COVID-19: How to protect your property investment while facing building-site closures
In the guidance provided by the UK Government on March 24, Chancellor Rishi Sunak confirmed that construction sites are being allowed to remain open - if done safely.
However, we can see numerous firms taking the difficult decision to close their sites anyway. By doing so they are minimising their costs and, more importantly, complying with UK Government guidance, aimed at slowing the spread of the COVID-19 pandemic.
But where does this leave investors, particularly those away from London and away from their projects?
As an investor, here are the things you should ensure:
- Keep your site in its best possible condition to re-start work at any time.
- Check the terms of any relevant construction contracts carefully. If an extension of time is needed, payment of the contractor’s expenses may be needed. There could also be loss or termination rights available to either party. Any notice requirements should be carefully considered.
Here are the 5 key areas that need to be considered:
A clear line of communication should be established between all parties, and ensuring to not forget about the supply chain of materials. It is important for the site manager to hold up-to-date contacts for all key personnel involved in the project.
- Secure the site by ensuring appropriate fencing/barricades/hoarding is erected around the site boundary to prevent any access, (be aware that the site may not be monitored daily while it’s completely closed)
- Do not forget to check on all fire safety measures to avoid any issues. It is vital that these are tested for any defects.
- Ensure any materials, machinery, tools and other equipment is locked up, secure and out-of-sight.
- Ensure that your electrical installation and the main incoming water are isolated
- Test the alarm and any CCTV, if you have them in place. Ensure they are fully operational and could be closely monitored.
- Record the site before the closure by taking photos, and any other required evidence.
Contact your insurance company
- Check the contractual provisions: make sure all risks policy is in date, does it adequately cover all the necessary interests? Speak to your insurance brokers before closing the site
- There might be specific requirements to meet even if the site is insured, this could be security measurement or other controls being carried out.
Don’t forget the off-site material
- Inventory check should be done for the off-site materials as the goods might be held for a long period.
- A vesting certificate should be in place to secure the materials you bought which are ready to ship in.
Protect the completed work
- If you have completed work handed over or finished, make sure they are kept in the right environment (temperature and humidity) on site, for example your lovely timber floors.
- Protections set to cover completed work should be approved by the installers.
A status report is strongly recommended
Not only do we recommend you to take pictures to record your materials, an independant status report is strongly advised.
Project status reports are timely updates on the progress of your projects. It is written concisely, they offer high-level information about a project, rather than every detail. This report should include:
- Outline any concern over workmanship and a review of the work progress.
- All information should be up to date with a register of current issues and decisions required by the client
- Review of the financial cost plan. It should include the latest valuation, the projected cash flow and expenditure
- To conduct a risk register to understand the impact of each risk in terms of cost/time/quality.
- A up to date assessment to the remaining time for the project and cost plan allocated to complete the works is needed.
Seeking new opportunities
It is always disruptive for any site to close, this could impact on the profit of the investment or could increase the budget. With the emergency 0.5% rate cut by the Bank of England in the midst of the Coronavirus outbreak, this means it might be beneficial to check in with your lender if you are not on a fixed rate. Furthermore, if you think the closure is becoming a financial burden for you, you could always seek help and as for a mortgage holiday.
With site closure a project manager and investor could use the time being to review the progress of work, and work on off-site tasks,such as technical coordination and value engineering. A quick review of the project strategy could help by minimising loss of time and ensure the site opening to be smooth.
Ask for advice
If you need any specific advice on your project, please get in touch. and we’ll be happy to assist.
Astons is a leading global immigration advisory firm with offices in London, Beijing, Moscow, Dubai and Limassol (Republic of Cyprus) and offers residency & citizenship investment solutions worldwide including UK, Turkey, Vanuatu, EU & the Caribbean.
For further information or to discuss your personal circumstances in a private consultation, please contact Astons at email@example.com or call +44 207 292 2977