28 | BUSINESS Legal column WORDS | John Howell


BUSINESS


Collaborate and co-operate to win


OPP legal columnist John Howell is disappointed to be dealing with project failures yet again this month. He wants the overseas property sector to look at more pooling of its resources and its clients to get through these tough times.


generated by my last article. Ok, so it might only have been a barrage of phone calls, but I thank you for taking the trouble to track me down. The response was driven by a whole series of queries and concerns regarding the liability of directors. To save your blushes I am not going to mention your names but what was quite clear to me (albeit, from a very small sample) was just how little some directors know about their obligations and about the penalties they can face if they do not live up to the requirements of the law.


W


It is simply not the case (as several of the callers thought) that forming a limited company protects the directors from all of the risks of business. I was so surprised about how little these people knew (please, forgive me if you are one of the people who phoned – I am not belittling or getting at you) that I have decided to prepare one of our online audio-visual training sessions on the topic.


I will do this in the next couple of weeks and make it available free on our website and give a copy to OPP so that they can do with it as they see fi t. All of this did, however,


underline the need for training within this industry.


The fact that it has grown from a cottage industry with very small companies catering to very small numbers of buyers into an industry where there are now some big


ow! I have never had as much response to an article in OPP as was


companies with multi-million turnovers is a great thing ... but it does raise the expectations of the public – whether they are dealing with the largest or the smallest of companies.


Raised expectations lead to raised risk for those who do not perform. Changing the subject, in the last month I have been faced (yet again!) with examples of failing developments.


“Raised expectations from the public lead to raised risk for those who do not perform.”


I have spent time in Cape Verde,


in Turkey and in Spain and it is obvious that this problem is getting worse not better. A year or more ago there were large numbers of developers failing but these were, generally, unsound developments built by companies which did not have the resource to cope with the fi rst puffs of wind generated by the storm of the global economic crisis. Today we are seeing larger companies –


often with good developments – in danger of going to the wall. These are the companies that have lived


off their reserves over the last year or so but who have now run out of money. They had hoped for an upturn in the economy – and, in particular, in the international property industry - but still see no sight of it.


I mention in passing that the recent austerity measures taken by the Government in the UK will certainly


not help.


It seems common ground that these will cost at least 500,000 public jobs and God knows how many spin off losses in the private sector.


In my experience, the greatest barrier to investment in overseas property, whether as an investment or as a life style choice, in uncertainty about your future fi nancial position.


The fear of possible unemployment as much as unemployment itself could well nip in the bud the small signs of improvement that I have seen over recent months. Anyway, back to failing


developments. Very often, in my view, these problems could have been alleviated (though not avoided completely) by the companies concerned taking active steps to tell their buyers what was going on and to procure their active support and co-operation.


“Co-operation could have saved a number of developments by pooling resources - mainly buyers.”


Instead, all too often, the response


of the company in diffi culty has been to tell the buyers more and more – and more and more outrageous – lies in order to buy time. This policy seldom works.


This failure of more and more companies poses a challenge to and an opportunity for the industry as a whole. This is, of course, an industry


John Howell 020 7836 2841 john@jhco.org


where there is little or no co-operation between rival companies and where any move towards such co-operation would be seen by some as a sign of weakness, disloyalty or insanity. Yet such co-operation could have


saved a number of developments by pooling resources – mainly buyers - into a smaller number of viable projects and then mothballing the others until the market is enjoying better economic times. Just as importantly, it would have saved the buyers upon whom we all ultimately depend from huge amounts of stress and large fi nancial losses. Changing this culture is diffi cult


but essential.


In my opinion, a good starting point would be a strictly private conference where some of the key players could get together and discuss the problems as a group.


As a lead body they could start to try and identify the mechanisms we need to put in place – confi dentiality, independent mediation, confi dence building, public relations, government support etc – to make this cultural change happen. The industry then has to make it all work in practice. John Howell will be speaking at the OPPLive conference in London this October. For more details and to register for the event, please go to: www.propertyinvestor.co.uk/london/


www.opp.org.uk | AUGUST 2010


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60  |  Page 61  |  Page 62  |  Page 63  |  Page 64  |  Page 65  |  Page 66  |  Page 67  |  Page 68