In the UK the rental economy is booming, with the number of privately rented properties seeing an increase of 63% between 2007 and 2017. Furthermore, an additional 560,000 households are expected to be in private rental accommodation by 2023.
Today, that equates to a fifth of the population living in privately rented accommodation – that’s around 4.7 million households. This growth is partly driven by the increased cost of buying a home; rising house prices in the UK have outpaced salaries, with the average home (outside London) now costing £230,292 (up from just £70,000 in 1998). That’s almost eight times more than the average salary of £29,588 a year. Due to this large expense, first-time buyers typically spend eight years saving to buy a home, with those based in London saving for an additional two years.
The rental industry’s current relationship with the gig economy
Despite the huge rental economy in the UK, the industry is still tricky to navigate for renters. In the last ten years digital transformation has impacted almost every industry and a number of technology-driven startups have sprung up in the proptech space, revolutionising everything from mortgages to property management. Buyers, landlords and estate agents have streamlined processes however, renters are yet to be provided with the same level of service.
Renting is extremely expensive and for gig-economy workers, the irregular income associated with part-time/frequently changing shift work means something as necessary as renting a home can become a challenge.
The average tenancy deposit in England is currently valued at £1,110 and, given the average wage in the UK is £29,588, an average renter based in England is expected to put down a deposit that is over half of their monthly income. Without a consistent ‘pay-day’, gig-economy renters are often classified as ‘high-risk’ and, as a result, asked to pay a bigger sum of money up front or seek a guarantor.
As the gig economy accounts for 4.7 million British workers, it is crazy that a flexible financial lifestyle has not been further taken into account. Using today’s technology, it’s possible to create a rental system that is financially beneficial for both renters and landlords in a way that generates and maintains financial security for all.
Deposit free renting
Liberating gig-economy workers, young renters and those from disadvantaged backgrounds who cannot afford the over-the-top fees can be done ditching the deposit.
Rental affordability remains the number one priority for tenants when choosing a property. But renters are currently expected to pay a deposit over five weeks rent before they are eligible to move into the property.
A recent poll found 40% of working age Britons have less than £100 in savings, with the proportion increasing to more than 50% in specific regional locations. Thus, many renters can be living paycheck to paycheck and a deposit of this size this can be prohibitively expensive. In worst case scenarios, renters can become trapped in unsuitable and substandard accommodation.
By offering renters the option of deposit protection insurance, the landlord is still covered for any damage or loss of rent (for a higher value than is covered by the traditional deposit) without the need for the renter to pay out a large lump sum at the beginning of their tenancy. This can enable renters to save some money – whether that is for a house deposit or just in case of a rainy day.
One way the property industry can further streamline the process for renters is to harness disruptive technology available. One of these services is open banking – a service that provides third-party financial service providers open access to consumer banking, transaction, and other financial data from banks and non-bank financial institutions.
For the property sector, open banking brings with it the opportunity to re-set the precedent of incoherence that has been established by traditional processes. Currently landlords have to request and wait for paperwork such as bank statements, references and proof of previous addresses to be collated and sent by the renter. The validity of these documents must then be checked, which can mean renters wait weeks before they are allowed to move into a property.
Through the innovative technology of open banking, it is now possible to automatically verify a renter’s income and past rental payments using their transactional history. Because data should belong to the person it concerns, renters can then access this on-demand and share it with different letting agents and landlords, should they want to. Not only does this speed up the process enabling landlords to make informed and fast decisions regarding a tenancy, it ultimately streamlines the rental process for all parties involved.
Other technologies can also help build financial resilience for renters. For example, rent tracking technology that records monthly rental payments and allows them to build up a credit history, ultimately improving their credit rating during the course of their tenancy. A strong credit score translates into higher savings for renters, with lower financing rates and better access to a range of financial products.
At the moment, the rental landscape does not cater for renters in the same way it does for landlords. The industry has a way to go, but the steps to getting there are exciting and revolutionary exciting time ahead of it, as old systems die and technology takes the reigns, the process of renting should and must accommodate flexible workers and those at a financial disadvantage. At the end of the day, every human being has the right to a safe roof over their head and the opportunity to build a better life and it is the responsibility of the industry to make sure it is fully equipped to do so.
UK seeks G7 consensus on digital competition after Facebook blackout
LONDON (Reuters) – Britain is seeking to build a consensus among G7 nations on how to stop large technology companies exploiting their dominance, warning that there can be no repeat of Facebook’s one-week media blackout in Australia.
Facebook’s row with the Australian government over payment for local news, although now resolved, has increased international focus on the power wielded by tech corporations.
“We will hold these companies to account and bridge the gap between what they say they do and what happens in practice,” Britain’s digital minister Oliver Dowden said on Friday.
“We will prevent these firms from exploiting their dominance to the detriment of people and the businesses that rely on them.”
Dowden said recent events had strengthened his view that digital markets did not currently function properly.
He spoke after a meeting with Facebook’s Vice-President for Global Affairs, Nick Clegg, a former British deputy prime minister.
“I put these concerns to Facebook and set out our interest in levelling the playing field to enable proper commercial relationships to be formed. We must avoid such nuclear options being taken again,” Dowden said in a statement.
Facebook said in a statement that the call had been constructive, and that it had already struck commercial deals with most major publishers in Britain.
“Nick strongly agreed with the Secretary of Stateâ€™s (Dowden’s) assertion that the governmentâ€™s general preference is for companies to enter freely into proper commercial relationships with each other,” a Facebook spokesman said.
Britain will host a meeting of G7 leaders in June.
It is seeking to build consensus there for coordinated action toward “promoting competitive, innovative digital markets while protecting the free speech and journalism that underpin our democracy and precious liberties,” Dowden said.
The G7 comprises the United States, Japan, Britain, Germany, France, Italy and Canada, but Australia has also been invited.
Britain is working on a new competition regime aimed at giving consumers more control over their data, and introducing legislation that could regulate social media platforms to prevent the spread of illegal or extremist content and bullying.
(Reporting by William James; Editing by Gareth Jones and John Stonestreet)
Britain to offer fast-track visas to bolster fintechs after Brexit
By Huw Jones
LONDON (Reuters) – Britain said on Friday it would offer a fast-track visa scheme for jobs at high-growth companies after a government-backed review warned that financial technology firms will struggle with Brexit and tougher competition for global talent.
Finance minister Rishi Sunak said that now Britain has left the European Union, it wants to make sure its immigration system helps businesses attract the best hires.
“This new fast-track scale-up stream will make it easier for fintech firms to recruit innovators and job creators, who will help them grow,” Sunak said in a statement.
Over 40% of fintech staff in Britain come from overseas, and the new visa scheme, open to migrants with job offers at high-growth firms that are scaling up, will start in March 2022.
Brexit cut fintechs’ access to the EU single market and made it far harder to employ staff from the bloc, leaving Britain less attractive for the industry.
The review published on Friday and headed by Ron Kalifa, former CEO of payments fintech Worldpay, set out a “strategy and delivery model” that also includes a new 1 billion pound ($1.39 billion) start-up fund.
“It’s about underpinning financial services and our place in the world, and bringing innovation into mainstream banking,” Kalifa told Reuters.
Britain has a 10% share of the global fintech market, generating 11 billion pounds ($15.6 billion) in revenue.
The review said Brexit, heavy investment in fintech by Australia, Canada and Singapore, and the need to be nimbler as COVID-19 accelerates digitalisation of finance, all mean the sector’s future in Britain is not assured.
It also recommends more flexible listing rules for fintechs to catch up with New York.
“We recognise the need to make the UK attractive a more attractive location for IPOs,” said Britain’s financial services minister John Glen, adding that a separate review on listings rules would be published shortly.
“Those findings, along with Ron’s report today, should provide an excellent evidence base for further reform.”
Britain pioneered “sandboxes” to allow fintechs to test products on real consumers under supervision, and the review says regulators should move to the next stage and set up “scale-boxes” to help fintechs navigate red tape to grow.
“It’s a question of knowing who to call when there’s a problem,” said Kay Swinburne, vice chair of financial services at consultants KPMG and a contributor to the review.
A UK fintech wanting to serve EU clients would have to open a hub in the bloc, an expensive undertaking for a start-up.
“Leaving the EU and access to the single market going away is a big deal, so the UK has to do something significant to make fintechs stay here,” Swinburne said.
The review seeks to join the dots on fintech policy across government departments and regulators, and marshal private sector efforts under a new Centre for Finance, Innovation and Technology (CFIT).
“There is no framework but bits of individual policies, and nowhere does it come together,” said Rachel Kent, a lawyer at Hogan Lovells and contributor to the review.
($1 = 0.7064 pounds)
(Reporting by Huw Jones; editing by Jane Merriman and John Stonestreet)
G20 to show united front on support for global economic recovery, cash for IMF
By Michael Nienaber and Andrea Shalal
BERLIN/WASHINGTON/ROME (Reuters) – The world’s financial leaders are expected on Friday to agree to continue supportive measures for the global economy and look to boost the International Monetary Fund’s resources so it can help poorer countries fight off the effects of the pandemic.
Finance ministers and central bank governors of the world’s top 20 economies, called the G20, held a video-conference on Friday. The global response to the economic havoc wreaked by the coronavirus was at top of the agenda.
In the first comments by a participating policymaker, the European Union’s economics commissioner Paolo Gentiloni said the meeting had been “good”, with consensus on the need for a common effort on global COVID vaccinations.
“Avoid premature withdrawal of supportive fiscal policy” and “progress towards agreement on digital and minimal taxation” he said in a Tweet, signalling other areas of apparent accord.
A news conference by Italy, which holds the annual G20 presidency, is scheduled for 17.15 (1615 GMT)
The meeting comes as the United States is readying $1.9 trillion in fiscal stimulus and the European Union has already put together more than 3 trillion euros ($3.63 trillion) to keep its economies going despite COVID-19 lockdowns.
But despite the large sums, problems with the global rollout of vaccines and the emergence of new variants of the coronavirus mean the future of the recovery remains uncertain.
German Finance Minister Olaf Scholz warned earlier on Friday that recovery was taking longer than expected and it was too early to roll back support.
“Contrary to what had been hoped for, we cannot speak of a full recovery yet. For us in the G20 talks, the central task remains to lead our countries through the severe crisis,” Scholz told reporters ahead of the virtual meeting.
“We must not scale back the support programmes too early and too quickly. That’s what I’m also going to campaign for among my G20 colleagues today,” he said.
Hopes for constructive discussions at the meeting are high among G20 countries because it is the first since Joe Biden, who vowed to rebuild cooperation in international bodies, became U.S. president.
While the IMF sees the U.S. economy returning to pre-crisis levels at the end of this year, it may take Europe until the middle of 2022 to reach that point.
The recovery is fragile elsewhere too – factory activity in China grew at the slowest pace in five months in January, hit by a wave of domestic coronavirus infections, and in Japan fourth quarter growth slowed from the previous quarter with new lockdowns clouding the outlook.
“The initially hoped-for V-shaped recovery is now increasingly looking rather more like a long U-shaped recovery. That is why the stabilization measures in almost all G20 states have to be maintained in order to continue supporting the economy,” a G20 official said.
But while the richest economies can afford to stimulate an economic recovery by borrowing more on the market, poorer ones would benefit from being able to tap credit lines from the IMF — the global lender of last resort.
To give itself more firepower, the Fund proposed last year to increase its war chest by $500 billion in the IMF’s own currency called the Special Drawing Rights (SDR), but the idea was blocked by then U.S. President Donald Trump.
Scholz said the change of administration in Washington on Jan. 20 improved the prospects for more IMF resources. He pointed to a letter sent by U.S. Treasury Secretary Janet Yellen to G20 colleagues on Thursday, which he described as a positive sign also for efforts to reform global tax rules.
Civil society groups, religious leaders and some Democratic lawmakers in the U.S. Congress have called for a much larger allocation of IMF resources, of $3 trillion, but sources familiar with the matter said they viewed such a large move as unlikely for now.
The G20 may also agree to extend a suspension of debt servicing for poorest countries by another six months.
($1 = 0.8254 euros)
(Reporting by Michael Nienaber in Berlin, Jan Strupczewski in Brussels and Gavin Jones in Rome; Andrea Shalal and David Lawder in Washington; Editing by Daniel Wallis, Susan Fenton and Crispian Balmer)
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