Property & Construction Daily

The Property & Construction Daily provides a sector-specific comment from leading analyst Alastair Stewart. His daily perspective provides a round-up of market statements, news, economics and views from the property and construction sectors.

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October 24, 2022

Doubling in buy-to-let investors transferring to company status to save on tax

HLCL | News – Doubling in buy-to-let investors transferring to company status to save on tax; a third of rail upgrades stalled

Company news

Helical (HLCL, 297p, £366m)

Commercial real estate investor, focused on London and Manchester offices. HY trading update. Guidance: “We have had a good first half of the financial year with both development and leasing targets being met or exceeded. We achieved practical completion of The JJ Mack Building, EC1 and have a strong level of interest from occupiers seeking the best-in-class and most sustainable office space. Elsewhere, we recently sold Kaleidoscope, EC1 at a 4.25% net initial yield, having completed our exit from Manchester in July, as well as disposing of an office and further residential units at Barts Square, EC1. Trading: Lettings – four new lettings totalling 19,642 sq ft, delivering contracted rent of £1.3m at a 2.2% premium to 31 March 2022 ERV. Developments – Practical completion was achieved at The JJ Mack Building on 30 September 2022, as scheduled. The 205,961 sq ft BREEAM Outstanding office development is now available to let and the formal launch took place on 6 October 2022. At 100 New Bridge Street, EC4, once planning approved, the redevelopment work is anticipated to commence in late 2023 after vacant possession has been obtained. Over £200m of sales achieved during period, all above March book value

In other news …

Lettings market.

The number of landlords transferring their buy-to-let properties from personal to company ownership to reap tax benefits has resulted in a doubling of buy-to-let companies in five years to over 300,000, according to the Hamptons Lettings Index, Property Week (link, paywall). The agent said the shift was driven by interest rates rising to 6%, which resulted in the average higher-rate taxpaying landlord with property in their personal name facing an average £1,716 annual tax bill, despite making a loss of £2,479. Hamptons said it estimated around 40% of all new buy-to-let purchases are now made via a company structure, up from around 10% in 2016, when key tax changes were tapered in.

Infrastructure.

Around a third of projects in the Government’s £10bn Rail Network Enhancements Pipeline have failed to advance in the three years since the 2019-2024 plan was published, ConstructionEnquirer.com (link). Trade body, the Rail Industry Association, has carried out its own progress audit on the planned rolling programme of 58 enhancement projects, after concern over the Department of Transport’s failure to publish annual progress updates as originally promised. The Government initially committed £10.4bn for enhancements in the ‘CP6’ programme, but has since revised down this amount to £9.6bn. But the supply chain warns it is now operating in the dark about exactly which projects will progress and which will be delayed or cancelled.

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