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June Co-Funder Newsletter, 2020 – Andrew Whelan

Dear clients, friends and colleagues

I hope that you and your families are well as we start the slow move out of lockdown across all our offices.


Though Sancus has been lending throughout the past few months, as conditions ease and the economy begins to open up, we are keen to support entrepreneurs, developers and other businesses to move forward, taking advantage of new opportunities for expansion and diversification.

Co-funding with Sancus is a great opportunity for individuals and institutions to have a direct and positive impact on supporting local businesses and communities and supporting the larger national economy as it gets back on its feet following the haze of the last few months.

To date this year, Sancus has been repaid £43m of loans and has written over £17m in funding to businesses and individuals, several of these loans have been completed during the lockdown period.

Returns and economy

We do not yet fully understand the full economic impact of COVID-19 on the economy, though we do know that it shall not be an easy journey to recovery or even the full extent of the recession (or indeed depression).

However, as with any recession, skilful adaptors and disrupters will emerge stronger1 and as Sancus was created following new market opportunities post the 2008 recession, I feel that we are well placed to move forward.

The Bank of England has cut interest rates, bond prices and yields have tumbled and the UK government issued negative yielding bonds for the first time ever in May2, amid anxiety about the economic impact of the pandemic.

Interest rate cuts, low bond yields and erratic movements in global stock markets make the Sancus offer of a range of risk adjusted asset backed funding opportunities an attractive option for the deployment of Co-Funder’s capital at this time of uncertainty.

News from the ground in the UK

Richard Whitehouse, our sales lead in the UK (based in London) is in regular contact with property developers, brokers and borrowers, he reports the following observations:

  • We have good anecdotal evidence from our professional advisors that development sites are operating.  We have seen practically no serious interruption on sites we are funding, largely due to the proactive management of those sites by our experienced borrowers.  Most sites are behind plan, albeit not significantly so;
  • There has been a surge in residential property enquiries from home owners / buyers since the lockdown has eased3, although this is expected to decrease in the short term, the expectation for 2020 is an overall reduction in transaction volumes compared to 2019.  The surge does suggest that market fundamentals are sound and many agents are predicting a strong return to normal market conditions in 2021;
  • Approximately 60% of home movers are continuing with their move.  The other 40% do not intend to leave the market but have postponed their decision, ultimately many will (in my opinion) not proceed with their original property and many may well decide to postpone any decision to move for the longer term;
  • Current trends show an increase in demand for out of city properties with good outside private space.4
  • The UK furlough scheme has been extended until October, which has postponed fears of an immediate spike in unemployment.  Between the private and public sector approx. 42% of all people in paid work are now being paid by the government!
    • The scheme tapers in August and from then employers will have to meet 20% of the bill, this is likely to be the first test of the strength of the employment market, so the figures for unemployment benefits in September will be something to keep an eye on.
    • Unemployment levels will be a big driver to values and activity for the remainder of 2020, impacting the numbers of potential purchasers and for those still in employment, this may lead them to hold off on big decisions like buying their next property;
  • An even more uncomfortable but expected impact of the pandemic on the UK property market to consider is driven by “hatch/match/dispatch/divorce”, following the direct and indirect impact of the virus.

Property Market

The impact on the housing market of the pandemic are now being fed through reported data.

The number of mortgages approved for housing purchases in the UK in April plunged to 15,8485, a reduction of a third on pre-COVID predictions. The monthly HM Revenue & Customs estimate6 of residential property transactions in April was less than half of that in March as the UK Government’s housing restrictions to limit contagion took effect.

From 13 May these restrictions eased allowing market activity to slowly re-commence.

Future implications of the current situation on the Real Estate market

Savills’ recent survey7 makes interesting reading with three areas of particular interest:

Residential sector

The lockdown has highlighted the importance of outdoor space and technology (high-speed internet access) in the home-buying process, this combined with the expected increase in home working has shifted the requirements of home buyers. This includes more consideration given to homes with access to private outside space, areas for working stations and an increase in demand for out-of-town locations.

Office space

Although many businesses have been successful in implementing “working from home” policies throughout their organisations, it has also been apparent that offices are important for connection and corporate culture. There is an expected shift towards the hybrid office model with a combination of home working, local office hubs and a head office.

Hotel sector

This sector has been hit extremely hard over the lockdown period. In the longer term, demand will return, with some commentators forecasting performance to return to pre-COVID levels by 2022. However, this shall also be impacted by the expectation that personal international travel and business travel to decrease significantly.

We have always considered commercial property (including office space and retail) as a higher risk sector to lend to, therefore we are not exposed to the impact the pandemic may have in this area and the hotel sector is an area that we have sensibly avoided.

Default interest waiver

We have had a few applications from our Borrowers for extensions on loans to help them over the coming months, we have taken the decision to support such requests where the Borrower’s behaviour has been solid prior to the request being made.

In each case we liaise with all Co-Funders in the relevant loans to seek their agreement and I would like to thank you for your empathy in this regard.

Stress testing the portfolio

We continue to monitor our loans closely, focussing on Borrower’s LTVs, taking discounts on the valuation of security and projecting forward any delays and consequent impact on accrued interest on roll-up loans.

In Summary

As a Group we are all now easing out of lockdown albeit at different rates depending on government guidelines. In the Jersey office we have had an office shift rota over the last few weeks and we are looking at most of the team being back fully in the next couple of weeks.

We have a healthy loan pipeline though lining up all parties through the process with their respective lawyers, valuers and third party providers is a slower process currently though we expect this to start speeding up.

The Sancus Team are always happy to talk and answer any queries you may have, please email your relationship manager in the first instance, here are our staff contact details.

Please keep safe

Andrew Whelan,
CEO, The Sancus Group

T 01534 708900


1 Financial Times – “Are we heading into another Depression?”

Markets Insider – “UK sells negative-yield bonds for the first time”

3 City AM – “House buyer demand surges after government lifts property market restrictions”

Knight Frank – “Residential Market Outlook Week Beginning 1 June 2020”

5 Trading Economics – “United Kingdom Mortgage Approvals”

HM Revenue and Customs – “UK  Property Transactions Statistics”

7 Savills – “Impacts – The Future of Global Real estates”

All news

Get in touch

Our Team of experts are keen to talk to you about your property finance requirements or funding with Sancus.

Contact us
Risk Warning: Don’t invest unless you’re prepared to lose money. This is a high-risk investment. You may not be able to access your money easily and are unlikely to be protected if something goes wrong. Take 2 mins to learn more.

Funding through Sancus is entirely at your own risk and the decision whether or not to is solely yours. The return on any funding opportunity is dependent on a number of factors and cannot be guaranteed. We cannot give assurances as to the creditworthiness of any borrowers, the collectability of any repayment, the quality and accuracy of any information obtained in respect of any funding opportunity or the enforceability of any security. In the event of a default, the timescales and outcome of any recovery is inherently uncertain. By using the platform, you knowingly accept the foregoing risks and you further accept that the role of Sancus is limited to providing an online marketplace for users and that information obtained from Sancus does not constitute legal, financial, tax or other advice or recommendation in relation to a funding opportunity, and you will conduct your own research and form your own opinion as to whether or not to participate in a funding opportunity. There is no recourse to the Financial Services Compensation Scheme, or other such government run compensation schemes. The UK platform is operated by Sancus Lending (UK) Limited, a UK incorporated company which is authorised and regulated by the Financial Conduct Authority, firm reference number 593992.