Housebuilder continues to grow, with the help of a tough market and new taxation rules
Galliford Try has predicted more takeovers in housebuilding as smaller firms sell up before fresh taxation rules come into force.
Frank Nelson, the company’s financial director, was speaking as it continued its march north with the £9.3m acquisition of Kendall Cross in Newcastle upon Tyne.
Nelson said: “We are seeing huge opportunities. A combination of the tough housing market and the changes to Capital Gains Tax (CGT) have opened things up a lot.
“This deal was not activated by the tax issue as we had been talking for months but there are certainly a lot more opportunities coming across our desk in terms of acquisitions and that is being driven mostly by the changes to the tax regime.”
We are seeing huge opportunities. The tough market and CGT changes have changed things a lot
Frank Nelson, financial director
The government intends to scrap “taper relief” and impose a flat tax rate of 18% on all capital gains. Taper relief gives investors a favourable rate of 10% on profit made from selling on stakes in companies, provided they hold them for at least two years.
The changes to CGT are also believed to be behind the move by members of the Miller family to dispose of their holdings in the Scottish housebuilder.
Nelson said: “We wouldn’t normally be looking to buy a regional builder but Kendall Cross is involved in affordable housing and operating in an area in the North where we are not operating so they were attractive.”
The Newcastle contractor and affordable housing specialist reported £1.6m profit on £23.3m turnover for the year ending May 2007. The management team will remain in place.
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More on the growth of Galliford Try at www.building.co.uk/archive