Boyes Turner: Policy changes and tax changes can help but the pressure on costs is relentless

We spoke with Brian Dowling, Partner at Boyes Turner, on the firm's decision to sponsor the Thames Valley Property Awards, picking the best of the best in the region, what it is one should look for in a winner, and what the general trends in the sector are.

The Thames Valley Property Awards 2021, organised by The Business Magazine, brings together corporate finance advisors, lawyers, bankers, private equity investors, accountants, and funding specialists – plus of course the management teams that have led the deals themselves.

What motivated you, as a company, to sponsor the Thames Valley Property Awards and more specifically the Housebuilder of the Year Award?

We’ve demonstrated our passion for the region and the sector for over 130 years. We all know that education opportunities, connectivity, and the landscape all make Reading and the Thames Valley a fantastic place to live and work. We wanted to encourage and applaud particular examples of developers and housebuilders opening up the region to more and more people, by creating great places.

What are the main environmental challenges of house building in the Thames Valley region? How can these be overcome?

We are lawyers, not scientists, but we know that our clients are particularly concerned about how to enable SANGS, and increase net biodiversity when land values and viability can be so challenging. These policies will particularly impact on land use, whereas changes to heating, insulation and power generation (prompted by COP 26) should be easier to adapt to.

Ultimately, clients want to make homes that people want to buy and live in, and people want to live in sustainable and healthy environments. But there will be a cost, and affordable housing or CIL may need to give way to paying for environmental measures.

In the course of negotiating land acquisition and planning agreements our developer clients constantly have to strike a balance. They deal with the ever-increasing regulatory costs of providing high-quality sustainable housing, meeting the challenges of transport congestion, the impact on protected landscapes, and the financial demands of landowners. They then still have to help clients deliver housing that is affordable to potential buyers. These are directly competing pressures.

Policy changes and tax changes can help but the pressure on costs is relentless, especially now with labour and materials cost inflation adding to build costs. Ultimately either house prices or land values will have to absorb this.

How did you, as a firm, navigate the challenges the pandemic posed to your sector during this financial year?

The team at Boyes Turner really pulled together and adapted quickly when the pandemic hit. By focussing on regular and clear internal and external communication and the wellbeing of our people and supporting them to provide excellent service to our clients, we have continued to grow as we have adapted to the challenges the pandemic has posed. Our experiences have helped to evolve and to embrace change which places us well for the future and the challenges that await us and our clients.

What have been the overall financial trends in your sector in the Thames Valley region this year?

Guarded confidence, concern with but possibilities for offices and retail. Ultimately, there is an issue in our region because land values for sheds/logistics space are actually higher than residential values. So the sites with decent transport links are in high demand with commercial developers being able to outbid residential developers. 

How have the financial trends of this year differed from the previous one and what are your expectations for 2022/2023?

We are seeing less financial impact from the previous uncertainty and concern with the political headwinds (including Brexit, change of government, and changes to legislation and taxation), and share our clients’ hope that the worst of Covid is behind us. It will also be interesting to see how commitments at COP-26 translate into the built environment, as developers, investors and occupiers all have different drivers and concerns. More negatively, labour and materials shortages, and inflation generally, seem to be more of a concern this and next year, and could threaten housing delivery and the benign interest rate environment.

Sustained high (and increasing) land, labour and materials prices are inevitably placing cost pressures on our clients which is compounded by increased delay and holding costs often associated with delays caused by the planning system which remains under resourced. CIBILs loans and other Government initiatives have benefitted the sector but the full impact of the ending of those initiatives has yet to be seen.

About Boyes Turner

Boyes Turner advises developers and landowners on a range of long-term strategic acquisitions and disposals and collaboration, consortium and promotion agreements, as well as site assembly and conditional and unconditional transactions with particular focus on the housing and health care sectors. Based in Reading, the firm works with clients in the UK and around the world, including North America, Europe, and the Middle East.