Barclays UK: Talking real estate

Maintaining property momentum

Backing UK real estate

Tony Geary National Head of Business Development Barclays UK

Since the start of UK lockdown in March, the real estate sector has faced unprecedented challenges, from house sales delays to site closures to difficulty accessing building materials – and, more recently, getting the sector back to business after being given the green light from the government.

Through our network of BDMs, we work closely with brokers to develop tailored financial solutions for their residential, commercial and industrial real estate clients – and we’ve been there during the pandemic with a package of support including capital repayment holidays and restructuring of facilities. We’ve backed clients facing reduced income from myriad factors, including commercial tenants being unable to meet payments while trading is paused and residential tenants seeking rent reductions due to unemployment or furlough.

Ready to reopen

As the real estate market gathers momentum in a safe, socially distanced manner and we see resumption of property valuations and other related activities, an array of new challenges have presented themselves.

Clients’ cash flow during this period of uncertainty has diminished. While contracted sales have continued and many developers have started selling online, new sales have been impacted due to office closures – and there have been disparities in rent collection levels for property investors ranging from 25% to 95%. Some sectors which service hospitality, leisure and retail businesses have faced the largest challenges.

Building business resilience

Government-backed schemes such as the Coronavirus Business Interruption Loan Scheme (CBILS) and the Coronavirus Large Business Interruption Loan Scheme (CLBILS), as well as our existing bank loans, were just some of the ways Barclays had been there to support clients during such an immensely challenging time – and we continue to do so. As well as capital repayment holidays, we

New sales have been “ impacted due to office closures – and there have been disparities in rent collection levels for property investors ranging from 25% to 95%

also provided covenant waivers and amendments, a series of virtual events and an updated buy-to-let proposition for limited companies.

Lending for buy-to-let properties amounts to around £40 billion per year, but there has been a reduction in individual landlords buying properties due to the phased removal of tax for landlords on mortgage interest payments but I still believe there is plenty of opportunity within this segment. Last year, Barclays launched a new proposition to help landlords purchase up to three properties up to a value of £1 million through a limited company. Whilst this has been successful, we wanted to help more of your clients to invest and that is why we have now reduced the income level to £25,000 from £75,000 for this proposition.

By making this important change, we’re strengthening our real estate offering, opening it up to clients looking for investment opportunities and a stepping-stone into the real estate sector.

Future outlook

Whilst we remain positive about the outlook for UK real estate, we won’t be able to fully quantify the impact of the coronavirus until we get through the crisis. The length and scale of the pandemic will determine the long-term changes to the sector – some of which will hopefully be for the better.

Whatever the future holds, our experience of banking through historically challenging periods gives us the tools and knowledge to continue to support brokers, helping you and your clients to navigate this uncertain period. So far, our teams have supported 450 clients with capital repayment holidays with an approximate value of £300 million. But our BDMs offer much more than financial support. They’re always looking to support you with the latest insights, coupled with longstanding market knowledge across multiple sectors.

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West One Loan Ltd is authorised and regulated by the Financial Conduct Authority. Firm Reference Number: 510024. Certain types of loans are not regulated, for example loans for business purposes or certain buy-to-lets. West One Loan Ltd is registered with the Information Commissioners Office. Registration Number: Z2651210. West One Loan Ltd is registered in England and Wales. Company Number: 05385677. Registered Office Address: 3rd Floor, Premiere House, Elstree Way, Borehamwood, Hertfordshire, WD6 1JH.