Friday, 27 April 2012

Recession – what recession?

So we are back in recession and can confirm the ‘double-dip’ – well technically we can anyway. But should we really give this apparently depressing news anything more than a passing grimace as we get on with our job. If you look back over the last few months, GDP has been up a bit and down a bit. There is no doubt that we face some major challenges, not least where some of the property debt might come from to replace that which has to be renegotiated over the next 2-3 years, but the majority of business are getting a bit fed up with being in recession. They are keeping their heads down and just getting on with life.

The British Chamber of Commerce summed up the position succinctly in its press release which I quote below.

“The latest ONS data shows a fall in GDP of 0.2% in the first quarter of 2012, pushing the economy into technical recession. The figure is disappointing, and paints an unduly pessimistic picture of the state of the economy. Many commentators will question the accuracy of the data, particularly as it is based on only 40% of the information used for these estimates. As well as large falls in the construction sector, the estimate by the ONS that service sector output rose by only 0.1% on the quarter will be seen as too low by most analysts.

“Business surveys, including the BCC’s Quarterly Economic Survey, have shown a more positive picture, and we believe these give a more accurate indication of the underlying trends in the economy. We think it is likely that the preliminary estimate will be revised upwards when more information is available. For the time being, the main priority is to minimise any possible damage to business confidence. These figures are at odds with the experiences of many UK businesses, which continue to operate with guarded optimism.

“But it is clear that economic growth in the UK remains much too low. We need to see a reallocation of priorities within Plan A that will bolster business growth. That means reducing regulation, encouraging exports and improving infrastructure. While the government must persevere with plans to reduce the deficit despite these figures, it must introduce more measures to empower businesses to drive recovery.”

It would be a tragedy if we allowed the recent news to dent the vital confidence which allows business to invest in the future, because it is that investment which will drive the economy into more sustained growth.

Chris Haworth
Head of Commercial Division

Commercial, Cambridge
T: 0207 016 0729

Monday, 23 April 2012

Brazil: a tough nut we need to crack

Carter Jonas partner and joint head of its commercial agency and professional services in the eastern region, is not the only Britain who’s nuts about the Latin American country’s economic ascendancy.

Brazil puts the ‘B’ in the mnemonic BRIC as one of the darlings of the developing economies alongside Russia, India and China.

It’s a country top of mind of this country’s elite. Not only did the third in line to the British royal throne visit Brazil with a delegation in March but it also got a mention at the dispatch box in the House of Commons when the Chancellor of the Exchequer delivered his Budget statement.

It’s no wonder. March saw this Latin American nation overtake us in becoming the sixth-biggest economy in the world - growing by 2.7 per cent last year whereas UK growth was 0.8 per cent.

In such a vast country of topographical contrast, Brazil’s economic boom is down to high food and oil prices. It’s now the world’s ninth largest oil producer and its government aims for a top five ranking.

The UK is Brazil’s fourth largest foreign investor and the George Osborne was clear in his Budget speech in saying we’re looking to create a climate for export finance which will support our smaller firms in such new markets as Brazil. He also - in contrast to previous default positions of western states of old - was pointed about not wanting ‘protectionist rhetoric’ which, in the past, would have seen a regime of tariffs and heavy protection of currencies in challenging economic times.

Much has been said of the growing gap between rich and poor in our country, with predictions that austerity measures will see this gap increase. With a growing economy, Brazil has seen a decline in absolute and relative poverty in the past ten years, during which time the poorest half of a total population of circa 190 million saw incomes grow by up to 60 per cent.

The source of that statistic tells its own story. It’s Brazil’s Getulio Vargas Foundation which some in the foreign policy field regard as one of the world’s top five policymaking think-tanks. It has links with partner educational institutions such as Harvard Law School, St Petersburg State University, London Business School and, closer to home in our region, Cranfield University.

HRH Prince Harry was in Brazil for the Rio de Janeiro launch of the GREAT campaign which is part of the Government’s drive to capitalise on the international spotlight we’re in this year in not only hosting the Olympic and Paralympic Games but it’s a year which sees the Queen’s Diamond Jubilee.

The GREAT initiative’s Rio launch was anchored around a £25 million campaign to encourage Brazilians to visit the UK. GREAT will see campaign launches in Mumbai and Shanghai too.

British brands on display at the launch included Bentley, Aston Martin, Burberry and Stella McCartney, who is both a brand and the fashion designer responsible for the Olympic wardrobes of Team GB.

Indeed, we pass on the Olympic baton from London in 2012 to Rio de Janeiro in 2016 and, in between, Brazil hosts the 2014 FIFA World Cup.

Even though Horse Guards Parade on Whitehall is the scene for the beach volleyball Olympic event, it’s a world away from Ipanema or Copacabana. But wouldn’t it be inspiring to think that, alongside some of the 2,000 plus tons of sand scattered across the London landmark for the event, some of that Brazilian economic fairydust might be mixed in so we can maximise the chance to shine that this summer will bring Team UK plc? .

Will Mooney MRICS

Commercial, Cambridge

Friday, 20 April 2012

Is buying a property as complicated as you think?

In recent times it has been difficult to escape from the general negativity surrounding the housing market whether it is a newspaper, television or radio report discussing various factors from economic uncertainty to limited finance options. There aren’t too many stories around that offer buyers and first time buyers much confidence in the current market. Through recounting my recent house-buying experience, i hope that i can offer a more positive insight.    

My family, like many others decided post Christmas that a house move was now essential. We had been putting it off for some time but the need for more space was becoming critical. Having identified the most suitable property, we submitted an offer on the 21st February and signalled our intention to complete by the 23rd March to take advantage of the first time buyer stamp duty relief scheme. We were able to exchange contracts on 13th March and we successfully completed on the 23rd.

Within those three weeks, between the offer being submitted and contracts being exchanged we had to apply for mortgage which was to be 85% of the value. Carter Jonas do have a Financial Services arm or an affiliated company so i received no specialist treatment as some may think, I merely selected a broker who came highly recommended, explained the criteria and let him advise me accordingly. The process couldn’t have been smoother; the valuation was booked in quickly, the report emailed to the lender the same day as the valuation and the mortgage offer followed 48 hours later. Furthermore I received a text update from the lender at every step.

I am not naive enough to believe that every transaction can be as straight forward as this but there is some specific advice that i believe that will benefit all buyers to help iron out any potential problems.

1. Carry out proper research, not just on the properties that you are looking at but the affordability. Research the amount of money that you are able to borrow prior to viewing properties so that once you decide to move on one you can with confidence and you’ll better know your budget and negotiating margins as a result.

2. Select a good broker and solicitor; they will save you time and money in the long run. My broker researched not only the lenders that i could go to but also the backlog of paperwork of each to ascertain who was able to perform within the timescales and the difference in the rates only amounted to a couple of pounds a month. Cheap solicitors commonly found on price comparison sites will cause you more problems and stress and eventually more money than a local, knowledgeable solicitor with experience. Pay a little more upfront and have the security that matters will be dealt with swiftly, professionally and that protect your best interests.

3.Finally, commit to the purchase. I found it strange sat with my solicitor as she told me that a large percentage of clients use the signing of the contract meeting as a way to try and re-negotiate or specifically look for a problem as justification for pulling out of the purchase. If you are unsure at the outset don’t proceed, you will save yourself and others time and money and when the right property comes along you will be certain and once it does, commit to buying, look for reasons to buy not for reasons why not too.

What this whole experience has taught me and what i am keen to share is that many of the perceived problems with buying a property currently seemed to be manufactured. Yes i appreciate not everyone has had or will have the same experience as me, however if you approach the purchase from the right angle, do your research, take time to find the right people to work with and if you are happy then buying a property can be very a very straightforward and stress-free process.

Patrick Brady

Residential, Bath