Borders housing sites were sold at half price

by DOUGLAS SHEPHERD

The apparent lack of demand for development land in the Central Borders resulted in the sale of two sites earmarked for new housing at rock bottom prices.

One of the lots being offered by the administrator of an insolvent Galashiels building company was snapped up by a local housing association while the other went to a community group who will use the prime housing land to create a village green. There was little or no interest from the private building sector.

Given the proximity of the Buckholm Corner site on the outskirts of Galashiels to the Lowood Estate,  purchased by Scottish Borders Council for £9.6 million to facilitate new housing, there must be serious doubts as to whether the local authority can hope to recoup the large sums of taxpayers' money which financed the land deal unless there is an unprecedented upswing in demand for building plots..

The prices paid for Buckholm Corner and a site at Lilliesleaf are included in a report by Richard Gardiner, the administrator of Murray & Burrell, a business established in Galashiels in 1946 and which encountered financial difficulties in 2016.

Murray & Burrell was in possession of a number of potential development sites in the region. But when Mr Gardiner came to sell the various parcels of land to pay off the firm's considerable debts he found a very weak market indeed.

In a reference to the Buckholm Corner site (10.87 hectares or 26.8 acres) Mr Gardiner says in his report: "From discussions with various agents I was advised that there is little interest for plots of this size in the Borders area".

The directors of Murray & Burrell had valued the site at £1.2 million, but agents working for the administrator estimated a price of £750,000 to £1 million.

However, after Scottish Borders Council had indicated its intention to remove the land from the local authority Development Plan, Mr Gardiner's property agent lodged an objection and an offer of £640,000 for the entire Buckholm Corner site was accepted. The price equates to £23,880 per acre, far below figures being achieved in the Borders up to eight years ago.

The price per acre paid by Scottish Borders Council when it purchased Lowood in 2018 has not been made public while figures included in a report by the District Valuer for the council prior to the conclusion of a deal were redacted in a copy made available via Freedom of Information.

The difficulty in disposing of the Lilliesleaf site is also outlined in Mr Gardiner's progress report. In this case Murray & Burrell management's estimated value had been £790,000 with the agents quoting a figure of £200,000 to £275,000.

"Following an unsuccessful attempt to sell the land at auction a local community group offered £160,000 just prior to it being entered into a second auction", the report says. The community deal was made possible by a grant from the Scottish Government's Land Fund.

The low prices achieved for these two sites and others will have a knock-on effect for Murray & Burrell's ordinary creditors.

Assetz Capital Ltd., which held a standard security over all of the company's assets have been repaid in full. And employees with claims totalling £30,000 for wage arrears and holiday pay will also receive all that they are due, explained Mr Gardiner.

But the dozens of ordinary creditors owed £2.13 million between them will be far less fortunate..

The report warns: "Based on the asset values provided by the directors at the time, a dividend of 100 pence in the pound would be available to creditors.

"Unfortunately, due to the lower values that have been achieved on the land sales this is no longer the case. Current indications are that there may be a dividend of approximately 25 pence in the pound to ordinary creditors".

There is a similar message for shareholders: "The anticipated surplus in the anticipated financial position of the company indicated that there might be funds to be returned to shareholders, However, given the lower return from the sale of assets, I can advise that there will be no return to shareholders".