestimates. If it costs more the client may be asked for extra money (never a good option) or the contractor will simply have to swallow the cost. If it costs less the contractor makes a profit but the client feels aggrieved. However on an average home improvement renovation project there may be between 10 to 15 changes, if this guestimate process is used throughout a significant amount of money can be left unaccounted for without a paper trail to follow. This will ultimately lead to problems when settling the final account sum for the project.
Is there a solution to this problem? Yes, it is called an Online Change Order SystemTM and was developed by Onis in 2008. The system works as follows. When a contractor finds some rotten timber hidden in a floor joist the site manager logs the information into a web portal on their laptop, which is then sent immediately to the QS via email. The QS prices it up and sends the details of the change order and its cost, effect on programme, etc to the client via email in the format of a change order form. The client then simply replies with confirmation to go ahead or a reason for not going ahead, to the QS who, if the change order has been given the go ahead, can immediately action the change order with all parties knowing it has been expertly priced and an electronic paper trail created for future reference. And all inside as little as 1 hour!
James Cockin, the engineer at Onis who built the system explains in more detail how it works.
“Basically the Online Change Order SystemTM is a corporate web portal designed to simplify the administration of change orders on home improvement projects. The system eliminates the need for paperwork which has traditionally made the process of a customer obtaining quotes from the contractor and the contractor obtaining customer sign off time consuming and inefficient. In technical parlance it was developed in PHP with a MySql database using a standard Apache web server running on Linux and access to functionality within the system is role based with project access assigned on an individual basis.
The main requirement of this system is to provide a project manager with a very straightforward entry system to capture the key requirements of a Change Order whilst having a supporting process to allow the office team to complete the details, co-ordinate prices with suppliers, contractors and any other third parties impacted by the change and provide a document to the customer to accept and sign off the Change Order, knowing the full impact on their project, in as short a time frame as possible.
The initial interface to allow a site manager to raise the Change Order is reduced to a single web-based entry form which captures the key details and also starts the paper trail.
Once submitted, the Change Order is tagged to the customer and project and stored in a database for later retrieval. An email alert is triggered to the assigned QS for the project so they are informed of a new task to process the Change Order.
The Change Order is then viewed either through the customer’s project interface or, if desired, through a Change Order overview, which allows a site manager or QS to easily review multiple Change Orders across multiple projects.
Then, when all the necessary information has been gathered, the customer’s project interface allows the QS to email a complete copy of the Change Order as an automatically generated form to the customer who then has the option of confirming acceptance by email. This is received by the site manager allowing the Change Order to be implemented immediately.
Finally, when the project has been completed, there exists a complete audit trail of all Change Orders raised by the customer along with the agreed price so that an accurate statement of account can be established”. And all of this generally takes on average one hour which is a big improvement on the average time taken when we started to develop this system of 3 days.”
So finally there is a way to take advantage of changes on a home improvement project without being taken advantage of. Back to top
(C) Onis Living 2009
Unless you have been living in a remote cave for the past year or took
a trip into space and have just touched down again, you will no doubt
have heard of, and felt the effects of, the U.S subprime mortgage
crisis. It has rippled through the global economy destroying the
financial health of institutions, businesses and individuals that stand
in its path. But what really happened? What really caused the sub-prime
mortgage crisis?
Well at Onis we went on a mission to find out...
We spent time in numerous jargon laden trenches and only just managed to bend our heads around a series of esoteric concepts.
Firstly there was the U.S housing price conundrum - why were house prices so high?
Then we needed to understand what Mortgage Backed Securities were and what they had to do with anything
And finally what were Collateralized Debt Obligations
By understanding the facts, dismantling the jargon and simplifying the concepts we managed to piece together an explanation of what really happened and began to understand for ourselves the subprime mortgage crisis a little better.
U.S house prices normally rise; at least according to the Case-Schiller Housing Index they have been doing so at a steady pace for most of the 20th century.
However around 2000 they started to rise rapidly. And from 2000 to 2006 they rose by a whopping 80%.
The conventional factors that economists would use to explain this phenomenon are an increase in the demand drivers, the two most obvious being an increase in the population and an increase in salaries.
However although the U.S population did increase in that period by approximately 1.5% salaries actually decreased by 3%. Therefore the net effect of the demand drivers went down by 1.5%.
So another conventional economic explanation is the supply drivers: housing must have dried up right. But is this true?
Well in 2000 there were around 115m housing units in the U.S with 1.8 million new units being built each year. So during the same period from 2000 to 2006 the number of housing units actually grew by about 6%.
What is going on? Demand was down, supply was up and yet prices did not drop, in fact they sky rocketed.
Well between 1980 and 2000, if you wanted to buy a house you would go to your bank manager and they would ask you to put 25% down (meaning if you wanted to buy a house worth £100,000 you gave the bank £25,000 and got a mortgage on the remaining £75,000), verify that you had a secure job and demonstrate a good credit score, say a 700 points.
In 2001 this changed to you needing to only put about 10% down, verify that you had a job and demonstrate an OK credit score, around 500 points.
By 2003 this had changed to you needing to put no money down, simply claim that you had a job and demonstrate no credit score what so ever. These people were known as NINAs : No Income, No Assets. It is the mortgages given to this class of borrowers that the real estate industry refers to as subprime mortgages.
So the bank’s lending criteria got more and more relaxed with time, which in turn meant that the number of people now able to bid on a home was significantly larger than before. And it is this that pushed up demand and caused the enormous rise in housing prices over the last few years.
But why did the banks relax their lending criteria to such an extent? To understand this we need to move into Mortgage Backed Securities .
Well, these sound rather obscure but in fact they are not so difficult to understand. Here we go.
We start with borrowers; people like you and me who need to buy a house with a mortgage. We go to the bank and we ask for say £1m to buy a house. The bank agrees and charges us 10% interest on the mortgage. Say they do this with 1000 customers; they would have £1bn in mortgage loans and receive £100m per year in interest.
Then comes along an investment bank who says to the bank, “hey we want to buy your mortgages from you and package them up so that we can sell them to investors”. Now this sounds rather strange but it’s very simple. Basically what happens is the investment bank buys the rights to the loans and the cashflows (basically the interest payments as well as any principle that is paid by the borrowers) and incorporates a new company (a Special Purpose Vehicle ) and divides the share capital into say 1m shares, now each share is worth £1,100 (which is the £1bn in loans plus the £100m interest they expect to receive divided into 1m shares). The investment bank can now sell these shares to investors on the market and it is these shares that are known as Mortgage Backed securities.
So what does this have to do with the subprime mortgage crisis? Well it turns out that the investors and investment banks with their sophisticated computer models began to realise that the returns as they stood (the investment bank receiving its £100m per year in interest from all the mortgage loans) required for everyone to pay their mortgage and for no one to default or pre-pay.
“Hold on, they said, I don’t think it’s realistic to claim that everyone will pay their mortgage and if they default we won’t be able to sell the house at its market value necessarily and so we must account for this in our returns”. For example, say 20% of people default and the investment bank can only recover half the value of the house. That means that in effect 10% of all the loans are worthless, so instead of a 10% return, investors would get a 9% return.
So in response to this the investment banks began to sell different types of shares to investors. Some shares cost a bit more, and came with higher risk and higher returns. Some shares cost less, and came with lower risk and lower returns.
How did they do this?
Let’s go back to our investment bank’s special purpose vehicle. Instead of dividing up the share capital equally the investment bank separated its 1m shares into 3 classes called Equity, Mezzanine and Senior. These worked as follows. If you owned Senior shares you paid less but got less return on your investment but at significantly reduced risk, in fact you got paid first out of the money coming in from the mortgages. Then if you owned Mezzanine shares you paid a little more for your shares than Senior and got a little higher return but you were only paid from what remained from the pool of mortgage money after Senior shareholders were paid. And finally, if you owned Equity shares, the most expensive shares, you got much higher returns that the senior and Mezzanine shareholders but you were paid last from whatever was left in the pool of mortgage money after Senior and Mezzanine shareholders were paid.
These types of shares are collectively known as Collateralized Debt Obligations.
Well it goes like this:
Because you have lots of people making money from the new types of shares (Collateralized Debt Obligations.) the investment community are hungry for more, so the banks need to sell more mortgages and they can do so now to more people than ever before because they have reduced their lending criteria in part because they are not responsible for collecting the mortgages, the investment bank is, and some investor somewhere is willing to buy from the investment bank a higher value of share for a higher return. This is perceived by the investment bank to offset the risk associated with the bank’s lending to higher risk individuals, the NINAs.
But they all got their numbers wrong and instead of something like 10% defaulting on their mortgages, which historically may have been true and was no doubt incorporated into their computer models, some 40% defaulted.
Why did so many people default?
When the housing market is booming and property prices are on the rise even those that default on paying their mortgages can sell up and even make a profit. This way the banks get their money back and no one is really hurt. But when the housing market slows down those that can’t pay their mortgage have no option to default and the bank has to foreclose on the property meaning they lose money and so do the investment banks and their investors.
And this is what happened, the housing market slowed down and house prices began to fall, due to demand tailing off, a surplus of housing stock and interest rate rises.
So lots of people, mostly the NINAs whose incomes were wholly insufficient to cover the mortgage payments they took on, could no longer afford to pay their mortgage and without any equity left in the home were forced by the banks to foreclose . This meant that the investors in the Mortgage Backed Securities and Collateralized Debt Obligations had a significantly reduced return due to the huge number of people no longer paying their mortgages. These investors included investment banks, hedge funds, private investors, institutions such as Insurance companies and pension funds and...You guessed it, banks!
A consequence of the creation of Collateralized Debt Obligations was that investors, not banks, would assume the risk for the relaxing of the bank’s lending criteria so as to be able to offer more mortgages to more people including high risk borrowers. But in the end the banks got greedy too and it’s these toxic assets that many banks are holding on their balance sheets that are expected to cost the U.S taxpayer about $8.5 trillion ($3,291 USD per person) via the U.S. government’s commitment to funding a host of economic stimulus programs.
We hope you have enjoyed this article and that we have helped make understanding the subprime mortgage crisis easier for you.
Back to top
(C) Onis Living 2009
At Onis we are always keen to understand where in the bigger scheme of things we fit in. And so we have conducted research into how the home refurbishment market behaves and how it fairs in a recession. Here are our findings:
You may be surprised to find out that very little data actually exists on the UK home refurbishment market and of that available most of it is entangled with data from the home improvement product market.
However using data from a recent home improvement lending market study, the market for major projects such as conservatories, extensions and loft conversions around £50K, is worth an estimated £16bn per annum with 6% growth year on year.
Given that there is a whole range of project values from c. £30K- to c. £1m+ it is not unreasonable to assume that the actual home refurbishment market may be worth nearer £30bn per annum.
You probably don’t need us to tell you this but the home refurbishment market is indeed a seasonal one with homeowners tending to shy away from conducting home refurbishments over Christmas and summer holidays and cracking on with refurbishing their home during late winter, spring and autumn.
There are various ways for customers in the home refurbishment market to finance their home refurbishment. They can use cash, savings even credit cards in some instances. There is also the home improvement lending market in the UK that represents a well established and growing industry for customers to turn to for finance when wanting to refurbish their home.
The home improvement lending market in 2001 advanced £13.6bn in secured and unsecured personal loans to homeowners for the purpose of refurbishing their homes, making it the third most popular reason for taking out a loan, after debt consolidation and car purchases. In 2006 this figure stood at £17.7bn representing a 5.4% annual growth rate. In 2009 that figure, if withstanding the ill effects of the current economic climate, is expected to reach £20bn.
Providers of Home Improvement loans in the UK include: Sainsbury’s; First National Bank plc; Ocean Finance; Halifax and Netloans.
No, not army pants with heels, home refurbishment market trends, some general ones include:
Fewer people undertake home improvements as interest rates rise.
Fewer people are looking to move as the cost of stamp duty rises and good amenities (schools, local shops and transport links) become more in demand.
Press coverage ensures home refurbishments remain a popular pastime.
Competitor activity in the home improvement lending industry will maintain the visibility of personal lending products ensuring finance is available for home refurbishments.
One problem with the home refurbishment industry during a recession is that it is packaged in with the commercial construction and house building industries and banks and other stakeholders assume the fates of these industries are the same. However they are not.
In a recession a consumer’s first impulse seems to be to refrain from incurring new liabilities, subsequently sales of new houses drop and the house builders are forced to lay off staff to cut costs. Along with the commercial building industry the house builders are also heavily dependent upon bank finance which dries up leaving them exposed and in danger of not being able to meet their short term creditors.
This does not happen to the same extent in the home refurbishment industry whose products do not expose its customers to the same financial burden as a new home and whose businesses and customers are not so dependent upon, or instrumental in, the stability of the financial sector as they do not jeopardise large sums of bank’s capital.
At the beginning of the 2008 economic downturn in the UK Onis was still receiving a consistent number of sales enquiries. These were mostly from homeowners looking to increase the living space in their current home as opposed to moving.
It appears as though when the housing market is booming people are keen to improve their home as they perceive it as a good investment and home improvement finance is readily available from banks and mortgage lenders. People are also able to move house easily as the expectations of both the buyers and sellers with respect to prices meet favourably due to good market conditions and most, if not all, homeowners moving into a new home want to adapt the home to their specific needs and so refurbish to some extent.
However, when the housing market and wider economy contracts buyers and sellers get stuck in a stalemate with sellers unwilling to sell at the prices the buyers are willing or able to buy at.
The banks also become cautious about lending against a depreciating asset which exasperates the stalemate. The net effect is that more people along the housing chain are unable to move but the catalyst for them wanting to do so remains and so many of those wanting more living space decide to stay put and refurbish. For verification of this phenomenon occurring in London read the Evening Standard article from 27 March 2009 about how Planning applications have soared since the market downturn.
The home refurbishment industry is by any standard a huge industry (The entire UK brewing industry is worth £19bn, that is £11bn less, and you know how much us Brits enjoy our beer!) and like many is seasonal and displays consistent trends. Like others it is also impacted heavily by an economic downturn however one could argue in the opposite fashion. Its protagonists appear to posses recession proof qualities that if utilised could see their order book increase dramatically however in order for this to happen they would need to fulfil certain criteria.
A key factor to a contractor’s survival throughout a recession is the success of their marketing and the message of reliability and quality that it needs to convey. When a homeowner does indeed decide to refurbish or extend their home it is essential for them that the finished product is of high quality as when the market begins to correct itself poor workmanship is heavily penalised via the homeowner’s inability to sell their house for the price that would have been paid had the refurbishment been of a high quality. The contractor, irrespective of budget or standard of fixtures and fittings, will therefore only be selected if they appear to, and indeed actually do, produce high quality workmanship for their customers wanting to ensure a good return on investment when refurbishing their home in a recession. Back to top
(C) Onis Living 2009
You may be feeling the pinch at the moment (by pinch we are referring to the economic climate of course, but don't fret, there is always the British summer) and there is never a better time than right now to start saving money. Also with rising fuel costs and shortages of oil, gasoline, natural gas, and electricity all over the front-page news where better to start than in the comfort of your own home on your own energy consumption.
So here are some tips on how to reduce your fuel bills without having to kit your entire family out in woolly jumpers and mittens...
These are quick and cheap to fit and are very effective at stopping cold air from entering your home and hot air from escaping.
Initial cost: About £15 per item + fitting.
Low energy light bulbs (often referred to as fluorescent bulbs) are only a tiny bit more expensive to buy yet they use about 75% less energy than standard incandescent bulbs, are safer to operate, produce about 75 percent less heat and last up to 10 times longer. They are available in many different sizes and shapes and fit in almost any fixture, both indoors and outdoors. Although the bulbs themselves cost a fraction more than the standard bulbs you can significantly reduce your electricity bill and cut energy costs associated with home cooling.
Product: 20watt BC/B22 Bayonet Cap (Equivalent to 100watt) energy saving light bulb
Initial cost: Around £2.20 per light bulb
Reduction in lighting bill: 75%
If every UK home replaced just one of their light bulbs with a low energy light bulb we would reduce green house gases equivalent to the emissions of over 160,000 cars.
This table gives you an idea of how many Watts typical appliances use on standby compared to when fully operational.
Appliance |
On |
Standby |
|
Hifi |
22 |
12 |
|
TV |
100 |
10 |
|
Video recorder |
13 |
1 |
|
DVD player |
12 |
7 |
|
Digital TV top box |
6 |
5 |
|
Computer and peripherals |
130 |
15 |
|
Monitor |
70 |
11 |
|
Laptop |
29 |
2 |
|
Broadband modem |
14 |
14 |
|
Answering machine |
3 |
3 |
|
Mobile phone charger |
5 |
1 |
|
TOTAL |
404 |
82 |
|
All figures are in Watts Per Hour |
||
We are not about to promote that you turn all these appliances off all the time, imagine, instead we suggest that if you can, without losing important settings, turn them off at the wall when you are not using them. If you turn the above appliances off at night, say for 10 hours, then you are saving 10 X 82 = 820 Watt-hours, or 0.82 Kilowatt hours (kWh) per day. Given the cost of 1 Kilowatt hour from British Gas is around 12p per kWh you would be saving around £50 per year.
OK so you’re not going to retire on that any time soon but its money in the pocket none the less.
Initial cost: £0
Reduction in electricity bill: Approximately 10%
As you know hot air rises and in most cases it keeps going past your loft and out through your roof. Put a stop to that by laying down some loft insulation. Fairly easy to install and with grants available from the Government you can’t afford not to insulate your loft.
Product: 150mm Loft Roll Insulation - 1140 x 5330 x 150mm
Initial cost: Around £20 per roll or £4.50 per Square meter
Reduction in energy bills: Around 20%.
This creates a big saving over time however there is a fairly large initial investment. As well as reducing heat loss and noise pollution it will also increase the value of your property.
Initial cost: Approximately £500 per window for supply and fix of new double glazing, slightly less if you are converting a sash window to double glazing.
Reduction in energy bills: Around £100 or 10-25% depending on overall energy usage.
If you have an immersion heater hidden in some cupboard somewhere then lagging it (lagging is the material wrapping around pipes or boilers to prevent loss of heat) will save you on your electricity bills as it helps to keep the tank warm.
Product: Immersion Tank Cylinder / Lagging Jacket
Initial cost: £20 + fitting.
Sounds a bit obvious (and detrimental to your cosy evenings in front of the telly) but just reducing your thermostat by a few degrees will save you money on your central heating bill.
Try reducing your thermostat by 1 degree per day and see what is comfortable for you. The optimum temperature for comfortable living is 19-20 degrees but you may find you can go lower than this and still be functioning OK without exhaling visible breath. Also try turning down the thermostat by a few more degrees each night and then turn it up again in the morning,
this will save you more money and possibly provide you with a better nights' sleep (due to greater physical comfort but saving money is also helpful for a peaceful sleep).
Initial cost: £0
Reduction in central heating bills: Reducing by 1 degree can save 10%.
Yes, we have come to the end of the article, but one last tip: Close your curtains as soon as it gets dark. This will stop heat from escaping (and people peeking into your home as they walk by...come on, we all do it). Back to top
(C) Onis Living 2009
When a new little person is arriving into your life, three important questions spring to mind: where should I put the baby, how much is it going to cost and will it look like me. If it is your first one, the challenge ahead is bigger: there are endless lists of what you ‘need’ on the internet and friends and family also have boundless knowledge and suggestions - regardless of whether they have had a baby or not.
If you are at the stage where you are thinking of preparing a room for your little one here are some simple tips that may help.
Invest in good curtains. Your baby will be doing plenty of sleeping over the first stage of his life so it makes sense to invest in curtains that have a ‘black out’ & fabric layer and a lighter layer. These are known as ‘double curtains’ and are fitted in a double rail which provide the flexibility of giving your baby plenty of darkness shall they need it, whilst also allowing light to come through when they are awake. You may also want to invest in a new set of curtains for your own bedroom because you may want to relax during the day with your wee one in the comfort of your own bed. Make sure the curtain cords are not too long as they may end up in the baby’s mouth once it starts crawling, which can be dangerous.
Make all electrical sockets baby proof. To achieve this, you needn’t move the electrical sockets upwards, you just need to get baby proof protectors. A good website for baby safety gadgets is: http://www.safetots.co.uk/ you can find the electrical socket covers here.
Industrially clean your living spaces. Take some time and invest some cash in an industrial clean of floors and walls. This is particularly important if the baby’s room is carpeted as when babies start crawling, they lick everything.
Keep the room’s colour scheme simple. When choosing blankets, paint colours, rocking chairs, and other accessories try to stick to a neutral colour. Babies are attracted to bright objects during their first months of life and there will be plenty of greens, reds and yellows from toys, nappies, clothing motifs and all the presents that you will get from generous friends and relatives. If you’re not careful, before long, you may end up with room full of contrasting, un-matching colours that resemble a box of crayons or even worse, a rainbow.
Choose the happy baby motifs carefully. Having just made the point of keeping it simple with accessories, there are certain infant motifs that can cheer up a room and create a welcoming and cozy environment. A good choice is fabric adorned with animals or playful motifs, which can be used for your curtains or to upholster a key piece of furniture. The left over fabric can be used to either make some matching cushions or even better, your matching nursing pillow!
Reuse and re-fit furniture. What furniture will give you the best value for money? Are you planning on investing in a super expensive baby changer or could you use an existing piece and customize it? Remember you could always spend the spare change on a thousand other items.
Get a rocking chair or rocking moses. Either will help with the important task of setting your baby to sleep and feeding!
And now the serious stuff - you will have a myriad of other expenses to consider prior to childbirth. Here are some tips to help you plan ahead:
Set an overall budget. This should include decorating the room plus all other costs including nursing/child minder fees.
Make a list of all items that need to be purchased. Itemize everything you need (excel works fine) and get a price comparison from three retailers. You will be amazed at how much prices vary from shop to shop.
Plan ahead for the sales. Instead of getting that gorgeous cardie, could you save some cash on bottles or other key ‘baby tools’ by waiting till the end of the January sales? Ask the retailers if they have special sales planned especially for baby stuff, or try to fish out information on when the best times of the year to shop are. Use the cute belly factor wherever possible!
Babies are not fashion oriented. Be clear about what you are buying in order to please yourself, your partner (or impress the neighbours for that matter) and what you are buying that you actually need! It is key to be strict and not get carried away by status anxiety. For example if you walk a lot a super good pram makes sense. If you drive a lot, then you can afford to be less picky.
If you can, get a nurse. If it is your first baby, will you be treating yourself to a home nurse for the first few days? Childbirth is overwhelming as is a stay in hospital so perhaps there is room for this in the budget. Your partner is likely to be exhausted too (from all the celebrating and cigar smoking, if anything!)…
And finally, our advice is to keep it simple and practical. Remember that you are likely to make a mess of the room with all the talc, nappies and what not. We have been having children as a species for eons and did so without zillions of gadgets. Also, in terms of cost there are the school fees to think of, and the new trainers and the pocket money and so on. You get the picture! Back to top
(C) Onis Living 2009
Sounds a bit farfetched perhaps; however there are a number of arguments accompanied by existing policy and activities in emerging markets that give this idea some credibility.Could the VAT bill paid by consumers on their home refurbishments be finally reduced without upsetting the Government?
Currently the cost of the majority of home
refurbishment is enlarged by a 17.5% VAT charge. This not only
represents a financial disincentive for people to refurbish their home
but also encourages people to engage building companies that are happy
to waive the VAT. Customers without contracts are subsequently
unprotected against poor workmanship and worse, cowboy builders who
cost the nation approximately £42m a year.
Any disincentive
to refurbish one’s home hampers the UK economy. The condition and
subsequent value of each home in the UK contributes to one of the
nation’s largest assets: the housing stock. This asset underpins a
considerable portion of citizen’s loans and mortgages from banks and
building societies. On a grand scale, the consequence of individuals
not refurbishing their home and not making the most of its value
collectively reduces billions off the optimal value of the nation’s
housing stock.
Many bodies including the Royal institute of
Chartered Surveyors and the Federation of Master Builders champion a
reduction of the current VAT rate on home refurbishments to 5% in
keeping with the rate of new build.
This of course represents
a significant reduction in revenue for the Government - some £10bn per
annum. This loss of revenue is defensible because of the implications
of the aforementioned disincentives. In Onis, we are wondering if there
is a way to remove the disincentives and keep the exchequers coffers
spilling over?
We are all aware of the impact of greenhouse
gas emissions on the planet’s atmosphere, it contributes to the earth’s
temperature rising and consequently causes water levels to rise -
amongst other life threatening factors. As a result the term ‘carbon
footprint’ and its reduction thereof, has become a popular buzzword.
Since the signing of the Kyoto protocol and the commitment of each
signatory country therein, the UK has set targets for the reduction of
its carbon emissions. The consequences of Climate Change on our planet
have received an ever increasing proportion of media attention. As a
result of these set of circumstances a burgeoning market has emerged
and continues to grow: carbon market which operates under the
International EU Emissions Trading Scheme.
It works as
follows: as a way of reducing greenhouse gases and to reduce their
carbon footprint companies are able to buy carbon emission reduction
credits, called Carbon Credits. These credits have a fluctuating
monetary value defined by the carbon market at any given time, i.e. £7
per tonne of carbon. Carbon credits can be produced by companies, in
house, as a result of a change, say in technology, which helps them
pollute less, or can be sold to polluting companies and companies with
an interest in CSR and environmental accounting by investment funds
operated by carbon trading companies that have aggregated the credits
from individual projects such as investing in carbon emission reducing
technologies. Reductions are made following the methodologies set by
the UNFCC’s Joint Implementation or Clean Development Mechanism (for
projects in non Annex I countries).
How can the burgeoning carbon market be used to reduce VAT?
When
a consumer uses energy efficient methods and materials during a home
refurbishment, they are in effect creating a carbon asset. This asset
needs to be measured, assessed and certified in a manner that can
demonstrate that it does indeed reduce carbon, to an agreed amount.
How can this be realized en masse so the Government does not lose out?
To realize this carbon asset, there then needs to be a system that enables all the consumers within the UK to:
a)
Have their carbon assets aggregated into a fund that carbon development
companies can sell to companies in the carbon market looking to reduce
their carbon footprint. This capital can then be returned to the
consumer in an amount pro rata to the amount of carbon they reduced on
their project. This can then be offset against the VAT the consumer
pays to the building contractor on their refurbishment or
b)
More simply, guidelines can be set for home refurbishment, as already
specified for New Build, which residents can follow systematically.
Residents that follow the guidelines, which can be verified by a third
party, could be given a direct tax credit. To put it simply, residents
would get a direct VAT reduction as a result of making their home
energy efficient.
Taking this a step further, from an
individual consumer saving to Government policy, requires the right
infrastructure to enable a national scale operation and international
market to emerge. However, it is a solution to lead to people saving
VAT by improving the energy efficiency of their home, reducing their
outgoings whilst reducing the impact on Government revenue. Why not
realize the value of the carbon savings from each refurbishment, at the
same time offering HMRC an alternative to reduce the VAT bill for home
refurbishments, to equal that of new builds?
We say: tit for tat!
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(C) Onis Living 2009
UK consumers increasingly place great importance on, and give preferential treatment to, a product or service that has succeeded in placing within their mind a positive perception of the experience and range of benefits using that particular product will offer them.
The company, with its stylized brew of personality, vision, colours,
graphics, accreditations and messages succeeds in convincing the
consumer in advance that they will attain a range of benefits such as
safety, security, health, wealth, wellbeing, social status, self esteem
and so on just from purchasing the company’s product. The consumer is
promised some of these benefits when they buy something as trivial as a
hand bag or a magazine but this ‘brand promise’ is of critical
importance to them when they buy something important like a car or a
health insurance plan. It is the commercial equivalent of a referral
from a trusted advisor, friend or family member and reduces the
inclination and time spent raising and satisfying all their concerns
prior to buying a product or service from an otherwise unknown entity.
Without this ‘brand promise’ a consumer would constantly have to
determine if the product or service they are thinking of buying is in
the first instance safe, does it even work, who are the people behind
it, do they share the consumer’s philosophy and values, will they do
what they say they are going to do, what if it all goes wrong and so
on.
Yet when a consumer refurbishes their home, (by refurbishment I mean a
substantial project including the building of an extension or a
complete renovation of a property) or to put it another way, when a
consumer tampers with the very fabric of their biggest asset where for
the majority of their lives their beloved family resides, this is
exactly what they have to do. Why? Why is there not a brand in the UK
home refurbishment industry that consumers can turn to with the same
level of confidence they have when they are shopping in the UK retail,
banking and telecommunication industries?
To get an insight in to why the UK does not have a national home
refurbishment brand it is necessary to understand the restrictions that
are placed upon anyone trying to create one. A general building
contractor is predominantly a one man band and is the ‘brand’ of their
company. If they are competent, likeable and trustworthy then a client
may refer them on to another client and so on until they becomes well
known to a few.
But is a recommendation sufficient? Does the builder have what it
takes to satisfy all of the consumers concerns prior to their
engagement? And can a builder grow indefinitely servicing an ever
increasing geographical area leaving satisfied clients in their path?
The answer to both these questions is highly unlikely because of the
following predicaments:
a) The home refurbishment industry is a fragmented and haphazard
industry with little or no universal standards or processes. There does
not exist any model sales and delivery process that is referred to by
all practitioners, no benchmark payment process adhered to by all and
no standard terms of business available to all clients. Instead each
building contractor operates according to their own personally
preferred and somewhat comfortable modes operandi that the client needs
to reconcile with their concerns prior to engagement. Of course an
element of flexibility and negotiation is normal in many business
dealings but without an established process borne out of experience
that withstands the test of scrutiny a client cannot be assured that
the arrangement is to the mutual advantage of both parties and so
suspicion is aroused in the client which the building contractor has to
work against in order not only to win the contract but to maintain the
contract as problems arise throughout the project.
b) A building contractor cannot grow indefinitely because they
suffer from severe skill shortages. A successful home refurbishment
project requires consistent project management throughout. As it is the
role of the proprietor to first visit a client and manage the pre
contract phase it is necessary for their involvement throughout the
whole project, a fact the client will insist on. The fact that they may
be a one man band means also that the client has invested in the
proprietor’s character and so does not want someone else to take over.
The role is also communications intensive and calls for a personal
touch and the authority to make executive decisions whilst maintaining
the confidence and satisfaction of the client. This role also involves
liaising with the project architect and engineer, engaging suitable
trades and monitoring the quality of their work all whilst ensuring the
project is on time and on budget. This is a very serious and time
consuming role that a client demands the proprietor assumes, if they do
not to start with, they will eventually. However a successful home
refurbishment project also requires a foreman, someone on site day to
day who is ensuring everyone is working according to the project
manager’s instructions and that problems are resolved in real time and
momentum is maintained. Normally the proprietor carries out this role
as well as that of the project manager; if the proprietor is running
two or three projects simultaneously they may have a couple of foreman
to rely upon so that the project management function is not compromised
however to grow beyond this so as to be running 10 or 20 or more
simultaneous projects the proprietor has to find a working foreman for
almost every project. The problem is that candidates for qualified
foremen fall in to two main categories; they are either running their
own general building contractor or they are already employed in the
commercial sector for higher wages than they would get otherwise as a
home refurbishment foreman for a general building contractor. They are
therefore notoriously difficult to employ as foremen for home
refurbishment projects.
These problems mean the proprietor cannot take on too many projects
simultaneously as he or she will have to perform many of the foreman’s
tasks and thus lose sight of the higher project management functions.
This is why, even under the best conditions, general building
contractors do not grow beyond the status of a local enterprise. It
therefore follows that they do not acquire the resources or capacity,
nor the inclination due to the nature of their repeat business, to
engage communication strategists, PR advisors and brand creative’s to
give their operation a professional well polished cooperate image with
all the necessary elements to succeed in placing within their
prospective client’s mind a positive perception of the experience and
the range of benefits using them will offer.
Now let’s assume that a home refurbishment brand did exist, what would it look like?
Well firstly it would possess the appropriate corporate image that
its target audience could relate to and rely upon. It would also have
policies in place that demonstrated the underlying logic of how the
company operates bearing the customers interest in mind especially when
things go wrong – this is of real importance given the whimsical nature
of the environment home refurbishment operates within. It would have
clear values and a mission driven by a vision that showed clients what
kind of an entity they were dealing with and that it was not in the
company’s interest to deceive a single client at the expense of a much
bigger vision. It would almost certainly invite the client to become a
part of this vision and in doing so greater facilitate the delivery of
projects. It would also attempt to better the industry it operated
within for all its stakeholders by researching and sourcing new methods
and actively seeking constructive feedback.
Most importantly It would operate according to a standard sales and
delivery process that assured a client that whether they were wealthy
or on a tight budget, male or female, single or married, living in
Edinburgh or in London their project would be subject to the same terms
of business as everyone else’s and that they could understand what was
going to happen next such as when they would be expected to pay, how
much and why.
Next is achieving the task of making these standards available to
the nation. What kind of an entity could achieve this given the
problems of scalability? One business model available to achieve the
transition from general building contractor to national home
refurbishment brand considering the aforementioned dilemmas is the
franchise model.
The franchise would be operated by a master franchisor who would
own the goodwill and Intellectual property of the brand and would be
responsible for, but not restricted to, the development and promotion
of the brand; creating and producing marketing and advertising
initiatives; developing and improving operating systems and processes;
quality assuring the customer experience and workmanship; Signing off
the workmanship whilst at the same time ensuring financial control;
providing ongoing support, feedback and advice to all the franchisees
and last but not least franchising. The master franchisor in return
would receive an initial set up fee and ongoing commissions from all
franchisees.
Ideal candidates for franchisees would be professional project
managers, architects and other property related service professionals
looking for an exciting and rewarding challenge. The franchisee would
own their own business and have the right to use the goodwill,
Intellectual property and operating methods of the master franchisor.
They would operate a particular geographical area such as a borough of
London or a small town. For business professionals with strong
management skills looking for a bigger challenge there is the
possibility of operating as a regional franchisee. They could be the
regional franchisee for all of London or a region of the UK and sell
smaller areas to franchisees. In either case the franchisee would
perform the function of professional project manager whilst
subcontracting the building works to vetted general building
contractors.
The key advantage here to the consumer is that the franchisee can
focus exclusively on the higher functions of project management;
keeping the client happy, making executive decisions, managing the
performance of the general building contractor, ensuring the project is
on time and on budget whilst the proprietor of the general building
contractor acts as the foreman and ensures their teams are being
productive on site. This way the project runs more cost efficiently and
completes faster.
The advantages here to the franchisee is that they can grow their
company in scale and profitability beyond what would be possible if
they were a general building contractor as they are not impeded by the
foreman dilemma. Also as a result of the flexibility of owning their
business mixed with the professionalism of being affiliated with the
bigger corporate entity they can generate better quality sales with
greater ease.
This also means that the general building contractors and tradesmen
will benefit from repeat business from a major client – the franchisee;
this will make it comparatively easier for the building contractor to
win business whilst ultimately making their service more competitively
priced for the franchisee and the client. The building contractor can
also now focus on what they do best, building.
The arrival of a national home refurbishment brand with universal
standards in the UK would represent a significant social change. It
will remove so many stigmas and anxieties surrounding something as
fundamental and necessary as improving the home environment. It will
improve the relationships between general building contractors,
building professionals and homeowners and possibly more stakeholders
farther afield. For example depending upon the political nature of the
leadership of the brand it could make it easier and quicker for new
policies and technologies aimed at reducing CO2 emissions to reach
their intended audience whilst achieving greater results.
At Onis we have already begun the creation of this national home
refurbishment franchise and I would estimate that we will be operating
in every major city and town in the UK by the year 2020. No doubt
competition will emerge along the way that by 2020 will have helped
produce a bigger, more sophisticated industry that presents viable
options to consumers; who will be able to turn to a range of service
providers that have succeeded in placing an affirmative feeling of the
experience of using their service in the mind of their users.
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(C) Onis Living 2009
Nationwide said the price of a typical house fell again in January to £150,501, wiping over £30,000 from the value of the average home over the last 12 months.
The market is not going to improve until lending picks up, Britain's third-biggest lender added.
"Mortgage approvals for house purchase fell to a record low of 27,000
in November, and partial figures for December suggest there has only
been a small improvement since then.
"House purchase approvals have historically been a good lead indicator
of house price movements, and we would not expect to see a
stabilisation of property prices until approvals recover significantly
from current levels," said senior economist Martin Gahbauer.
Buyer enquiries have strengthened over the last few months as interest
rates have fallen sharply, but these have not translated into sales,
the lender said.
David Smith, senior partner, Dreweatt Neate estate agents, said: "While
there are signs of interest in the market given the extent to which
house prices and the base rate have fallen, this amounts to nothing in
the absence of credit.
"Until the lenders start to lend, any interest on behalf of a large percentage of buyers is academic."
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(C) Adfero Ltd 2008
A total of 99,000 mortgage deals were approved – down from 100,000 in November and the six-month average of 136,000.
Approvals worth £8.7 billion were recorded – down from the depressed six-month average of £14.1 billion.
Activity was particularly low in the remortgage market – where 36,000
deals were approved – down from 71,000 in September, as low rates on
standard variable rate mortgages give borrowers little reason to switch
at the end of fixed deals.
Mortgage approvals for home purchases were up in December to 31,000 – but still lower than in September and October.
"December’s rise in mortgage approvals might be a sign that the rise in
new buyer interest seen over the past few months is finally boosting
housing market activity. But we wouldn’t get too excited," said Vicky
Redwood, UK economist at Capital Economics.
"For a start, the rise from 27,000 to 31,000 simply reversed November’s
drop – approvals are still 76 per cent down on their peak."
She added: "Meanwhile, we find it hard to see approvals picking up significantly further when credit is still so hard to get.
"And lastly, if the rise in approvals is driven by 'bargain-hunters',
stronger housing activity might not prevent further falls in house
prices."
"Overall, then, no convincing signs of a housing recovery yet."
Howard Archer, chief UK economist at Global Insight, said: "The Bank of
England mortgage data do not fundamentally undermine the view that the
housing market faces a very difficult 2009."
Andrew Montlake, at mortgage broker Cobalt Capital, said: "Although any
improvement in the lending figures has to be welcomed, I'm not going to
crack open the fizz quite yet.
"The fact remains that the mortgage market has gone from one extreme to the other.
"We've gone from over-exuberance to over-reaction and, in many cases, lenders have still got the shutters firmly down."
The Bank of England data also showed the UK is now paying off its
credit card debts – with £100 million more paid off on credit card
debts than spent – despite the Christmas rush.
Consumer borrowing rose "a miserly" £297 million in December," Dr
Archer said - down from £727 million in November and below the monthly
average £753 million.
"Going forward, consumer borrowing will be limited by ongoing very
tight lending conditions while many people are likely to be
increasingly keen to rein in their borrowing," he said.
"Rising debt levels, historically low household savings rates, plunging
house prices and sharply weakened equity markets mean that there is a
pressing need for many consumers to improve their finances.
"Furthermore, we suspect that very serious concerns over jobs and the
economic outlook will cause people to try to save more, if they can."
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(C) Adfero Ltd 2008
According to the largest independent network of home-finders in the UK,
County Homesearch, potential buyers have shown a renewed interest in
2009.
The website has seen a greatly increased number of potential buyers registering for its services in the last two weeks.
The strength of the pound could also be playing a role, with County
Homesearch managing director Jonathan Haward arguing UK residential
housing was now seen as a bargain for anyone earning dollars or euros:
“As well as indigenous interest, we have also witnessed a substantial
increase in registrations from buyers across the world.
“With discounts of up to 40 per cent on some property due to last
year’s price falls and some lenders offering best-buy mortgage rates of
below four per cent, UK house prices currently look like a bargain to
foreign buyers," added Mr Haward.
“We have quite definitely seen an increase in buyer inquiries and as we
are right at the sharp end of any housing market transactions we
predict continued growth in buyer activity.”
County Homesearch believes this news reinforces the findings of the
Royal Institution of Chartered Surveyors (RICS) who reported that
“buying interest is now at levels not seen since 2006.”
Mr Haward added: “Those buyers who have no need of a mortgage can rely
on us to negotiate some very real bargains and even if house prices dip
by another 5 per cent-10 per cent we can see some excellent house price
growth starting in 2010. In five years time today’s buyer will be
sitting on a substantial profit.”
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(C) Adfero Ltd 2008
|
"We wanted to have a new kitchen and bathroom in our new home but didn't know where to start. We found Onis on-line and were impressed by the information and advice they provided and the transparency of their processes. The design and execution of the project was exemplary and the quality of the workmanship is 10 out 10." |
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