Hurry Up!


17th April 2013

 

Hurry Up!
 

 

By Jenny Robotham, IT Support


 
 

 
 

From a commercial property viewpoint an easing of credit and availability of finance for property lending will provide some real impetus to growth.  My colleague Neil Slade talked about a shortage of new development where demand exists but credit is difficult and I thought it was worth supporting Neil’s piece with a little more detail.
Well the headline from the latest Ernst & Young Item Club that “The crippling credit crunch is loosening” certainly seems to be a pointer that the availability of credit may be getting a little easier.
There is little doubt that the ongoing credit crunch and crisis in the Banks continues to affect business thinking nearly 5 years on from the start of the world’s economic woes.  The effects on property both commercial and residential are well catalogued and there for all to see – not least the retreat of values!
It is not an argument for inflating property values – what we need is more financial liquidity in the market to ‘make things happen’.
The Item Club lays bare some of the statistics around the credit crunch.  Part of their commentary was how UK Banks borrowed “£900 billion” that was borrowed from overseas up to 2008 and how we’ve been paying the price ever since as the UK reigns back from the £100 billion a year that Banks were using to fund domestic lending.
The Item Club explain that once it happened, the breakdown in the funding markets triggered several other crucial factors.  Secondary banking subsidiaries had to be supported, straining capital adequacy ratios.  Loan losses had the same effect.  Bank boards, as well as their shareholders and regulators, became very risk-averse as the losses mounted.  Tougher capital and liquidity requirements exacerbated the lending squeeze.  The ensuing recession made Banks even more worried and of specific concern for those earning their money in the property market, about the solvency of mortgage borrowers and small businesses.  Lending was depressed because the economy was depressed and vice versa, a classic vicious circle.
The Item Club thinks the background of tight credit and the Banks’ liquidity issues may be coming to an end with credit and liquidity requirements having been relaxed.  The Bank of England’s new Funding for Lending Scheme is designed to increase the flow of credit and reduce its cost, increasing the funding gap, or at least slowing the speed at which it is paid down.  It will reinforce the effect of the revival of the UK mortgage-backed securities market seen in recent weeks.
Ernst & Young say that ‘Although banks remain very risk-averse, they are effectively shifting the risk lending to affluent home buyers who have equity to invest.  In the case of first-time buyers, the builders and the government are shouldering the risk through new-buy schemes.  The banks’ capital base is also recovering’ they say.  Furthermore they comment that ‘These developments help to explain the marked improvement in the mortgage market suddenly being signalled by the Bank of England’s Credit Conditions survey, the sharpest since this survey began in 2007.  In the third quarter of this year, a significant proportion of mortgage lenders said they had loosened their lending criteria or were planning to do so, while 22% were planning to reduce the mark-up on mortgage rates.  The survey suggested that little movement in unsecured lending and forecast a continued deterioration in the outlook for lending to small companies, which it seems, are still regarded as too risky.  Nevertheless, these developments are encouraging.’
A lot of economic detail but for ‘property watchers’ and for those like us working in the property industry these are important pointers for how the market may perform over the next 12 to 24 months.
Not sure we can say this is the end of the credit crunch although we’d all hope that, it may just be the ‘end of the beginning’ though

How many times have you found yourself shouting at your computer to ‘hurry up’ as it is being slow at bringing up a webpage on the internet? The answer – too many times!

Most of us are online every waking moment one way or the other. Computers are accessed throughout the day, our smart-phones are constantly connected and pushing data and if our connection goes down we’ll “freak” out – our daily routine is disturbed!

An article caught my eye in the Birmingham Post about broadband speeds across the Midlands and how areas differ much in broadband capabilities and speeds. This is often annoying if you’re one of the many homes outside of major towns and cities that can’t get a decent broadband speed; I even read that a village in rural Lancashire recent laid their own fibre optic cables as they were fed up of using dial-up! But what if you’re a business and the speed of your connection isn’t just an annoyance – it’s a real barrier to the evolution of your IT infrastructure.

As one of the IT support staff at Harris Lamb studying part time for a BTEC in IT, Networking and Telecoms for part of my responsibilities and involve giving fee earners the help they need not only with in-house support but also the IT that ‘looks out’ for the business, which includes the website editing and help within e-marketing. Increasingly I have also been helping some of the agent’s research Broadband capacities in various locations where we are marketing large office space. For instance is the Broadband connection speed a ‘selling feature’ of the building and if so, would this information help us market properties?

I sometimes think that having a properties broadband capacity and connection speeds advertised on particulars and property details would be better use to occupiers than having a buildings insulation standard being set out as we do with Energy Performance Certificates (EPC’s)

With more and more talk of ‘cloud computing’ these days (which should really be referred to as ‘virtualisation’, but that’s a blog for another day), what happens when a company wants to utilise emails from a cloud server? Or even backup to a secure cloud service? Well if your one of the lucky occupiers that are located near an exchange, you can easily utilise bonded ADSL technology, relatively cheaply, to establish a large enough ‘pipeline’ to enable such off site solutions. Your connection speed is likely to be strong, and some service providers even offer ‘first mile’ services, giving service level agreements on lines within a mile, or so, of an exchange – happy days.

But assume for a minute, you are a company based in a suburb, or out of the city core, with your nearest exchange some 5 or even 10 miles away. How do you make the most of modern advancements in virtualisation when it even takes you half an hour to download an album from iTunes? This is where the real problem presents itself – COST. You can obtain a super fast connection in this situation – but you will have to pay for it. Leased lines, connections provided specifically for one, or a small number of users, benefit, can be rather pricey – not just to run, but to install in the first place. In fact, in some cases we have heard of companies moving offices because it’s cheaper to rent space closer to an area of good connectivity than it is to install and contract a leased private line!

With barriers to business like this in many more areas than people realise – it’s no surprise that offices outside of city cores can struggle to compete. A recent study online suggested that 13% of the UK last year, only 5% was receiving connections classed as superfast, with the average speed between 35.8Mbps to 44.6Mbps.

Isn’t it time, with such ubiquitous connectivity now available in major locations (Birmingham City Centre has a free wi-fi service, indoors and out) that fast, reliable connectivity was rolled out across the majority of the UK? With the speed of infrastructure improvement mostly driven by private sector service providers, which in turn is driven by profits, perhaps the government needs to increase its work and see that, this isn’t just about surfing the net; internet connectivity is a real requirement for business growth outside of major cities and towns.

 


If you need help or assistance with any of your property decisions contact one of our team at Harris Lamb on 0121 455 9455 or email charles.dauncey@harrislamb.com

Disclaimer: The views expressed within this article or weblog (‘blog’) are the personal views of the contributors and authors only and do not necessarily reflect the views of any named companies or their employees.