During the Covid-19 lockdown, it has been widely reported, primarily in the mainstream media, that the property market has cooled. In many ways it has but my own experience somewhat contradicts this. I am certainly being kept busy by my consultancy and legal clients. Enquiries in response to our direct to owner letter campaigns have also risen.
What I am finding is that investors and property owners are considering more creative strategies in structuring their property deals. The simple straightforward sale and purchase, especially at the right or discounted price certainly isn’t commotosed but creative deal structures are being more widely considered. I was thus delighted that Richard Bowser invited me to write about this, especially to relay what I am myself seeing at the coalface.
The main motivation behind the shift to more creative deal structures, as I see it, is that age old human trait - necessity is the mother of invention. The cooling of the property market, the inability to have properties valued and the slowdown in the property finance sector have all led to innovation.
I have long held the view that every economic pause for breath (I’m intentionally avoiding the ‘R’ word) gives us the opportunity to behave like startup ventures. Remember those halcyon days? The business plan was a blank sheet of paper - you had inbox-zero, your venture was small and adaptable. To borrow from Mark Zuckerberg - you could move swiftly and break things. The Covid-19-led slowdown has delivered the opportunity for innovation and creativity.
Property deals still need to be done and my experience shows that they are very much being done! Let’s turn to have a look at some of the contractual structures my consultancy and legal clients have been adopting.