AT THE END OF LAST MONTH’S COLUMN, we had got as far as owning a field and having planning permission to build a veterinary practice on it.
This process had taken about six months, so we were keen to get on with the next stage, which was finding the money and spending it. I will not bore you with the full details as trying to compress 18 months of negotiations and sleepless nights into this column will bore you all to tears and give me a nervous breakdown reliving the highs and lows… well, lows separated by long empty periods of waiting, of the process.
Unrelated to the build project, but just at the start of it all, I had a meeting with Ray Cox from Medifinance (now also known in the veterinary world as JPM finance) about what vets need from finance brokers for an article they were doing in this magazine.
One idea to come from that meeting was the interest-free credit loans that are now available for vets’ clients. We had a couple of lunches in a pleasant pub by the sea and at our last meeting I said jokingly, “We might need some money soon, quite a lot actually,” and so it came about that our vast loan was set up by a man I met down the pub.
The next person on the scene was Andrew Windsor of JPM financial advisers who came up with a whiz-bang scheme to use money in our pensions as a SIPP to finance the build. This would reduce lending requirements and also provide us with a ready made exit strategy for retirement and finally is very efficient on inheritance tax.
This was and is a very good idea; unfortunately, it also turned out to be very complicated and very expensive to set up.
I don’t know if you have ever heard a solicitor make the same sort of noise a builder makes when he says, “Who did this? It’s going to be expensive to sort out,” or a new hairdresser when they ask, “Oh… who cut your hair last?” It was that kind of reaction we got when we came to turn financial planning into legal reality. Anyway, it did happen and is currently functioning very well as we near the end of the building process.
Another lesson to take from this: think of a figure you will end up spending in fees and triple it! Overall I would think of adding 5% of your build cost to set aside for fees, as when building a new build you will be bankrolling the following people: architects, planning department, three surveyors (yours, the bank’s, the builder’s), the bank’s fees, your solicitor, the bank’s solicitor (and in our case the SIPP solicitor), your IFA, the pension consultant if using a SIPP and more. That’s before you pick up a spade and start digging.
We often felt like a big (cash) cow that had wandered innocently into a watering hole full of piranhas: the phrase “feeding frenzy” would fit. One useful tip is to see if you can get your bank to agree to use your own architect as their independent monitoring surveyor (IMS) for the build process. This cuts out costs and means you have someone on your side dealing with the bank.
The role of the IMS is the link between the build itself and the money; they confirm progress and the bank releases funds accordingly. Generally speaking, a good architect does not just design your building but acts as your advocate and expert on your side throughout. I hadn’t realised how much they do after the design is done, and without one prepared to take your side when things go slightly off-piste during the build, you would be lost.
Hold the front page
However, pick up a spade we did and just before Christmas 2015, a mere two years post planning permission, we had the press out and two local dignitaries brandished a suitably shiny spade to break ground for the paper. A cohort of clients came down to witness it and it felt great to be finally building.
This being the comedy of errors that it was, though unbeknown to the public and the builders (who thought they were finally going to earn some money after 18 months of meetings), there was still a covenant on the land from the department of transport (DoT) that needed to be transferred to the SIPP.
This was, we were assured, something they could not refuse to do. They could, however, drag their heels and without it there was no financial contracts and no money.
If you look at the press photo of that day, everyone apart from me is smiling. I am grinding my teeth with stress, as I knew there was still no money available.
What was holding it up was that the DoT or part of it we needed no longer existed and the office we needed to deal with was unfamiliar with the process. Cue help from a most unlikely source, our local Tory MP.
For those few weeks around the breaking ground ceremony, his office and I were working away to get the DoT to behave themselves, and after some pressure from him in Whitehall, the necessary rubber stamp was duly applied – the money could come!
Vogons have nothing on a real bureaucracy – some things are beyond satire. Vets tend to be a self-sufficient and cynical bunch of people, but I found the local MP very helpful when I had a genuine need and was offering new business and employment prospects in his constituency.
The build itself began in earnest at the beginning of this year. We have used a timber frame construction which is built mainly off site and arrives as the world’s biggest at pack ready to go on to the foundation slab. After over two years since planning was granted, we had a foundation slab. I then went on holiday for a week and when I came back there was a building on it!
Fascinating process
Modern building regulations are incredibly rigorous when it comes to environmental impact, drainage, insulation, etc. I have always lived and worked in old buildings and seeing this totally different form of building going up is fascinating.
The insulation is incredible and will be a whole new experience from working in a leaky single-glazed and damp Victorian building. We have lost the sedum roof due to cost but will have an attractive “Catnic” roof instead, and larch cladding. We have two-and-a-half acres of field left and have planted a small orchard, made a wildlife pond and hope to have some sheep.
We are also putting a well-fenced dog training paddock in for community use.
I walked round the building yesterday and the trials and tribulations of the process to get this far are finally seeming worth it. The SIPP involvement means we can keep it separate from the business and when the time comes to retire from the business, we will keep the building as we will already own it outside of the company, rather than buying it out when a decade of property price inflation has occurred. And when that other time comes, a SIPP can be inherited without inheritance tax.
The final instalment of this series will be after we move in, with a review of how it all worked out and what effect it has had on the staff and the business.
- An upcoming article is going to be a review of advanced practitioner status and the routes to get there. Have you got your AP status? How did you achieve it? How easy is it to maintain? Do you feel like you should have AP status but have no clear route to achieving it (e.g. established referral vets, holders of non-UK or older UK certificates)? Do you find the AP status useful when referring cases? Has a client ever commented on it or asked about it? E-mail me at garethcross@hotmail.com.
