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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Dennis Bebo – MSC, BSC, DEA, CeMAP

TA DenEco Consultancy – www.deneco.co.uk

What must a mortgage lender do if a borrower is in arrears

The Financial Conduct Authority (FCA) considers that a reasonable period for repayment of arrears or a shortfall will depend on the borrower’s circumstances. In some cases, it can mean spreading the payments over the remaining mortgage term.

The lender must not attempt to process more than two direct debit requests in any one calendar month

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A mortgage lender must also establish and implement clear, effective and appropriate policies and procedures to ensure the fair treatment of customers whom the lender understands, or reasonably suspects, to be particularly vulnerable.

If a borrower is in arrears, the lender must consider whether one or more of the following actions would be suitable to help resolve the problem

  • extend the mortgage term;
  • change the mortgage type;
  • defer payment of interest due on the mortgage or sums due under a home purchase plan;
  • treat the payment shortfall as if it was part of the original amount – know as capitalisation and effectively adding the shortfall to the capital owing;
  • make use of any government forbearance schemes to help borrowers with problems.

Please contact your lender as soon as possible if you’re experiencing financial difficulties to get a suitable solution.

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Dennis Bebo – MSC, BSC, DEA, CeMAP

TA DenEco Consultancy – www.deneco.co.uk

 

Covid 19 Financial impact: Pension freedom

Over 55 and in financial difficulty due to Covid 19, you can take the opportunity of pension freedom as solution to Covid 19 financial impact.

Pension freedom allows personal pension planholders to take as much cash as they want from their pension fund from the age of 55. This can be an attractive option for those in mortgage difficulty, but there are two key factors to consider:

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  • Only 25% of the fund can be taken tax free, with any excess added to income for the year. This could result in a large (and unexpected) tax liability, which, in turn, could lead to less cash than expected.
  • The planholder’s income in retirement could be significantly reduced as a result of using the pension fund in this way. In addition, because they cannot take cash from their fund before the age of 55, they will have only limited time to rebuild their pension fund for retirement.

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Thinking of buying a property?

Need help with residential and commercial property purchase/finance in the UK from start to finish, Please Contact me

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Dennis Bebo – MSC, BSC, DEA, CeMAP

TA DenEco Consultancy – www.deneco.co.uk

Louis Vuitton to use perfume production lines to start making hand sanitiser

Louis Vuitton owner LVMH will use its perfume production lines to start making hand sanitiser to protect people against the coronavirus outbreak.

The luxury goods maker says it wants to help tackle a nationwide shortage of the anti-viral products across France.

“These gels will be delivered free of charge to the health authorities,” LVMH announced on Sunday.

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France has now seen 120 deaths from the coronavirus as the pandemic spreads.

“LVMH will use the production lines of its perfume and cosmetic brands… to produce large quantities of hydroalcoholic gels from Monday,” LVMH said in a statement.

The factories normally produce perfume and makeup for luxury brands like Christian Dior and Givenchy.

The French luxury conglomerate also owns well-known brands such as champagne maker Moet & Chandon, watchmaker Tag Heuer and jeweller Bulgari.

“LVMH will continue to honour this commitment for as long as necessary, in connection with the French health authorities,” the company said.

France has closed its restaurants, cafes and non-essential stores in an effort to combat the virus, which has infected an estimated 165,000 people and killed more than 6,000 worldwide.

Governments across the world have called on manufacturers to help make products that are running low during the virus outbreak.

UK Prime Minister Boris Johnson is due to ask UK engineering firms on Monday to shift production to build ventilators for the NHS.

In China, at the peak of its coronavirus outbreak in February, electronics giant Foxconn switched some of its production from Apple iPhones to make surgical masks.

Source: BBC News

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Thinking of buying a property?

Need help with residential and commercial property purchase/finance in the UK from start to finish, Please Contact me

Selling or renting your property in Greater Manchester? Get same day EPC for £45 only

Dennis Bebo – MSC, BSC, DEA, CeMAP

TA DenEco Consultancy – www.deneco.co.uk