LBTT threshold increased and additional funds available for the First Home Fund Fallon Sara Spencer

Personal Guarantees

Wed, 24 Feb 2021 12:30:38 GMT

Guarantees are commonplace security instruments in many commercial deals, and they have a particular prevalence in Limited Company lending. There are a variety of types of guarantees but the one which is used in asset backed lending is known as the “on demand” guarantees.

On demand guarantees are a separate document which is entered into between the guarantor and the lender. As mentioned above, these types of guarantees are typically used in Limited Company lending. The nature of the guarantee is to remove the protection offered to by the Limited Company making the guarantors of the guarantee personally responsible for the lending debt issued by the bank or building society.

As the name suggests, an on demand guarantee does not require any specific performance rather, in the event of a breach of the lending conditions, the bank or building society who the guarantee is in favour of, can call up the personal guarantee and demand that the guarantors under the personal guarantee remedy any breach. There is no requirement for interventions of the Courts to enforce the terms of the guarantee, written demand by the holder of the personal guarantee informing the guarantor of the default is sufficient.

It is also a requirement of the guarantee that the guarantor receives independent legal advice on the nature and effects of the personal guarantee.

For further information on personal guarantees or for independent legal advice please contact Fallon Sara Spencer , Principal and Head of Specialist Lending.

LBTT threshold increased and additional funds available for the First Home Fund

Fri, 10 Jul 2020 00:00:00 GMT

Following the Chancellor of the Exchequer's Summer economic update on Wednesday, the Scottish Government have announced that the Land and Buildings Transaction Tax (LBTT) will be increased from £145,000 to £250,000 in an attempt support homebuyers get on the property ladder and help the Scottish economy recover from the impact of coronavirus.

Additionally, an extra £50 million has been added to the First Home Fund, a shared equity scheme providing first time buyers with up to £25,000 to buy a property.

There has been no change to the Additional Dwelling Supplement (ADS) meaning this surcharge would still be payable.

Further assistance confirmed for borrowers affected by Coronavirus

Wed, 03 Jun 2020 00:00:00 GMT

Since the World Health Organisation claimed Coronavirus a pandemic, lenders in the UK have offered a variety of support to borrowers suffering financially as a result of the pandemic. One of the biggest forms of support has been allowing borrowers to take a mortgage payment holiday and the latest figures published by UK Finance have shown that one in six borrowers have requested a payment holiday.

As the UK and Scottish Governments look to relax the lockdown restrictions and navigate the next steps for the country, lenders have offered further support to borrowers allowing for a further full or part holiday for 3 months if a borrower is nearing the end of their current payment holiday or if a borrower has not yet applied for a mortgage holiday, they are now able to do so until the 31st October 2020.

https://my.website-editor.net/home/site/b8b7d7345473497c970e8771e8f9c659/lending-in-scotland-the-def...

Monday Musings: Effective tips for managing stress

Mon, 11 May 2020 00:00:00 GMT

The Coronavirus Pandemic has impacted our daily life as we know it. Even if we have not been infected by the virus we have still been affected by it.

Lock-down, working from home, cancelled holidays and events, being worried for friends and family coupled with information overload can be a recipe for stress and anxiety.

Feeling anxious and stressed is inevitable in the current Pandemic, but too much stress can negatively impact your mood, sleep routine and even your health. There are a variety of ways to effectively manage stress and here are a few suggestions:

1. Change "I'm stuck inside" to " I can now focus on the things I don't usually have time for"

As uncertain as things may feel right now, think of working from home as an opportunity to refocus. Doing one productive thing per day can lead to a more positive attitude. Complete that long avoided task, organise your wardrobe, create something you have always wanted to or wash the dog. Creating a "could-do" list as opposed to a "to-do" list assists with approaching the task with a relaxed frame of mind as opposed to a deadline orientated task, which if you don't manage to compete, will only stress you out more. This is your chance to slow down and focus on yourself.

2. Try to maintain your daily routine (in so far as possible and is allowed!)

Try and maintain some form structure from the good old pre-quarantine days. When working from home it could be all too tempting to adopt a more lethargic lifestyle, which could lead to negative thinking. Instead, wake up and go to bed around the same time, eat healthy balanced meals, shower, adapt your exercise routine and get out of your PJ’s!! Not only will sticking to your normal routine keep you active and provides something to occupy your mind it will also be easier to readjust when lock-down ends and we can all head back into the office.

3. Limit information overload

It is all to easy to spend your days and evenings mindlessly scrolling through social media (I mean, do you really need to find out what pizza you would be or what Harry Potter house you would be sorted into?!) and news apps. But spending too much time reading about the Pandemic can actually make you feel more anxious and confused. Of course it is important to be informed but limiting your time and reading content from creditable sources is important to ensure you are not being tricked by incorrect reporting and click-bait headlines.

Hopefully some of these tips will help however, if your stress levels are reaching levels that are unmanageable, you should reach out for professional help https://www.nhs.uk/conditions/stress-anxiety-depression/understanding-stress/

Bank of England publishes UK interim financial stability report

Thu, 07 May 2020 00:00:00 GMT

The Bank of England has published their first report on the potential impact of the Coronavirus Pandemic on the banking sector and UK economy.

The report focuses on the recent performance of the financial system after the seriousness of Coronavirus was reported, the resilience of the UK banking sector amidst the Coronavirus Pandemic and discusses the financing of the corporate sector during the Pandemic.

The report also includes a scenario which based on the assessment of risk of the UK's financial stability and the resilience of the UK's economy. If the scenario is correct, it would see the GDP of the UK falling to 14% which would equate to the worst annual slump for more than 300 years.

The report can be read here

Monday Musings-Mental Wellbeing

Mon, 04 May 2020 00:00:00 GMT

Naturally, we are all focused on adjusting our new normal as a result of the Coronavirus pandemic. For example, we are adjusting to being in lockdown, working from home and trying to balance childcare.

We all know how important it is for us to stay at home to prevent the spread of Coronavirus and protect everyone's physical health but we might be forgetting how important it is to take care of our mental health during lockdown. Everyone is adjusting to the pandemic in their own way and whilst the pandemic is affecting us all, it is not affecting us all equally.

It is all too easy to throw yourself into work, working 14-18 hour days or to realise that you haven't moved all day and watched the whole of Netflix in one day. Neither of these are healthy. Instead, we need to use this time to make sure that we are looking after our mental wellbeing as we adjust to a new way of life.

Communicating with friends, family and co-workers is important not just for yourself but for checking in on others who might be struggling. We all have good and bad days as part of life but the management of how we respond to bad days during the pandemic is important. Normally we can tell if a friend is down by looking at them or if a work colleague is struggling by their silence but as we cannot interact with others like we usually do, it is important to actively check in with people and ask for support if you are having a bad day.

I have listed some helpful websites and YouTube videos below that you might find useful:

https://www.mind.org.uk/

https://www.nhs.uk/oneyou/every-mind-matters/

https://www.youtube.com/watch?v=y4X36wp6QJs&feature=youtu.be

https://www.youtube.com/watch?v=dEzbdLn2bJc&feature=youtu.be

https://www.youtube.com/watch?v=xzNMABRELPg

Non-bank funding discussions continue

Fri, 24 Apr 2020 00:00:00 GMT

Our earlier article on non-bank funding mentioned that proposals had been submitted to the Bank of England and HM Treasury to provide support packages for non-bank lenders.

A decision was expected this week as to whether the submitted proposals would be accepted however discussions are still ongoing and as of yet, no decision has been made to approve the support packages.

Registers of Scotland launch electronic applications

Thu, 23 Apr 2020 00:00:00 GMT

Registers of Scotland have today announced that certain applications can be submitted electronically from the 27th April.

The announcement should allow a number of cases which settled under the interim arrangements to be submitted to Registers of Scotland and now that the electronic solution is in place, we would expect to see a number of lenders who have not signed up to the interim arrangements proceeding with transactions.

It is important to note that the register has not been re-opened and this is an interim solution to allow registration.

Solution nearly finalised by Registers of Scotland and the Law Society of Scotland to allow transactions to proceed

Mon, 20 Apr 2020 00:00:00 GMT

The Scottish property market was plunged deeper into disarray on the 24th March 2020 as the Registers of Scotland (RoS) closed the application record, which records the transfer of ownership and registration of lenders charges.

Since the application record was closed, RoS has been working closely with the Law Society of Scotland, UK Finance and key stakeholders to devise a solution which will keep staff safe but allow applications to be processed remotely.

However, the solution was not simple to implement. Registration law in Scotland was modernised in 2014 with the introduction of the Land Registration etc. (Scotland) Act 2012 which provided RoS with a statutory basis for their powers and to implement a workable solution to reopening the application would require a legislative amendment.

The Coronavirus (Scotland) Act 2020 came into force on the 7th April 2020 and provides a workaround to allow applications to be submitted electronically however, this is still in the beta testing phase.

Myself and McVey and Murricane have been working closely with RoS trailing the new workarounds and providing feedback.

For further information, please contact Fallon Sara Spencer , Principal and Head of Specialist Lending.

Desktop Valuations, the key for restarting lending?

Mon, 20 Apr 2020 00:00:00 GMT

Following the Government’s implementation of social distancing, carrying out a physical valuation has not been possible and this has lead to a suspension in new mortgage applications. As the social distancing measures continue, lenders are looking for solutions to allow valuations to be carried out remotely such as desktop valuations.

Desktop valuations do not involve a physical visit to the property rather, the valuation is based on aggregate data such as comparing the 3 most recent properties in the area and other comparable properties in the local area. So, if desktop valuations offer a solution, why aren’t lenders using these? The answer depends on whether the lender securitises their loans.

Securitisation is used by lenders which obtain their capital from the capital markets as opposed to the Bank of England. Lenders who secure their mortgages package up a number of these (known as mortgage backed securities) which are rated by a rating agency depending on the financial stability of the package and sold to an investment firm in return for capital.

The downside of desktop valuations is that they are not readily accepted in the capital market where the securities are sold. In fact, lenders who utilise desktop valuations offer suffer financial penalties or the rating issued by the ratings agency is lower, which may make the investment less attractive to potential buyers.

As social distancing measures continue for the foreseeable future, the volume of lenders accepting desktop valuations are likely to increase but it is likely to be used for residential purchase and remortgage cases to begin with.

Lenders report a surge in mortgage repayment holiday requests

Sun, 19 Apr 2020 00:00:00 GMT

Since the Government announced on the 17th March 2020 that anyone struggling as a result of the Coronavirus pandemic will be able to take a three month mortgage repayment holiday, more than 1.2 million homeowners have taken advantage of the scheme.

What is a mortgage repayment holiday?

A mortgage repayment holiday is a request made to your lender to suspend mortgage payments for up to three months. Mortgage repayment holidays are available to all homeowners who are up to date on their mortgage repayments.

What about buy-to-let landlords, can they apply for a mortgage repayment holiday?

Yes, if a landlord's tenant has been financially affected by the Coronavirus pandemic then the landlord will be able to request a repayment holiday and the relief provided should be passed on to the tenant.

Is there an affordability test?

No, you do not need to undergo any affordability tests instead, your lender will ask you to self-certify that you have been affected, either directly or indirectly, by Coronavirus. If you are a landlord, you will be required to self-certify that your tenant's income has been affected.

What about my credit score, will this be affected if I take a repayment holiday?

No, the credit reference agencies which comprise of Experian, Equifax and TransUnion have all introduced an "emergency payment freeze" which means that credit scores are maintained at their current level for the duration of the repayment holiday.

For more practical information on common issued faced during the pandemic please visit our dedicated Coronavirus legal health check page https://www.legalhealthcheck.scot

Peer to Peer lending-The modern alternative to traditional lending

Sun, 19 Apr 2020 00:00:00 GMT

What is Peer to Peer (P2P) lending?

Peer-to-peer (P2P) lending allows financing to be obtained directly from other individuals, without involving a bank or building society. P2P is essentially an online finance marketplace connecting those who want to lend money with those in need of financing.

How P2P evolved

When P2P was introduced in 2005 it was used by high-risk borrowers who were likely to be rejected by traditional lending institutions. However, in recent years use of P2P has expanded to provide mainstream financing for:

Paying off credit card debt at a lower interest rate;
Home improvements; and
Purchasing a new car.

With expansion comes regulation

Although P2P was introduced in 2005, the first regulations were not published until 2014. As the sector continues to grow and expand, boosted by the higher returns for investors in an apparently permanent low interest environment, further regulations have been published to reflect the changing nature of the sector.

On the 4th June 2019, the Financial Conduct Authority (FCA) announced their proposed changes to the regulations, which will come into effect on the 9 December 2019.

What are the changes?

The changes are intended to protect borrowers and many of the changes focus on:

greater transparency;
clearer communication;
robust credit risk management; and
standardising the process in the event of default.

What is the future?

Innovative lending options will continue to expand as investors seek yield. The Scottish environment often depends upon different methodologies in achieving the same ends achieved in England and Wales. For further information, please contact Fallon Sara Spencer .

Traditional lending

P2P lending

McVey and Murricane launch "Contactless Conveyancing" service

Sun, 19 Apr 2020 00:00:00 GMT

These are terrible times and while the completion of property-related transactions is well down the list of priorities, when compared to the health of individuals and the nation as a whole, nevertheless McVey and Murricane understand these transactions are important for individuals to feel safe and secure.

As one of the largest providers of property-related legal services in Scotland, McVey and Murricane clearly recognises the impact of the virus on transactions. Often it is the logistics which have been limited by lockdown requirements which mean that transactions do not complete, even where the parties involved want to achieve that.

Again, while these matters are not important when compared to the restrictions faced by individuals and the country, nevertheless anything that maintains economic activity is worthwhile.

ContactlessConveyancing is the key that unlocks so many of those transactions.

How does it work?

Since 2012 McVey and Murricane have been utilising an innovative method called MMiAuthority to ease the constraints and tensions of conveyancing and remortgage transactions.

MMiAuthority is a limited single use authority which has been successfully used in over 100,000 transactions. It has received widespread praise including the Property Law Committee of the Law Society of Scotland. MMiAuthority requires a great deal of organisation to be effective which is provided by the innovative and unique systems used and developed by McVey and Murricane. The systems use a "traffic lights" control to determine whether an MMiAuthority exists for any particular transaction.

ContactlessConveyancing develops the existing MMiAuthority further. As innovators, as well as experts, in Scottish property and lending law McVey and Murricane are always looking at new ways to make the conveyancing process easier for clients and lenders. We invest heavily on innovation as opposed to replicating what has been done for years.

ContactlessConveyancing takes matters one step further. Relying upon an obscure section within existing Scottish legislation it allows for digital documents to be treated as original provided that that digital document is an electronic image of an original wet signed document.

The process has been approved as entirely valid and secure by one of the most senior conveyancing authorities in Scotland.

To find out more about the innovative ContactlessConveyancing service, visit here or contact Fallon Sara Spencer , Principal and Head of Specialist Lending.

At a time of great uncertainty, how can McVey and Murricane’s MMi Security Audit protect your security?

Fri, 17 Apr 2020 00:00:00 GMT

As the banking sector faces its largest challenge since the financial crisis, how can lenders ensure that their charges are adequately protected?

During this difficult time, lenders have withdrawn products and paused pipelines to focus on maintaining capital and dealing with payment holiday requests.

With the majority of resources being used in these areas, there is little resource left to deal with the management of securities. In the event of repossession or selling the loan book, lenders will want to know that their charge is unchallengeable.

At McVey and Murricane, we have created a variety of innovative products through our MMi Security Audit which bridges the gap between when the funds leave the lender and when the charge is registered.

For further information on how McVey and Murricane can assist, contact Fallon Sara Spencer , Principal and Head of Specialist Lending.

Proposals issued to the Bank of England and HM Treasury could assist Specialist Lenders during the Coronavirus pandemic

Thu, 16 Apr 2020 00:00:00 GMT

Specialist lenders are typically non-bank lenders, meaning that they do not receive funding from the Bank of England and they raise the capital needed from the various capital markets around the world. Since the Coronavirus pandemic, specialist lenders have felt the strain as the capital markets have closed, essentially cutting off their funding supply. Yet at the same time the Government has enforced mortgage payment holidays for customers.

As the Coronavirus pandemic grows the funding support for specialist lenders diminished. Unlike high street lenders, they cannot receive financial assistance from the Government or the Bank of England and in order to maintain capital and several specialist lenders have had to withdraw products from the market to survive.

This is particularly concerning as the specialist lending customer has changed over the last few years. Yes, there is still a large share of limited company and special purchase vehicle lending but a wider customer base is now using specialist lenders including those who are self-employed, have poorer credit ratings or defaults and customers with lower incomes. All of whom would typically not be offered a mortgage with a high street lender.

The proposals submitted to the Government and the Bank of England are intended to offer specialist lenders the same capital and liquidity support already offered to high street lenders. The proposals are:

A term-funding scheme open to non-bank specialist lenders, funded by the purchase of investment-grade bonds by the Bank of England and supported by bank guarantees to support wholesale funders.
A Forbearance Liquidity Funding Scheme which proposes that the UK Government provides eligible specialist lenders with the liquidity required to fund loans on which forbearance has been provided that would currently fall outside of existing funding lines.

There has been much discussion over the last few years about extending term-funding to specialist lenders, but it had not been implemented. The closure of the capital markets during the pandemic has reawakened the issue of financial support for specialist lenders.

Specialist lenders cater for a particular market which will need assistance more than ever following the pandemic and it is hoped that the proposals will begin to allow specialist lenders to reopen pipelines to assist customers during these difficult times.