September 2010 Archives

EGTV talks to chief executive of British Land Chris Grigg, Lloyds Banking Group's Richard Dakin, Hammerson chief executive David Atkins and JP Morgan Cazenove head of real estate Robert Fowlds about their views for property's future.

Speaking from the EG Investment Summit at the King's Fund in London today, the four outline the future of their companies, investment in the sector, and which markets are attractive - or not - to investors and developers in the current economic climate.

By Sean Randall, tax lawyer at Deloitte:

Prior to reports that the Pre-Budget Report would be scrapped this year, rumours began circulating that the Government might introduce an indirect charge to stamp duty land tax (SDLT) on sales of units in property-rich unit trust schemes. This seems to have been based on statements made by both the Liberal Democrats (LD's) and the coalition Government. The LD's included in their manifesto: 'Prevent offshore trusts being used for SDLT planning.' And a Press Notice published in the Emergency Budget indicated that the coalition Government would examine whether changes to the SDLT rules on 'high value' property transactions are needed to prevent avoidance.

The risk of an indirect SDLT charge on unit or share sales is probably low, at least for the time being. The previous Government twice abandoned attempts to introduce such a charge on sales of property-rich companies. The reasons were two-fold. First, technical reasons connected with enforcement; and secondly, fear of collateral damage.

Were the Government inclined to introduce such a charge (following, for example, the land-rich duty regimes in the various states and territories of Australia) the scale of the change would be such that consultation on draft legislation would be needed to ensure that the legislation is effective and not disproportionate. HMRC policy would be conscious when instructing ministers of their failure to consult industry on changes to the rules on transfers of interests in partnerships in 2007, which led to retrospective rectification.

This past weekend, media have picked up on stories published in early June (see our EGi article) stating that Canary Wharf Group looks set to partner Land Securities at its Walkie Talkie office building in the City.
While that piece of information is nothing new, analysts at JPMorgan Cazenove say it now looks like the deal is more certain.
Canary Wharf Group - which is 69% owned by Songbird - will provide construction services to the project, according to reports.
"We would see such a potential JV as a positive for both Land Securities and Songbird," said JPMorgan.
"The main positive for Land Securities being that it could start another (speculative) office project with an experienced JV partner.
"As we said before, Land Securities is gearing up its development pipeline and putting money where its view is (which we welcome)."
What does seem new from these reports is that China Investment Corporation has approached Land Secs to take a 25% stake in the Walkie Talkie - see article here.
"We already note that CIC has an indirect stake in the building as it holds around 15% of Songbird," said JPMorgan.
"We hope Land Securities does not lower its stake below 50%, although everything has its price."