Nedbank Private Wealth today stated that despite appreciating that UK elections typically have a limited impact on the UK property market, it expects the 12 December 2019 election to buck that trend and have a more significant impact due to the ramifications this election’s manifesto promises are likely to have on London’s residential property market.
Noting that it was agnostic with regard to any election outcome, the bank sought to highlight the likely impact of each of the various scenarios that could result from the vote, as well as a resolution to the current Brexit impasse, on its clients. It also flagged that political uncertainties are often difficult to discuss, and anyone’s political persuasions can be very firmly seated and are not always a foregone conclusion.
Speaking at its annual London property seminar reviewing the UK residential property market and offering an outlook for the coming 12 to 18 months, and the launch of a campaign to promote the bank’s flexible, quick and tailored lending solutions for high-net-worth clients, Colin Campbell, private banker, stated: “The UK property market has come off the record highs seen in 2017. Meanwhile, prime central London residences have seen a continued correction in prices since 2015. This drop in property values has come at a time when there is also limited confidence in other traditional investment options, such as bonds and equities, due to a variety of investors’ concerns about negative interest rates and the sustainability of financial markets.”
Knight Frank figures show a drop of 14% in property prices in sterling terms since the EU referendum – a figure that falls to 20% once exchange rates are taken into account although it was as low as 25% before the recent bounce in the value of sterling. Peak to trough, these levels are lower than they were during the global financial crisis.
Regarding the likely outcomes of the forthcoming general election, the main four scenarios are based on: (1) the Conservative Party gaining a majority or working with other parties/individuals to form a government; (2) the Labour Party gaining a majority or working with other parties/individuals to form a government; (3) a decision by any government to hold a second referendum; and (4) the ongoing impasse continuing while any future government sought to get a (new) Brexit deal agreed by parliament. The scenarios being considered ahead of the publication of updated election manifestos are:
The Conservative Party gaining a majority or working with other parties/individuals to form a government
Given the party has been in power for some time, Nedbank Private Wealth believes that any changes should already have been put through, although the first budget by Sajid Javid originally set for 6 November has been cancelled due to the election and we have not seen the new chancellor’s vision. However, election time always raises the possibility of the publication of an updated manifesto that draws ideas from other parties if they are a popular choice with voters. This may be the case with stamp duty, which has been cited as the second most unpopular tax in the UK, not least as the Conservatives had promised reform in their 2017 manifesto, although no changes were subsequently announced. A change here might see the levy changed to a new system that charges 4% on properties valued above £500,000 and 5% on those valued over £1 million.
The Labour Party gaining a majority or working with other parties/individuals to form a government
Here the UK residential property market would be affected by a number of changes that Labour are on record as putting forward for change. Any additional levies here are mainly due to their desire to redistribute income. Again stamp duty would be an area for re-assessment where the only published aim would be that stamp duty would only remain where the purchasers were for non-domiciled UK residents (non-doms), companies, second homes and investment properties. In addition, current council tax charges on properties would be replaced with a progressive tax based on the value of the property, which would be payable by the owners instead of those living in the house. Here too, scope for more change has been pledged with higher rates applicable for second homes, those standing empty and for properties that are owned by non-doms and/or non-residents. Last, but not least, another area affecting property would come in the form of a reformed capital gains tax charge that sees rates for second homes/investment properties aligned with income tax rates as a starting point, as well as the removal of principal private residence relief.
A decision by any government to hold a second referendum
This is only – as currently stands – an option being mooted if a Labour-led government were to be voted in. Here, Nedbank Private Wealth believes that any impact on the property market would be determined by the terms of a second referendum rather than the physical vote itself.
The ongoing impasse continuing while any future government sought to get a (new) Brexit deal agreed by parliament
A sense of caution has prevailed in the property market while prospective buyers have been waiting for a resolution to the EU issue. With the announcement of the general election, this is likely to continue. Given the extent of pricing correction in London to date, Nedbank Private Wealth does not envisage significant price adjustments in any holding period.
Also speaking at the event were representatives from global real estate consultants, Knight Frank; RSM, one of the largest tax advisers in the UK for individuals and trustees; and London’s Chartered Surveyors & Valuers with its 125+ years’ combined experience covering the capital’s property market.
Tom Bill, head of London residential property research at Knight Frank and author of the longest running index on central London’s residential marketplace, stated: “The more adverse tax landscape is now largely priced in by the market. This year has shown the extent to which political uncertainty is causing some to still hesitate. While a wall of capital has built up and buyers are scrutinising the market for value, as political uncertainty recedes, this should translate into higher levels of activity. This repricing, combined with the impact of a weaker sterling and ultra-low mortgage rates, is underpinning demand. The extent to which pent-up demand is released in 2020 depends on the disappearance of the risk of a disorderly Brexit and the emergence of a stable government.”
Gary Heynes, head of private clients at RSM, stated: “From a tax perspective, there are still some changes coming through, which may affect the health of the property market, and not just in London. In April 2020, the most significant of these is the change in capital gains tax reporting which gives everyone just 30 days to report on a sale after the transaction has completed. That is a very short timeframe for buyers to pull together the full history of their relationship with the property. Added to that are changes affecting individuals with regard to their main residence. The first of these is that the previous 36-month timeline for sellers to benefit from principal private residence relief, which had already come down to 18 months, is now going to be reduced to a mere nine months. The second change is the removal of letting relief. Both of these could mean more individuals are drawn into the scope of capital gains tax, just as the window for calculating and paying the tax shortens.”
Simon White, managing director of London’s Chartered Surveyors & Valuers, added: “Although the London market in the last year has dropped by 2% in terms of value and 8% in terms of the number of properties coming to the market, there is still value in the capital. Aside from the effects of gentrification that still impact many areas, other factors are leading to some areas seeing a rise in value now. Areas such as Battersea are enjoying an increase due to the continued domestic demand for the right property, while areas such as Whitechapel and Lewisham are seeing the impact of better transport links – due to the Elizabeth line and extension of the Bakerloo line respectively. It’s not all bad news and there is still some considerable value to be had, particularly over the longer term.”
Staying connected: keeping the numbers moving in the finance industry
By Robert Gibson-Bolton, Enterprise Manager, NetMotion
2020 will certainly be hard to forget. Amongst the many changes we have come to live with, for many of us it has been adapting to a new style of working. Whatever your take on it is, remote working, working from home or even agile working, one thing remains clear – for many of us, this could be the new-normal for the foreseeable future. The professional services sector is no different. For example, many finance practices around the world are now allowing staff to work from home part of the time. In addition, a recent KPMG report found that half of the UK’s financial services workforce want to work from home after COVID-19.
Will this therefore become the de facto working practice for the finance industry too? We can’t say for sure, but this agile approach to working has certainly caused a major rethink for many firms. And as they evolve and adapt to meet the demands of a different way of working, firms need to ensure that their workforce can seamlessly interact with each other and their clients – this is key if they want to continue to deliver exceptional client service. Whilst financial services organisations everywhere are busy adopting innovative new technologies to better reflect the ‘work from anywhere environment’, they need to ensure secure access to resources and strive towards enhancing the end user experience. Success will be replicating the office working experience at home or wherever else they may be.
It’s all well and good for a firm to boast about the ability of their staff to work successfully from home, but how do they also establish that their people are just as productive as they were before? Whilst the IT department will have to grapple with security and compliance issues that arise from agile and remote working, they must also ensure that their people can connect securely, without eschewing user experience. And it needs to be completely seamless, without compromising the service level provided to clients.
Why all the fuss?
Which brings us nicely to persistent connectivity. Persistent connectivity effectively allows you to do more. How frustrating for the user when connectivity drops, or when the device that they are working on can’t find a network to connect to (or if the device switches between different networks). When connectivity drops, and re-connection is required then there is that small period where the user is not connected at all. And the user might have to re-authenticate or log into their VPN again (most VPNs are rubbish when they lose connectivity). All of these different scenarios ultimately disrupt the user experience – persistent connectivity provides the flexibility to overcome these challenges. When you enjoy consistent connectivity, you are making sure that the technology works as it was designed to work, allowing staff to rely on optimum user experience, anytime, anywhere – in effect, supplying them with that office-like experience, wherever they are. Just think about how many hours might be spent on a train, in a hotel or even on a client site. Consistent connectivity is key here – consistent in any of these locations.
Connectivity will be a fundamental component for successful remote working as firms try to meet the demands of an increasingly mobile workforce. Ultimately, they need encrypted and reliable connections that enable them to quickly and easily reach business applications and services. Working in a disconnected environment can lead to frustrated workers, hardly fitting given all the new remote working policies in place.
Getting the user experience spot-on
When you fine-tune connection performance so that essential business applications run reliably across networks, you are essentially talking about traffic optimization. Mobile traffic optimization ensures that applications, resources and connections are tuned for weak and intermittent network coverage and can roam between wireless networks as conditions and availability change. When connections aren’t performing well, applications that are crucial for job performance can experience packet loss, jitter or latency that can make working on the hoof extremely tricky. Compared to wired networks, wireless networks operate under highly variable conditions, including such factors as terrain or congested mobile towers. When you optimise the flow of traffic, you are helping to manage packet loss. Effectively, packet losses are data loss, which happens very regularly when you’re on the move or transitioning between different networks. Applications that require a lot of data tend to become fairly unusable when you hit even minor packet loss, which can be a common occurrence for many on residential broadband or on local Wi-Fi. conversely, NetMotion can enable critical applications to work and prevent disruptions at over 50% packet loss – in this way, employees can rely on technology performing well in situations and locations where it simply could not before. That is incredibly powerful for firms.
The finance industry is facing many of the same challenges presented to other industries. It is a question of balancing the requirement for more sophisticated ways to ensure secure access to resources with the need to enhance the end user experience (key team members in particular). For finance firms everywhere, adopting the right technologies will ensure that their people can enjoy a ‘work-from-anywhere’ environment.
Hong Kong’s Cathay Pacific warns of capacity cuts, higher cash burn
(Reuters) – Cathay Pacific Airways Ltd on Monday warned passenger capacity could be cut by about 60% and monthly cash burn may rise if Hong Kong installs new measures that require flight crew to quarantine for two weeks.
Hong Kong’s flagship carrier said the expected move will increase cash burn by about HK$300 million ($38.70 million) to HK$400 million per month, on top of current HK$1 billion to HK$1.5 billion levels.
Hong Kong is set to require flight crew entering the Asian financial hub for more than two hours to quarantine in a hotel for two weeks, the South China Morning Post reported last week, citing sources.
“The new measure will have a significant impact on our ability to service our passenger and cargo markets,” Cathay said in a statement, adding that expected curbs will also reduce its cargo capacity by 25%.
The airline, in an internal memo seen by Reuters, requested for volunteers among its crew who could fly for three weeks, followed by two weeks of quarantine and 14 days free of duty, adding it will be a temporary measure and not all its flight will require such an operation.
“We continue to engage with key stakeholders in the Hong Kong Government,” the memo said.
The government did not immediately respond to a request for comment.
Separately, a company spokeswoman said the airline could not detail the impact on vaccine transport specifically in terms of cargo shipments.
The aviation industry has been hit hard by the COVID-19 pandemic as many countries imposed travel restrictions to contain its spread.
In December, Cathay’s passenger numbers fell by 98.7% compared to a year earlier, though cargo carriage was down by a smaller 32.3%.
($1 = 7.7512 Hong Kong dollars)
(Reporting by Shriya Ramakrishnan in Bengaluru; Additional reporting by Jamie Freed in Sydney and Twinnie Siu in Hong Kong; Editing by Bernard Orr and Arun Koyyur)
Travel stocks pull FTSE 100 lower as virus risks weigh
By Shashank Nayar
(Reuters) – London’s FTSE 100 fell on Monday, with travel stocks leading the declines, as rising coronavirus infections and extended lockdowns raised worries about the pace of economic growth, while fashion retailers Boohoo and ASOS gained on merger deals.
The British government quietly extended lockdown laws to give councils the power to close pubs, restaurants, shops and public spaces until July 17, the Telegraph reported on Saturday.
The blue-chip FTSE 100 index dipped 0.1%, with travel and energy stocks falling the most, while the mid-cap index rose 0.1%.
“Stock markets are crawling between optimism around the rollout of vaccines and worries that a jump in virus infections and fresh local lockdowns could further affect recovery prospects,” said David Madden, an analyst at CMC Markets.
Britain has detected 77 cases of the South African variant of COVID-19, the health minister said on Sunday while urging people to strictly follow lockdown rules as the best precaution against the country’s own potentially more deadly variant.
Prime Minister Boris Johnson had earlier warned that the government could not consider easing lockdown restrictions with infection rates at their current high levels and until it is confident that the vaccination programme is working.
The FTSE 100 shed 14.3% in value last year, its worst performance since a 31% plunge in 2008 and underperforming its European peers by a wide margin, as pandemic-driven lockdowns battered the economy.
Online fashion retailers Boohoo and ASOS surged 4.8% and 5.9%, each. Boohoo bought the Debenhams brand, while ASOS was in talks to buy the key brands of Philip Green’s collapsed Arcadia group.
Recruiter SThree Plc gained 0.9% after its profit, which nearly halved, still managed to beat market expectations and the company said it had resumed dividends.
(Reporting by Shashank Nayar in Bengaluru; editing by Uttaresh.V)
Staying connected: keeping the numbers moving in the finance industry
By Robert Gibson-Bolton, Enterprise Manager, NetMotion 2020 will certainly be hard to forget. Amongst the many changes we have come to...
How to lead a high-performing team
By Matthew Emerson, Founder and Managing Director, Blackmore Four When we think about a great team, the image we conjure...
A practical guide to the UCITS KIIDs annual update
By Ulf Herbig at Kneip We take a practical look at the UCITS KIID What is a UCITS KIID and what...
Oil prices steady as lockdowns curb U.S. stimulus optimism
By Noah Browning LONDON (Reuters) – Oil prices were steady on Monday as support from U.S. stimulus plans and jitters...
Dollar steadies; euro hurt by vaccine delays and German business morale slump
By Elizabeth Howcroft LONDON (Reuters) – The dollar steadied, the euro slipped and riskier currencies remained strong on Monday, as...
Hong Kong’s Cathay Pacific warns of capacity cuts, higher cash burn
(Reuters) – Cathay Pacific Airways Ltd on Monday warned passenger capacity could be cut by about 60% and monthly cash...
Stocks rise on recovery hopes
By Ritvik Carvalho LONDON (Reuters) – Global shares rose to just shy of record highs, as optimism over a $1.9...
Fragile recovery seen in global labour market after huge 2020 losses – ILO
By Stephanie Nebehay GENEVA (Reuters) – Some 8.8% of global working hours were lost last year due to the pandemic,...
“Lockdown fatigue” cited as UK shopper numbers rose 9% last week
LONDON (Reuters) – The number of shoppers heading out to retail destinations across Britain rose by 9% last week from...
Alphabet’s Verily bets on long-term payoff from virus-testing deals
By Paresh Dave OAKLAND, Calif. (Reuters) – For Alphabet Inc’s Verily, a healthcare venture that is one the tech giant’s...