This week industry experts have urged the Bank of England to radically overhaul the regulations they have set in place for lending in the property sector. If such reforms were to materialise, they would likely have a significant impact on the future of property fund investment in the UK.
An industry expert who works as an advisor to property investment funds, Simon Morris has a wealth of experience in both the commercial and residential UK property sectors. As such, he sees the value in a recalibration of lending regulations as the industry progresses.
Vision for Real Estate Finance in the UK
The IPF-sponsored Vision for real estate finance in the UKpresents a host of reforms for the bank’s attention, including suggestions for a new database of property loans, as well as the introduction of a system of long term valuations for borrowers and lenders.
Specifically, the report detailed seven reforms that its authors believed were vital to the recalibration of property sector lending. One of the most essential would be the aforementioned database, which would feature a listing of real estate loans, which would contain information on loan-to-value ratios, margins and asset classes
The Voice of the Property Industry
Opinions over the report and the necessity of its implementation were expressed by key players at its launch. Rupert Clarke, Chairman of Milligan and former Hermes Chief Executive, was particularly vocal, arguing that these reforms were a “tremendous example of the industry standing up and being counted.”
The man who chaired the Group that authored the report, Nicholas Scarles, Finance Director at Grosvenor, was another insistent voice at the launch, urging both the Bank and the industry at large to act on the recommendations outlined in the report.
Scarles said: “It is really important that we do something with this work because we did not get together to just write a report.” He went on to say: “The idea was to make the market better, to protect the banks and to ensure that the real estate industry gets together to support the economy in the best possible way.”
Simon Morris comments that the findings of this panel of industry experts has clear merit moving forward for the national property market. Should such regulations be implemented, they could affect property investment funds, which trade in every sector asset class, throughout the UK.