Covid19: UK Payment Holiday Extended for 3 months

The UK government has told banks to give more time to millions of people struggling with debts owing to the coronavirus crisis.

Credit card, store card, catalogue credit and personal loan customers will be able to defer repayments for another three months.

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The help was first ordered by the City regulator, the Financial Conduct Authority (FCA), in April.

Anyone taking advantage of the freeze must still pay back the debt at the end of the deferral period.

This has prompted debt charities to warn of the potential for individuals’ financial problems to simply be stored up for a later date.

The FCA said that if borrowers could resume their repayments they should do so, to avoid getting into more serious difficulty in the future. Banks may also be stricter in who qualifies for the payment deferral, and might only agree to a reduction in minimum repayments.

The regulator stressed that using the payment deferral should not affect a borrower’s credit rating. However, it warned that loan providers did have other ways to check on whether payment holidays had been taken, such as asking for bank statements, when making decisions on whether to agree to credit applications.

Although these extensions are currently proposals, banks only have until Monday to comment and the FCA expects the rules to be implemented soon after.

Help for people with car finance, payday loans, rent-to-own deals, pawnbroking, and buy-now-pay-later agreements will be updated by the regulator at a later date.

Most Banks are currently offering interest free overdraft up to a certain amount with reduced interest rate.

Check for details on your banks website. Most application can be done online.

Source: BBC News

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Can blockchain technology double the speed of UK property sale?

The delay in completing a UK property sale several months and has been a big problem in the UK property industry. To solve this problem a blockchain-style platform has promises to double the speed of UK property sales, with the startup behind it announcing a new deal for its widespread use.

The deal with other software firms will give around half of UK estate agents access to new technology designed to tackle typical delays in property sales, according to ‘proptech’ firm Coadjute.

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The firms chief executive Dan Salmons said home sales typically take months because of a lack of joined-up thinking and data-sharing among many stakeholders involved.

Confusion over next steps in a sale is common. Salmons said estate agents need “large armies” of workers merely to check for and pass on updates among parties, while buyers and sellers often have to complete similar forms multiple times.

Some experts say the sector is “ripe for disruption,” and UK government officials are among those who believe blockchain and similar technology could help “revolutionise the buy-sell process.”

Salmons acknowledges his firm is far from the first to promise to speed up sales by better connecting buyers, sellers, estate agents, conveyancers, lenders, government officials and others involved in transactions.

But he said previous efforts hit a wall as they sought to persuade all parties to use a single IT system. This can prove difficult to tailor to everyone’s needs, and poses privacy concerns with all data centralised. “People love new stuff, but they’re not good at giving up old stuff,” he added.

Britain’s Land Registry began exploring such technology in 2018, with trials held involving officials and conveyancers around the world who wished to tackle similar challenges.

The work sparked the launch of Coadjute, initially as Instant Property Network, as a participant in the trials. Salmons joined the startup after first getting involved in the experiments as Royal Bank of Scotland’s director of innovation for home buying.

It has since been working on its software and building interest, but Salmons said the pandemic had proved a turning point. The rise of remote working among estate agents, solicitors and others has sparked a “sudden demand for digitisation” in recent months, he said.

Source: Yahoo Finance UK

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Can UK Green Mortgage help climate change?

The UK has set itself a target of net zero greenhouse gas emissions by 2050, but that will be a challenge for the housing market.

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As things stand, domestic housing accounts for nearly 20% of the UK’s carbon emissions. At the same time, there are few ‘green’ mortgage products and even fewer that have been set up to fund making homes more energy efficient.

This matters, because upgrading current buildings will be what helps cut emissions.

According to the UK Green Building Council, around 80% of the buildings that will exist in the UK in 2050 are already constructed.

Few of those are energy efficient. Based on the government’s energy performance certificates (EPC), most of the UK’s housing stock is in the middle, ‘D’, band.

Top of the list in making housing more energy efficient is cutting fuel use. Around 10% of the UK’s carbon footprint comes down to heating – mostly domestic heating.

In principle, green mortgages that help homeowners manage the cost of boosting energy efficiency should be widespread and keenly priced.

In May 2020, the Green Finance Institute published a report on financing energy efficient buildings.

This cited “growing evidence that favourable financing terms can be achieved on securities that have an environmental or social impact label or certification”. 

But only three lenders in the UK currently offer green mortgages – Barclays, Ecology Building Society and Nationwide.

Chris McHugh, our Director of the Centre for Sustainable Finance, describes the UK green mortgage market as “a cautious beginning”.

“The eligible customer base, property types and notional amounts are limited. The price incentives for borrowers appear to be small or non-existent.”

The UK green mortgage market

Indeed you can count the number of green mortgage lenders on the fingers of one hand.

Ecology Building Society and Nationwide both offer lending for green home improvements. Ecology is a very small firm specialising in green finance including sustainable builds. In 2019 it lent £43.5m across 308 sustainable properties and projects.

However, compared to many other mortgage lenders, it’s relatively expensive – with a current standard variable rate of 4.1%.

Nationwide Building Society is a much bigger player with around 12% of the UK market. It  offers preferential rates on green improvements for loans up to £25,000, but only for existing customers.

Barclays has around 8.6% of the UK mortgage market. It does offer green mortgages for “energy-efficient new-build” homes provided by “partner suppliers”. But it doesn’t have any plans to offer mortgages for green home improvements in the near-term.

Lloyds, which has the biggest overall share at nearly 16%, announced in January that it plans to launch green mortgages, but did not give further details.

Right now, lenders may be cautious about broadening their green mortgage offerings as demand is likely to have been hit by the Covid-19 pandemic

“There are far more pressing matters on consumers’ minds,” says John Somerville, our Head of Regulatory Relationships.

“With all green properties and loans, there’s likely to be an extra cost and more underwriting. The appetite to jump through those hoops will be strongly diminished for some time to come.”

Source: The London Institute of Banking and Finance

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UK Property sale hits record low

Residential property sales in the UK in April hit their lowest monthly level since comparable records began in 2005, new figures show.

Houses

There were 38,060 transactions in April, according to provisional numbers from HM Revenue and Customs (HMRC).

This was less than half the level seen in the same month last year.

Spring is usually a busy period for the property market, but the coronavirus lockdown halted activity.

The government lifted many of these restrictions on the sector in England in mid-May. The total number of UK property sales is slightly less than the previous low when the taps were turned off in the property market at the height of the financial crisis in January 2009.

Source: BBC News

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UK Property market estimated to fall by 13%, Is it the right time to buy?

Economists and housing experts are forecasting UK-wide price falls of up to 13%, with “brutal” declines in some areas, as the property market struggles to rebuild during the coronavirus crisis.

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The range of forecasts from the major researchers is markedly wider than usual. At one end is the Centre for Economics and Business Research, which predicts that 2020 prices will be down by 13% “as a lack of transactions, high uncertainty and falling incomes take their toll”. But the estate agent Savills said the hit to the market could be more like 5%, and a third of valuation surveyors are predicting that price falls may be limited to 4% or less.

The post-lockdown market will be a buyer’s market, said Jonathan Hopper of Garrington Property Finders, as he forecast falls of 10% nationally and 15% in some areas.

“Areas with a more resilient jobs market should see values hold up better, but elsewhere the price correction could be more brutal,” he said.

Knight Frank, in a revised forecast issued this week, said it anticipated a fall of 7% in 2020, more than its earlier forecast of 3%. Its analysis suggested prices had already fallen 5% since March, with a further downtick to come.

Source: The Guardian 

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UK property market: Questions asked by buyers and seller

The coronavirus crisis is affecting buyers and sellers alike. An estate agent talks through the hurdles faced by both parties

Spring and summer are often cited as the best time to buy a property, with the warmer weather encouraging more people to put their homes up for sale. But with the Government having all but shut down the UK’s housing market, buying and selling is challenging during the lockdown – although not entirely impossible.

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Here are the questions being asked by buyers and sellers:

Can I still complete?

The Government advises buyers and sellers to “where possible, delay moving to a new house while measures are in place to fight coronavirus”.

However, solicitors are not banned from continuing completions and the Government has accepted some may still have to take place. For those who need to move for reasons such as death, divorce or debt, and for those who want to move perhaps to be in a better school catchment area for their children, there are still some possibilities.

What if I’m looking to buy?

If you are looking to buy, things look great on the face of it. The Bank of England has slashed interest rates to a record low of 0.1 per cent in response to the crisis, meaning mortgages are more affordable than ever as repayments will, in theory, be lower.

However, many lenders have withdrawn tracker mortgages offering the best rates. Savings the banks are making are not being passed onto consumers. Larger deposits are also now required. Nationwide Building Society, one of the UK’s biggest lenders, recently withdrew mortgages with a loan-to-value (LTV) ratio above 75 per cent from sale.

Paul Broadhead, head of mortgage policy at the Building Societies Association, says: “Lenders and borrowers are facing unprecedented conditions. The temporary move away from higher LTV products across the whole market reflects prevailing uncertainty and the fact that physical valuations are on hold. Lenders are focusing on supporting their existing borrowers that have been affected by Covid-19, often with fewer staff available to work.”

What if I need a mortgage?

A downside for buyers is that you have to have 100 per cent of the property’s value in cash to now be in with a chance of securing a property. Assuming you have seen a house you liked before the restrictions came into effect, estate agents are unlikely to put any offers forward where a mortgage is required.

Mortgage valuation surveys are unable to take place during the lockdown because mortgage companies cannot send a surveyor out in person to ensure a property has not been overvalued by an estate agent. This is good news if you are a cash buyer and puts you in an even stronger position with less competition from other buyers.

However, sellers should be aware that cash-rich investors often expect a price reduction, with some offering as much as 30 per cent below the asking price.

What if I’m selling?

If you are looking to sell, it may still be possible. Some agents are making the most of technology and offering virtual viewings and video valuations, with vendors taking their own photos to market their properties.

This sounds great, but it isn’t. Unless you are a professional photographer with a wide-angle lens camera, it’s unlikely you will be marketing your property to its full potential.

It is also doubtful the valuation will be as accurate without the agent having visited. Every property is unique. And while virtual viewings are great for the casual viewer at home who doesn’t have to leave the sofa, they are not so helpful for vendors deciding how keen and motivated a buyer really is.

If an acceptable offer is made, there is even less certainty than usual when it comes to trusting that someone will see the process through to conclusion from sale agreed (subject to contract) to exchange/completion, as they have yet to set foot inside the property.

Some estate agents, such as Purplebricks, charge a fixed fee whether the property sells or not. It is worth noting that according to research firm TwentyCi, Purplebricks received an estimated £18m from 21,380 vendors whose properties were withdrawn having failed to sell in 2019. With actual viewings currently impossible, who knows what their figure for 2020 will be.

Property prices: Where next?

House prices were flat in March, the first time they did not rise in five months, according to the latest data on the UK property market.

Halifax, who compiled the figures, said the housing market began March in recovery mode as political uncertainty about Brexit had passed. Prime Minister Boris Johnson’s election victory had also boosted confidence in the market.

But by the end of the month, the UK was in different territory as coronavirus swept across the country and the property market ground to a halt as the UK was put into lockdown.

Halifax said it was too early to accurately assess the long-term impact of the virus on the UK housing market.

When will the market recover?

Problems with physical viewings and mortgages will make moving house difficult in the short term.

But once the coronavirus crisis has blown over, and the barriers on movement have been lifted, the market should bounce back fairly quickly. After the lockdown is finished, the artificial restrictions on the free market will be released, causing a flood of supply and demand from sellers and buyers.

If furloughed employees are able to return to their place of work on their full salary, consumer confidence will likely be restored. Pent-up demand will hopefully encourage lenders to increase supply of affordable mortgages.

The property market may return to normal sooner than many currently envisage.

 

By Rupert Gray – an estate agent working in the Greater London area

Source: inews

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Covid19 financial difficulty & what UK banks are offering

Many banks are offering help to customers in financial difficulty due to coronavirus, by offering mortgage, loans and credit card payment holidays, increasing limits for overdrafts, credit cards and cash withdrawals, waiving overdraft charges and offering other financial difficulty solutions.

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It is recommended to contact your financial provider or lender, first visit their website to explore the various ways you can get help or support if you are impacted financially by coronavirus and can’t afford to keep up with repayments or manage your finance.

Coronavirus help and support UK major banks are offering:

  • Barclays Bank – See the source imageMortgages; Payment holiday of up to three months. Personal Loan; 3 months repayment holiday. Credit card;  No late payment or cash advance fees for the next 90 days starting from 19 March, and you might be able to increase your credit limit to help you in an emergency. Overdraft; No interest between 27 March and 30 April 2020. You don’t need to do anything – it’ll happen automatically. Savings; No penalty charges for withdrawing your money early. Visit Barclays website here for more information and updates.
  • Natwest Bank – See the source imageMortgages; Payment holidays for up to 3 months. Personal Loans; Payment deferrals of up to 3 months. Credit card; Refunds on request for cash advance fees to access cash in an emergency, and you can apply to increase your credit card limit. No late payment fee from 1st April until 30th June 2020, you don’t need to get in touch, it will be done automatically. Overdraft; From Monday 30th March, for 3 months, if you are a personal Banking customer using your overdraft, you will pay less as overdraft interest will be at current rates (Representative 19.89% APR (variable) for most customers) and you won’t pay any fees or charges. Savings; Close and access cash with no early closure charge from your fixed term savings account. Visit Natwest website here for more information and updates.
  • Lloyds Bank – See the source imageMortgages; 3 month payment holiday. Personal Loans; Repayment holiday of up to 3 months. Credit card; Payment holiday for 3 months. If agreed, you won’t need to make the usual payments to your personal credit card. Apply to increase your existing Credit Card limit using internet banking. Overdraft; Automatic £300 overdraft buffer if you have an existing arranged overdraft on your current account. This buffer will be interest-free from 6th April to 6th July 2020. Apply online for new overdraft and existing overdraft limit increase. Savings; Access your savings held in a fixed term account, charge will be waived. Visit Lloyds website here for more information and updates.
  • HSBC Bank – See the source imageMortgages; Payment holiday of up to 3 months. Personal Loans; 

    You can request to defer your next 3 repayments. This gives you the chance to pause repayments for 3 months. Credit Card; You can request a 3-month payment holiday. Overdraft; From 26 March 2020 until further notice, no interest charges on the first £300 of overdraft borrowing. Savings; Access restrictions and early closure fees waived for the Fixed Rate Saver product if you need to access your money.  Customers can still close their Regular Saver account and withdraw the funds if they need to, as normal. Visit HSBC website here for more information and updates.

  • Santander Bank – See the source imageMortgages; Get up to 3 months holiday from your mortgage payments. Personal Loans; Online application forms for repayment holiday will be available soon. Credit card; From 31 March until 6 July, late payments fees and cash advances will be automatically removed. Online application forms for repayment holiday will be available soon. Overdraft; Automatically waive interest on the first £350 from 6 April until 6 July. If you need to add an overdraft to your account further information on this is being prepared and will be shared next week. Savings; Access your money held in Santander fixed rate bonds and fixed rate ISAs before the end of the fixed term, free of charge. Visit Santander website here for more information and updates.

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Barclays Bank set a net zero carbon target

Barclays said it planned to set a net zero by 2050 carbon target, to be voted on by shareholders at its forthcoming annual general meeting in May.

The bank said it would also commit to align its financing activities with the goals and timelines of the Paris Agreement.
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‘The alignment of Barclays’ portfolio will start with the energy and power sectors, and will cover all sectors over time,’ the company said.

‘Barclays will provide the transparent targets required to judge its progress and will report on them regularly, starting from 2021.

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COVID19: UK Government suspends property market till further notice

The housing market was halted on Thursday night by the Government after financial institutions said they could no longer operate properly.

Ministers are discouraging buyers from going ahead with house sales and purchases unless they have ­already exchanged contracts as part of wider efforts to slow the spread of the coronavirus, saying no one should move unless absolutely necessary. ­

As a result of the pandemic, homeowners trying to sell their properties face a year of misery as the number of buyers dwindles, estate agents close their doors, banks withdraw deals and house prices falling.

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Banks and building societies have agreed to extend mortgage offers where completions have to be delayed as a safety precaution.

Grainne Gilmore, head of research at Zoopla, commented: “The clarity provided by the government announcement is welcome for buyers, sellers and agents who are in the middle of the sales process.

“Agents continue to support their buyers and vendors remotely. But, now that there is some leeway on mortgage offers – with a three month extension from lenders – this will enable some buyers to press pause, and to re-start their purchase once the current social distancing rules are relaxed.”

What does it mean if you’re buying?

You should only consider going ahead with your move in the immediate term if you have already exchanged contracts.

If you have not yet exchanged contracts, the government are advising you to delay doing so.

See the source imageBanks and building societies have agreed to extend mortgage offers for up to an additional three months to enable customers to move at a later date without losing the deal they had lined up.

If your circumstances change during this period or the terms of the house purchase alter significantly, meaning that continuing with the mortgage would put you into financial hardship, lenders have pledged to work with you to manage your finances as a matter of urgency.

What it means if you are selling?

Putting your property on the market will be more challenging than usual, as you are not allowed to have visitors to your home.

As a result, you will not be able to have estate agents come to take photos or carry out a physical market appraisal, while Energy Performance Certificate assessors are also not allowed to visit you.

If your home is already on the market, you can continue to advertise it for sale, but people cannot come to physically view your property.

Importantly, you are still allowed to accept offers on your property during the current period.

In fact, the number of sales agreed between March 16 and March 22 were only 4% lower than a year earlier.

Source: Zoopla Property News

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UK Covid-19: How to apply for government business loan

The government has released more details about the £350bn package of financial support which Chancellor Rishi Sunak has promised to UK business to deal with the effects of the coronavirus pandemic.

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Last week he set out plans to pay employees 80% of their salaries, capped at £2,500 per month, in an attempt to protect jobs.

Two further schemes to help business were announced on Tuesday: a new interest-free Business Interruption Loan Scheme for small and medium-sized firms and a Bank of England finance option for bigger businesses.

How will the Business Interruption Loan Scheme work?

UK-based small and medium-sized businesses (SMEs) with an annual turnover of less than £45m can apply for an interest-free loan of up to £5m to help them through Covid-19 related difficulties.

The government will provide a grant payment to cover the interest and initial fees for the first 12 months, and will guarantee 80% of the loan amount to give banks and financial companies the confidence to lend.

Under the scheme, which will initially run for six months, businesses will be able to borrow for up to six years. They will be liable to repay the money in full – the guarantee is for the lenders, not the borrowers.

Will all small and medium-sized firms be able to borrow money?

Not necessarily, Firms will have to prove that they are viable businesses which have been trading successfully, but just need extra support to deal with short term difficulties caused by the current disruption. Some firms may not be successful.

The money will be provided by more than 40 lenders who have signed up to the scheme, including High Street banks like Barclays, HSBC, Lloyds and NatWest, as well as more specialist finance companies.

Businesses are asked to contact their own bank first (if they are taking part in the scheme) via the company website if possible, and only approach other lenders if they need to.

The British Business Bank, which is running the scheme, told the BBC on 23 March that it expected money to start flowing “this week”.

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You can read more about how the scheme will work here.

Can self-employed people apply to the Business Interruption Loan Scheme?

Yes, The British Business Bank says self-employed people with an annual turnover of up to £45m can apply under the scheme, as long as they operate through a business bank account, and generate more than 50% of their turnover from trading activity.

This includes sole traders, freelancers, and limited partnerships, operating in all sectors.

The government has already said the UK’s five million self-employed people would be allowed to defer self-assessment tax payments, and would benefit from mortgage payment holidays as well as an expansion of welfare support, including universal credit and Local Housing Allowance.

HM Treasury told the BBC the government was “working hard on further measures to support the self-employed”.

What about help for bigger businesses?

Companies that have a yearly turnover of more than £45m may be able to take advantage of the Bank of England’s new Covid Corporate Financing Facility.

The Corporate Financing Facility is effectively a government promise to buy short-term IOUs from companies which are in sound financial health and have a very high credit rating, but which need help to boost their cash flows.

The IOUs can be for any period between one week and 12 months.

The Bank of England says that eligible companies must have a “genuine business” in the UK, and “make a material contribution to the UK economy”.

Generally they will be based in the UK, or have their headquarters here, and employ or provide services to a significant number of people in the country.

How do big companies apply?

Companies must apply through their own bank in the first instance, assuming it is taking part in the scheme, and need to request funding of at least £1m.

The facility will offer finance to companies on similar terms to those available in the markets in the period before the pandemic.

The government will not publish details of which firms have taken advantage of the scheme, which is due to run for at least 12 months.

Source: BBC News

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