High Street banks will be gone by 2025

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That’s the prediction made by the Economist Intelligence Unit (EIU) and banking software company, Temenos. Temenos AG is a company specialising in enterprise software for banks and financial services headquartered in Geneva, Switzerland.

An overwhelming proportion of European banks, surveyed by the EIU and Temenos, say that their bricks and mortar banks will be dead and gone in just three years.

The major banks intend to phase out their physical branches by 2025, a trend that has been boosted by the Covid pandemic which has seen a massive momentum shift towards total online banking – most people with bank accounts these days never need to visit a branch.

New enabling technology

New technology coming along, including the increasing use of artificial intelligence (AI) the new revolutionary distributed ledger blockchain technology, will make online banking easier to use, faster and more secure.

The major banks have discovered through the pandemic that by far the majority of their customers can manage their financial and banking affairs perfectly well without visiting a branch and will never miss them when they are gone.

With just under 5,000 bank branches potentially due to close over the next three years in the UK alone, let alone the rest of Europe, the implication for further disruption on high streets is stark – more vacant properties which were hitherto destination sites.

For the minority of customers still using branches, including the elderly and small businesses, the change is likely to be disruptive, though the banks have plans to ease this pain in the short term with mobile units, Post Office banking and other measures. The move to a cashless society, again accelerated though the pandemic, with a huge boost in card payments, means that the problem for small businesses diminishes by the day.

Tech expertise

There are now many European banks with plans to gain more technology expertise by taking over smaller financial technology (fintech) companies and challenger banks. With the future of banking likely to be in the fintech world, competence and security in this space will be essential.

The UK has already lost more than half of its traditional bank branches since the trend first started as far back as 2000, but the banks admit there is still some way to go to overcome barriers such as customer trust of banking Apps, AI and other aspects of their banking products.

However, the banks are confident that this will improve over time as users and the bank regulators become familiar with the systems and processes, which need to be made transparent, safe and secure.

Temenos chief science officer Hani Hagras said:

“As AI becomes mainstream, banks need to establish a set of processes that provide transparency into the logic behind the decisions made by machine learning algorithms.”

Opportunities for investors

As the bank branches close it will drastically altered the makeup of UK high streets. Bank branches have hitherto played an important role in most town and village communities, particularly in the remoter areas where internet banking could not always be widely used. These closures will leave vacant commercial units, often big imposing premises with limited alternative uses on high streets up and down the country.

Not all bank premises are ideally located for retail, office of leisure. Town centre locations have been hit by many more consumers shopping online, forcing retailers to re-structure their operations, and reducing their overhead by looking to reduce the physical size of their commercial outlets.

In many cases bank freeholds are owned by the banks themselves and will be competing in a tenants’ market for replacement tenants. The reality is, many of these empty premises will join others that are already vacant on Britain’s high streets, and some will stay vacant for months if not years.

For other branches, sold off on long leases to private landlords, they will either have had their leases reach their term, in which case private landlord owners will be looking for new tenants, or they will still be paid rent by the bank for a time on their vacant premises.

Some of these branches will be in prime locations, making of them suitable for conversion to alternative uses. Offices, wine bars and restaurants are typical alternative uses for these buildings. They can present some attractive propositions for those with the right expertise to develop and convert.

Often national chains are constantly on the look out for these types of premises in the right locations, for example, Neros, Costa Coffee, Pizza Express, and Wetherspoons, are all businesses known for occupying ex bank premises and they make excellent long term tenants.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – High Street banks will be gone by 2025 | LandlordZONE.

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LATEST: Arguments over social problems linked to HMOs hot up in Hartlepool

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Labour councillors in Hartlepool campaigning to restrict HMOs in the town have been told to find evidence of problems caused by shared properties.

They want to make all sizes of HMOs subject to planning permission to give local residents a voice, says deputy Labour group leader, councillor Jonathan Brash (picture), who reports that problems in his ward have included drug dealing, prostitution, fly-tipping, empty dwellings and a range of other anti-social issues, particularly noise. 

“In 11 years of being a councillor, if I have received a complaint of anti-social behaviour or criminality related to a property then I can almost guarantee it’s in the private rented sector,” he tells LandlordZONE.

“The impact of this is that there are literally hundreds of families right across Hartlepool whose lives are being negatively impacted by poorly managed properties.”

Anti-social behaviour

Brash adds that he understands why landlords often feel that greater regulation is an imposition on them but says: “In the balance between that and defending the rights of other residents to live in a street that is safe, quiet and free from anti-social behaviour, I come down on residents’ side every time.”  

Planning committee chair Mike Young says coming up with evidence about HMOs will be key to any debate around possible policy changes.

Read more: The complete guide to renting an HMO.

He told a recent council meeting: “Finding out whether they are indeed causing anti-social behaviour for example, and more broadly whether the ‘fear of crime’, a definite material consideration, is reasonable in determining the impact of HMOs based on the actual evidence we have.”

Young added: “I am just as motivated to discover the impacts of HMOs and how that might help steer future council policy.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – LATEST: Arguments over social problems linked to HMOs hot up in Hartlepool | LandlordZONE.

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BREAKING: NRLA launches pilot redress scheme for landlords and tenants

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The NRLA has launched a pilot redress scheme for landlords and tenant ahead of the government’s recent announcement that it intends to make membership mandatory for landlords.

The pilot is being run in partnership with the Property Redress Scheme (PRS) and The Dispute Service (TDS). Running for 12 months, the scheme will help landlords and tenants resolve disputes.

Tenants will be able to raise complaints to the independent redress scheme, after which a case assessor will work to encourage early resolution of disputes or arrive at decisions to provide fair resolution to a wide range of tenancy issues.

Members of the NRLA now can opt-in to participate and are being encouraged to do so by its Chief Executive Ben Beadle.

Effective system

“For some time, we have stressed how important it is that an effective system of redress be established to resolve disputes between landlords and tenants,” he says.

“This pilot will give NRLA members the chance to demonstrate their commitment to excellent customer service and play a pivotal part in the development of a future, mandatory redress scheme in which both landlords and tenants can have confidence.

Tim Frome (pictured), Director of HF Resolution Ltd trading as the Property Redress Scheme: “We have run a successful government authorised redress scheme for property agents since 2014 and our dedicated tenancy mediation service helps resolve mainly end of tenancy disputes during these difficult times.

“We are, therefore, delighted to work with Ben and his team to provide redress directly to NRLA landlord members and their tenants.

“We worked closely with the NRLA to design the pilot and to ensure it is right for both landlords and tenants.

“Landlords using us for the pilot will benefit from our experienced and qualified team, who know the sector inside out.  What we will learn from working with NRLA landlords and the experience gained during the pilot will be vital in guiding the government when they make landlord redress mandatory.”

Steve Harriott (pictured), Chief Executive of The Dispute Service adds: “We have been working with the NRLA on a mediation service for some time and the Tenancy Redress Service marks a major step forward in offering redress to tenants of participating NRLA landlords”.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – BREAKING: NRLA launches pilot redress scheme for landlords and tenants | LandlordZONE.

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BREAKING: NRLA launches pilot redress scheme for landlords and tenants ahead of new legislation

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The NRLA has launched a pilot redress scheme for landlords and tenant ahead of the government’s recent announcement that it intends to make membership mandatory for landlords.

The pilot is being run in partnership with the Property Redress Scheme (PRS) and The Dispute Service (TDS). Running for 12 months, the scheme will help landlords and tenants resolve disputes.

Tenants will be able to raise complaints to the independent redress scheme, after which a case assessor will work to encourage early resolution of disputes or arrive at decisions to provide fair resolution to a wide range of tenancy issues.

Members of the NRLA now can opt-in to participate and are being encouraged to do so by its Chief Executive Ben Beadle.

Effective system

“For some time, we have stressed how important it is that an effective system of redress be established to resolve disputes between landlords and tenants,” he says.

“This pilot will give NRLA members the chance to demonstrate their commitment to excellent customer service and play a pivotal part in the development of a future, mandatory redress scheme in which both landlords and tenants can have confidence.

Tim Frome (pictured), Director of HF Resolution Ltd trading as the Property Redress Scheme: “We have run a successful government authorised redress scheme for property agents since 2014 and our dedicated tenancy mediation service helps resolve mainly end of tenancy disputes during these difficult times.

“We are, therefore, delighted to work with Ben and his team to provide redress directly to NRLA landlord members and their tenants.

“We worked closely with the NRLA to design the pilot and to ensure it is right for both landlords and tenants.

“Landlords using us for the pilot will benefit from our experienced and qualified team, who know the sector inside out.  What we will learn from working with NRLA landlords and the experience gained during the pilot will be vital in guiding the government when they make landlord redress mandatory.”

Steve Harriott (pictured), Chief Executive of The Dispute Service adds: “We have been working with the NRLA on a mediation service for some time and the Tenancy Redress Service marks a major step forward in offering redress to tenants of participating NRLA landlords”.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – BREAKING: NRLA launches pilot redress scheme for landlords and tenants ahead of new legislation | LandlordZONE.

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CLADDING: Charging smaller landlords for remediation is ‘wrong’, MPs tell government

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A cross-party group of MPs has demanded that the government look again at excluding scores of landlords from accessing cladding remediation funds.

The Levelling Up, Housing and Communities (LUHC) Committee disagrees with the government that only buy-to-let landlords with one other property should be included in statutory protections for leaseholders, arguing that there are other options to exclude wealthy property tycoons without making smaller landlords liable.

Its Building Safety: Remediation and Funding report warns that too many leaseholders will fall through the cracks of the government’s “piecemeal measures” to protect them from the costs of building safety remediation.

It wants the proposed cap on non-cladding costs for leaseholders scrapped, as well as a comprehensive building safety fund to cover the costs of remediating all building safety defects on any buildings of any height where the original ‘polluter’ cannot be traced.

Committee chair Clive Betts (pictured) says the government needs to stop pitting the building safety crisis against the housing crisis.

“Leaseholders should not be paying a penny to rectify faults not of their doing in order to make their homes safe,” he says.

“We recommend the government identify all relevant parties who played a role in this crisis…and legally require them to pay towards fixing individual faults and ensure that they also contribute to collective funding for building safety remediation.”

Timothy Douglas (pictured), head of policy and campaigns for Propertymark, says the government now needs to reject the assumption that all landlords are ‘wealthy tycoons’.

He adds: “Our member letting agents who work closely with landlords are clear in their message to us that many are extremely concerned about the huge financial hardship they are facing.

“The Secretary of State has repeatedly said that those who are not responsible for this crisis should not have to pay, so we urge him to act on that principle and take away the uncertainty by accepting the recommendations in the committee’s report without delay.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – CLADDING: Charging smaller landlords for remediation is ‘wrong’, MPs tell government | LandlordZONE.

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Developer to build £1 billion ‘built for renters’ portfolio in London commuter towns

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London commuter towns are being targeted by property developer Strawberry Star Group to establish its new £1 billion build-to-rent (BTR) empire.

It has announced plans for a 163-apartment block in Harlow (pictured) due to start construction this year under its Star Living brand.

The firm also has planning permission for a 100-unit site in Gravesend, while an existing block in Luton – where 65% of the current 135 rental units were rented within the last three months of completion – will soon release 564 more. 

Strawberry Star Group aims to have a £1 billion portfolio within London commuter towns by 2027 in areas close to transport hubs that have very few new-build rentals on offer, with a high proportion of young professionals, says chairman Santhosh Gowda (pictured).

“More choice and better supply will be a huge advantage to those now spending increasing time at home with flexible working here to stay, as BTR products are in a much better position to meet future needs and live-work trends,” he explains.

Renting journey

The Star Living site in Harlow will manage each renter’s journey from reservations to end of tenancy. Its studios, and one and two-bedroom apartments have Wi-Fi and furniture included and offer digital concierge, maintenance, parcel storage, flexible co-working, shared roof terrace, dry cleaning and housekeeping. Pets are also welcome. 

Read more: Housing hotspots in 2022 – Where should you invest?

Gowda adds that 2022 is the year of BTR. “Last year saw a near 80% increase of capital invested into the sector compared to 2020, so it’s not unreasonable to suggest investment could triple as we edge towards 2023, having shown incredibly strong resilience during an unpredictable year for the UK economy.”

Investors ploughed £4.1 billion into build-to-rent last year, betting that purpose-built flats would provide more reliable returns than other sectors, according to global real estate advisor CBRE.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Developer to build £1 billion ‘built for renters’ portfolio in London commuter towns | LandlordZONE.

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Are Buy to Let nightmares keeping you awake at night?

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A recent study reported in The Daily Mail has found that stress is affecting 1/3 of landlords’ health and wellbeing.

From finding, it is more and more difficult to generate a profitable rental income, to worrying whether the abolition of S21 will make it difficult to sell their properties and access the equity many have planned for their retirement to the new threats resulting from Russia’s invasion of Ukraine

View Full Article: Are Buy to Let nightmares keeping you awake at night?

Inflation Attitudes Survey

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This news release describes the results of the Bank of England’s latest quarterly survey of public attitudes to inflation.

From February 2022, the survey has been conducted on the Bank of England’s behalf by Ipsos, prior to that it was conducted by Kantar.

View Full Article: Inflation Attitudes Survey

Colliers International expects healthy UK commercial property returns in 2022

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Retail property has been trailing, but the industrial sector will continue to help underpin returns as warehouses, prime offices and life science/pharma assets remain in demand.

The American owned international property agents, Colliers International, predict that all UK market sectors will show positive total returns growth in 2022, with the leading sector industrial property in the vanguard at 13.2%.

Overall, yields are well below the 16.5% total rental growth seen in the six-year high figure in 2021, but yields will stabilise and values will recover following a very difficult period.

Douglas McPhail, head of Colliers in Scotland, has said:

“We continue to see considerable investor demand for offices in Scotland, especially in Edinburgh where we have witnessed strong prices being paid.

“Looking across the commercial property spectrum, pricing remains firm with yield compression expected across most market sectors this year.

“We are also expecting investment volumes to break through the £2 billion mark in 2022 as appetite remains strong and there are still opportunities for strong returns.”

Investment in Scotland encouraging

The firm reports retail investment sales in Scotland hitting a three-year high of £530 million in 2021, helped by a strong final quarter which saw £210m transacted.

Tourism volumes are expected to return slowly as Covid recedes, with an expected return to near normal levels by the summer, which should help support high street shopping.

However, following price hikes due to rising inflation and the war sanctions these will have a real impact in real household incomes. The result will be declining consumer confidence which will inevitably continue to put pressure on retailers. Colliers is expecting yet more rent reductions across most UK retail centres over the next two years, with as return to growth in 2024.

Despite the significant rental declines through the pandemic period, Colliers predicts that the pricing correction is coming to an end. Mr McPhail says that, “All retail yields in Scotland hardened in 2021 and at the end of the year were at 6.98%, down by just 0.84% since the end of 2020.”

Retail warehouses are expected to perform particularly well, with Scottish office buildings holding their own at just 5% below the 10 year average of £680m. Investor demand for prime assets remains strong which will result in steady asset price rises expected this year.

Glasgow, Edinburgh and Aberdeen have all seen record take-up levels of leases, with a potential resurgence in the oil business making Aberdeen one of the front runners for North Sea oil companies. Shell recently took 71,000 sq ft at the Silver Fin Building earlier in 2021.

Colliers figures show that around £340m accounts for transactions completed in the industrial sector in 2021. This is a big increase from the £220m transactions in 2020, and almost 50% above the 10-year average of £230m.

Elliot Cassels, in the National Capital Markets team at Colliers Scotland, had said:

“The rise in e-commerce and the effects of COVID-19 has accelerated the structural change in demand for warehousing. The increased tenant demand and strong rental growth has resulted in industrial and distribution remaining the best performing sector in the Scottish property market and the rest of the UK attracting strong investor demand from both domestic and overseas capital. However, the Scottish market has limited prime stock and subsequently the market has been starved of product.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Colliers International expects healthy UK commercial property returns in 2022 | LandlordZONE.

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What to do with equity release funds?

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Hi guys, I’m in a position to release a total of £680,000 equity on two properties (my home and a buy to let). I’m not sure whether to use this to expand the property portfolio, or use this to clear the mortgage on my main residential home and invest the remainder?

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