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Who Will Replace Mark Carney as Bank of England Boss?

There’s a pretty prominent position that’s about to open up with the UK government, calling for a fair amount of financial acumen and experience. The official recruitment process to find the next Governor of the Bank of England has begun, with Mark Carney set to stand down after six years of service at the end of January 2020.

For the first time in history, the British government has enlisted the services of a third-party recruitment company – Sapphire Partners – to help pinpoint the perfect candidate for the job. Despite the prominence of the position, the vacancy has been advertised publicly with a complete job description, along with a healthy salary of £480,000.

The successful candidate must demonstrate that she/he can successfully lead, influence and manage a complex and powerful financial institution, inspiring confidence and credibility within the Bank, throughout financial markets, in the wider public arena and on the international stage. She/he will need a broad range of capabilities ranging from macroeconomics, to understanding developments in, and the structure of, financial markets, to macro-prudential and micro-prudential supervision.” – An extract from the official job description.

Of course, rank outsiders with a background in banking aren’t realistically in the running for the post. Instead, there’s a strong chance the decision is being made at this moment behind closed doors, by way of an elite selection committee approaching qualified candidates directly.

Nevertheless, it had previously been suggested that the looming menace of Brexit could deter many candidates from applying for the role. Given the immediacy of the post following Britain’s possible (or otherwise) exit from the EU, the new Governor of the Bank of England could have their work cut out from day one.

The Most Likely Candidates

In terms of who’s most likely to be appointed for the role, the most prominent internal candidates right now are Chief Economist Andy Haldane and Bank Deputy Governor Ben Broadbent. Nemat Shafik also has a strong chance of taking over as the new Governor, as does former Deputy Governor Andrew Bailey.

But what’s interesting in this instance is how the government is proactively using headhunters to locate potential external candidates for the first time. Not only this, but it’s no secret that the chancellor is under immense pressure to appoint more female candidates to higher-level positions within the Bank of England.

The appointment of Sapphire Partners represents a clear reflection of the government’s growing advocacy of high-level female roles. The specialist recruitment agency describes itself as “advocates for women in business” and is operated by a board of five female partners.

Gender diversity within the British Government has been a growing cause of controversy as of late – the Monetary Policy Committee (MPC) having been criticised for failing to appoint sufficient female candidates. Hence, it’s widely predicted that the government will give more consideration to qualified female candidates for the position of Bank of England Governor as of January next year.

The same also applies to international candidates – the government in general being urged to consider candidates beyond the borders of Britain.

As far as the Chancellor is concerned, whoever takes the torch from Mark Carney will have some rather large shoes to fill. The current governor of the Bank of England having “helped steer the UK economy through a challenging period,” according to Mr Hammond.

“Under Mark’s leadership the Bank of England has been at the forefront of reforms to make our financial system safer and more accountable,” the chancellor continued.

Along with a basic salary of £480,000, official records show that Mr Carney actually took home a total annual salary last year of more than £880,000.

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Other Finance News

The Downfall of the Payday Lenders

At the risk of causing controversy, the downfall of Britain’s most prominent payday lenders didn’t come as the biggest of shocks. Considered by critics to be the highwaymen of the 21st century, payday lenders in general didn’t have the most polished of reputations to begin with.

Nevertheless, it took the spectacular collapse of Wonga – Britain’s biggest payday lender – to kick the deterioration into overdrive. When Wonga collapsed in the wake of a wave of compensation claims, it still had more than 200,000 customers with no idea what to do next.

A figure that demonstrates just how severe Wonga’s compensation woes were…and still are.

But given the fact that Wonga was once touted for a flotation that would have valued the company in excess of $1 billion, what exactly went wrong? Or more importantly, what went wrong for the entire payday lending industry in the United Kingdom?

Far from a single point of contention, there were a handful of prevalent issues plaguing both the industry and its customers from day one. Some of which critics argue should never have been tolerated in the first place.

Extortionate Borrowing Costs

For example, Wonga wasn’t even close to being the worst offender on the market by way of borrowing costs. Nevertheless, the company still displayed a representative interest rate of 5,853% APR on its website. Additional charges included £10 loan extension fees, £5.50 transmission fees and standard £20 late payment fees. All of which added up to millions of customers borrowing small amounts of money and ending up out of their depth in debt.

To put things into some kind of context, secured loans can typically be arranged at a much lower interest rate of around 3.5%. Penalties associated with repayment issues can also be considerably less severe with secured loans.

Payday lenders routinely argued that just as long as the borrower fulfilled their repayment obligations as agreed, they’d be looking at competitive and affordable overall borrowing costs. As far as the critics were concerned, there was never any justification for these kinds of interest rates and borrowing costs.

Oversimplified Application Processes

It’s also argued that payday lenders in general made it far too easy for pretty much anyone to access cash they really couldn’t afford to borrow. The typical payday loan application process demands very little personal information and involves few formal checks of financial status. As a result, millions were able to take on debts they neither needed nor could afford, quickly falling into an inescapable debt spiral.

At which point, payday lenders were accused of doing little to help. In fact, many companies’ profits were generated primarily by the additional borrowing costs and penalties levied on those who fell into difficulties.

Targeting Vulnerable Customers

If all this wasn’t enough, major and minor payday lenders alike have been routinely accused of deliberately targeting vulnerable demographics. From the unemployed to the elderly to everyday households struggling to make ends meet, payday loans have been marketed directly at those most likely to struggle with the subsequent debt. Official advertising watchdogs have confirmed this was indeed the case.

So rather than simply taking advantage of individuals in vulnerable positions, many payday lenders were deemed to have deliberately targeted them in the first place. The result of which being the kinds of extensive compensation claims that led to the downfall of Wonga. And if a once-enormous financial powerhouse like Wonga was unable to remain afloat, what chance did the rest of the industry have?

A Way Out?
Secured consolidation loans have proved useful for many who’ve accidentally fallen into a debt spiral. It’s s facility that works by combining all debts-related outgoings into a single loan at a far more affordable rate of interests. Consolidation enables struggling borrowers to take back control and make enormous savings.

Whenever moving unsecured debt to a secured basis, the consequences of not repaying the new loan should be carefully considered before going ahead.

In a Nutshell…

The downfall of Wonga served as a stark reminder of the risks associated with high-interest borrowing out of pure desperation. The lesson learned for the borrower being that if you’re struggling to make ends meet as it is, the last thing you want is more debt to deal with.

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How Are Estate Agents Fairing in the Brexit Limbo?

Britain’s Brexit blues show no signs of abating in the near future at least. In the meantime, businesses and entire industries across the UK are suffering. One example of which being the estate agency sector, which is in the midst of one of the most turbulent periods ever encountered.

If we had any idea what was going to happen even six months from now, we’d be able to plan ahead. As it stands, nobody knows if, when or how the UK will ever leave the EU. And it’s precisely this uncertainty that’s making it difficult for industries like these to get by.

How Will Brexit Affect Estate Agencies?

Whatever takes place (or doesn’t) on or before October 31 will have a significant impact on the UK property market. If the outcome is amicable, we could be looking at healthy and on-going property price hikes in key markets nationwide. If things take a turn for the worst, it could cripple the entire UK economy.

As a result, it’s hardly surprising would-be movers and investors are, for the most part at least, sitting tight and waiting to see what happens. Enormous decisions are being delayed indefinitely, which is having a knock-on effect on the estate agency sector.

Nobody wants to base their decisions on pure guesswork alone, which means nobody’s buying. And when nobody’s buying, estate agents struggle to stay afloat. The longer the uncertainty drags on, the more challenging it’s going to become for estate agents to survive.

Estate Agents and Brexit Uncertainty

There’s a growing trend among UK estate agent right now to avoid filling the vacancies left by departing agents and representatives. At the time of the EU referendum, it was estimated that the UK estate agency sector was already overpopulated by approximately 20%. That being, 20% more agents needed to cover the requirements of the market at the time.

Today, there’s an even bigger deficit in demand due to the lingering uncertainty of Brexit. To such an extent that some have gone so far as to predict that as many as 2,500 estate agency branches will close their doors permanently over the next 18 months.

Brexit’s eventual outcome could have a significant impact on this tally in either direction, but it still makes for pretty grim reading.

Focusing on specific agencies, a recent report published over at Motley Fool suggested that property powerhouse Purplebricks could completely run out of money, if it doesn’t carefully reconsider its international expansion plans. Two weeks after being bought out of administration, House Network ceased trading entirely.

Despite having some of the best real estate agents in Britain, Countrywide posted total losses of £218 million last year, while suggesting the company plans to close a total of 267 branches.

Across the board, economists believe that the latest wave of low-cost, often web-based real estate agencies will have no choice but to significantly increase their fees to get by. The problem is that this will somewhat augment the appeal of working with a dynamic digital agency in the first place, rather than taking your business to a traditional real estate agency.

In Search of Certainty

While the bewildering Brexit battle continues, issues like these are only set to intensify for many major sectors across the UK. Even if the UK’s departure from the EU turned out to be disastrous, estate agents would at least be in a position where they can make decisive choices and plan for the future.
The way things stand right now, nobody even knows what they’re planning for.

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What Will Homes Look Like in The Future?

Flying cars, robot butlers, Star Trek style transportation systems – we’ve seen some pretty wacky projections for homes of the future over the years.  Realistically, the house of the future envisaged by the sci-fi fanatic was never going to happen during our lifetime. But this doesn’t mean the homes of the future we’ll be seeing soon enough won’t be impressive in their own way.

You simply have to gauge your expectations as little more realistically!

According to the pages of a new report entitled “Futurology: the new home in 2050”, the house of the future is all about smart technology for homes. The kinds of smart homes where intelligent hardware and software make automatic decisions on things like security, heating, shopping and so on.

The Smart Technology Homes of the Future

As the world deals with a rapidly expanding and ageing population, architects expect to see growing demand for multi-generational properties to accommodate various generations in one household. This will require greater flexibility and adaptability than ever before, in order to accommodate the changing needs of the property’s occupants.

Builders and architects are also already planning a future where homes capitalise on vertical space, occupying as little horizontal ground space as possible. This will enable areas of high demand to support much larger populations, with the creation of compact homes with multiple stories to accommodate those within.

Technologically, we’ll undoubtedly be seeing a continuation of the smart home trend already making its mark. Industry watchers expect to see more homes than ever before collecting and storing their own energy with renewable methods, while more effectively utilising and recycling their own water supplies.

Smarter technology in general will significantly reduce the average household’s energy consumption requirements and carbon footprint. In fact, sustainability in general is expected to represent a growing area of importance for builders and developers over the years to come. Homes able to reduce their impact on the environment will potentially qualify for attractive incentives from local and national government offices.

It may also be possible for the home of the future to play a more direct role in overseeing the health and wellbeing of its occupants. Particularly where elderly residents are concerned, smart technology could be used to look for warning signs of ill-health to report directly to the relevant medical professionals. If a person was to collapse, the house itself could immediately call for an ambulance.

Smart refrigerators and storage devices are already warning households when stocks are running low and creating virtual shopping lists. Sooner or later, households will come to rely on completely automated systems that order and organise the delivery of everything they need, before ever even realising they need it.

It’s also entirely likely that working from home will become an even more prominent fixture for the average household in the future. It’s already possible to communicate and collaborate with teams from any location worldwide via a basic computer and webcam. The more sophisticated computer technology and IT security become, the broader scope for getting the job done from home.

Last but not least, the complete automation of home comforts, convenience and entertainment systems is already happening. From window dressings to fireplaces to music systems to lighting to heating and so on, personal preferences can be met via voice assistants, facial recognition technology and simple automated timers. Once again, the idea being that the home of the future will know what it is you want, before you even realise it yourself!

Exactly how all of the above affects the future of house prices remains to be seen, but it nonetheless paints a pretty impressive picture of what’s to come.

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Mortgages

Should Tenants Who Pay Their Rent on Time Be Eligible for A Mortgage?

For millions of members of ‘generation rent’, getting on the property ladder is simply a pipedream. By the time they’ve paid their rent, organised their outgoings and put food on the table, there’s little left to play with. Even for those who manage to scrape together the bare-bones of a deposit, they may lack the established credit rating needed to qualify for a mortgage.

This, despite the fact that they’ve responsibly paid their rent on time for years…maybe even decades.

A frustrating situation to find yourself in, but a surprisingly common problem nonetheless. To such an extent that a recent petition saw more than 145,000 people demand a change in legislation, which would see regular and timely rent payments considered on a person’s credit report. If the initiative was to go ahead, this would mean a good track record of paying your rent could help you qualify for a mortgage.

With the petition having exceeded the 100,000 signatures threshold by a significant margin, the issue is being debated by the government at an official level.

The Effect of Rental Payments on Mortgage Applications

When you sign up for a credit service or hire purchase agreement of any kind, your subsequent actions are recorded on your credit score. If you keep up with the payments and repay the balance as agreed, your credit score improves. If not, it takes a hit.

Nevertheless, the single largest and most important outgoing in the lives of millions has no such effect at either end of the scale. With rental payments, the responsibility or otherwise of the tenant isn’t normally taken into account. It doesn’t have any impact on your credit report and won’t be considered by the vast majority of mortgage lenders.

This bizarre imbalance is what led campaigners to begin taking the petition seriously – started by one responsible individual who’d paid no less than £70,000 in rental payments on time. Jamie Pogson was bemused as to why this clear demonstration of responsible financial behaviour made no difference whatsoever to his would-be mortgage application.

Particularly when given how the slightest oversight – even applying for a line of credit and being refused – can wreak havoc with your credit score.

Worth Keeping a Clean Sheet?

Even if you’re able to provide concrete evidence of your responsible history of on-time rent payments, there are no guarantees the typical High Street lender will be interested. Nevertheless, it’s worth remembering that the one thing every major lender does when considering a mortgage application is inspect the applicant’s bank statements.

They want to see what’s going out and what’s coming in, which may include how regularly (or otherwise) you are paying your rent. Even if it has no bearing on your credit score, it could still have an impact on the way your financial history and current circumstances are perceived.

Hence, it’s a good idea to keep a clean sheet with your rent payments, even if it doesn’t necessarily boost your credit score. Whether or not the government decides to bring about new legislation remains to be seen, but for the time being at least, it’s a pretty painful blow for common sense and the responsible financial activities of millions of tenants across the country.

Alternative Options…

If a traditional mortgage is out of the question for any reason, there are always alternative options to explore. From subprime mortgages to flexible secured finance to bridging loans and so on, a conventional mortgage may not be the only option…or even the most affordable option.

If in doubt or struggling to qualify, speak to an independent expert for advice on the alternative options available. Work out the costs of a mortgage using our UK mortgage calculator

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Bridging Loans Mortgages

Deposit and purchase capital raised for a renovation project at standard bridging rates

Buy to Let mortgage arranged within 6 months of property ownership

Our client, a relatively inexperienced property investor was looking to quickly purchase what she deemed to be a new bargain investment property. To do this our client wanted to raise the maximum possible deposit using a recently purchased investment property as security which had been bought with a bridging loan arranged by ourselves.

The security property was in a very poor condition when purchased but had now been swiftly renovated to a standard that was sufficient for mortgage lenders to use as security. We were able to raise all the money required for the new purchase by raising the deposit on the already owned property via a Buy to Let (BTL) mortgage and the remainder needed for the new purchase and renovation was arranged as a light refurbishment bridging loan, at the same interest rates as a standard bridging loan.

The BTL was allowed even though our client had not yet owned the property for 6 months. We were able to navigate the 6 month rule i.e. a property needs to be owned for 6 months before refinancing at a higher value because we were able to evidence the work carried out by our client and value added during the period of ownership and the bridging lender also supplied BTL products which were specifically designed for this type of transaction.

Our client intended to renovate the new investment property which was uninhabitable and not suitable for mortgage purposes and sell for a profit once complete to repay the bridging loan.

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Other Finance News

Another Retailer at Risk? Is This a Sign of Things to Come?

UK retail news has been blighted as of late with a near endless string of permanent closures. It’s no secret that there are more retail stores closing their doors in the UK than ever before, painting a rather bleak picture for the UK retail sector as a whole.

The most recent casualty to join the apparent downfall being Bonmarché, which is now under threat after more than 35 years on the UK High Street. Currently operating 312 stores across the country, the company is expected to post significant losses of more than £5 million for 2019. Its owner, billionaire Philip Day, has given a reason to suggest stores and jobs in worrying numbers could be under threat.

Reading into the headlines, you begin to wonder how many retail businesses are there in the UK that can survive long term? Considering what percentage of retail sales are online in the UK, you can’t help but feel a sense of pessimism for the High Street as we’ve traditionally known it. Right now, an incredible £4 out of every £100 spent in the UK is scooped up by Amazon alone.

This represents just one of many thousands of online businesses making life difficult for the traditional British retailer.

How Much Is the UK Retail Industry Worth?

With figures like these, you’d expect the total value of the UK retail industry to have plummeted to next to nothing. In reality, this simply isn’t the case. In total, the UK retail industry is valued in excess of £358 billion annually. Despite the on-going challenge posed by web retailers, online sales still account for just 17% of overall annual retail sales.

That’s according to the Office for National Statistics, suggesting there’s still plenty of room in our lives for the traditional retailer.

Somewhat less surprisingly, the 21st century retail landscape of United Kingdom is led by the four biggest supermarkets. Tesco, Sainsbury’s, Asda and Morrisons account for the lion’s share of the revenues generated on the High Street, attributed largely to their convenience, ease-of-access and impossibly low prices.

Nevertheless, the web retail industry is accelerating at its fastest-ever pace – growing at a rate of more than 20% annually. As far as economists are concerned, this is set to continue indefinitely and could further increase pressure on the High Street.

Avoiding Overheads

By eliminating any number of overheads from the equation, online retailers are able to sell products at significantly lower prices than their High Street cousins.  From physical premises to vast workforces to general upkeep costs and so on, the reduction of operational expenditures results in huge savings being passed on to the customer.

At the same time, retail property leases, taxation and general operational costs are increasing for traditional retailers. All compounded by the convenience of 24/7 accessibility, free shipping and the most enormous range of products now available online at the touch of a button.

But does all of this spell the complete demise of the High Street? Not exactly – it’s simply a case of shifting focus to a different aspect of customer expectations.

Experiences Over Products

When polled, customers who continue to favour traditional High Street retailers spoke of their preference of the ‘experience’ as a whole. Being able to walk into a welcoming and atmospheric store, speak to a knowledgeable representative, examine products first-hand and generally make an experience of the whole thing.

A sentiment shared by the CEO of Harrods, who stated that the key to long-term success on the UK High Street lies in focusing on the benefits online retail cannot replicate. Challenging perhaps, but achievable by getting to know what exactly any given target audience responds positively to and providing it at the highest possible level.

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Selling a Property Through Probate? How Much Tax Do I Have to Pay?

Concerned regarding how to pay inheritance tax before probate? In need of advice on how to value personal property for probate? Given the importance and sensitivity of such transactions, sourcing independent expert advice should be your first port of call.

What Is a Probate Property?

Dealing with a loss of a loved one is challenging enough, without the added complications of handling complex probate and inheritance tax issues. In the simplest terms, a probate property is a property an individual takes ownership of having been named in the final will and testament of a deceased individual.

Irrespective of whether or not you intend to sell the property, you may be liable for probate tax – aka inheritance tax in the United Kingdom. The importance of an accurate probate valuation of property cannot be overstated – nor can securing expert representation to help relieve some of the burden. From obtaining Grant of Probate to dealing with all administrative and taxation requirements, it’s important to have an experienced team behind you.

Do I Have to Pay Inheritance Tax?

In England and Wales, you will be liable for an Inheritance Tax payment if the total estate bequeathed to you has a combined value in excess of £325,000.  This is the existing inheritance Tax Threshold – the limitation of the inheritance you can receive without having to pay tax.

If the total value of the estate exceeds £325,000, a full 40% is payable on the amount that goes beyond this threshold.

What Does Probate Have to Do with Inheritance Tax?

When an individual receives ownership of a property through a final will and testament, they must obtain a Grant of Representation to confirm their legal ownership of and rights to the estate. In order for this to happen, the entire estate must be valued and Inheritance Tax obligations calculated.

The process cannot be completed until the recipient of the estate is able to prove that they have paid the Inheritance Tax due in full, or provide formal evidence that Inheritance Tax is not payable. By working with an experienced and reputable probate specialist, the entire process of evaluating the property and establishing inheritance Tax Liability can be accelerated and simplified significantly.

A Typical Example

In a working example, an individual is left a property in the final will and testament of a parent. The property has a probate valuation of £475,000, which is also the maximum value the property is likely to sell for in the current market.  Assuming this is the total value of the deceased individual’s estate, this amounts to £150,000 above the current Inheritance Tax exemption threshold.

This would mean that 40% of the £150,000 would be payable to satisfy Inheritance Tax requirements, amounting to a total of £60,000.

However, there are countless variables that could affect the total taxation liability in both directions. From charitable contributions to capital gains tax to the type of property and its intended use, it isn’t quite as simple as establishing basic Inheritance Tax obligations alone.

The Importance of Responsible Representation

The representation you secure throughout the process could have an enormous impact on the costs incurred. Avoidance of taxation isn’t an option, but there are often avenues to explore to minimise the amount of tax you’re required to pay. All while simplifying a complex legal and legislative process during an incredibly difficult time of life.

At the earliest possible stage, therefore, secure the most capable and experienced representation available. Doing so could save you time, money and a lot of unnecessary hassle along the way.

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Company News

UKPF Experiences Huge Success At National Exhibition

UK Property Finance had not previously been on the exhibitors list of a show this size before but certainly made the most of the 4 days exhibiting. The national homebuilding & renovating show is open to the trades and general public to source the latest building materials for their project. The latest innovations in building technology are show cased in front of large crowds. 5 Seminar halls are filled through-out the event with back-to-back lectures.

“The advice Gary and Ewan gave, has made me really motivated to roll my sleeves up on my refurbishment property”

An estimated 36000 visitors piled into the NEC in Birmingham over the course of the event. A team of 4 including UKPF’s managing director, Gary Latham, were on hand to offer advice and quotations relating to their current project.

UKPF at NEC Birmingham exhibition

Gary led the team in providing quality advice and handing out informative literature to passers-by. Enthusiastically UKPF spoke to hundreds of clients each day and found plenty of unique projects needing specialist finance solutions. Mr Singh from Edgbaston, Birmingham commented “It’s unusual not to see more finance advisors here. The advice Gary and Ewan gave, has made me really motivated to roll my sleeves up on my refurbishment property”

Every morning, a tannoy announcement was made and large crowds could be seen running into the exhibition halls with the mayhem of black Friday. The halls filled up within minutes and a queue formed around stand H139.

Mrs Betteridge from Diss, Suffolk approached one of the team as soon as the exhibition opened and said ‘Oh fantastic! I’ve found you! I need your advice on property finance’.  This continued through-out the day. By 11:30 am, an orderly queue had formed down the main aisle of potential clients looking to see Gary and the team. 25 requested quotations where emailed to UKPF HQ within first morning of the exhibition.

‘How to finance your development project – An expert guide to different funding sources’

The event came to a pinnacle during the weekend when Ewan Duncan, Senior Consultant took to the stage to host a seminar in front of a large audience. The master class theatre was in the heart of the exhibition and drew large crowds with lectures on everything from underfloor heating to timber frame builds. Ewan presented a 20-minute seminar on ‘how to finance your development project – An expert guide to different funding sources’. The presentation described in detail the versatility and flexibility of bridging loans. Ewan was able to address the audience’s common misconceptions when it comes to development finance and provide a detailed approach to choosing finance for your project.

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