Property Bulletin - A Briefing For Investors, Developers, Surveyors And Other Professionals In The Property Sector - Planning For An Uncertain Future.

Will a boom follow the bust? Probably. In the meantime, we

offer some advice on planning for the future, minimising your tax

burden and making use of capital allowances. We also discuss what

to look out for if you think a supplier is struggling

financially.

THE BIGGER PICTURE SCENARIO PLANNING FOR PROPERTY

SERVICE COMPANIES

By Denis Burn

Denis Burn explains scenario planning, and how it

can help property service companies in the current

market.

Scenario planning helps businesses to spot good opportunities

and to make decisions that are more resilient to future

uncertainties. It has been likened to 'rehearsing the

future'. The UK property market, as it moves from credit crunch

through recession to recovery, is an environment in which industry

players could make use of this tool.

The technique was founded in the 1960s, and has since been

widely adopted in response to rapid change, increasing complexity

and rising levels of uncertainty.

Scenario planning offers a number of benefits, and now underpins

the plans and decisions of many businesses, for good reason.

Decisions based on scenario planning are more resilient because

cause and effect have been rehearsed.

The process builds effective teams. It is creative and

enjoyable, it uncovers and feeds on differences of opinion, it

challenges assumptions, it shares learning, and it builds new

perspectives of what might be possible and where new opportunities

lie.

Scenario planning helps a business to be more alert to external

developments; it becomes more observant and nimble.

Scenarios are easy to communicate so that employees are more

aware of the drivers of success and potential dangers. Businesses

are less likely to be ambushed by unexpected events (and better

able to respond). Scenario planning is more useful if it is

structured around an important and far-reaching decision, or

possibly a 'what if' event. For example, you may be

considering the impact of the retrenchment of the commercial

development market on your business and clients, or wish to test an

existing strategy against the emerging realities of the economic

downturn, tenant insolvencies and government policies.

With a specific question in mind, you can identify forces that

will influence the success or failure of your property business

strategy. The most important and uncertain forces become the

foundations of different scenarios.

Building detail into these scenarios allows you to consider how

the future might unfold for the real estate sector during the next

few years and how your strategy would stand up. This is a creative

session: scenarios take the form of a narrative with characters

– stories that link together complex interactions and

possibilities.

The idea is not to make forecasts of what is most probable, but

to identify what is plausible. Scenarios are not an end in

themselves but tools to improve strategic thinking and decision

making. They provide a way for you to test out and improve your

strategies.

However, a critical ingredient of successful scenario planning

is the skill and experience of the facilitator. Smith &

Williamson provides this skill, drawing on our detailed involvement

with property service companies and valuable experience and insight

from other sectors. If you would like to discuss this management

technique further, please contact us.

LOOKING FOR LIQUIDITY WHEN CASH IS KING

By Mike Fosberry

Mike Fosberry explains how professionals can invest

together for a mutually beneficial pension

outcome.

The pension simplification reforms, which came into force in

2006, allow for greater flexibility and innovative solutions.

Importantly, the new rules don't distinguish between companies

and private individuals – allowing for the advent of the

Family Self-Invested Personal Pension (SIPP). The Family SIPP is

made possible through a little-known but highly desirable feature

of the regulations that can have far-reaching consequences for

those involved in business together.

The Smith & Williamson Family SIPP enables professionals

(solicitors, barristers, accountants, chartered surveyors, dentists

and business partners) to consolidate their existing pension pots

into one fund that can be used to purchase commercial property.

Pension funds can buy freehold or leasehold, whether offices,

surgeries, retail units, leisure facilities – even land

– and includes their existing trading premises. However,

great care must be exercised if there is any residential

element.

Such an approach creates liquidity from existing capital,

without the need for any new monies to be invested, and is

therefore likely to be of great interest in the current economic

climate which is hindered by credit constraints. Wellinformed

investors will be looking for opportunities to exploit unfavourable

conditions; by using this approach they have the chance to harness

capital that may have been invested into pensions some time ago,

when times were far less challenging than now.

As well as all the normal features and benefits of a SIPP

wrapper, the Family SIPP offers a number of other benefits and tax

advantages.

Gearing and tax...