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Government loans only appeal to half of business owners

  • Loans: Only half of businesses likely to take up government subsidised business loans
  • Cash: Two-thirds of businesses have less than £50k cash and are likely to run out of money before Easter
  • Revenues: 80% report falling revenues between 40-50% in March
  • Time: 45% of owners believe it will take at least a year, if not two, for the business environment to normalise
  • Crisis: 63% liken coronavirus pandemic to the global financial crisis in 2008

Business finance lender MarketFinance sought the views of business owners following the wide ranging measures announced by the Treasury recently. Despite the sizeable fiscal stimulus, more than two thirds (67%) believe funds will not reach them in time and they will run out of cash before Easter (12thApril).

Loans

Only half (52%) of UK businesses are considering taking advantage of the Coronavirus Business Interruption Loan Scheme (CBILS which offers up to £5m, interest free for the first year, over 6 years) to shore up their businesses. Because most businesses (67%) have a pre-existing loan, their biggest concern (36%) is making repayments for any additional loan. Invoice finance (borrowing against invoices on completed work) ranked highest as an alternative to taking a loan, with 48% considering this option over the next 12 months, to avoid the addition debt burden.

Cash flow

With revenue at companies across the country being hit hard, 80% reported a decrease this month of between 40-50%. They are seeking immediate measures to ease this pressure on cash flow. Business owners ranked a larger overdraft facility as first preference before seeking a business credit card and in third place, using invoice finance as a means to inject working capital into the business.

Anil Stocker, CEO at MarketFinance, commented: “Business owners are uncertain on revenue numbers for this year with a third expecting at least a 50% drop in sales and, rightly, weary of taking on more loans that they might not be able to pay back. It’s important to realise that in the fine print, many banks will ask for additional security and Personal Guarantees for loan amounts greater than £250,000 of borrowings.

“The number of businesses that believe they won’t make it to Easter has doubled from a third to two thirds despite the Treasury’s announcements. Time is of essence. It is imperative that businesses are made aware on how to access the measures they have announced but also to widen the range of finance options available to them”.

Advice

Most (35%) business owners are turning to their accountants for advice on what to do next before consulting their friends and family (21%). Only one in six are seeking advice from their bank manager on what to do. Business owners feel their accountants are the most accessible given the remote working environment.

Accountant Rashesh Joshi at Alexander Rosse commented: “The government headlines from last week covered numerous initiatives to be implemented such as the CBILS scheme, the job retention scheme and a new lending scheme facility for larger firms amongst a raft of other measures. The reality on the ground is unfortunately unlike the rapid spread of the COVID-19 virus.

“We have been touch with a number of the accredited lenders and our colleagues at larger accounting practices. Feedback, information and practicalities of the application process and lending criteria are decisively in slow motion. It seems large institutions with all their resources had no contingency plans in place. We are aware of challenger banks and other businesses who could act quicker but have been frustratingly left out of the original process (but now invited) thereby losing further critical time as highlighted in MarketFinance’s research.”

Rashesh added: We are partnering with our clients to help with their cashflow forecasts, rationale for the loan application, contingency plans, how they would cope with self-isolating staff and a whole raft of questions that the banks will ask before they will even consider lending. We are encouraging lenders to get with the reality on the ground which is frankly brutal. In our view the process needs to be simpler and quicker and bridging finance also made available to small to medium businesses”

Anil Stocker added: “Economies around the world are in a state of shock. In the UK, the government has poured billions in subsidies, grants and guaranteed loans for businesses, but nobody can be sure how well the rescue will work and how this money will be propagated around the small business community. It is critical that business owners have a prepared mindset for all scenarios. They will be heavily reliant on all their advisers – accountants, bankers and boards – to help them navigate the turbulence ahead.”

“The government needs to urgently implement and deploy their policy announcements. Business advisers will play a key role in guiding businesses on the best finance options for them. It’s imperative they are up to speed with all the necessary information and nuances of what is available”.

Since 2011, MarketFinance has advanced over £2.9 billion to companies across a range of sizes and sectors, providing working capital and finance for everything from paying staff and suppliers to launching new products or services and accelerating growth.

MarketFinance is backed by Barclays, Santander InnoVentures, European venture capital fund Northzone (invested in Klarna, iZettle and Trustpilot), private equity group MCI Capital (also invested in iZettle, Azimo and Gett) and Viola Credit.

Source: Business Mole

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Boris Johnson under pressure to stop non-essential construction work amid coronavirus crisis

Boris Johnson is under growing pressure to stop non-essential construction workers heading to building sites as the country attempts to tackle the spread of coronavirus.

The Prime Minister has faced calls from across the political spectrum for more stringent rules so workers are not placed at risk, and public transport is not overwhelmed.

In an address to the nation on Monday, Mr Johnson told people not to leave their homes and go to work unless “absolutely necessary”.

Stopping non-essential construction would still see building work on new hospitals take place, but would halt the building of new homes.

Asked at PMQs by Labour leader Jeremy Corbyn why construction sites had not yet been closed, Mr Johnson said: “Everybody should work at home unless they must go to work.

“If a construction company is continuing, then they must do so in accordance with advice from Public Health England.

Earlier on Wednesday, Housing, Communities and Local Government Secretary Robert Jenrick said work on building sites can continue but workers should practice social distancing.

On Tuesday, Downing Street said that construction work should continue if it can be done following Public Health England (PHE) and industry guidance.

A day later, Mr Jenrick told ITV News: “If your employer thinks they cannot follow those guidelines then they should not be operating just as they shouldn’t be breaching any other form of health and safety guidance or regulation.

“So there’s an important duty on employers to consider whether they can operate within those guidelines and if they can’t then unfortunately they are going to have to temporarily close.”

Shadow Secretary of State for International Trade Barry Gardiner called for construction workers to be supported with “at least the living wage” when not working.

He told ITV News: “People need to know that they are going to have – at minimum – a living wage, then they know they can do the right things by themselves and the right thing by the wider public.

“But you cannot self-isolate on a building site, you cannot self-isolate and observe the social distancing measures if you are on a building site or a hairdresser or the many, many self employed professions.”

On Tuesday, Health Secretary Matt Hancock said those who cannot work from home, including key workers in the NHS and social care, should go to work “to keep the country running”.

The Health Secretary said construction workers were among those who could continue to work as long as they could remain two metres apart at all times.

But some builders and construction workers have said they feel “angry and unprotected” going to work, while others are under pressure from employers to go in.

London Mayor Sadiq Khan’s office said the Government must act urgently to get more people staying at home following construction workers reporting to building sites and images of packed Tube trains appearing on social media.

It comes as housebuilder Taylor Wimpey said on Tuesday that it has closed its construction sites, show homes and sale sites due to coronavirus.

Transport for London (TfL) has also said work on its Crossrail sites was being temporarily suspended – but that essential maintenance of the transport network will continue.

Conservative former cabinet minister Sir Iain Duncan Smith added his voice to the calls for non-essential building work to be stopped, telling BBC Two’s Newsnight: “I think the balance is where we should delete some of those construction workers from going to work and focus only on the emergency requirements.”

Andy Burnham, mayor of Greater Manchester, told the programme: “This decision about allowing non-essential work appears to be taken for economic reasons when actually – when you’re in the middle of a global pandemic – health reasons alone really should be guiding all decision making.”

One of the reasons construction workers are still attending building sites is because they are self-employed.

The Government is also under intense pressure to set out a financial support package for self-employed workers – measures senior Conservative MP Sir Iain said were soon to be announced.

“I believe the Government has reached a conclusion about that, the best way to do it is to look back over the average for the year but that does leave out some who haven’t been self-employed for over a year,” he told Newsnight.

Source: ITV

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Pound Sterling Bounces 0.5% against the Euro, but Outlook Remains Soft

The Pound staged a 0.50% recovery against the Euro on Tuesday, March 24 amidst a broad improvement in investor sentiment, linked to signs the China was exiting its strict quarantine aimed at thwarting the spread of the coronavirus.

Swings in investor sentiment has an impact in the flows of international capital into, and out of, the UK since global stock markets began to plunge in late February amidst investor panic over the rapidly spreading coronavirus. The swings in sentiment in turn impact the valuation of Sterling.

News that China will lift travel bans in Hubei province from Wednesday serves as a rare pice of good news for markets and prompted investors to buy discounted stocks and other ‘risk-on’ assets.

China was first to shut down owing to the spread of the virus and now appears to be the first country emerging out of the crisis.

This is a constructive development for those currencies that are most exposed to the performance of the Chinese economy, particularly the Australia Dollar and New Zealand Dollar while it also aids a recovery in overall investor sentiment generally.

However, the British Pound also sits on this spectrum, falling when stock markets are in decline and rising when they are moving higher as the UK currency is particularly prone to shifts in the inflows and outflows from the UK of investor capitall.

Stock markets rallied on the news that the easing of restrictions by Chinese authorities comes after Hubei province reported new infections dropped to zero on March 19, suggesting the spread of the disease had all but been contained.

While there are some cases of new infections, it is believed these are in citizens returning to China from other parts of the world where they would have been exposed to the virus.

Authorities have added they will lift restrictions on citizens in the town of Wuhan – the epicentre of the global virus pandemic – from April 8.

China initiated a strict lockdown in Wuhan and Hubei province on January 23, thereby restricting the movements of 60 million people and setting the Chinese economy on the path to a sharp economic slowdown that translated into significant falls for ‘risk-on’ currencies such as Sterling.

The FTSE 100 is trading 4.5% higher at the time of writing, the German DAX is up 6.6% and France’s CAC is up 5.8%. The strong recovery in Asia and Europe looks set to feed into the U.S. session where futures for the Dow and S&P 500 are aimed higher.

Pound Sterling has responded to the developments by going higher: the Pound-to-Euro exchange rate is trading 0.70% higher at 1.0843, a sharp reversal of the poor performance seen at the start of the week.

Sterling Remains Vulnerable

A surge in demand for Euros and the market’s lingering distaste for Sterling has seen the Pound-to-Euro exchange rate endure another +1.0% decline on Monday that prompted the pair to once again fallen below 1.08, a move that suggests the strength in Sterling we saw in the second half of last week was potentially a ‘dead cat’ bounce and the market is therefore still biased to weakness.

The Pound has lost 7.82% of value against the Euro in March alone, and while the pair has recovered some lost ground over recent days this remains an exchange rate that looks heavy and prone to further declines.

It appears traders are happy to sell into any strength in Sterling, confirmation of this bias was confirmed over the course of the past two trading sessions when the GBP/EUR exchange rate shot through 1.10 on Friday to only be met by heavy selling interest and fall below the 1.08 level and reach a daily low of 1.0727.

The Euro has meanwhile outperformed the majority of its peers on global FX markets, recording gains in excess of 1.0% against the Canadian Dollar, Yen, Pound and crucially, the Dollar at the start of the new week.

A 1.0% advance in the Euro-Dollar exchange rate to 1.0794 will have provided some upside impetus for the Euro to appreciate in purchasing power against the Pound.

Despite Euro strength, the sell-off in the Pound has ultimately been broad-based and is therefore suggestive of underlying weakness in the currency.

A surge in demand for UK government bonds could be a key catalyst behind the latest declines as the value of UK gilts has risen sharply in the wake of the Bank of England’s announcement last week that it would be significantly expanding its quantitative easing programme.

This involves the buying of government bonds (gilts) in the secondary market by the Bank of England: as the Bank’s actions increase demand the amount the government has to pay bond holders declines, therefore the Bank is able to keep the cost of borrowing lower than normally would be the case.

The intervention by the Bank of England comes at an opportune time for a Government that is going to have to significantly expand its spending levels in order to fight the coronavirus-inspired economic slump. This spending will ultimately be financed by borrowing and if it were not for the Bank of England stepping in to snap up Government bonds with freshly-printed money the market could start asking questions as to the ability of the UK to finance its fiscal support package.

Last week saw the Bank of England cut interest rates to 0.1% and increased its government and corporate bond holdings by £200BN in an unanimous decision in a bid to stave off the negative effects of the coronavirus pandemic.

The total value of bonds the Bank will now hold is therefore taken up to £645BN and should provide enough demand to push the yield paid by the government and corporates lower.

Bank of England, Investor Sentiment Driving Sterling Weakness
As bonds falls in value they ultimately become less attractive to international investors who might in the past have sought them out as an investment asset. Without the demand for UK assets by foreign investors Sterling is left exposed to declines.

Market data shows the yield paid on UK ten year bonds has fallen some 30 basis points over the past three days, courtesy of the Bank of England’s actions.

“The BoE asset purchases are a game-changer for GBP rates while an increasing number of risks could take EUR/GBP to parity,” says Morten Lund, US & UK analyst at Nordea Markets.

The latest bout of selling pressures could therefore be related to the Bank of England’s quantitative easing programme in the debt markets.

The coronavirus outbreak has meanwhile kicked another leg of support from underneath Sterling, as global investors sell UK assets in favour of holding onto cash, a series of events that leaves the currency potentially more exposed than many of its peers.

Because the UK runs a current account deficit – largely courtesy of the country’s tendency to import more than it exports – the Pound is left exposed to global investor sentiment.

A current deficit can persist if a country’s currency is propped up by inflows of investor capital, but when that capital dries up the currency will in theory fall until a new equilibrium is established between imports and exports.

“The UK has a twin deficit with the biggest current account deficit (as % of GDP) in G10. A constant capital inflow is therefore needed to underpin the GBP which is challenging in the present ‘dash for cash situation’,” says Lund.

With international investors running scared the positive flows of capital into the UK appears to be fading to the extent that a major move lower in the currency has been initiated, therefore the longer the current crisis in confidence persists owing to the coronavirus, the further the Pound could fall.

But there are other reasons why Lund believes Sterling has lost ground.

One reason being the UK has a large and systemic important banking sector which Lund says is particular exposed in times of credit crunches and disturbances in the global funding system.

Another reason for Sterling’s vulnerability in times of market turbulence is the impact of Brexit on how the international investor community perceives the UK.

“After years of Brexit uncertainty and low returns, the sterling has lost some of its appeal as a major reserve currency,” says Lund.

Written by Gary Howes

Source: Pound Sterling Live

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Coronavirus to bring UK house prices growth to ‘juddering halt’

The coronavirus outbreak is set to bring UK house prices to a “juddering halt” in the coming months, a top economist warned today.

UK house prices fell 1.1 per cent between December and January. But they were 1.3 per cent up on the previous year, data released today showed.

The Office for National Statistics said UK house prices increased 1.3 per cent over the year to January. That was down from 1.7 per cent growth in December.

Average UK house prices increased 1.1 per cent over the year in England to £247,000. In Wales they rose two per cent to £162,000. And they were 1.6 per cent up in Scotland to £152,000, and 2.5 per cent higher in Northern Ireland to £140,000.

London house prices grew 1.4 per cent over the year.

Howard Archer, chief economic adviser to the EY Item Club, said the data showed the housing market was in a relatively good place following December’s election.

Coronavirus to harm UK house prices’ Brexit recovery

But he warned said coronavirus was likely to stop growth in its tracks.

“The late-2019, early-2020 upturn in the housing market looks certain to be brought to a juddering halt by the impact of coronavirus on the economy,” he said.

Miles Robinson, head of mortgages at online mortgage broker Trussle, added the coronavirus outbreak will deal a blow to UK house prices.

“We can’t ignore the elephant in the room,” he said. “Pressure is mounting on the economy as the coronavirus outbreak escalates. As it stands, we’re yet to see its full impact on the housing market.

“With more stringent government guidelines now in place… sellers may see a drop in property viewings for at least three weeks.

“Many existing homeowners will have been financially affected by the outbreak. The chancellor’s announcement to freeze mortgage repayments will help to reassure those who are worried about their ability to make their monthly payments.”

Archer said data from other sources such as the Bank of England and a survey from Halifax showed the UK housing market was in good shape before the crisis hit.

The Halifax survey showed a 2.9 per cent increase in UK house prices in the three months to February.

However, a recent survey from the Royal Institute of Chartered Surveyors (RICS) showed early evidence of the possible impact of coronavirus.

The RICS survey said: “Although near term sales expectations remain positive, optimism has moderated somewhat, with anecdotal evidence suggesting concerns over the economic impact of the coronavirus are weighing on the outlook to some extent.”

Rightmove has in the last week reported a “significant” slowing in property sales.

By James Booth

Source: City AM

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Housebuilders call for consistent government message

The National Federation of Builders (NFB) has called for a consistent message from the government about safe on-site working practices.

Housebuilder Taylor Wimpey is one of few firms to have closed its sites to protect the spread of coronavirus.

Yesterday Prime Minister Boris Johnson said people may only leave home to exercise once per day, to travel to and from work, to shop for essentials, and to fulfil any medical or care needs.

Richard Beresford, chief executive of the NFB, said: “The Prime Minister’s address was a strong warning to the nation and we now need written guidance about which industries can remain open.

“Industry has been working on safety guidance, which will be updated to reduce all risks but we also need a consistent message across the government.

“At the moment, it’s absolutely not business as usual but we are trying to support our industry to fit within this new and ever changing normality.”

The NFB has welcomed regular engagement from the Government and partnership working with the Construction Leadership Council (CLC), especially as many businesses are desperate to keep sites operational with their staff and supply chain, in work.

Nick Sangwin, NFB chair, said: “It has been a very difficult few months and we have been working hard to ensure our members and the wider industry has strong guidance on safe working practices.

“Projects vary in size and complexity and we look to the government for clear guidance on this issue.

“There are also key strategic national assets that are under construction that may fall under the key worker category that needs looking at.

“We would ask the government to consult with the experts such as the NFB to provide assistance on this.”

BY RYAN BEMBRIDGE

Source: Property Wire

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Bank of England will ‘closely’ monitor credit to economy amid coronavirus crisis

The Bank of England’s Financial Policy Committee (FPC) said it will “monitor closely” the credit conditions facing the economy amid the coronavirus pandemic, and stands ready to take further actions if needed.

In minutes from recent meetings released this morning, the Committee said it “stands ready to take any further actions deemed appropriate to support UK financial stability”.

It described the “nature and global impact” of the shock caused by coronavirus and the speed with which it has spread as “unprecedented in recent history”.

The FPC said it “judges that major UK banks are well able to withstand severe market and economic disruption”, having “built up the resilience of the UK financial system over recent years”.

It also deems “household vulnerability is considerably lower than before the financial crisis”.

The Bank of England has twice slashed interest rates in response to the coronavirus outbreak, with the Bank’s main rate reaching a record low of 0.1 per cent.

The BoE has also launched a £200bn money-printing programme in a bid to calm panicked markets and support the economy.

Its FPC and Monetary Policy Committee (MPC), has also introduced measures to reduce financial stability risks associated with the pandemic and to keep credit flowing into the economy.

These include cutting the UK’s countercyclical capital buffer rate to zero per cent of banks’ exposure to UK borrowers, in the hope this would release up to £190bn of bank lending to businesses. The rate had been at one per cent and was due to reach two per cent by the end of the year.

Last week, the BoE cancelled this year’s stress tests of major banks in Britain and pushed back the implementation of new capital rules to help banks focus on supporting customer lending during the pandemic.

The FPC said today that the UK’s major banks have Tier 1 capital levels — a key measure of financial strength — over three times higher than before the global financial crisis.

“Businesses and households should be able to turn to the banking system to meet their need for credit to bridge through this period of economic disruption.”

It added that it “will monitor closely the response of banks to these measures as well as the credit conditions faced by UK businesses and households more generally”.

By Anna Menin

Source: City AM

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Intermediaries should be tapping into the increased demand for alternative finance

The commercial property and mortgage markets will continue to be worth following over the course of 2020 in terms of activity and innovation, although they will inevitably face their fair share of challenges.

We’ve already seen some positive signs from Shawbrook Bank, who recently suggested that its commercial mortgage enquiries were nearly three times greater in January 2020 when compared with the same month last year. In a similar vein to the rise in enquires seen across the residential property market, it’s not too far of a stretch to realise that much of this could be explained by the decisive election result back in December. After all, no property market likes uncertainty, and the degree of political certainty emerging from this vote has certainly helped provide a lift for all property-related activity. And this level of stability appears to be enticing house buyers and investors back into the market and to even broaden risk profiles across their portfolios.

So, what else can we expect from the commercial mortgage market?

First, and foremost, there will be an increased use of online platforms to make it easier for clients to access finance. These will help match investors – who are looking for a higher return on their money – with clients needing to borrow, for example, deposits through property funds. Retailers themselves are utilising innovative technology to grow their client base through logic capabilities algorithms which can provide predictive insights into customer behaviour, which in turn can transform their property location strategy.

However, obstacles surrounding access to finance for SMEs remain. A recent study from specialist lender Together has indicated that hundreds of thousands of UK SMEs have been turned down for property finance over the past five years.

It reported that nearly a quarter of SMEs said they had struggled to find the funds to move or expand – with inflexible lenders and a shortage of suitable property proving the biggest problems. The research showed that even the 24% which have successfully completed property moves or upgrades still struggled to navigate challenging funding processes. Finding a suitable property was ranked as the biggest problem by SMEs – 30% said it was an issue – but the next four biggest challenges were all driven by issues with lenders and raising finance. Around 28% of firms said lenders were inflexible, while the same number – the equivalent of nearly 840,000 firms – had applications rejected during the process. 27% said they had to resubmit applications and nearly one in five (19%) said lenders did not understand their businesses.

SMEs remain the lifeblood of the UK economy, and these figures highlight just how difficult it can be for some firms to access the type of finance which could support their business and help with expansion plans. In fairness, commercial lenders are being asked tough questions when it comes to funding lines and risk appetites in what remains some uncertain times for the UK high street and general economic conditions. Having said this, SMEs are evolving within this shifting climate and lenders have to be more flexible in both their criteria and product ranges in order to meet these needs. The Bank of England is also doing its bit after loosening some of the restrictions on banks to allow them to lend more to businesses, which is estimated to free up an extra £190bn of credit to the economy.

Thankfully, there are enough positive indicators to suggest that the market is moving in the right direction, and much of this is being generated through specialist lending and distribution channels, a factor which really highlights the importance of the advice process. Which means that intermediaries should be tapping into the increased demand for alternative finance as many of their existing clients, and potential new ones, will be part of this growing SME army. And now is the time to engage with them for their business as well as personal borrowing requirements.

By DALE JANNELS

Source: Financial Reporter

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Sterling takes another big tumble as investors seek safety

The British pound fell sharply again on Monday as investors dumped currencies they consider riskier to own amid the coronavirus pandemic.

Sterling has been under pressure because of a massive wave of selling of most currencies other than the dollar, which is the world’s most liquid currency and the safe haven of choice when confidence evaporates from financial markets.

The pound has also been hit by investor concerns that Britain’s approach to dealing with the virus, which has seen a more staggered disruption to economic and everyday life than in other countries, is not the right one.

Britain’s large current account deficit has also made sterling vulnerable, while drastically poorer liquidity has exacerbated moves downwards.

Sterling fell as much as 1.6% to $1.1490 by 1550 GMT before recovering slightly.

Last week the British currency briefly touched a 35-year low of $1.1413.

Against the euro, sterling tanked by an even greater margin.

The euro added 2% to 93.61 pence, still some way off last week’s lows of 95 pence.

Some analysts have been impressed by the British policy response to the crisis, but say sterling has not benefited. The Bank of England has slashed interest rates to record lows, ramped up its quantitative easing programme and the government announced significant fiscal stimulus.

“The broken financial environment means that GBP is not able to respond to the proactive fiscal support undertaken by UK policy makers,” ING analysts said in a research note.

Kit Juckes, an analyst at Societe Generale, noted that according to positioning data, as of last Tuesday there had only been a small reduction in the long positions on the pound.

That would make the currency vulnerable to further falls as investors cut their long positions.

“Has the slide since Tuesday cleared the longs? It seems doubtful,” he said.

Currency markets were highly volatile again, with the dollar falling after the U.S. Federal Reserve announced an unprecedented scheme of credit support to help the United States economy.

The greenback later recovered some of those losses as stock markets resumed their fall and investors sought safer places to put their cash.

British flash Purchasing Managers Index survey data for March published earlier on Monday unsurprisingly fell into contraction, with the coronavirus expected to damage the economy further in the weeks ahead.

Reporting by Tommy Reggiori Wilkes

Source: UK Reuters

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Estate agents urge government to extend coronavirus support

Estate agents have urged the government to protect the industry as house viewings drop and sales activity slows due to coronavirus.

The sector has called for the government to extend the business rates holiday, which applies to retail and hospitality firms, to estate agent companies.

The UK’s housing market looked set to bounce back this year with increased certainty over Brexit due to the Conservative election victory.

The price of property coming to market in London surged 5.1 per cent year on year last month to an average of £638,826, the highest annual rate of growth since May 2016.

However the coronavirus pandemic has caused viewings to drop, as people follow recommendations to avoid social contact. Knight Frank research found that new buyer volumes were down four per cent last week.

”Typically spring is when we see an influx of properties coming into the market but we are already seeing low stock levels and less demand for viewings,” Mark Hayward, chief executive of the National Association of Estate Agents, said.

Despite challenging circumstances people will still need to buy and sell, so we are advising agents to move to virtual viewings where possible and for buyers and sellers to take a pragmatic approach.”

The government last week said all retail, leisure and hospitality businesses would be given a business rates holiday, regardless of the size of the firm, however the allowance will not extend to estate agents.

“As it currently stands, estate agents are the only businesses on the high street who will continue to have to pay business rates, due to the fact our offices are classed as commercial space and not retail,” Simon Gerrard, managing director at Martyn Gerrard Estate Agents, said.

He added: “Under social isolation measures, no one is able to view homes or properties, and so sales agreements will grind to a halt.

“In addition, we are at the coalface in dealing with both residential and commercial clients unable to pay rent due to loss of earnings and jobs. We have been left out in the cold by the Government, to deal with a crisis that they have failed to sufficiently plan for.”

Liam Bailey, global head of research at Knight Frank, said: “Given the unique nature of real estate, many investors still need to see assets in person before making a decision.

“Their ability to do so is currently curtailed, especially for those without a local market presence. For some this is undoubtedly slowing and even postponing the decision making process.”

By Jessica Clark

Source: City AM

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Bank of England Slashes Interest Rates Again, to Record Low of 0.1%

The Bank of England cut interest rates for the second time in two weeks, to bolster the economy against the coronavirus epidemic.

The latest cut, announced Thursday, took interest rates from 0.25% to 0.1%—the lowest level in the Bank’s 325-year history.

The bank also increased its quantitative easing stimulus package, buying an additional £200 billion of UK government and corporate bonds to pump cash into the economy and keep down the cost of borrowing.

New governor Andrew Bailey, who took over from Mark Carney just Monday, said the measures were designed to calm markets spooked by the mounting death toll from COVID-19, crises in other economies and rumours that London will soon be forced into complete lockdown.

“The obvious increase in the pace and severity of Covid-19, which has built during the week, was something we had to assess and respond to, we can’t wait for the hard economic data before we act,” he said.

Markets reacted optimistically to the news, with the FTSE ending the day up 1.4% and the pound rising against the dollar.

The cut in interest rates and quantitative easing are “highly unlikely to highly unlikely to prevent a sizeable hit to [UK] GDP this year,” analysts at Japanese investment bank Nomura said. But they added, “there can be no question that the monetary and fiscal authorities are throwing everything they can at this problem to support firms and households, cushion demand as much as is reasonably possible, and to reduce the long-term hit to supply.”

However, there will be questions about what further action the Bank of England can take, after Bailey reiterated his reluctance to use zero or negative interest rates.

Bailey said the Bank was considering further monetary boosts it could make. “We are not done. The Bank of England will do what the public needs in the days and weeks ahead.”

As interest rates plunged, some lenders moved quickly to withdraw tracker mortgages from the market.

Henry Jordan, Mortgage Director at Nationwide, said: “With a second cut in interest rates in just over a week, bringing Bank Rate down to an unprecedented 0.1%, we have taken the decision to temporarily withdraw all of the society’s residential tracker mortgages from sale.”

Other lenders, including Barclays, HSBC and Santander, said they would reduce their tracker and variable rate mortgages in line with the new Base Rate.

Among HSBC’s tracker mortgages is a two-year deal which charges just 0.64% above the Bank of England base rate. Now pegged at 0.74%, the deal is believed to be the lowest interest rate ever offered for new mortgages. It’s available to buyers with a 40% deposit, on properties worth up to £5 million—but buyers will need to act quickly. Brokers expect it too will be withdrawn from the market by next week.

Broker Aaron Strutt of Trinity Financial said the recent cuts had demonstrated the value of tracker mortgages. “About 95% of mortgages are on a fixed-rate basis, but if you’d taken out a tracker a couple of months ago your rate would have effectively halved.”

Source: Money Expert