Maximising Opportunities

The current year will be another challenging year for the sector. Risk management will be more important than ever, ensuring that the contracts construction companies enter into are properly costed and fully understood, with parties they can rely on and who will pay.

The key for business owners is to continually appraise their business, in order to maximise on the opportunities available and avoid potential pitfalls.

Below are just some of the areas of potential opportunities we are working with our clients to explore:

  • Below are just some of the areas of potential opportunities we are working with our clients to explore:
  • Research and Development Tax Relief, which many are missing out.
  • Capital Allowances relief on investment in plant and equipment.
  • Employee Management Incentive (EMI) share schemes to encourage staff retention and bonus schemes.
  • Refinancing opportunities whilst interest rates are low.
  • Buying smaller competitors or affiliates to enhance service offering.
  • Re-evaluating supply chains and sub-contractors to ensure value for money and business continuity.
  • Eliminating low margin high risk projects.
  • Looking at expanding markets such as: residential/commercial builds, data centres, student accommodation, Buy to Rent and retirement homes.
  • De-risking contracts by getting contractors and their staff to fully understand their obligations and ensure they are followed.

Unfortunately there are potential drawbacks:

  • Brexit “hangover” may continue to supress development and speculative builds.
  • Starter homes only available to first time buyer under 40 with prices capped at £250k outside London and £450k in the capital with minimum of 20% discount.
  • Increased material cost due to devaluation of sterling.
  • Mayor of London looking for 35% of affordable housing in any development thereby potentially reducing the appetite to build.
  • Permitted development opportunities – where initially there was low hanging fruit, these opportunities may now dwindle, as commercial refurbishment may have more value.

Proposals that would help in the next 12 months if implemented:

  • Stamp duty eliminated for first time buyers.
  • Exempt stamp duty for over 65’s who are downsizing.
  • Heathrow – needs to be fast tracked.
  • HS2 committed to or develop Northern Powerhouse Rail, connecting Liverpool and Hull with Newcastle, Sheffield, Manchester and Leeds.
  • Crossrail 2 to be fully supported by government as well as the mayor.
  • Amending regulations on the retentions held by the main contractor.
  • Eradicate late payment practices by applying penalties.
  • Tax initiatives to contractors to develop offsite construction.
  • Brexit determines that the movement of labour is not to be materially restricted.
  • More support for trainees to come into the construction industry and become a career choice.
  • Eliminate the double tax of the Apprenticeship Levy and Construction Industry Training Board (CITB) contributions.
  • Increased government funding on infrastructure projects to give a post Brexit boost.

Please read the full report here: 2019 MHA UK Construction Sector Report

If you would like to discuss any of the issues raised in more detail or if you would like to speak with a member of our Construction & Real Estate team about how we can help, please contact Hannah Farmborough or call on 0207 429 4147 to be put in contact with your local representative.