Yet last year, according to industry specialist GBG, over 18,000 fraud attempts were made against each UK retailer on average during the period between Black Friday and the January sales.
Sarah Whipp Head of Go to Market Strategy at Callsign argues that during busy periods such as Black Friday and Cyber Monday, businesses are under pressure to balance the fraud with customer experience, but they must be careful not to let the latter slip.
At the same time, banks have to foot the bill when it comes to a majority of this type of fraud, so they have a vested interest to not let their retail customers to get complacent when it comes to security.
Given the incredibly high volume of transactions over the coming weekend, and indeed the whole festive period, often merchants will accept that fraud will be higher than usual. However, they are often willing to take the hit because it will be worth it for the extra business as long as there is no long-lasting reputational damage. Indeed, the financial costs of fraud are now borne by banks as well as merchants and Black Friday fraud is a growing challenge for financial institutions.
This is set to change next year. With Secure Customer Authentication (SCA) coming in for merchants in 2021 they may be well advised to make hay now with a lower security bar. In the future they will need to make sure they have trusted merchant status and that they manage their pricing to take into account of SCA exemptions to have a premium user experience. Next year, merchants need to partner closely with issuers (banks) to manage this situation.
3D Secure could throw another spanner in the works for banks whose customers are online retailers that use it to avoid chargebacks. It can massively complicate treatment strategy as the payments are verified by the likes of Visa, Mastercard Secure Pay and Amex Safekey, therefore the liability is mainly with the card issuers and banks.
To deal with the issue, merchants should use agile IT systems to their advantage. For example, if a retailer’s system has the functionality to modify fraud appetite policy dynamically (including adding in extra fraud checks), then they may want to lower the bar initially to gain the maximum number of sales. Then, if they were to spot a high degree of fraud attempts they could ramp up prevention measures on the fly. Of course, the impact on the customer and the risk of possible reputational damage needs to be kept at front of mind at all times.
After weeks of debate and delay, the British parliament has finally agreed there will be a general election on 12th December. The election was widely anticipated and sterling did not move after the announcement. The biggest reaction was concerning that many School Nativity plays will need to be reorganised. Markets are forward-looking as they had already anticipated a general election.
Since the bill to hold a general election was passed on the 31st October, the pound has fallen 0.84% against the US Dollar, whilst the FTSE All share has risen 1.39%. Neither moves are particularly significant and such movements could be down to a number of factors, including changes in the global outlook.
This lack of reaction is not uncommon. Investors dislike uncertainty or a lack of information and they adopt a wait-and-see approach. It is impossible to make any sensible investment decisions at this early stage so they don’t take the risk.
Markets are likely to become more focused on the result of the election the closer we get to the 12th December. How they behave will depend a lot on whether or not a clear winner is anticipated. However, given that in recent years the polls haven’t been very accurate, combined with the lines being drawn regarding Brexit and parties encouraging tactical voting, it is likely this election’s result will be hard to forecast, no matter what the polls suggest.
How domestic markets react to the election result is likely to be closely linked to what the expectation is.
The typical view is that the Conservatives, with a focus on business and capitalism, are good for the stock markets and Labour, who focus on investing in services, are not. However, analysis of market performance post-election shows this is not necessarily the case.
In 1992, John Major won a small majority, but a large proportion of the vote. The FTSE 100 rose 12% the month afterwards on the back of the result largely because a hung parliament had been anticipated.
How domestic markets react to the election result is likely to be closely linked to what the expectation is. This probably matters more in this general election than many others. A clear majority for either the Conservative Party or the Labour Party will give them control of parliament and the ability to make and pass laws. The greatest concern markets are likely to have is another Hung Parliament with a minority government of any colour. This risks returning the UK to the position it has been in for 2019, where it cannot make a decision over Brexit and the lack of direction weighs on the economy and the UK stock market. So a majority government is likely to be positively received by markets in the short term, at least, as it means we have avoided a stalemate situation.
If we look at the longer-term impact on markets, over one year, Tony Blair’s first election win in 1997 and third victory in 2005 were both followed by strong performance in the FTSE 100 with returns of 37% and 28% respectively. Major’s 1992 victory saw a 21% rise putting it in third place since the 1987 election.
It is difficult to attribute too much to the Party or indeed the individual in these situations. Both Major and Blair’s first victory occurred during a strong period for stock markets. Although there is some relief in the short term, the likelihood is that once the election is over, the market will shift its focus onto economics and company fundamentals.
How might markets perform after 12th November 2019?
Any views here are a bit of speculation as markets rarely perform based on one thing in isolation for very long.
The Brexit issue is going to be the major factor, primarily because the issue has been weighing on both the UK economy and stock market for over three years and particularly so in 2019.
Boris Johnson has led with a ‘get Brexit done’ motto and if he is reelected with a working majority, this should give markets confidence and certainty that the first phase of Brexit will be completed. The removal of such uncertainty should prove positive for the pound and the UK market which has been lagging previously – so can regain lost ground.
A Corbyn win is not as clear cut when it comes to Brexit. Jeremy Corbyn has indicated that he would renegotiate the deal and then put it to a second referendum. So this suggests that Brexit uncertainty will continue to feature throughout much of 2020 with an extension beyond the 31st of January deadline likely. Given this, there is little reason to think the outlook for the UK will materially change until we have an idea what type of Brexit will happen.
Both parties have committed to spending more in the next term, the devil is in the detail but the age of austerity appears to have come to an end.
As things stand, Labour appears to have committed to spending more than the Conservatives. Whilst this is likely to be well-received in some areas there is the question of affordability. With interest rates at such low levels now is a good time to borrow, however, international markets will want to know the UK can afford any borrowing. Fiscal stimulus should be supportive of the UK economy and help drive growth, although large infrastructure projects take time to feed through.
On tax, there are some key differences.
Boris Johnson has already promised in his leadership to raise the income tax threshold for higher-rate payers to £80,000 (from £50,000). Take-home pay for those in this band would increase – for example, someone who currently earns £60,000 per year would keep an extra £2,000. John McDonnell has proposed to bring the 45% additional income tax rate from £150,000 to £80,000, plus introduce a new 50% rate on income of more than £123,000.
Sajid Javid suggested at the Conservative party conference that he was considering scrapping inheritance tax, whilst Labour would look to change the allowance to a lifetime cap of £125,000 on the amount you can inherit tax-free.
Higher taxes take money away from households and into the government, so they could have an effect on consumer spending in the short term but help support government projects over the longer term and help grow the economy if well invested. The Conservative policy could give more back to middle England and boost demand.
It is important to remember that whilst the Manifestos set out party policies, these are often reviewed, tweaked or even abandoned once the party is elected. Investors should not spend too much time trying to back one result or another and it is better to be prepared on a number of potential outcomes.
Activity was particularly subdued in the difficult to interpret third quarter of the year, when USD 622.2bn worth of deals were struck globally, down 21.2% on 3Q18 (USD 789.7bn) and with 1,164 fewer deals than last year.
The US market, which had so far seemed immune to the global downward trend at play since the middle of last year, is starting to be impacted. At USD 262.9bn in 3Q19, US M&A is down 32.1% on 3Q18 (USD 387.1bn). Worth USD 1.25tn YTD, US M&A is still marginally up on the same period last year (USD 1.23tn), just about retaining a 50% share of global M&A activity, down from 52.5% in 1H19. Marred by the trade and tech war between Washington and Beijing and persistent political instability in Hong Kong, YTD M&A activity in Asia is down 26.5% over last year to USD 417.2bn.
Despite a small recovery over the summer, European M&A remains 29.4% lower compared to the same period last year, as a weakening European economy and geopolitical tensions continue to dampen activity. However, London Stock Exchange’s USD 27bn acquisition of US-based financial data provider Refinitiv, the largest deal globally in 3Q19, exemplifies the strength of European outbound M&A, which at USD 187.1bn is up more than 20% on last year and at its highest YTD level since 2016.
Beranger Guille, Global Editorial Analytics Director at Mergermarket commented: “Whether they are motivated by the desire to get more growth, or a way to secure future survival, deals are getting larger. On the back of the longest equity bull market in history, and amid persistently low interest rates, corporates have ample cash reserves and appealing debt financing options at their disposal to pursue M&A. This context and the growing feeling that it will not last forever are pushing valuations up.”
Below Marcin Nadolny, Head of Regional Fraud & Security Practice at SAS, explains more on the date push back and what this will mean for banks moving forward.
UK companies must be able to demonstrate that they are moving towards compliance from September 2019, but no enforcement action will be taken for 18 months. For the rest of the EU in general, the timeline is unchanged. However, national competent authorities have the flexibility to provide limited additional time to become PSD2 compliant (see the recent EBA opinion).
But whichever country you’re in, it’s essential that companies recognise the urgency at play. In the new digital world, payment security is absolutely essential. The question now is not whether PSD2 compliance should remain at the top of the priority list. It’s how quickly companies can realistically achieve it. In a nutshell, PSD2 simultaneously massively increases the amount of financial data moving into banks’ systems while also making it mandatory that they run fraud controls on that data in real time.
As PSD2 ushers in the age of open APIs in finance, the traffic volume that payment processors will have to handle will be enormous. Consumers’ personally identifiable data will be at heightened risk, and we will observe increased malware attacks and data breaches via the newly created attack vectors. If businesses aren’t prepared for the change, it’ll be a fraudster’s paradise.
Is your organisation ready to cope with this new heavy traffic and identify fraudulent activities? It might be like finding a needle in a haystack. Fortunately, AI is coming to the rescue. Emerging technologies, such as predictive models, network analytics and anomaly detection, all have the power to increase your efficiency in finding and fighting fraud.
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PSD2 is more than just a regulation. It’s the start of a major transformation for the payments industry. With the move to digital-first, open models, there’s an increased need to operate processes in real time – providing instant payments, for example – and that means that fraud prevention will need to move at the same speed.
Adequate anti-fraud protection is required by the regulation. Banks are expected to fill out certain tests as a fraud assessment, including reviewing behavioural profiles, checking known compromised devices and IDs, applying known fraud scenarios to transactions, and detecting malware signs. Analytics can help speed up detection, find suspicious behaviours and collate data points by ingesting new data sources. This builds a picture of "normal" behaviour against which banks can measure transactions.
At present, not all banks are applying all these anti-fraud measures. Some base their protection on simple rules and aren’t able to detect fraud in real time or stop transactions in progress. These abilities aren’t technically required by the regulator until PSD2 comes into effect. Real-time fraud prevention used to be a luxury – but now it’s a must-have. Banks must take the initiative to ensure they can detect fraud in process in incredibly short time frames.
The other major change included in PSD2 is the arrival of third-party providers in the market. These nonfinancial companies, including GAFA (Google, Amazon, Facebook and Apple), e-tailers and fintechs, will be able to work as payment processors going between customers and banks. This means the banks have a much bigger traffic volume to handle and review for fraud. Legacy systems and processes simply can’t handle it.
In order to cope, banks need to have systems in place that are able to assess for fraud at huge volumes and in real time. Not only that, but transactions from third parties might come with limited contextual information. So, banks will have to enrich them with additional data on variables including digital identity, reputation and past behaviour.
AI applications will be essential to handle that ongoing enrichment at speed. Humans alone simply can’t process that level of information. So, it’s essential that banks invest in AI to augment the skills they have and lighten the load of compliance.
The risk to banks posed by these growing data streams is not just in terms of payment fraud. There is also a heightened cybersecurity risk. New data flows and new payment systems present possible system back doors and new attack vectors that hackers will be quick to discover. By attacking third party infrastructure, malicious actors will be able to gain access to consumers’ personal data.
Addressing this problem is not the sole responsibility of the banks. But it highlights the level of risk associated with the increase in data volume and connectedness. Reputational damage and heavy fines are a very real possibility for institutions that don’t get their act together in time.
Compliance will require many changes to anti-fraud and customer identification processes. The technology required to handle this additional burden is out there. Banks must invest wisely and ensure they are fully equipped, whether next month or by 2021.
Cryptocurrencies followers forecast Bitcoin to replace fiat currency and become the only method of value exchange. With bitcoin induced demonetization, Bitcoin should change people’s relationship with money. The fact that people will be the owner of their money and its value is seen as one of the distinctions that will make most people avoid fiat currencies.
Bitcoin prices have become a bellwether for the market. While still difficult to nail down an exact characterization of cryptocurrency and how it fits within the modern financial pattern — whether a currency, digital asset or a commodity — by evaluating the price action in the context of its more established analogs, it becomes apparent that Bitcoin and its peers have reached significant milestones.
The acuteness of the cryptocurrency market has made it obligatory for traders to make quicker decisions and perform transactions faster. These demands led to the development of the Bitcoin apps to offer traders an automated trading platform and more leverage in the market.
The Bitcoin apps enhanced a unique algorithm that can interpret and process the market signals faster such as the bitcoin revolution. If the bitcoin revolution is over then the users are forced to invest from the beginning, without trying the platform first.
The price of Bitcoin has fallen from $13,200 to $9,684, with major cryptocurrency exchanges, including Coinbase, recording a 26.6% drop within a period of seven days. The recent fall of Bitcoin is widely believed to be a technical factor that was pushed by sellers who took control of the market once the dominant crypto asset went below key support levels at $11,500 and $10,500.
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The recent rise was not a rise at all but in fact a fall. in other words, the value of Tether (controversial cryptocurrency with tokens) dropped so in order for altcoins to keep their value up they needed to rise against Tether, when bitcoin rises (assuming Tether is worth $1) altcoins seemingly rise up but not because they keep their value, in fact, they fall in value against USD and BTC but because this fall is not equal to bitcoin price rise, the final result is a rise.
For example, if bitcoin is $1000 and some altcoin is worth 0.1BTC and then bitcoin goes up to $2000 that altcoin if it remains 0.1BTC, will rise to $200 which is impossible for that coin to happen because there is nobody buying it.
What happens is that the rise of bitcoin from $1000 to $1000+ will start creating arbitrage opportunity in ALT/BTC and ALT/USD and as traders arbitrage this the final value of that coin will go somewhere between $100 and $200 and closer to lower bound. So the final result will be an altcoin worth around 0.06BTC which is a big fall but thanks to arbitrage traders the value of it rose a little to $120 in a fake manner.
The VIX volatility index – which is commonly used to gauge the fear level among investors – jumped by 36%, leading the markets to become particularly volatile. Losses have been widespread. In the week of the 5th of August alone, the NASDAQ plunged 3.5%, the S&P 500 and Dow Jones both dropped 3%, the FTSE 100 fell by 2.5% and both the French CAC 40 and German DAX 30 saw decreases of around 2%.
With neither side willing to be the first to blink, investors are increasingly seeking out ways to properly insulate themselves from the instability of the market. However, given the unpredictability of the conflict itself, this is no simple task. So, to help you make the best decisions that you can, here André Lavold, CEO of Skilling, takes a look at what has gone on and how some key stakeholders have reacted.
The present state of play: tariffs, tweets and devaluations
Under this current American administration, trade conflicts are never truly resolved; instead being defined by periods of escalation and détente. May saw the US choose to increase the levels of tariffs on $200 billion of Chinese goods, to which the Chinese responded by raising tariffs of its own on $60 billion of US goods. At the G20 summit in Osaka, both sides publicly agreed to a ‘truce’, however this was almost immediately reneged upon by the Americans after the President tweeted that he would levy an additional tariff of 10% on $300 billion of Chinese goods.
This brings us to the current state of play. While the US and China have always treated each other in an adversarial fashion, the latest measures have escalated the conflict to a new level of significance. The latest round of tariffs, most of which will be introduced in the autumn and winter of this year, now focus on consumer-facing goods like electronics and clothing. Companies with significant exposure to China – such as Nike and Apple, who saw their stock prices fall by 3% and 5.2% respectively – were especially affected. With importers likely to pass on the price rise to consumers, these new measures will likely negatively impact consumer spending. With the US household being the backbone of the American economy, the odds of a severe economic slowdown or recession are increased.
Companies with significant exposure to China – such as Nike and Apple, who saw their stock prices fall by 3% and 5.2% respectively – were especially affected.
Knowing that this was likely to hurt its export-reliant economy, the Chinese took action. The People’s Bank took the strategic decision to allow the Yuan to depreciate below the seven per dollar rate for the first time since 2008. Being a floor that the Chinese Government had vigorously defended in past, many have suggested that this was a retaliation against the latest round of tariffs. While it’s only possible to speculate on whether this was indeed retaliation, there would be scores of evidence to suggest so. The positive current account balance which China maintains with the US means that its own tariffs are not as effectual as those implemented by the United States. However, by letting the Yuan weaken, this not only reduces the price of Chinese exports but also reduces the profit of American companies with operations in China.
Spillover: has a trade war become a currency war?
Having considered China’s actions as combative, the United States took the historic decision of labelling China as a currency manipulator; the first time it had done so since the Clinton administration in 1994. The President has also previously attacked the Federal Reserve for not choosing to cut interest rates, stating that this has led to an appreciation in the value of the dollar; making American organisations uncompetitive on the global market.
His rhetoric, combined with the greater chances of a global economic slowdown, suggests that a devaluation in the dollar could be forthcoming. A tough business environment would vastly increase the likelihood of intervention – be it quantitative easing, or lower interest rates – and this would result in the dollar losing value.
With both sides now flirting with the idea of a currency ‘race to the bottom’, this could develop into a very dangerous game of chicken.
With both sides now flirting with the idea of a currency ‘race to the bottom’, this could develop into a very dangerous game of chicken. While China has much to gain from a devaluation, it also has much to lose. Let the currency slide too far, and there is a great risk of capital flight. Similarly, as previously mentioned, given that the US retains a trade deficit of approximately $488 billion, it will be hard to let the dollar fall without impacting its own businesses.
The ultimate effect of this will be volatility in the currency markets, especially in the USDCNY pair, and for traders, this can create lots of opportunities.
Wider reactions
With such unpredictable market forces at play, currencies and commodities that are considered ‘safe havens’ such as the Japanese Yen, the Swiss Franc and Gold have seen rises, as traders look for ways to protect their earnings. As long as the market remains volatile, they will continue to be good prospects. However, with the Japanese economy also being very reliant upon exports, traders should be wary of potential intervention.
The conflict has also led to lower oil prices, as doubts have been expressed in the general economic climate. This has impacted commodity currencies such as the Canadian Dollar and Norwegian Krona. The Australian Dollar has been doubly impacted as, in addition to being relatively reliant on natural resource exports, its economy is also uniquely exposed to the Chinese market.
Given the present impasse, it’s becoming increasingly likely that the trade war will not cease for some time. With both sides willing to dig their heels in, it may take a governmental change for the situation to develop any further. However, in the meantime, there are steps that you can take to protect your earnings. Minimise the risk of loss by auditing your portfolio and making sure that you’re comfortable with its allocation. By doing so, you ensure that you continue to earn at your fullest potential.
The price per coin has so far been strong this year as traders and investors cheered the likes of Facebook and Apple showing interest in bitcoin, cryptocurrency and bitcoin's underlying blockchain technology. This weekend's drop was attributed to a lacklustre debut for the highly-anticipated Bakkt bitcoin and its cryptocurrency investment platform at the beginning of the week.
According to Forbes, the drop has caused panic among traders and investors who have been anticipated a drastic change for some months now. For the time being bullish Bitcoin traders are advising to buy as the markets look confused as ever, and there will be some results on the horizon. In addition, chief investment officer of Morgan Creek Capital, a US bitcoin and cryptocurrency investment company, suggests "buying the dip," clarifying that daily change sin the value of Bitcoin are rarely significant and should be ignored.
Daniele Mensi, CEO of Nexthash, the operating group of digital exchange platform Nexinter, commented on the price drop: "The volatility of cryptocurrencies is what makes them excellent conduits of growth for traders, investors, and growing businesses. What is important to remember is that Bitcoin is still up around 115% this year, so its short terms peaks and troughs are necessary to facilitate longer-term growth across the currency. It is important for new traders and investors to do their due diligence on each currency that they invest into to ensure that it is the right route for them, but institutional investors and high-growth companies will continue to look crypto and digital trading to facilitate international, fluid growth."
Importantly, the political situation does not accurately reflect the current state of affairs in other sectors of the economy. Jerald Solis, Business Development and Acquisitions Director at Experience Invest works closely with international investors, and he says it’s reassuring to see that UK property, be it commercial or residential, is still held in high regard.
In the first half of 2017, and less than a year following the EU referendum, the UK made up 14% of global commercial property investment transactions. This was second only to the US and tells us that international investors evidently were not letting the prospect of Brexit impact their long-term real estate investment strategies. Meanwhile, total investment volumes into the UK’s multifamily residential sector rose by more than 150% to reach $7.6 billion in 2018.
So, what is it about UK property that holds global interest even at the most challenging of times, and how can international investors use Brexit to support their long-term financial goals?
Currency fluctuations in the wake of the Brexit vote has had a significant influence on investment decisions. Since June 2016, the value of the pound has steadily fallen; as a result, overseas investors have found themselves enjoying more buying power, particularly within the prime property market.
With a weakened pound, overseas investors have been in the position of being able to snap up UK properties at discounted prices. According the HMRC, for instance, there was a 50% spike in the number of UK homes sold for over £10 million in the year following the vote.
The Bank of England has also cut interest rates to historic lows, encouraging investment in real estate assets. The interest rate has been held at 0.75% since August 2018, with little indication of this being raised in the near future.
While foreign interest in the market remains, investors’ strategies have been changing in response to Brexit. Namely, the variety of opportunities now on offer means that investors have been looking beyond the traditional remit of property investment in the UK to explore new cities and sub-sectors that offer the potential of long-term capital growth.
Historically, London has been the destination of choice for international investors. However, in recent years, investors have increasingly recognised high-growth cities and leading business destinations like Manchester, Liverpool, Leeds and Newcastle.
This is something we have witnessed first-hand at Experience Invest. Indeed, Manchester and the other so-called Northern Powerhouse cities have attracted some of the highest levels of Foreign Direct Investment of any UK region outside of London according to research from Ernst & Young.
It should come as no surprise then, that house prices in Manchester have surged; in the 12 months to July 2018, house prices rose by nearly 9%. Meanwhile, enquiries by Chinese investors alone about buy-to-let options in the city soared by 255.6% in January 2018 compared to the same month in the previous year.
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Cities like this, which are undergoing rapid regeneration, have been clear favourites in the aftermath of the Brexit vote. The reasons for this are clear; with prices in such areas typically below those seen in the capital, rental yields and capital appreciation forecasts tend to be markedly stronger.
Indeed, such cities are also home to a large student population, representing huge demand for year-round accommodation and good long-term investment prospects. This translates to another trend taking hold. Namely, overseas investors are beginning to diversify their assets, looking towards options such as Purpose-Built Student Accommodation (PBSA) that cater to growing demand for term-time accommodation. Indeed, overseas investors dominate the UK PBSA market according to Cushman & Wakefield, making up 55% of 2018 transactions.
The UK’s proven track record for delivering high-quality real estate leaves us in no doubt that international investors will continue to target the UK, albeit perhaps with a different approach. Particularly with a heavy investment in regeneration projects up and down the country, the improvements in infrastructure and connectivity, as well as the delivery of sought-after new-builds, means that the UK property market will remain a top target for investment – even if it does naturally experience an immediate post-Brexit wobble.
It is very likely to be the most significant purchase you ever make. Because of its long term ramifications, you want to take the process seriously. Below, the experts at Crawford Mulholland provide Finance Monthly with a simple guide to buying your first home.
First, you want to examine whether or not you are actually ready to purchase a home. Buying a home isn't something that you should jump into without proper preparation and knowledge. While owning your own home might sound appealing, it involves a lot of maintenance and ongoing work. When you own a home, you are responsible for paying all of the repairs and you are going to be responsible for paying for the respective taxes, insurance, and everything else. Because of this, you need to figure out if you are financially ready for such a leap.
You want to be sure that you are factoring in the costs that you might not necessarily be looking at initially. There are plenty of costs associated with buying your own home that you have to factor into your buying decision including but not limited to the removal costs, stamp duty, the initial furnishing, the survey costs, the solicitor's fees, and more. Make sure that you are factoring in everything when you are making a buying decision.
Once you have decided that you want to go ahead and purchase a home, you want to shop around for a mortgage. This way, you will be able to minimise the interest rates that you are forced to pay on the mortgage. You will be able to search for some of the best mortgage rates online in order to find the best deal. You want to find the best deal because it will end up saving you a lot of money in the long run and you will need to look to see which type of mortgage would best suit your family.
When you are shopping around for your first home, you want to take the necessary steps in order to find the right one. Finding the right home is very important because you don't want to make such a large investment in something that you are going to regret later on. Take your time to figure out where you want to live and find a home that is suitable for you to live. You should be looking at the different properties in the surrounding areas that you would like to live to see whether or not you can find a place that you would love to call home. Don't rush the search process because it is going to dictate where you live for the foreseeable future. You want to factor various things in this process including how long the home has been on the market, why the property is being sold, and what is included in the sale.
If you are going to be purchasing a home for the first time, you want to be prepared to negotiate. Without proper negotiating, you are not going to minimise the total price you end up having to pay for the property.
Overall, there are plenty of things that you can do to make the process much simpler. By following the tips above, you should be able to maximise your chances of finding a great home to purchase as a first time home buyer.
One of the top things that you need not skip is the "staging" process. This is the phase where your house will be readily available for potential buyers to see. Not only does this help you sell your property faster, but it even helps you add a few more pounds and value to your house for sale. Listed below are some tips on how you can prepare for your house's staging process.
Go over your entire home and de-clutter your space. Whether it's a one-story home or a three-story house filled with lots of rooms and baths, you may want to go over your things declutter those that you're not using at all. Give it to charity, sell them, give it to a friend. If you've not used it for months, then it's probably best that it goes. While you may not be including furniture pieces at home along with the sale, this is still an important process because we want to make sure that potential buyers won't see the house in a "messy" and "cluttered" state.
A fresh lick of paint will immediately transform an old-looking house and give it a fresh, new look. Make sure that when you're showing your property to potential buyers, given them a nice impression. Show them how beautiful the property is, and they can't appreciate it if the paints are all chipped, old, and dusty. Choose neutral colors for the paint and avoid personalizing the house too much. This way, buyers can see the true beauty of the home and they can do the personalization themselves.
If there are minor repairs that need to be done, do it. Do you have holes in the wall? Fix it? Are the door knobs broken? Replace it! We want to make sure that the house looks clean, refreshing, yet minimal looking. Do not over-decorate. It's hard to appreciate the entire house when it is filled with large furniture and overwhelming with home decor.
You may also want to do a general cleaning this time. If you can't do it, hire someone to professional help you with this. Get rid of the lime streaks if any, clean the windows, make sure that the floors are waxed - until every inch of the house is squeaky clean.
Did you know that the kitchen is one of the most precious and well-prized of your home? Many people's decisions make or break when it comes to the kitchen. Resurface your kitchen cabinets, replace the tiles or clean them if they're all filthy. You may also want to consider upgrading your kitchen countertop. It may be a little bit expensive, but it definitely adds a lot more value to your home and helps you sell it at the best price.
Give your guests a welcoming feeling. Make sure that the house doesn't have furniture that is too squished or too close together. Making it look light and airy adds value to your house and can even help you sell it at a higher price.
We don't want potential buyers stepping into your home while the house smells stinky! If there are drainage problems, it may cause odor and we don't want to just patch that with a band aid. Instead, to add value to your home and to make sure that it sells quickly at the best price, fix the source of the problem.
During a house visit, you may also want to bake some cookies or bread, as it helps them feel at home. Or, you can add some diffusers for a nice smelling home with therapeutic effects too!
Lastly, to make sure that you won't be ripped off by potential buyers, make sure that you work with an experienced real estate agent. Find one that has extensive experience in this field and one that can help you further increase the value of your home. When giving potential buyers a tour to your home, let the agent do the talking. They're the ones trained and they know exactly what to say, to help you get the best price and even sell the home much quicker.
Without this integrity – and constant striving for health - a market risks becoming a venue for market manipulation, insider trading and other undetected criminal behaviour. Catherine Moss, corporate Partner at Shakespeare Martineau, explains for Finance Monthly.
Preventing behaviours amounting to market abuse, and tackling a lack of awareness of risk, has been central to the regulators’ quest for fairness for a number of years. So, following on from the July 2016 introduction of the Market Abuse Regulation (MAR), how is the UK faring and with a further review by the European Securities and Markets Authority (ESMA), what does the future hold?
Markets are driven, and develop depth, through pricing; and prices are – and have always been – vulnerable to manipulation. MAR, and its previous manifestations, were designed to identify behaviours which manipulated markets, or which allowed people to buy securities or commodities on a privileged basis with information which was not generally available to other trading parties.
The UK has had a legal framework around insider dealing and market abuse for a number of years. However, the introduction of MAR in 2016 formed a further part of a Europe-wide attempt at greater harmonisation, in response to scandals which came to light in the financial crisis and the greater complexity of the financial markets and emergence of alternative trading platforms. In the move towards a more congruent, European-wide, regime encompassing not only securities trading but trading in fixed income and commodity markets and related benchmarks, did the EU fulfil its markets’ needs? Leaving aside the question as to whether the latter could ever be achievable given the myriad trading venues now available, have market participants found the legislation fit for purpose?
The upcoming review of MAR will be undertaken by ESMA, looking into how well the regulations and directives are being implemented, whether the regime should be broadened, whether cross-market order book surveillance should be made subject to an EU framework; and, suggesting purposeful legislative amendments. Consideration is to be given to extending the regime to the foreign exchange markets. In addition, aspects of MAR which are still - unhelpfully - subject to specialist debate as to their scope, for example buybacks, insider lists and managers’ transactions, are to be further considered by ESMA.
At its simplest, there is a need to balance the desire of a company to access public money and trade its securities on a public platform against the requirement to adhere to the rules which apply to that market and its participants. It is crucial to the health of a market to ensure that information which may unfairly disadvantage other parties is not only managed securely but released in accordance with that market’s rules. Julia Hoggett, Director of Market Oversight at the FCA, put it starkly: “The life blood of all well-functioning markets is the timely dissemination of information, without which effective price formation cannot take place. The malignant form of that same life blood is the misuse or inappropriate dissemination of that information.”
However, as companies and their advisers know, market abuse legislation - whether EU or local - has been traditionally quite complicated and tricky to comply with. As the recent survey results from the Quoted Companies Alliance (QCA) demonstrates, issuers and their advisers have exhibited a broad range of responses to legislation which is meant to direct efforts to maximum harmonisation. However, these requires additional processes and procedures to be put in place, understood and adhered to.
Lack of certainty as to the MAR requirements, for example, on the duration of closed periods, is striking. The FCA has quite rightly observed that “awareness is not present in all market participants.” Given the FCA’s stated objective of making effective compliance with MAR a state of mind - at least amongst the community it regulates - it must be asked how this is to be achieved within the current, or future, legislative framework where achieving certainty as to the meaning of the legislation appears difficult.
Clearly, with the introduction of any new regulation, some companies and issuers adapt faster than others, particularly if they are larger and better resourced. It is obvious from the QCA’s survey results, however, that many smaller and mid-size issuers are still navigating MAR’s complex requirements hesitantly. But more worryingly, it can be seen from the pattern -and lack - of regulatory announcements that some issuers, particularly in less obvious and well-policed trading venues, seem not to have recognised the breadth of its application. Education clearly is key and greater regulatory and market promotion of the constraints which issuers are to work within is to be encouraged.
With the introduction of any new regulation, some companies and issuers adapt faster than others, particularly if they are larger and better resourced.
So, what should be done to ensure that the requirements of MAR become part of an issuers “state of mind”? Effective regulatory response can seem sometimes to be limited to the publication of extensive decision notices which are picked over by advisers, keen to ensure that practical examples of poor behaviour, or the failure of systems, can be relayed as precautionary horror stories to their clients.
Many issuers seek regular training sessions with their advisers or company secretaries and become more confident as the reporting and transactional cycle demands their attention. Others find it difficult to engage in the processes required. Some, however, are not well-served by the advisers operating in the market and sector within which they trade. The FCA appears keen to seek to educate all issuers but, inevitably, issuers are still tripping up as they fail to understand, or to take advice on, the requirements of the regulatory framework within which they operate.
Whilst the ESMA review of MAR is unlikely to change the regime substantively, some regulatory time should be devoted to tailoring it more expressly to an issuer’s needs and securing a greater measure of awareness. Whilst the regulatory burden is unlikely to be lessened, clarity of approach together with greater support from markets and trading platforms as to the implications of MAR to their issuers would be welcome.
Here Jamie Johnson, CEO and Co-founder at FJP Investment, discusses with Finance Monthly the real impact of Brexit on the UK property market.
While it may seem like the country has ground to a standstill as the political standoff in Westminster continues, we cannot let this overshadow the activity and trends underpinning many of the UK’s leading sectors.
The property sector is a case in point – domestic and foreign investment continues to pour into the market, increasing house prices grow and in turn producing attractive investment opportunities. Recent research suggests that property investors also stand undeterred despite Brexit uncertainty –almost half (45%) of property investors have expanded their property portfolio since the EU referendum, whereas only 7% said they had sold one or more homes as a direct result of Brexit.
To understand why the UK continues to be a prime property hotspot despite the current state of political affairs, it can be valuable to reflect on how the sector has fared over the last two and a half years. This including understanding the key trends that have played a central role in shaping the real estate market.
In times of uncertainty or transitions, commentators like to take a keen interest into how different sectors are performing in London. As a cosmopolitan hub renowned for its residential and commercial real estate opportunities, the capital has faced some challenges. Since the EU referendum, house prices have largely stagnated, and in some postcodes even fallen.
However, focusing on primarily on London risks overlooking the progress taking place in regional markets. Indeed, national house prices have actually been on an upwards trajectory in recent months, driven largely by strong growth in places like the Midlands and North of England.
Birmingham (up 16%), Manchester and Leicester (both up 15%) have experienced the fastest rates of house price growth since the June 2016 referendum, followed by Nottingham (14%), Leeds (12%), Liverpool and Sheffield (both 11%). In real terms, this means that the average property in Birmingham now stands at £163,400, while the average house in Manchester costs around £168,000. For an investor, this attractive capital growth few assets can match.
So, what are the underlying reasons for these strong performances? Much of it comes down to large-scale regeneration projects which are reviving infrastructure, construction and transport links. Some of the construction works include the redevelopment of land close to new stations that are being created for High Speed 2 (HS2).
Significant public and private investment is undoubtedly bolstering the sector, yet another important trend to note is the volume of property transactions taking place even at the height of Brexit uncertainty.
In January of this year – just weeks from the original Brexit deadline, and without a clear vision of what the UK’s transition from the EU would entail in practical terms – the number of transactions on residential properties with a value of £40,000 or greater was 101,170, or 1.3% more than a year prior.
This is testament to the underlying popularity of property as an asset class able to deliver long-term returns, and weather political and economic transitions. In fact, recent research revealed that Brexit hasn’t dampened investor sentiments towards property; the survey of over 500 property investors revealed that 39% plan to increase the size of their property portfolio in 2019, regardless of the ongoing negotiations.
Notwithstanding the obvious challenges facing the UK – namely, setting out a clear direction for the future of the country outside of the EU – there are some pressing national priorities that also deserve attention.
Perhaps most important of all is the housing crisis. At present, there are simply not enough affordable and accessible houses on the market to meet growing demand. And while the government has set targets to address this issue, there is an overwhelming fear that these goals will ultimately fail to materialise.
Last year, Prime Minster Theresa May committed the government to delivering 300,000 new homes a year by the mid-2020s. Although a positive step in the right direction, the current pace of progress suggests that construction efforts will fall short of reaching this target.
Figures released by the housing ministry in March 2019 showed that building work began on 40,580 homes in England during the final quarter of 2018. This is down 8% on the previous three months. Further to this, a National Audit Office report recently concluded that half of councils are expected to miss house building targets.
While Brexit has largely taken priority over important issues, the Government cannot put off committing the necessary time and resources towards rebalancing housing supply and demand. Creative reforms are needed, and debt investment projects, such as off-plan property investments, are but one of the many solutions that could promote the construction of new-build properties.
Despite the current obstacles facing the property market, UK real estate has proven itself to be a resilient asset class even in times of hardship. Bricks and mortar remains a popular destination for domestic and international investment, and looking beyond the more immediate challenges lying on the horizon, it is important to recognise the resilience of property as a leading and desirable asset class.
