House sales surge in September

Residential property transactions increased by more than 20 per cent in September compared with August sales.

However, September’s figures of 98,010 showed a 0.7 per cent dip on the same month last year according to customs and revenue statistics.

The chancellor Rishi Sunak attributed September’s positive results to his stamp duty holiday on properties up to £500,000 in value which was introduced in July.

He was upbeat about the data claiming a rise in house moves would have a positive effect on the economy.

“With a third of Brits planning to spend savings from the tax break on home improvements and renovations, the temporary stamp duty cut is boosting business and protecting jobs.

“This ranges from carpenters to cleaners, brickies and decorators, they can all benefit from each sale – helping us to further deliver on our plan for jobs,” he said.

Brokers Hank Zarihs Associates said development and refurbishment finance loans to builders doing up properties was thriving.

Many think now is a good time to move

The Building Societies Association’s latest property tracker survey shows37 per cent of people think now is a good time to buy a property compared with 25 per cent in June.

Nearly a third thought house prices would rise in the next 12 months in September, up from 16 per cent in June. More than a quarter thought prices would fall over the next 12 months down from 45 per cent in March.

Raising a deposit was a barrier to 53 per cent of people in September, up from 40 per cent in June. Access to mortgage finance was an obstacle to 40 per cent of people in September, up from 34 per cent in June.

However, job security was cited as the biggest barrier for 86 per cent of respondents compared with 65 per cent in June. Among people actively looking to buy a home 61 per cent quoted job security as a problem.

The Bank of England predicts the unemployment rate will rise from 5.5 per cent in the third quarter to 7.5 per cent by the end of the year partly due to furloughing finishing on October 31st.

MCI appoints Hinckley & Rugby Building Society to its growing panel

The MCI mortgage club has appointed Hinckley & Rugby Building Society to its growing panel of lenders. The mortgage club recognises the growing demand within the specialist sector and continues to partner with innovative providers to maximise the number of solutions to accommodate all types of customer circumstances.

Hinckley & Rugby has a novel approach to underwriting with manual underwriting and no credit scoring. It also offers all brokers using the MCI club the option to use its Mortgage Referrals Committee to consider individual cases. The Mortgage Referrals Committee reviews complex cases with the Society’s most senior decision makers, often providing a same-day outcome.

Hinckley & Rugby offers residential, buy-to-let, self-build and later-life lending products. Alongside these products, members will benefit from access to its ‘joint borrower, sole proprietor’ mortgage, split terms and maximum age of 85, with earned income being taken to age 75.

Mortgages available within the Hinckley & Rugby’s buy-to-let range include:

  • Top slicing
  • Portfolio landlords
  • Buy-to-let capital raising
  • First-time buyer
  • First-time landlord
  • Non-owner occupier

Melanie Spencer, Head of the MCI mortgage club, said: “With a growing demand in the need for products both from specialist lenders and from building societies, we are pleased that Hinckley & Rugby is joining our panel of lenders. I was particularly impressed with the Mortgage Referrals Committee that meet on a daily basis, that can assess individual cases and the broad range of products that our members will have access to. We constantly look to refresh our mortgage panel so that our members have access to the mortgages that they need to cater for their clients’ changing circumstances.”

Emily Smith, National Account Manager at Hinckley & Rugby Building Society, said: “We are looking forward to working with MCI Club, and offering its members greater flexibility when it comes to underwriting, including our daily, high-level Mortgage Referrals Committee. We have remained a consistent lender throughout these uncertain times and our niche lending products are a popular choice for brokers whose clients need individual consideration of circumstances. We hope our approach brings extra support to the MCI Club members.”

Government should allow leeway – Comment on the UK property transaction statistics for October

Following the UK property transaction statistics this morning, Richard Pike, Phoebus Software sales and marketing director, says: “Non-seasonally adjusted residential transactions in September are up from 2019’s figures. This is a welcome bounce back after the slump over lock down and likely due to continued demand spurred on by the stamp duty holiday, especially when we see the colossal spike in comparison to July and August’s figures.

“The demand is clearly having an effect on house prices which are starting to rise quite sharply. According to a study by Rightmove, the average price of a property coming to market rose by 1.1% in the last month. It is likely that pricing has been boosted by borrowers moving to more “COVID friendly” housing options, as people are willing to pay more for properties that reflect their ideal requirements as a result of lockdowns. However, the spike in transactions could also being contributed to by existing homeowners who can either afford to put down larger deposits and therefore avoid the rush of the one-day 90% LTV sales, or who can afford to offer above asking prices which we have seen happen in the more rural parts of the country.

“As we look forward, house prices should remain strong for the six months to March 31st. However, the effect on the property market of the “conveyancing system” not being able to cope with mass completions at the end of March remains to be seen. The Government should be looking at allowing some leeway, i.e. if an Offer Letter has been produced by 1st March, then it should be allowed until 15th April to complete and receive stamp duty benefit.”

Launch of UK’s first Islamic Finance undergraduate degree

Birmingham City University has announced the launch of the first Accounting and Islamic Finance undergraduate course in the UK – a niche of the finance industry set to grow exponentially in coming years.

The BSc (Hons) Accounting and Islamic Finance degree will see students study Islamic economics, whilst developing an understanding of corporate social responsibility in modules exploring how businesses are taking greater responsibility in helping to move towards a cleaner and more sustainable planet.

Islamic finance is one of the fastest growing financial industries, with global assets exceeding $2 trillion and expected to reach $3.8 trillion by 2023.

“The course is being launched at a very crucial time in our history,” explained course leader Shaista Mukadam.

“With the current pandemic and economic challenges, there is an urgent need to rethink an alternative to the interest-based economy.”

Islamic finance emerged in the 20th century as an effective tool for financing development worldwide, including in non-Muslim countries. Islamic organisations run their operations in a way that is consistent with the principles of Islamic law.

Sharia-compliant finance differs from conventional banking in key ways, the most notable being a prohibition on charging interest and investing in ethically compliant companies.

“Islamic finance uses tools to ensure a fair and equitable distribution of wealth, resources and growth based on profit, loss and risk-sharing while achieving the United Nations sustainable development goals and ensuring ethical and sustainable processes in business and finance,” added Shaista, a senior lecturer at Birmingham City University’s Business School.

“Students on the course will be taught the philosophy around these principles and will be encouraged to find ways to implement them in real-world scenarios. It’s not just a course for Muslims, it’s about an ethical way of doing finance based on the teaching of Islam.”

The degree will also provide students with opportunities to partner with organisations including Islamic charities on community advice projects.

Businesses are spending £2,000 per day on temporary ‘Interim Managers’ to help them survive past Covid-19

Whilst UK redundancies are rising at the fastest rate since 2009 amid the Covid-19 crisis, businesses have continued to hire at the very senior level to help push through new continuity and transformation projects – with assignments for Interim Managers expected to increase by 15-35% in the final quarter of the year.

The findings come from leading recruiter Robert Walters’ European Interim Management Remuneration & Market Report 2020 – which launched this week – and reveals that top UK Interim Managers can command as much as £2,000 per day due to the demand bought on by Covid-19.

A relatively new term to many, Interim Managers – not to be confused with a consultant – are highly experienced ‘hands-on’ managers – with a proven track record – who are typically hand-picked to match a company’s needs.

For the 6-12 months that an Interim Manager is typically in place they work at the complete disposal of the company, taking on operational responsibility within the framework of a well-defined assignment – whilst working as a self-employed person.

Daniel O’Leary, Business Director at Robert Walters, comments: “With continued uncertainty surrounding market conditions, companies have delayed long-term commitments and instead looked at bringing in the specialist skills of Interim Managers.

“Whilst the initial shock of lockdown significantly reduced interim recruitment, hiring has started to pick-up at the senior end of the market in direct response to Covid-19, where companies have been quick to leverage on interim crisis management and transformation expertise – particularly in areas such as financial management, budgeting, HR, legal, digital transformation and cyber security – which has pushed day rates up to the highest we have ever seen in the UK.

“As businesses transition from crisis management to business continuity, we expect there to be continuing demand from organisations considering interim professionals as a key strategic advisor.”

With demand at decade-high peak for Interim Managers, senior professionals within this space can expect little downtime between projects – with 59% predicted to find their next interim management assignment in less than 3 months, twice as quickly as normal.

Not surprisingly, the most common interim assignments carried out in 2020 have been organisational restructuring & crisis management (28%), performance profitability improvement (22%), and implementation & redesign of new systems (14%).

Craig Howells, Senior Consultant at Robert Walters, comments: “Demand has been particularly notable for interims with M&A experience, where Private Equity Firms and competitive companies have been keen to capitalise on market changes, and effectively ‘jump’ on the successes or downturn of other companies.”

Top 5 most expensive Interim Managers in UK:

  • Director of Internal Audit: £2,000 p/d
  • Chief Information Security Officer: £1,725 p/d
  • Transformation & Change Director: £1,600 p/d
  • General Counsel: £1,200 p/d
  • Chief Financial Officer: £1,110 p/d

Despite being paid generously for their level of experience, money is not the primary driver for Interim Managers – with only 16% selecting a project based on the daily rate offered.

In fact, it is the type of assignment (51%) and the company situation or strategic project at stake (21%) which interim professionals consider more closely when selecting projects.

Craig Howells adds: “The mindset of an interim professional is very different to that of a permanent employee – in that they bring in a blue-sky thinking perspective – an outlook that is difficult to attain from employees who are busy doing the ‘day job.’

“The most interesting thing as we enter into a peak in demand for highly qualified senior professionals is that this is the youngest cohort of interims ever – with 1 in 3 being under the age of 50 – meaning that key drivers for job satisfaction is likely to have changes beyond just renumeration.”

Over three quarters (78%) of senior professionals surveyed by Robert Walters stated that they would prefer to carry out interim management assignments over finding a permanent job. Citing the opportunity to work with different organisations, flexibility to choose assignments, ability to make an immediate impact, and independence when working for a company as the top reasons to carry out interim assignments.

Interim Management Job Satisfaction Drivers:

  • Trust given by the board – 48%
  • Independence and autonomy – 39%
  • Exciting projects – 38%
  • Work-life balance – 31%

New research reveals mentally demanding tasks are more difficult to handle at home

Working from home, whilst doing complicated tasks and detailed thinking might have adverse effects on doing cognitive tasks, according to research using chess players from Dr Dainis Zegners, Assistant Professor in the department of Technology and Operations Management at Rotterdam School of Management, Erasmus University (RSM), Dr Zegners and his co-researchers from Maastricht University Dr Steffen Künn and Dr Christian Seel.

The researchers measured the effect of working at home using world-class professional chess players taking part in an online tournament from their homes. Their results give food for thought for managers and their teams who are still adjusting to the new normal of much more long-term working from home.

When live events were prohibited during the recent COVID-19 pandemic, chess tournaments were instead held online. The researchers used the online chess tournaments to assess the impact of moving tasks normally done offline into an online setting. They assessed the quality of chess moves and associated errors using Artificial Intelligence (AI) in the form of a powerful chess engine called Stockfish.

The research concludes that mentally demanding tasks are more difficult to handle at home than when physically present at a workplace. Based on the chess players’ performances, excessive use of homeworking can hurt productivity, the three researchers believe.

According to Dr Dainis Zegners “Chess is, in many ways, is similar to the work of the knowledge society’s office workplaces: the game is strategic, analytical and takes place under time pressure. Cognitive skills used in chess are also used for complicated tasks and strategic decision making such as drafting a legal contract, preparing a tender document or managerial decisions – the kind of tasks that require clear and precise thinking.

“We’re not saying that people should not work from home. Especially during the current pandemic, allowing employees to work-from-home can be crucial to limit the spread of the virus. However, our results show that there can be a drop in productivity for cognitively demanding tasks that needs to be accounted for.”

Business first, not compliance only is the future for accountants

The past few months have underlined the need for better business insight to reduce risk, improve decision making and exploit new opportunities. Businesses have needed rapid access to advice, support and information – yet in too many cases the obvious ‘go to’ resource has failed.

Accounting firms with a compliance only approach have been unable to step up and support businesses that need more than the basics of profit & loss; balance sheets; and cash flow. What they require is business support, from using corporate structure to mitigate risk to undertaking robust forecasting to inform investment plans and helping to maximise business value for a company looking to sell.

From providing essential advice to protect business assets – such as property – to R&D tax incentives and VAT consultancy, whether a business requires a fully outsourced FD or support for the existing management team, Peter Bracey, MD, Bracey’s Accountants, outlines the opportunity for progressive accountants to support constantly changing business.

Managing Change

Whether a winner or loser during the Covid-19 crisis, businesses across every industry have had to adapt to extraordinary change. Gyms were shut but companies selling gym equipment, bikes and paddleboards couldn’t keep pace with demand. Garden centres and nurseries were trying to keep alive tonnes of bedding plants – while seeds sold out online and everyone bought a greenhouse.

For some business owners the focus was on managing job retention schemes and accessing the life-line of government finance – but now they are worrying about the repayments of deferred VAT and government loans that will be due early in 2021; about closing premises or making redundancies. For others, the challenge was in responding to customer demand for home delivery; working out new finance models and overcoming supply chain glitches. Now they are looking to build on new customer relationships and embed expansion plans.

At every step, these businesses have needed advice, support and insight. But this was uncharted territory. Forecasting is tough at the best of times. Little if any of the business’ activity pre-Covid appeared to offer any relevance during the past six months. So where could businesses turn for help?

Valued Advice

These are decisions that require not only excellent financial and business understanding, but also excellent financial and business data. Which is where many traditional accountancy firms fall down. The majority have, of course, made the shift to cloud based software which provides shared, real-time access to business data. As yet, however, many remain committed to a service model that is predicated solely on meeting compliance requirements, not supporting critical business decisions.

Proactive firms are taking a very different approach, one that takes a business first rather than compliance only approach. Rather than attempting to mitigate risks and reduce tax liabilities after the fact, this model is about constant communication with clients to support change. By encouraging businesses to discuss plans in advance, accountants can provide vital support and insight – either working with the existing CFO or FD or providing an outsourced FD resource to those companies that cannot justify this dedicated role.

These firms are looking beyond annual accounts data to provide business insight and advice based on current, not historic – and now irrelevant, financial data. Whether the business is worrying about repaying its deferred VAT and Bounce Back loans next year, searching to minimise risk or building on new customer awareness to add revenue streams, there is a pressing need to understand the business as well as financial implications of change.

Continued Support

Today, that means supporting companies through a line by line approach to every item on the balance sheet. From cutting costs and chasing debts without jeopardising important business relationships; to identifying and funding new revenue streams – even creating local supply chains to mitigate the potential disruptions caused by Brexit – understanding, analysing and interpreting this data is key to making the right decisions today to support immediate goals.

But what about tomorrow? Covid-19 may have been a once in a century event but the pace of change affecting business in a digitally disrupted global economy demands this continuous level of proactive support. Few business owners or management teams have the time, resources or expertise to unravel the complexities of 21st century operations – and can become exposed to significant risk as a result.

Is it worth developing talent in house or more effective to recruit? Does the government’s latest apprenticeship scheme really work financially? What about tax incentives – such as R&D tax credits or the potential to cut corporation tax for sales of patented goods? How can the business safeguard its intellectual property?

Business Foundation

Providing the right answers to these questions is about far more than the mainstays of accountancy: the P&L and balance sheet. It is about leveraging business understanding and knowledge to support clients through every change; about helping companies to take every possible step to build a strong foundation, maximise tax incentives, minimise risk and realise business goals.

Take the retailer that has spent 50 years building up not only a successful customer base but also a valuable property portfolio and cash reserves. At first glance, a robust business. But the company structure revealed a significant risk: the entire operation was held within one limited company. There was no separation of assets. Should the business be accused of copying a product and face a legal claim, the entire company’s assets would be at risk. The simple step of creating a group structure and transferring some of the assets to a holding company draws a line in the sand and limits a creditor’s ability to attack the entire corporate asset holding.

Or consider the business that was investing circa £1million year on year in a new software product – yet had no idea that it could claim R&D tax credits and was due a £500,000 rebate. Or the businesses that have never considered applying for a patent on a product because of the up-front costs – and are, as a result, missing out on the long term financial benefits of patent tax relief. Any company with a patent pending can apply for Patent Box relief which can reduce corporation tax on the profit generated from the part of the product that is patented from 19% to 10%.

Conclusion

This level of proactive support and advice is invaluable but for many companies, and accountancy firms, it has taken a global pandemic to drive a change in expectations. As the firefighting phase draws a close, businesses will continue to face extraordinary, unprecedented change – not only as a result of Covid but also Brexit. Throw in the implications of a post Covid budget, evolving environmental legislation and technology enabled disruption and the ability to adapt and respond is now prerequisite for business success.

Business owners have never had more issues to consider – or more need for rapid, trusted business advice and support.

By Peter Bracey, MD at Bracey’s Accountants

Fleet Mortgages announce appointment of new Key Account Manager

Fleet Mortgages, the buy-to-let specialist lender, has today announced the appointment of Louisa Ritchie as its new Key Account Manager.

Louisa joins with immediate effect and is responsible for managing strategic partnerships with Fleet’s existing key accounts and identifying opportunities to work with new network and distributor partners.

She has over 25 years’ experience in the financial services industry working for lenders, advisers and distributors. Her most recent lender roles working within the intermediary sector include National Account Manager at lenders, Together and TSB Bank.

Louisa is also being joined at Fleet Mortgages by two new Telephone Business Development Managers (TBDMs) this month. John Gorard will be TBDM for the South East having held a similar position at Castle Trust for the last two years, while Sarah Bowen will be TBDM for South West, having previously held both BDM and advisory roles, as well as having run her own business outside the financial sector.

Steve Cox, Distribution Director of Fleet Mortgages, commented: “Our aim at Fleet is always to ensure we have quality individuals working directly with advisory firms and strategic partners, so we are very pleased to announce Louisa’s appointment as she arrives with vast mortgage market experience and a great reputation.

“Louisa will be working directly with our existing key accounts but also ensuring that we grow our relationships and partnerships with other networks, clubs and distributors. This is a highly important part of the market and we want to ensure that as many advisers as possible have access to our buy-to-let products and services.

“We’re also able to enhance the support to advisers with the appointment of John and Sarah as new Fleet TBDMs, and they are on hand to deliver everything needed by advisers in the South East and South West regions.

“Fleet is urging all advisers active in the buy-to-let sector to contact us to see how we can support them and their landlord clients.”

EQ approved for Government’s G-Cloud 12 framework

EQ (Equiniti Group plc), the international technology-led services and payments specialist, is pleased to announce that seven of its services have been approved as suppliers for the Government’s G-Cloud 12 framework.

EQ’s digital capabilities, which are provided by its specialist division EQ Digital, have been a permanent fixture on the G-Cloud framework since its inception in 2012.

Of the seven approved this year, three have been included for an eight successive year; providing case and information management tools, and HR solutions to G-Cloud users.

The full list of approvals for EQ’s Digital division includes:

  • ICS: public sector case and information management solutions
  • Toplevel: a case management platform for digital services across central Government
  • HR Solutions: integrated total reward, HR and payroll solutions
  • Pay: a leading business payment platform
  • Data: data scientists that help businesses find, engage and retain customers
  • KYC: Know Your Customer technology and services provider
  • Credit Services: a complete end to end loan servicing platform

The G-Cloud Framework helps public bodies find cloud computing suppliers that best fit their needs, providing them with access to over 38,000 services from over 5,200 suppliers, simplifying the procurement process for both buyer and seller by avoiding the expense of entering into time-consuming, individual contracts. Organisations gain greater flexibility via a shortened procurement process, and it is said for every pound spent on the G-Cloud Framework, a procurement pound is saved.

Aaron Hughes, CEO of EQ Digital, commented: “We are delighted that we have once again been approved as a supplier for the Government’s G-Cloud framework. With our long-history and experience of working in close partnership with public sector organisations, G-Cloud offers an efficient avenue to showcase our services to an ever-widening network of clients.

“This year, we have refined and strengthened our service offering, such as introducing new hosting capabilities, where we feel we can add additional value and outstanding service to new and existing clients.

“The pandemic has forced a huge technological change in the way local Government operates and the addition of four more EQ product lines is demonstration of the current appetite for faster IT procurement processes with clients looking for agile, effective and trusted solutions to meet their demands. We have also witnessed a particularly strong need for innovative credit and payments software as clients seek to mitigate the financial impact of COVID-19.”

Overcoming the greatest barriers to sustainability

Throughout the coronavirus pandemic, small and medium-sized businesses across the country have fought their way through adversity in an act of great survival. For most business leaders, this probably involved making tough decisions that they otherwise would have avoided altogether. Time and time again, they’ve shown the kind of grit and decisive bravery that’s required to start a business in the first place.

The journey to here has been tough. But now, as we start the recovery process, this same boldness must be aimed at one of our greatest challenges – climate change. Collectively, SMEs make up the UK’s biggest employer – so their commitment to playing their part in reducing the nation’s carbon emissions to net zero by 2050 is vital.

Encouragingly, in a recent survey of 1,000 SME business leaders, more than half said that sustainability has become more important to their business in the wake of the coronavirus pandemic. 48% agreed that they need to make bolder decisions in this area.

Yet, many of them also said that there are several hurdles in their way which are preventing them taking greater strides. So, what is it that’s holding them back? And more importantly, what can they do to overcome it?

‘I need to stabilise my business’

No doubt about it: coronavirus has delivered a devastating blow to UK businesses. What’s more, SMEs have been disproportionately affected as their financial reserves simply don’t stretch as well as big business and multinational corporations.

Around a third of SME business leaders say that it’s the need to stabilise their business that’s holding them back from taking bolder action in the name of sustainability. Yet, previous recessions have taught us that sustainability can actually be a lifeline for businesses during tough times. After the 2008 financial crisis, 93% of CEOs said that they believed sustainability had become a crucial part of their company’s future success. A big part of this was about building trust in the public; customers had started to vote with their money, choosing to spend with companies that aligned with their values.

Post lockdown, the public has never been so restless for change. This is evidenced by the huge demand for a Green Recovery and the growing number of people choosing to shop sustainably. So, while businesses need to get themselves in check financially, to abandon their sustainable development goals would be highly damaging and would risk losing any goodwill they’ve created with their customers and stakeholders.

Finding the right balance between financial necessities and sustainable responsibilities will therefore be crucial to a businesses’ success in the long run and in the fight against climate change.

‘It’s too expensive’ / ‘it doesn’t make sense financially’

Many business owners and senior decision makers allow themselves to fall for the myth that making sustainable changes requires a huge budget. Indeed, a quarter of SME bosses cited cost as the biggest barrier to sustainability for their organisation, while another 25% said it’s because shareholders and investors don’t see the link between sustainability and profit.

The fact is that a big part of being sustainable is actually about saving money. Yes, some sustainable technologies such as solar panels require an initial up-front investment, but these often save you money in the long term. What’s more, for some SMEs – particularly those that own their own land and/or premises – installing solar panels or wind turbines not only allows them to reduce their energy bills by generating and using their own electricity, but it also can create a passive revenue stream. That’s because any excess electricity can be sold back to an energy company using what is known as a Power Purchase Agreement (PPA) or an Export Tariff.

Sustainability also doesn’t have to be a case of going big or going home. There are plenty of small steps you can take that, when measured over time, end up going a long way. For example, did you know that turning the office heating down by 1°C you can reduce your annual heating bill by up to 8%? So, for a business spends £500 a month on energy, that small turn of the dial would save them £480 each year – the equivalent of one month’s energy.

We need to change the narrative away from sustainability as a cost, towards sustainability as a cost saver.

‘It’s not a big enough issue for my customers’

The future of the planet is everyone’s business. Yet almost a fifth of SME bosses still say that sustainability is not a big enough issue for them or their customers.

While for some companies in the UK the effects of climate change may still feel abstract, like they don’t affect you or your customers, the truth is that sustainability is one trend that you cannot ignore.

From a purely commercial perspective, choosing to overlook sustainable consumer trends could leave you at a competitive disadvantage. For example, consumer research published by the insights company Kantar has found that more than three quarters (77%) of Brits have switched, avoided or boycotted grocery brands because of their environmental policies.

More importantly, businesses need to recognise the impact their operations have on the environment and the impact this will have on future generations. Last year, the business sector accounted for 18% of total carbon emissions in the UK, making it one of the biggest contributors of greenhouse gasses along with energy production and transportation.

Valpy Fitzgerald, Director of Green Markets at renewable energy provider, Opus Energy