‘Property market needs can do attitude to survive’

Housing: Tax hurdles blocking sale of new developments, says lawyer

A top north-east lawyer claims Aberdeen’s property market needs to show a “can do” attitude to overcoming new tax hurdles and other roadblocks stopping the sale of new developments.

Rodney Whyte, partner and specialist in planning and development law at Pinsent Masons said although the housing sector is slowing improving, builders continue to be challenged with rising costs of new materials and labour.

Mr Whyte was speaking after the recent collapse of local house builders

“More stringent building standards, form part of the quandary”

Deveron Homes and Anderson Construction at the start of the month.

Deveron Homes and sister company Deveron Construction folded on July 4 with the immediate loss of five jobs.

The remaining nine workers at the Huntlybased businesses – subsidiaries of Deveron Holdings – have been kept on to help administrators from professional services firm KPMG sell the assets.

Then three days later Anderson Construction (Aberdeen) collapsed, with 19 jobs affected.

Mr Whyte said: “It is a familiar set of challenges which face property developers across the piece, from small family-owned firms and medium sized regional developers, right up to the national plcs whose marketing hoardings are prevalent on building sites throughout Aberdeenshire.

“From the builders’ perspective, it continues to be an extremely challenging environment. Rising costs of raw materials and labour, allied to having to absorb costs in complying with new, more stringent building standards, form part of the quandary. Housebuilders report that it remains difficult to sell new homes and many developments require significant levels of incentivisation to get the missives signed.”

Mr Whyte said another hurdle faced by developers is the planning process.

He added: “It’s not just the time it takes to get from drawing board to pouring foundations and laying the first brick on site – but uncertainty over what the ‘planning gain’ package will look like for each development.

“There is a fear within the development community that some elected members still don’t ‘get’ how development works and in particular the essential ingredient of development viability to secure the funding that is generally necessary to deliver development.

“At least one disputed north-east planning application, indicates a lack of willingness on the part of elected members to compromise when market conditions have clearly forced the developer to reappraise the initial plan. This application, which was supported by planning officials and attracted minimal objections from the public, is currently at appeal.”

Mr Whyte said developers, like all businesses, have to be encouraged to invest in a particular city or region, otherwise they will choose to locate their next jobcreating, local-economyimproving project in a more commercially aware and supportive environment.

He said: “Let’s not forget, most of the developers represented in Aberdeen city and shire are active elsewhere in the UK. If they find that planning authorities and councillors in Edinburgh, Newcastle, York or wherever, are more supportive and promise a more viable process for delivering new homes, it is probable that there will come a point when they decided to shift operations and capital to those cando cities.” Sports Direct has blamed tough comparatives and an £85 million hit from its stake in Debenhams for dragging full-year profits down 72.5%.

The sports retailer said on Thursday that its pre-tax profits plunged to £77.5m in the year to April 29, from £281.6m a year earlier.

It was impacted in part by an investment in Debenhams, having increased its total stake to 29.7% during the period.

The company upped its holding in the struggling department store chain in March, bringing it close to a level at which it must launch a takeover bid.

But a recent reduction in Debenhams’ value meant Sports Direct took an £85.4 million hit as a result - having been offset in part by investment income.

The total loss on

“Shares in Sports Direct dropped as much as 11%”

that investment was otherwise £98.1m.

The company also has strategic investments in businesses including Goals Soccer Centres, French Connection, and House of Fraser.

Shares in Sports Direct dropped as much as 11% in early trading.

Sports Direct said comparative figures from a year earlier were tough to match, having been boosted due to its sale of JD Sports shares and the disposal of the Dunlop brand.

The loss of Dunlop also hit revenues from its wholesale and licensing division, which dropped 22.7% to £186.3m, but the disposal eased operating cost pressures which decreased by 31%.

Total group revenue for the period was up 3.5% at £3.4bn, though its UK sports retail sales fell 2% to £2.2bn.

ADVICE: Rodney Whyte, partner and specialist in planning and development law at Pinsent Masons