Sir Tom Hunter backs housing market and invests in hospitality firm

Sir Tom conceded conditions in the housing market were “challenging”, following a series of hikes in interest rates by the Bank of England to cool inflation that has pushed up the cost of buying a home.

Progress has been slow on the development of Winchburgh village in West Lothian, one of the key assets owned by Sir Tom’s West Coast Capital investment vehicle, where there are plans to deliver three new schools, a 75-acre community park and a marina at the development with joint venture partner CALA. But Sir Tom signalled his commitment to continue investing in the housing market, as Scotland continues to suffer from an acute shortage of homes.

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He told The Herald: “The good thing about housebuilding … is that in the longer term we are still not building enough homes, either for rent or for purchase in the whole of the UK and definitely within Scotland. Therefore, over the long term, it is a good investment. There will be ups and downs.”

Sir Tom said that he had learned from the last financial crisis, “when I didn’t do very well”, by ensuring West Coast Capital remained debt-free.

“We can just simply carry on in Winchburgh,” he said. Noting that six major housebuilders are currently on site at the village now, he added: “There is some amazing stuff going on there.”

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However, Sir Tom said the Scottish Government’s decision to freeze rents in the private housing market in response to the cost-of-living crisis would have “unintended consequences”, declaring that it will exacerbate the well-documented shortage of homes across Scotland.

Scottish minsters introduced a temporary cap, set at zero per cent, on in-tenancy rent increases in October to help people as inflation spiralled. The cap will remain in place until at least March 31, 2023. But Sir Tom warned the policy could be damaging in the long run.

He said: “We do need to address some of the structural nature [of housing policy]. The Scottish Government came out with a rent freeze which on the face of it looks good for the people who are not paying more money. But it stifles supply, basically.

“I personally know of two big schemes in Scotland that are just not going ahead until there is future clarity about what is going to happen in the rental market. So, there are some big decisions to be make about housing.”

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But he added: “In the longer term, I think it is a good place to be [for investing].”

While Sir Tom said it can be seen as positive that tenants benefit from a rent freeze, the policy would have the “unintended consequences of cutting off supply”.

He noted: “In the longer run it makes things worse because if there is less supply coming into the market and more demand … prices skyrocket. There needs to be long-term thinking here and not just one-sided thinking.”

Sir Tom’s comments came as new accounts for West Coast Capital show it had total assets, less current liabilities, of £185.3 million on March 31, 2022, compared with £195.7m at the same stage last year. He said it had been a year of “steady progress”.

The period saw West Coast Capital invest in a “significant position” in Ayrshire-based hospitality group Buzzworks Holdings, and disposed of its position in Calum Smeaton’s TVSquared, which was sold to Innovid in a deal worth $160m. Sir Tom expressed his admiration for the “culture” being built by siblings Colin, Kenny and Alison Blair at Buzzworks, whom he said are showing people that they can build long and rewarding careers in the hospitality industry. West Coast Capital said its undisclosed investment in Buzzworks is to help support the growth of the company, which has added 100 jobs – taking its total headcount to 725 employees – since it became involved. The company has 13 venues, mostly in the west of Scotland.

Sir Tom, who said he has known the Blair family for around 15 years, said: “I was always admiring of the attitude they took towards their people. Kenny Blair, especially, is building a culture in the hospitality trade. People would maybe see hospitality as a transient [career]; they would maybe not even see it as a career.

Kenny, Colin and Alison are trying to say this is a good business to be in. We can offer you a good career, good career progression within Buzzworks. I really liked that.”

He also said the quality of Buzzworks’ outlets “stacks up with London”, adding: “It’s a real winning formula.”

West Coast Capital exited its investment in entrepreneur Calum Smeaton’s TVSquared during the period, following the sale of the company to Innovid for around $160m. West Coast had been the biggest investor in the company, which allows businesses to measure the impact of their TV advertising. Sir Tom said Mr Smeaton “deserves huge credit for building a successful global tech business from here in Scotland”.

He also said West Coast remains “committed to THG plc and would reiterate our absolute faith in Matt Moulding and his team”.

Sir Tom underlined the importance of the Hunter family’s philanthropic work through the Hunter Foundation, which has now donated £148m to various causes since its inception.

He said philanthropy is “what gets me out of bed in the morning”, adding that “it’s a joy and privilege” to be able to give money from West Coast’s investment returns to deserving causes.