Even before the pandemic hit our shores, the UK has been faced one challenge after another in recent years.
The general election in December 2019, and the UK’s official exit from the EU around the same time, provided a sense of security for the first time since the referendum in 2016 as Brexit became a known quantity.
Consequently, house prices, which are often the benchmark for this property-focused island’s economic wellbeing, showed the strongest growth since October 2017.
But the feelgood factor was shortlived as the significance of the Covid pandemic became more
apparent.
Two years later, we are finally at a point where – while Covid is still an ongoing concern – we can turn back and take stock.
The property market saw myriad trends, from the initial shut down and fears of a collapse, to the sudden wave of pent-up demand, buoyed by the stamp duty holiday, which kept everyone in this industry on their toes for the rest of lockdown.
Any dissection of these trends would have to be the subject of a separate, dedicated piece, but the most important thing to say is that the property market fared incredibly well, proving both its resilience and its importance as an integral part of the country’s recovery moving forward.
The government also did much to support the population, with the furlough scheme alone helping 410,000 employers support 1.16 million jobs that might otherwise have been lost, according to HM Revenue & Customs.
This, alongside the Coronavirus Business Interruption Loans Scheme (CBILS), the Bounce Back Loans Scheme (BBLS), Eat Out to Help Out, and VAT deferrals, as well as the stamp duty holiday, all underpinned the economy during a crisis that otherwise might have spelled disaster for many more.
However, the headwinds continue. The situation in Eastern Europe has exacerbated already problematic supply chain issues, stymied trade and investment flows in many areas, and created overall uncertainty beyond our shores, none of which bodes well for the UK economy.
Inflation has hit a 40-year high and we all know that food and energy prices are going to continue to soar. For those who managed to save during lockdown – no longer commuting, for example – those savings are going to quickly deplete.
For the many who were hit harder, this year will tighten belts and purses even further. Any relief we might feel about moving to a model of ‘living with Covid’ rather than hiding from it is quickly dissipating – just as we start to manage one global crisis, uncertainty rears its ugly head once again.
All of this is going to take its toll on affordability, credit ratings, deposit savings, and many other elements of buying property.
We are likely to see an increase in chain breaks, and an increasing number of borrowers turning to the specialist market.
On the development side, projects will be facing supply chain concerns, labour shortages, and any number of other unexpected delays.
Yet, there is reason to remain stoic. Employment is high and the number of job vacancies has exceeded unemployment for the first time since records began.
The property market also remains buoyant, with activity remaining strong. Mortgage lenders, both short and long-term, can play their role in keeping the market moving.
It is, however, important that in the face of such upheaval, now is the time for a robust, careful approach to underwriting that understands the nuances of the current climate, and makes use of data alongside human expertise and insight in order to continue to lend in a responsible way that supports the economy.
Short-term finance customers, whether they are one-time borrowers or professional investors, will all be facing difficulties ahead. In order to ensure that they are treated well, and provided with the best possible outcomes, brokers should ensure they are working with lenders that remain committed to transparency, customer focus and diligence.
In short, they should look to work with lenders that are members of the ASTL.
Our Code of Conduct, which every member must commit to, ensures that firms act with honesty and integrity, disclose all costs up front, and avoid excessive fees and unclear
terms, and that’s just for a start.
Our members set a high benchmark for quality service, customer focus, and responsible lending. A full breakdown of our Code of Conduct, as well as our rules for members, can be found on the ASTL website.
There is no perfect formula for lending, not least with the kind of challenges currently on the horizon.
However, by working with an ASTL member, a broker can be sure that every step is being taken to ensure a positive experience and outcome for all.
Vic Jannels is CEO of The ASTL
