First crowdfunding project to address housing crisis in UK

Abundance, Britain’s leading peer-to-peer ethical investment platform, today launches a new move into the social and affordable housing sector, building on its six-year track record of financing renewable energy and energy efficiency projects, by seeking to address the shortage of affordable rental homes in the UK.
Responding to feedback from existing customers who wanted its ‘win win investing’ approach to be applied to new sectors, including property, Abundance believes this new investment will show there is a better way to finance and build long term social and affordable homes for ordinary people. This move into financing affordable property is a bold new direction for Abundance that could in time prove highly effective at tackling the UK’s housing crisis.
The investment is called “Merseyside Assured Homes” – from pioneering housing developer Octevo Housing Solutions – and it aims to raise up to £4,250,000 to fund the construction of 21 mostly 3-bedroom, social or affordable rental homes and nine 2-bedroom supported living flats in and around Liverpool. The 3-year secured investment is paying 4.5% interest a year, which includes a 0.5% bonus from Abundance, with capital returned in full on maturity.
Once the housing is complete and ready for occupation, registered social landlord Finefair Housing will find and manage suitable tenants from those unable to afford market rents, on the basis of a lease that lasts at least 50 years. Finefair has the option to purchase the homes for £1 each at the end of the tenure.
Finefair Housing’s sister company, Finefair, already manages around 2,000 properties for public (local authority) and private landlords. Through its relationship with Octevo Housing Solutions, it will expand into Liverpool where more than 20,000 people are on council waiting lists looking for homes or in need of supported living accommodation.
Robert Macmaster, Director of Octevo Housing Solutions Limited, said: “We set out to design a viable long-term solution that will ease council waiting lists and prevent housing shortages from continuing to escalate. Our business model has been created to address the core procurement and funding barriers faced by local authorities and housing providers, and to deliver a robust new solution that can make a significant contribution to addressing local housing issues.
“We believe that the home should be the treasure chest of living. We hope investors will join us in helping to build quality homes that offer opportunities to other people to create their own homes and improve our society.”
Bruce Davis, joint Managing Director of Abundance, said: “Abundance has led the way with our win-win approach to support the transition to a sustainable, green energy economy. Now we want to use the power of crowdfunding to help address the structural problems of the UK housing market. We can change the way we finance new developments so that families and young people no longer have to bear unsustainable levels of housing costs. Everyone wins when more people get access to stable and long-term homes – tenants benefit, communities are stronger and small investors get a fair return.
“We believe that Merseyside Asssured Homes can show there is a better way to make the housing market work for everyone, a way which balances investment potential and social impact without fuelling the property bubble.”
The new homes will be built on three different brownfield sites in Merseyside, which already have planning consent. They will be built to high standards integrating sustainability and energy efficiency and aiming to foster a sense of local community.
As with all Abundance investments, Merseyside Assured Homes is raising money through tradeable Debentures, with a minimum investment of just £5, which are eligible to be held in an Innovative Finance ISA so returns can be tax-free. It is expected to be the first in a series of housing projects across the UK from Octevo listed on Abundance’s online platform.

Behind on the basics – three million people in arrears on essential bills in 2017

Analysis by StepChange Debt Charity reveals that two in five clients who received advice in 2017 were behind on at least one of their essential household bills (such as energy bills, council tax, mortgage or rent). Across Great Britain, the charity estimates the number of people behind on priority bills was over three million.

Behind on the basics: a closer look at households in arrears on their essential bills, written by Grace Brownfield, Senior Public Policy Advocate, reveals a complex patchwork of difficulty. In some cases, people may be avoiding arrears only by taking on more credit.

Among renters, for example, those without rent arrears had significantly higher levels of borrowing relative to their income (77%) than those renters with rent arrears (55%).

Worryingly, an estimated 9.3 million people last year used credit to meet a household need – with 1.4 million of these using high cost credit.

Groups identified as being at higher risk of arrears on priority expenditure included lower income families, renters, people with an additional vulnerability, and younger people. This could be because they are more likely to have been affected by factors that increase the risk of arrears – namely a squeeze on income, rising living costs, insecure work, and regular income shocks.

The charity looked at the various types of bills clients were responsible for paying, and worked out the proportion of clients who had each type of expenditure who were behind on payments. Among those responsible for paying these bills, the most common arrears were on council tax (30%), water bills (23.7%), rent (21.5%) and mortgage (20.6%). Generally speaking, the lower the income of the household, the more likely they were to be in arrears.

Such arrears levels are perhaps unsurprising given that the typical StepChange client spends, on average, 60% of their net monthly household income on essential household bills plus food – while among those on the lowest net household incomes (under £10,000), an average 93% of their monthly income is swallowed up by the basics, leaving very little for other items such as clothing, school uniforms, travel, or household goods.

One particularly striking finding is that those working on zero-hours contracts, or with highly variable incomes, were twice as likely to have experienced arrears on priority expenditure in the past 12 months than those who worked full-time – and they were only slightly less likely to have fallen behind than those who were unemployed.

Peter Tutton, head of policy at StepChange Debt Charity, commented: “Our findings, while worrying, help pinpoint three positive steps that could be taken to reduce arrears through better help for people to make ends meet, reducing the need for them to turn to unaffordable borrowing.

“First, the Government must ensure that the right kind of debt support framework is in place – especially in the design of the new debt breathing space scheme, but also in the way that deductions from benefits are applied. At the moment, these can have perverse consequences.

“Second, policymakers should make it a priority to increase households’ financial resilience through helping them to build savings, to help more people cope with the “new normal” of insecure income and regular income shocks.

“Finally, there is a huge opportunity for utilities providers, local authorities, landlords and other creditors to reflect on how they can create more flexible and personalised payment schedules for people whose incomes fluctuate. For example, higher payments in some months and lower payments in others could help people to work around foreseeable financial pinch points in the year –and potentially help them to keep up their agreed payments.”

FCA robo-advice review comment

Following the FCA’s statement on robo-advice, which required many providers to make ‘significant changes’, Robbie Constance, Head of Financial Services Regulatory, DWF, commented: “It is no surprise that robo-advisers and ‘online discretionary investment managers’ are having teething troubles, especially when we take into account the complex regulatory regime these services operate under. Rather than allow for cheap and simple alternative services, MiFID II expressly requires that direct to consumer digital investment businesses achieve the same high standards as face-to-face advisers.

“Robo-advisers that are already in operation have some urgent work to do to ensure that they are compliant with the current guidelines. Those still in ‘build mode’ – particularly banks – will no doubt take stock of the FCA’s statement, and add it to their long list of regulatory and other risks to worry about.

“If they haven’t already done so, firms should critically assess the FCA’s article, carry out an urgent ‘gap analysis’ against their own proposition and reconsider their product governance in light of this – and the MiFID II rules. It’s the perfect time for an independent third party to work with digital investment businesses to develop best practice.

“Unusually – but understandable given the FCA’s enthusiasm for fintech and need to encourage solutions to fill the ‘advice gap’ – there is no dire warning of enforcement action or remedial timeline imposed. Firms will welcome the softly sofly approach of feedback and a reminder of the need to get things right. In less favoured sectors of financial services, the FCA’s findings would probably have resulted in ‘Dear CEO’ letters, skilled persons’ reviews, variations of permissions, remediation – and worse. For now the FCA has shown willing to wait and see.”

Payments community calls on Open Banking to do more to enable access for FinTechs

The Emerging Payments Association (EPA) has written to the Open Banking Implementation Entity (OBIE) calling for the OBIE to amend the terms of the CMA’s framework so that emerging payments organisations can realise the potential of Open Banking.

The EPA’s ‘Open Letter’ represents the views of many EPA members, sharing their concerns about the barriers that could inhibit FinTechs from engaging with Open Banking. EPA members believe that the nine banks currently covered by the Competition and Markets Authority (CMA) framework have displayed varying levels of enthusiasm in embracing certain aspects of Open Banking, with some described as striving to meet the letter, rather than the spirit, of Open Banking.

The Open Letter, supported by the EPA Advisory Board and the association’s 130+ members, covers several EPA members’ concerns, including;
1) Banks’ compliance with Open Banking
2) Public perception and consumer protection
3) API standards
4) Data standards
5) Customer journeys
6) Scope of Open Banking

EPA members urge the OBIE to elaborate on the detail behind the framework it has implemented. Members seek more clarity for both banks and Third Party Providers (TPPs) about the services and obligations that will create the desired ‘open’ customer experience.

Furthermore, EPA members believe that there is a lack of understanding about, and trust in, Open Banking from both consumers, and TPPs. This lack of understanding and trust are a significant obstacle to customer uptake. To overcome this obstacle, the EPA believes it is essential improve the messaging around Open Banking and to provide certainty and protection to customers.

Tony Craddock, Director General of the EPA, commented, “Just having Open Banking will not stimulate innovation on its own. You have to collaborate to stimulate innovation. This Open Letter highlights what is missing from Open Banking and what needs to be done now to ensure its success. We hope it will enable collaboration between the EPA’s progressive payments companies and Open Banking. I believe that everyone using and facilitating payments will benefit.”

Landlords grow their buy-to-let portfolio through a seven-day second charge loan

The directors of an investment company, who own nearly 250 properties, are set to grow their portfolio after Together delivered funding secured against part of their buy-to-let empire – in just seven days.

The lender provided a second charge loan over 26 of their rental homes, worth £3.5 million, and owned by the high net worth customers, who run their property portfolio through a limited company structure.

The three investors, two who are self-employed directors of the property business, wanted to keep their favourable interest rate on the current first charge buy-to-let mortgages on the portfolio of properties across the North of England, which they bought before the financial crisis of 2008.

However, the customers wanted to unlock the equity they had built up over the past decade through a second charge loan, and wanted the deal to complete quickly so they could press ahead with adding to their property portfolio.

They approached expert packager Crystal Specialist Finance who brought the case to Together, having previously worked closely with the lender, and knowing its reputation for delivering fast finance tailored to their customers’ borrowing needs.

Marc Goldberg, commercial CEO at Together, said: “Our dedicated team of buy-to-let underwriters was presented with the complete package after Crystal’s clients couldn’t find the finance they needed through mainstream lenders.

“These customers run a multi-million pound property empire, which includes buy-to-let homes, commercial property and car parks, through multiple companies.

“All three of the applicants have spotless credit histories and, between them, have years of financial knowledge, as well as the experience they needed to expand their already-successful business.”

Together liaised closely with trusted experts from legal firm Priority Law and the customers’ solicitors, and provided £879,000 through a second charge loan, agreeing repayments on an interest-only basis.

Jo Breeden, managing director of Crystal Specialist Finance, said: “This case shows that professional and experienced landlords and investors are focusing on growing their portfolios, despite the tax and regulatory challenges of recent years. This limited company didn’t want to lose the interest rates on their first charge mortgages by remortgaging their properties, so, in this case, a second charge was a great option.

“It was fantastic that Together pulled out all the stops to deliver in seven days, allowing the customers to move quickly with their plans to purchase more buy-to-let properties.”

Together, which has been at the forefront of the specialist lending market for 44 years, lowered the rates on its buy-to-let products in March. It has also simplified its process for brokers to make it as easy as possible for them to submit portfolio landlord cases.

Lender representatives at FSE Manchester question FCA is ‘back tracking on MMR’

Following on from its Mortgages Market Study Interim Report, published earlier this month, a number of lender representatives have questioned whether the contents of the report mean the regulator is pulling back from the measures it introduced as part of the Mortgage Market Review (MMR).

Speaking at today’s Financial Services Expo (FSE) Manchester, the premier exhibition for the financial services industry in the North of England, and following the FCA’s own seminar presentation on its report, a panel of lender representatives discussed the Interim Report and a host of mortgage market topics.

Dave Rogers, Intermediary Partnership Director at Barclays, was first to question whether the Report signalled a different approach from the regulator. “In terms of the overall report, I don’t think there’s anything for the industry to worry about,” he said. “But it seems to be a bit of back-tracking on the Mortgage Market Review in terms of its view on price.”

The comments followed a heated session with the FCA when a stream of delegates questioned representatives from the regulator on whether its research on the potential cost-savings for borrowers not on the ‘cheapest rate’ was valid.

Ian Andrews, Managing Director, Intermediary Sales at the Nationwide while welcoming the report, in particular its view that intermediaries are not biased towards products that pay a higher procuration fee, also questioned what the Interim Report meant in terms of the MMR, asking: “Has the FCA softened on the MMR idea that everyone needs advice?”

Richard Tugwell, Group Intermediary Relationship Director at Together, also suggested that the “cheapest [mortgage] isn’t always the best” and “price isn’t necessarily the only driver”, citing the personal circumstances of clients as determining the recommendation provided.

Andrews also said he “couldn’t get his head around” the potential “Trip Advisor for clients” idea the FCA is positing which would allow individuals to compare different brokers/intermediaries. The regulator earlier said that it would like to work with the industry to establish what type of metrics it could use in a broker-comparison tool.

Overall however the lender representatives did welcome the Interim Report. Charles McDowell, Commercial Director at Aldermore, said it was a “fairly strong ringing endorsement” and that it “could have been much, much worse” for the industry. He did however question how the theoretical measures outlined would be put into practice.

GMB welcome news of rising wages in London but says there is still a long way to go

News that wages have risen is welcome but there is still a very long way to go to make up the ground lost due to the recession in 2008 and inflation since then, says GMB London

GMB London have welcomed new statistics from the Office of National Statistics, which shows wages rising at an annual rate of 2.9% in the three months to March, faster than the 2.7 % inflation, but cautioned that there was a very long way to go before earnings in London recover from the drop of 15.2% compared to earnings in 2007.

A study of official data by the GMB from January 2018 showed that in London, full-time workers mean gross annual pay in 2017 was just 84.6% of what it was in 2007. In 2007 the mean gross annual pay of full-time workers was £42,226. In 2017 that figure was £47,089, which when you factor in inflation at 31.7%, saw a decrease in pay of 15.4%.

Over the same period the decrease in earnings in the United Kingdom was 10.4%. In 2007 full-time workers mean gross annual pay in the UK was £30,015. By 2017 the figure was £35,423. After inflation, this is just 89.6% of what workers were earning in 2007
The full-time workers gross annual pay in Hillingdon in 2017 was just 75.2% of what it was in 2007. This was the biggest decrease in the London region. It was followed by Hammersmith and Fulham at 78%, followed by Sutton 79.5%, Westminster 79.6%, Southwark 80.2%, Islington 81.3%, Tower Hamlets 81.4%, Ealing 81.9%, Harrow 85.3%, Havering 86.6%, 87.7%, Camden 87.7%, and Enfield 88.2%. Lewisham and Richmond upon Thames were the only boroughs that saw earnings increase over the 10-year period.

The figures covering 33 London councils are set out in the table below, ranked by the highest percentage drop since 2007. This is from a new study by GMB London Region of official data from the Office of National Statistics (ONS) for 33 councils in London. It compares full-time workers mean gross annual pay in 2007 and 2017, followed by 2017 earnings as a percentage of 2007 earnings after inflation.

Results for 2003 and earlier exclude supplementary surveys. In 2006 there were a number of methodological changes made. For further details go to:

Estimates for 2011 and subsequent years use a weighting scheme based on occupations which have been coded according to Standard Occupational Classification (SOC) 2010 that replaced SOC 2000. Therefore care should be taken when making comparisons with earlier years.

Warren Kenny GMB Regional Secretary said:

“GMB welcome this news that wages have risen but there is still a very long way to go to make up the ground lost due to the recession in 2008 and inflation since then.

“Earlier this year GMB showed that across London as a whole the real value of average wages for workers resident in the region in 2017 was only 84.6% of the buying power they had in 2007 when inflation is factored in. Indeed residents in 8 of the 29 London boroughs that we received data from, fared much worse than this with residents in some areas very badly hit.

“Two conclusions can be drawn from the study. The first is that the impact on the living standards of ordinary workers of the bankers recession in 2008 onwards is still with us a decade later. Not a single person has been punished by a prison sentence for the recklessness and law breaking that has had catastrophic consequences as these figures show. The Panama Papers and the Paradise Papers show that tax evasion and tax avoidance are still going ahead undealt with on an industrial scale.

“The second conclusion is that ordinary workers require substantial pay increases to make up the lost ground. These increases are needed to boost spending power to keep economic growth on track.”

Fast-growing Yorkshire entrepreneur scoops industry award

A Sowerby-Bridge based finance management specialist has won a prestigious regional industry award.

Martin Mellor, founder and managing director of Mellor Financial Management, has won the ‘advisor of the year’ award in the inaugural Yorkshire Accountancy Awards 2018.

The ceremony, which took place at New Dock Hall in Leeds on Thursday 10 May, saw more than 300 people in attendance to celebrate accountancy achievements across the Yorkshire region.

Having recently celebrated its third year in business, Mellor Financial Management has experienced a 400% increase in revenue and continuous year-on-year growth.

Founded in 2015, Mellor Financial Management works with a range of businesses across industries including manufacturing, professional services, retail, hospitality and events.

The Yorkshire Accountancy Awards has been developed to celebrate the achievements of local small, mid-tier and large firms operating in the financial sector.

With more than 20 years of industry experience, Martin has provided services that have helped more than 15 clients which has supported more than 500 individuals since setting up Mellor Financial Management. The company has assisted companies to transform the finance side of their business, plan for future growth and maintain effective cost management systems.

Founder of Mellor Financial, Martin Mellor, commented: “Winning the advisor of the year award was a real privilege. We aim to do things differently by not only partnering with our clients but becoming embedded into their team to support them on their journey for growth.

“It has truly been a phenomenal year for Mellor Financial, we’ve recently celebrated our third year in business and have demonstrated year-on-year growth, so to win this award really means so much as recognition for the hard work put in over the last three years.”

Secure Trust Bank partners with Connect for Intermediaries network and packager

Residential lender Secure Trust Bank has joined the panel, not only of Connect for Intermediaries mortgage network but also its packaging arm.

Brokers from the wider market, can use Connect’s packager arm. This will provide DA brokers with access to Secure Trust Bank’s competitive lending to the “unordinary” borrower. Secure Trust Bank’s approach, regarding unusual incomes, means that its place on the panel of Connect for Intermediaries matches well with Connect’s growing reputation, as a leading network and packager for more specialist lending cases.

Secure Trust Bank provides accessible mortgages for the self-employed, contract workers, people with complex incomes, older borrowers, and those with a recently restored credit history, but it lends only through selected intermediaries.
Secure Trust Bank has a genuine desire to lend and treats every case on its individual merits. It takes an individual view to lending to the self-employed, using either their last year’s figures or an average of two or three years, depending upon the circumstances. For the recently self-employed it will even use anticipated income in the right circumstances.

With rates starting as low as 2.39%, financing is typically provided over a term of up to 35 years with fixed interest rate periods of 2, 3 and 5 years. Secure Trust Bank’s purchase and remortgage products currently have a maximum loan to value of 85% and a maximum loan size of £2m.This means brokers using Connect for Intermediaries who have clients with complex incomes now have access to a lender looking for reasons to lend where other lenders may choose not to.

Connect for Intermediaries is a specialist mortgage network and packager. In recent years it has expanded its offering to include a wide-ranging mainstream residential offering. As a result, a number of Connect’s AR’s now have residential permissions to compliment the specialist lending that they do.
Liz Syms, CEO of Connect for Intermediaries says, “The addition of Secure Trust Bank to our panel means brokers that use Connect for Intermediaries will have access to a lender offering unique and affordable solutions both for self-employed clients and those with complex incomes. Connect constantly strives to find partnerships and solutions for brokers, enabling them to provide the best possible customer outcomes.”

Tony Hall, Head of Sales & Marketing of Secure Trust said. “Partnering with Connect for Intermediaries was a logical step for us at Secure Trust Bank Mortgages as their Broker community help clients from across the lending spectrum. We look forward to the new opportunities this partnership represents in our mission to provide residential mortgage products to customers who are underserved by the high street lenders.”

Business Disability Forum offers 10-point strategy to reducing work-place stress

With 12.5 million work days lost each year as a result of stress, depression and anxiety, the global membership organisation Business Disability Forum is using Mental Health Awareness Week (14 to 20 May) to raise awareness of the impact of work-related stress and to offer advice to organisations on taking a strategic approach.

Business Disability Forum is releasing a 10-point strategy for reducing workplace stress to mark the week, in view of the increasing visibility of the condition both on the news and within businesses.

CIPD recently found that the phenomenon of ‘presenteeism’ – employees coming to work when unwell – could be tackled if high levels of workplace stress were addressed.

Diane Lightfoot, Chief Executive Officer at Business Disability Forum, called on businesses to be open and proactive in workplace stress, pointing to the benefits in employee morale, working culture, and productivity.

Diane said:

“The common misuse of the word ‘stress’ in everyday language has caused it to become somewhat devalued as a serious health issue, yet work-related stress is currently the biggest occupational health problem facing the UK.

“The non-visible nature of disabilities such as stress, means that it can often be harder for employers to recognise the needs of employees experiencing the condition and to put in place workplace adjustments.

“But there are huge opportunities here for employers. It isn’t overstating the case to say that tackling workplace stress, for example, could have a transformative effect on a business’s working culture and morale.

“As is proven by our research and the experiences of countless business leaders, employers who take care of their people in this way find that there are huge rewards for doing so. As organisations they enjoy higher productivity and lower costs associated with turnover and workplace absences.

“We hope that our 10-point strategy will encourage employers to take the first step in this direction, by reviewing policies and organisational culture and starting frank conversations about how to address this central issue.”

10-point strategy to reducing work-place stress

  • Ensure workloads are realistic and appropriate to the skills and capabilities of the employee and that employees are not working excessive hours – or during weekends and holidays.
  • Ensure everyone has clear objectives.
  • Allow employees as much control as possible in the way that they plan their time and perform their duties. Where possible allow flexible working and remote working patterns.
  • Ensure every employee receives regular feedback through good day-to-day management and fair performance appraisals.
  • Create a supportive environment in which employees feel able to talk about issues such as stress.
  • Raise awareness of the effects of stress and promote a healthy work/life balance, for example encouraging staff not to work through lunch.
  • Be ready to make workplace adjustments to help an employee who is experiencing stress to continue contributing to the workplace.
  • Introduce initiatives to assist employees to manage their time and control their pace of work.
  • Ensure your organisation promotes a positive and inclusive culture and has clearly signposted policies on workplace bullying and harassment and that complaints are investigated promptly and effectively.
  • Consult your employees and make sure your organisation’s communications are honest and open.

Business Disability Forum is a leading not-for-profit membership organisation which has over 20 years’ experience of providing advice and guidance on disability and employment. Its Members and Partners employ almost 20% of the UK workforce.

Business Disability Forum regularly carries out research and produces briefings on a range of disability employment issues. Its ‘10-point strategy for reducing work-place stress’ has been adapted from its recent research looking at employment adjustments for people experiencing stress, anxiety and depression.

The membership organisation is also marking Mental Health Awareness week by providing an in-depth Mental Health Toolkit to its Member and Partner organisations, in order to further help managers take the best care of their own and their employees’ mental health.