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.

August/July Co-Funder Newsletter, 2020

Dear clients, friends and colleagues

I hope that you, your families, friends and colleagues are all well as we adjust to our “new normal”.


Although the first part of the year seems to have flown by in a haze, with slow days and fast months we now find ourselves in a very active market with our business development teams across all jurisdictions working hard on a large number of new loans and future Co-Funding opportunities across the Group.

The Economy

The world economy is seeing huge changes off the back of the fallout of the last few months, including the prospect of a depression, the World Bank forecasting a global contraction of 5.2% this year1, which would represent the deepest recession since the Second World War.

This, combined with increasing tensions between China and USA, the hope of the US economy bouncing back looking increasingly less like, the weakening of the dollar and the turmoil across airline and travel stocks makes for continued uncertainty and large volatility across all asset classes.

GOLD – The historic safe-haven in times of economic turmoil has risen to $1,943 (27/7/20), above its 2011 peak. Gold is seen as a hedge against inflation, currency fluctuations and exchange risk and with historically low yields on Treasuries and the continued effects of Coronavirus on the central banks. It has become once again a safe haven2  as at the end of the day you simply cannot print more gold bars!

NEGATIVE INTEREST RATES – Interest rates have been in steady decline over the last few years with a number of central banks, including the European Central Bank and the central banks of Denmark, Japan, Sweden and Switzerland experimenting with negative interest rates.3 There is talk of this being an option the Bank of England could consider if the economy fails post-pandemic or with another spate of lockdowns.4

UK Government Bond Yields – UK yields across a range of maturities have sunk to all-time lows in the 2020 with some shorter-dated borrowing costs even turning negative.5

Property, a real tangible asset, is looking like an attractive option!

Why Co-Fund with Sancus?

Amidst global economic uncertainty, erratic stock market activity and the government’s burgeoning post-COVID-19 stimulus package, finding an asset backed return in excess of 6% is an attractive option for those with monies to deploy.

The benefits of Co-Funding with Sancus are:

  • All loans are backed by assets and in most cases, personal guarantees;
  • All loans written are unanimously agreed by an experienced credit committee, including members with strong technical local knowledge in each jurisdiction. Each sitting credit committee has a combined experience of over 100 years;
  • Sancus participates in every loan alongside Co-Funders, ensuring our interests are aligned;
  • Sancus has a credit facility with Honeycomb Investment Trust (HIT) that works alongside our Co-Funding model. HIT is a listed company that specialises in investing in non-bank lending platforms and only partners with high quality originators;
  • You can choose the loans in which you wish to participate and create your own risk/return/jurisdiction “portfolio” of loans that suits your appetite and exposure with each loan “ring-fenced”;
  • You can support your community, helping individuals and companies to get back on their feet and move forward following an unforgettable start to 2020;
  • An approachable, multi-jurisdictional team that is very easy to deal with, values your business and enjoys what they do.

News from the ground in the UK

Richard Whitehouse, our UK sales lead reports on the UK economy:

  • Following Boris Johnson’s promise to “build, build, build” the UK government has now granted “automatic” permission to build new homes, schools, shops and offices6 under a radical shake-up of the planning laws;
  • Sadly a number of employers have now announced large scale redundancies as the furlough scheme unwinds, more than 20,000 job losses have been announced since mid-June, largely in aviation, hospitality and retail. Not to ignore the individual pain the job losses will cause, most of the redundant positions seem to be in low wage roles and the expectation is that these job losses will have minimal impact on the housing sector;
  • Rishi Sunak, the Chancellor of the Exchequer, recently announced a stamp duty holiday on the first £500,000 on a property purchase to support the housing sector. We are also expecting some significant changes to planning law in the Autumn designed to make it easier for developers to build new residential property. Virus or not there is a long term structural imbalance in the supply side of UK housing stock which continues to drive the market;
  • There are increasing trends towards a more recognisable lending landscape as the initial Covid hiatus begins to shrink in the rear view mirror. The mortgage market is functioning well and high street lenders have re-introduced 1st time buyer products and their higher LTV loans, only this week NatWest for example brought back their 85% LTV mortgage;
  • In the short term debt market Bridging lending has all but returned to normal with high levels of liquidity. Pricing and leverage are pretty much at pre-Covid levels;
  • Money has been less quick to return to the development finance space and we are seeing high levels of enquiry where we have been able to maintain co-funder returns but reduce the leveraging on loans, hopefully providing an improved risk adjusted return.

Property Market

Considering what we’ve all been through, Sancus is not the only one experiencing a healthy bounce back in property market activity and loan enquiries. Zoopla has announced that UK house prices rose to an annual growth rate of 2.7% in June7 and Foxton’s recently hailed a recovery in the UK property market.8

Unlike many of our competitors, Sancus continued to lend throughout the lockdown period, which is standing us in good stead as we move forward with developers and entrepreneurs knowing that we can be relied upon.

Default interest waiver

We have had a few applications from our Borrowers for extensions on loans to help them over the coming months and 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 the Co-Funders in the relevant loans to seek their agreement and I would like to thank you for your support and empathy in this regard.

Stress testing the portfolio

We continue to monitor and review our current loan exposure closely and any potential issues that may impact our security, value and the accrued interest on roll-up loans.

With new loans we focus on the Borrower’s LTVs, take discounts on the valuation of security and factor in any potential delays based on the current socio-economic situation and subsequent impact thereon.

In Summary

We do not see an early resolution to the current global disruption. However, we are focussed on what we can control and are taking a positive approach to ensuring that we continue to operate, albeit with a heightened level of risk, going forward. We continue to have a weekly Group video call across all jurisdictions and I have seen a few beards come and go over the last few months (including my own)!

I am pleased to say that staff morale is high and expectations of a buoyant, active second half of the year is already proving highly likely.

As always, we are always available 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 The World Bank “COVID-19 to Plunge Global Economy into Worst Recession since World War II”

2 Bloomberg “Gold Tops $1,900 for First Time Since 2011, Heads Toward Record”

3 International Monetary Fund “How Can Interest Rates be Negative”

4 Bloomberg “Bank of England Ponders Monumental Gamble”

5 Financial Times “UK long-term government bond yields sink below Japan’s”

6 Sky News “Automatic planning permission”

7 Property Wire “UK house prices rise in June”

8 Financial Times “Foxtons hails recovery in UK property market”

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.