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Sledgehead

Berkely Homes: Attacks Sipps U Turn, Seen As 5% Of Biz

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Developer Berkeley attacks Sipps U-turn

Berkeley had "done a lot of work" preparing for the new scheme and expected to sell at least 200 of its 4,000 homes a year to Sipps investors,

also:

"Roughly half of the 1,656 homes Berkeley sold in the six months to October were to investors, including buy-to-let as well as foreign purchasers. Mr Lewis estimated "a minimum of 200 units" would have been sold a year into Sipps.

Mr Lewis brushed aside concerns about the investor market, despite conceding that there was an oversupply of two-bedroom, two-bathroom homes in Berkeley's key London region. Portman Building Society this week ceased offering mortgages on new-build buy-to-let properties because the market is "too risky". The Chancellor's decision on Sipps has added to those fears."

For shareholders over the next 4 years the shares look well underpinned: "The group has pledged to return £12 a share, or £1.45billion, by December 2010 by working its land bank for cash. "

Given that the shares only cost £10, that amount sto 4.5% plus return of capital - some bribe!

Interestingly they maintain that the fall in profits is due borrowing costs incurred on the back of a £5 div.

SH has no interest in the shares.

EDIT & NB: the £12 / share to be returned includes the previously returned £5, so going forward they are looking to return £7/share or 11% pa. Note that this a clyclical share and high div yields amongst such shares often point to rougher times ahead. None the less, 7 quid of your 10 quid cost today look safe. At current rates £10 would return £12.46 by dec2010, so the shares would need to hold above 12.46 - 7 = £5.46 by then to match or beat the bank.

Edited by Sledgehead

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"Roughly half of the 1,656 homes Berkeley sold in the six months to October were to investors, including buy-to-let as well as foreign purchasers.

Never mind SIPPs this is the first 'official' indication that foreign purchasers (investors) play a significant role in the UK property market (and why shouldn't they, there are enough Brits playing around in foreign property markets). The point is these investor may well pull the plug quickly, especially if their money is channelled through an investment club type of arrangement.

Anyone, heard of any of these types of clubs going bust, yet? Or even how many there are? Does anyone know about how money is invested in such schemes? I do not know much about, although I know they exist.

Edited by FTBagain

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  • 302 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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