Unite suffers £27.4m stamp duty blow

Unite Group, the FTSE250 property developer that specialises in student
accommodation, has suffered a £27.4m reduction to its investment portfolio due
to the withdrawal of stamp duty relief in disadvantaged areas.

Speaking as Unite released its interim results, group chairman Geoffrey
Maddrell said the decision to remove the relief, which was announced by Gordon
Brown in the 2005 pre-election budget, had been ‘unexpected’.

‘While there were some well-publicised anomalies arising from the
introduction of this relief in 2003, it provided a helpful incentive for
developers such as Unite whose businesses are committed to urban regeneration,’
Maddrell said. ‘Its abolition is therefore disappointing, although Unite has
continued to successfully secure new development opportunities subsequently.’

The cancellation of the relief has also hit other property companies,
including Unite’s FTSE250 compatriot Hammerson, which had to reduce its
portfolio valuation by £54m.

A spokeswoman for Unite said that, although the group would only be
materially affected by the removal of the relief if it chose to sell properties
– which was unlikely – it had been one of the criteria Unite had considered when
investing in properties.

‘Unite looks at each development on an individual basis and all issues such
as location and price are taken into account,’ the spokeswoman said. ‘Stamp duty
relief would have been one of the factors considered, but no one thing would be
behind a decision.’

Analysts have indicated that, because Unite focuses on student accommodation,
the removal of the relief will not see a major change to its investment strategy
as student lodgings are typically clustered around more deprived areas where
properties are cheaper.

‘Property companies received a bonus when stamp duty relief in disadvantaged
areas was introduced but it has been removed after a short period,’ Morgan
Stanley analyst Juliana Dalton said. ‘There is no significant impact on
valuation and even less of an impact on strategy.’

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