Reece Mennie is the CEO of Hunter Jones, the UK’s fastest growing investment introducing firm.
Why the excitement about property bonds?
Buy-to-let has long been seen as a lucrative investment, but the market is no longer as viable as it once was despite mortgage rates being at rock bottom levels. Stalling house prices coupled with a tax crackdown, and extra stamp duty levied on landlords, is having a crippling effect on the whole market. But for many, bricks and mortar investment still appeals.
Consequently, more people are turning to property bonds as a convenient means to secure attractive returns on their hard-earned capital. Property bonds enable savvy investors to invest in the development of a property, without the hassle of owning it. Essentially, it is a loan to a property development company to partially fund a construction project.
Investors will be reassured that property bonds are a legally binding agreement to pay them a fixed rate of interest over a fixed period of time, as well as the return of their original investment. In short, they offer the best of both worlds: attractive fixed returns with the peace of mind that comes from the security of ‘bricks and mortar’.
Are property bonds for me?
One of the biggest benefits of investing in a property bond is that you do not have to deal with the hassle of managing a property portfolio. Neither do you have to concern yourself with day-to-day financial issues such as maintenance fees, insurance and tax. You can simply invest your money and receive your income returns, without worrying about the complexities of buying, selling and letting a property.
Unlike stocks and shares, property bonds offer investors a bit more piece of mind in that they are a more stable investment. They come with asset-backed security and are far less susceptible to the day-to-day fluctuations that can make the stock market so risky. Interest is paid as ‘income’ periodically or is compounded over the term of the loan and added to the maturity proceeds as ‘growth’.
It must be noted that, much like many other investments, once you have placed your money into a loan note, it cannot be redeemed before the agreed term. Also it is important that you invest your money with a reputable introducer, i.e. one that operates to FCA standards and requirements, as the industry itself is unregulated.
Whilst property bonds offer very attractive benefits, not all property developers – and therefore not all bonds – are the same. Finding the right investment opportunities requires expert knowledge, and can, therefore, be both difficult and time-consuming for those with little free time or expertise. This is where financial introducers are often of assistance. By evaluating, and conducting due diligence on, developer offered property bond opportunities, a range of high potential investments can be showcased to investors, with little effort on their part.
Investor eligibility is vital!
It is important to note that property bonds are not suitable for everyone. For example, Hunter Jones only markets to self-certified ‘High Net Worth Individuals’ and ‘Sophisticated Investors’.
- High Net Worth Individual
Defined in regulations made pursuant to the UK Financial Services and Markets Act 2000. Essentially, it is someone with a net income that exceeds £100,000 and/or has net assets that exceed £250,000. This does not include any pension fund assets they may have or their private residence.
- Sophisticated Investor
If an investor can satisfy one of the following criteria they can ‘self-certify’: they have been a member of a business angel organisation or had more than one investment in an unlisted company; they have worked in the private equity sector; they have been a director of a company with a turnover of £1 million or more.
So what next?
For eligible investors, property bonds are a great means to generate a passive income, given that they are secured against physical property assets and offer a regular high yield. That being said, you must always speak to a professional financial adviser before making a decision to invest in anything.
I always recommend one that is approved by the Financial Conduct Authority (FCA). If you have found an adviser you are thinking about using, check the FCA register to ensure your advisor is regulated and approved.
Remember, property bonds can generate some of the most impressive returns currently available, and at relatively low risk. However, it’s extremely important that investors take the time to source and research viable opportunities, which is where experienced, specialist Introducers can help.
THE TRIALS AND TRIBULATIONS OF TRADERS TRADING FROM HOME
Steve Haworth, CEO of TeleWare Group
Banks had hoped to keep their London trading floors open amid the worsening coronavirus pandemic, insisting traders were “key workers”. But trading floors were quickly cleared and employees sent to work from home in isolation.
Firms needed to quickly adapt to remote working. This meant recreating the carefully monitored environment of the trading floor at thousands of sites.
With major disruption across the entire sector, it seems the Financial Conduct Authority felt no other choice but to relax regulations on recording calls. But does this measure introduce more problems than it solves?
Why call recordings are regulated
Whilst regulations differ globally, authorities in the UK, US and Hong Kong have long required trading floor phone calls to be recorded for certain activities.
In the UK, the FCA demands financial institutions keep records of all trades and transactions related to certain types of business for at least six months. Recording calls and reporting trades are essential to the regulators’ ability to monitor the markets for abuse, such as insider trading. Requirements to record calls apply to companies that receive and execute client orders to buy or sell in the financial markets.
Each trading floor in a financial firm also has its own set of policies which staff must abide by. For instance, the trading floor manager must ensure that all trade-based calls are recorded and monitored. An often-used policy that still exists is to ban all mobile phones on the trading floor. To enforce this, mobile phones are often stored in lockers and traders are required to use turrets to host calls.
Beyond call recording, most traders and salespeople need to sit together on a monitored trading floor in order to meet regulatory rules. A range of compliance complexities under GDPR, MiFID II and Dodd Frank have meant working from home has simply not been an option for many traders.
The rush to relax regulations
Traders are now required to work from home – if they can. The FCA has said it accepts that some scenarios may emerge where recording calls may not be possible. Adding that it expects companies to “consider what steps they could take to mitigate outstanding risks if they are unable to comply with their obligations to record voice recordings.” If financial services companies are unable to record calls they are then expected to “come up with a plan to fix the problem”.
Yet, trading firms have enough problems to solve without having to decipher call recording requirements. Why should traders spend extra time updating the FCA and coming up with an alternative solution when one already exists?
A smart alternative
Smart solutions – such as mobile call recording which meet global regulations – have perhaps been overlooked as a way to maintain business continuity.
Mobile voice recording technology (MVR) is not new. It has existed since 2011 and includes secure and reliable voice and SMS recording, easy to use conferencing and robust, accessible voicemail. It has matured over the years and proven itself to be flexible and highly reliable.
Technology can keep traders trading from wherever they are. Ensuring they can operate effectively at home while remaining compliant.
STOP THE CONFUSION: HOW TO KNOW IF YOUR BUSINESS MAY BE INSURED AGAINST COVID-19
By Alex Balcombe, Partner at Harris Balcombe
The last few weeks has seen businesses in hospitality, tourism, retail, leisure and more forced to close their doors following the Government’s orders that they should close to prevent the spread of coronavirus.
While this is expected to flatten the curve and reduce the number of coronavirus cases, it will of course have an impact on businesses and employees alike. For small businesses especially, there are many concerns about how they can claim on their insurance to weigh the fall of this impact.
In response to calls to help struggling businesses, the Government has informed the public that companies who are facing turmoil will be able to claim on their business interruption insurance during this difficult time. For most, this is wrong.
The insurance industry has also been extremely vocal that there is no cover for any coronavirus-hit businesses during this tough financial period. This isn’t strictly true either.
How can businesses see through the mixed messaging and best secure their future and their livelihoods and reduce money worries? It’s an extremely stressful time for many companies, and confusion over whether or not they can be covered can only cause more unnecessary stress.
Since it’s a new disease, most businesses will not be covered for business interruption due to COVID-19. In fact, the vast majority of policies do not cover anything related to COVID-19.
That said – don’t rule out the idea that you may be covered. There is a chance that you will be covered against COVID-19, but not know it. This is a very small chance, but your current cover may already protect your business against the consequences of coronavirus, and the nationwide response to it – though those with this cover are unlikely to realise it.
How Could I Be Covered?
Not everyone has business interruption insurance, as it’s not a legal requirement. It is entirely up to the policy holder to weigh up the benefits of having it, and their ability to trade should a disaster happen.
To be considered for cover for COVID-19, there are two types of policy extensions to your business interruption cover that can potentially cover you for this situation:
Infectious Disease Extension
Many policies expressly state which diseases fall within the realm of being an infectious or notifiable disease. If this is the case, your policy will not provide cover. As it is a new disease, these policies will not have included COVID-19.
Other infectious disease extension policies will define the disease with reference to the actions of the government. Since the UK Government has named COVID-19 as a notifiable disease throughout the UK, it is possible that your business may fall into this definition, thus meaning you may be able to make a claim.
However, again, it’s not always that simple. Many policies require the disease to have been on your premises, while others specify a radius from your premises in order to qualify.
Denial of Access Extension (non-damage)
Denial of Access Extension (non-damage) policies may cover you if you’re prevented from accessing your property. This could be due to an event, or by the actions of a competent authority, which could cause your business interruption cover to engage.
If covered by this clause, there are often very subtle differences in wording in your policy. This could depend on the insurer or policy. You may well be covered, but it will depend on your particular circumstances, and the specific policy wording.
It’s clear that the Government needs to do more in ensuring there is clear messaging for businesses, and to help the insurance market look after policy holders. This is an unprecedented situation, and with many people looking to claim on their insurance, we’re already seeing major delays which could have a domino impact.
People throughout the world are understandably facing all kinds of worries because of the current pandemic. Our ways of living have changed, and many business owners will not have experienced a situation like this in their life times. If you own a business and are unsure about whether you can claim for business interruption, or are confused about ambiguous wording, get in touch with a loss assessor.
These claims are not simple, but loss assessors will be experts in business interruption insurance, and will specialise in large and complex claims. They will be able to help and guide you along the way, check your wording and work on your behalf to make sure you get everything you are entitled to.
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