Budget Special | Stamp Duty Extension | FS Apprenticeships

Marc, how are things, how are you?

Very well, thank you, Sean. Thanks for having me on. I am looking forward to it. I have done a few of these podcasts recently and I think they are really great and adding a lot of value. So, really happy to be here, how about you?

Really good, you know, with the home-schooling and everything going on, I am trying to make sure we can record these shows without the dogs barking, escaping, kids causing mayhem, anyone bursting in through the door. We have got 11 padlocks on the door to make sure this is safe. I have tried to use every single duvet and pillow to try and soundproof the room. So far so good. We have got this far without any bloopers occurring that make the show, and myself, go viral outside of the sector.

It is about adapting to this new digital world, is not it, I suppose. We are used to doing a lot of things face to face, and everything’s kind of migrated over to this, hasn’t it?

So, we are recording two days after the budget and I do not think there was anything surprising in there for the property sector as a result of the leaks that have come out in recent weeks.

There is plenty for us to get stuck into. So, March, obviously everyone was concerned about the stamp duty cliff edge and that understandably was worrying lawyers. It was worrying brokers, worrying clients.

It has now been extended into three phases.

So, we have got the nil rate extension of £500,000 up until the 30th of June. Then we have got the nil rate reduced to £250,000 up to the 30th of September. And then the traditional level will be reinstated on the 1st of October.

What are your initial thoughts on that, Marc, for clients, lenders, brokers, and estate agents?

I think it is a great result all round for clients. So many have been worried about whether they will be able to get that purchase or sale over the line before the deadline. And this just gives them extra hope that they can now finalise their first or dream purchase of their property. I have spoken with a few lenders since the budget and the positives for them is that a lot of hard work has gone into making sure that their brokers have been able to deliver these results and fulfil their clients’ dreams.

The danger of a cliff edge, I suppose, for lenders was that it might all amount to nothing in a lot of cases because without stamp duty and that holiday many buyers could not afford to finalise their purchase. The same goes for the brokers. The amount of blood, sweat, and tears that has gone into getting these mortgages over the line for the clients, could potentially go to waste if applications collapse at that deadline.

Brokers enjoy doing what they do because they are making clients’ dreams come true. For them, a cliff edge, that would feel more like their dreams are being shattered, I suppose.

Again, a similar story for estate agents, from another angle. Selling a home to a first-time buyer who can now eventually afford to buy their first home, or clients that may finally be able to move to their forever dream property, because it works on that end of the scale as well. It was all in danger of collapsing. A lot of chains could potentially crumble if deadline lifted at the end of March with no extension or structured return.

So, I suppose with the budget many more property buyers will be able to make these dreams a reality which I think is amazing. I think it is super important though that we manage clients’ expectations, so, when we get closer to this sort of tapered return, contact your clients now and get ahead of the curve.

That is my concern. Especially looking at it from a legal perspective and for conveyancing lawyers. I have got a lot of sympathies there because if something does not complete, the likelihood is, rightly or wrongly, and even in bespoke cases, maybe it is fair, maybe it is unfair, they are going to carry a lot of the can potentially.

Probably secondly, lenders, I guess if things do not complete by a certain deadline.

I imagine there will be a tonne of relief that this 31st March deadline is not there. But similar to what I said last year, and I think it’s still pertinent now, in the last 10 years of legal reform, the relevant governments have just had a terrible tendency for putting cliff edges in and not really caring and saying, “you need to sort this out”.

As you were just alluding to, that puts the pressure on far too many people, in my view, to communicate the same message to a client, because you have lenders, estate agents, potentially mortgage brokers, and lawyers. And the question then is, as you get nearer to that cliff edge, what is the message that is going to be delivered to those clients about stamp duty?

Because as far as they are concerned, they are coming into it maybe three months, is it four months? Is it two months?

At what point does the message come in that says we can do this, but there is now an increasing risk that you are going to miss the deadline, and therefore what happens if you miss the deadline? And for some people that might be, it does not really matter. It would be nice if we hit it, it does not matter if we do not. And that is fine. I think everyone can proceed there.

But when it is, if we miss the deadline, this is not going to happen. I think that is where the difficult conversations need to be had. Or everyone needs to go in at the start with their eyes wide open.

I am still hopeful, and maybe I have missed this, and apologies if I have, but I hope that they bring something in that is a trigger point to basically say if you have got to this stage by this date, you do not have to have completed by that deadline. You are safe, in essence. That would be common sense to me if they are going to do this.

There is a wider discussion as to whether they should be doing it or not, but now they have done it, I think that is the only fair way to do it. I imagine they are not going to. And everyone can breathe a sigh of relief now, but I have just got a bad feeling that in a few months’ time, the pressure of that is going to be immense.

I wanted to pick your brains, Marc, on the new mortgage guarantee for homebuyers who can only afford a 5% deposit. I have seen that obviously for first-time buyers that is amazing, but it has been entitled for home buyers. So, with the 5% deposit, they receive a guarantee on 95%/5% loan-to-value. And many of the leading lenders are going to start with this in April, and many more like Virgin Money and others are going to start May onwards, according to the chancellor, what are your thoughts on that?

This was a fantastic announcement and one that I was personally hoping for because my little sister can now buy her first property because of this scheme. Ultimately, she would not have been able to do that without this scheme. She was going to be waiting a lot longer. And that would be the same for a lot of people across the country, I suppose, not just my little sister, but there will be people who I suppose had a 5% deposit.

COVID hit, lenders pulled back their LTVs because of the element of risk. Therefore, they would no longer have enough of a deposit. So, it is almost, they are there, and then that has taken away from them. So, this is going to give them that opportunity in this short space of time to be able to do that. It is creating opportunities for clients, but it is also creating business for estate agents, brokers, and lenders, as well, not forgetting the positive impact on our economy.

Looking at your sister’s case, Marc, what do you think about potential price increases?

Do you think there is any risk that stamp duty extensions combined with 95%/5% LTV’s mean that whether it be the sellers themselves, estate agents, a combination of both, that prices rise and then it’s all well and good having the 5% deposit, but then can people meet the affordability criteria for higher prices and find that 5% deposit?

Absolutely. I think prices are going to go up. I think there is a lot of repair to the economy that the government have got in mind as well. And I think, at the moment, I suppose it depends on the house buyer, if they are looking to buy now, then it’s great.

If they are now starting to look for their property and this takes a while, there is a chance that prices will rise. And of course, then the affordability will kick in and they will not be able to buy that property. So, there is an element of that. But I suppose, for those in the interim who were looking to buy that property, it is a great thing. Moving on from that, I think there are going to be issues with affordability when prices do rise, Sean.

We’re a nation of homeowners, and this is not my view at all, but it is interesting, I have seen quite a few people in America talk about actually moving to more of a renting choice. And for many, they will argue in this country they do not have a choice, in terms of owning their own home or renting. And I completely get that.

But I find it interesting that in America of living with Mum and Dad or renting. You have got a lot of people going freelance, consultants, self-employed professionals and all this kind of thing. Many feel chained to their job because of the take-home salary being required for their current bills or struggle due to needing to save to find large deposits.

Is it a case that the big thing about owning homes is that actually, it’s really crucial to your retirement, boosting your pension, being able to downsize, release equity, helping your kids etc?

Do you think that it is as important in the UK as it always has been, or do you think the sort of conversations from America, especially if you are looking to leave employment to go self-employed or freelance, that there are benefits to being a bit more agile by renting?

I think it is certainly a case-by-case basis. I mean, for renters that do travel a lot, and move around the country, renting is probably a better option for them in the sense that they are not stationary, they are not in one place. So, it does give them that flexibility to move around and not commit to the purchase of a property.

I have always been a firm believer of owning your own property. And that is mainly because it is cheaper to pay off a mortgage. I am astounded by some of the costs of rental properties. So, if you are looking to stay in one place, not only is it much cheaper to pay off a mortgage than it is a rental. I mean, I am in the North, so mortgages are a lot cheaper for properties up here, but every payment on a mortgage is an investment as well.

If you are paying rent, you are not going to see that money again. So, you are not putting that money into equity of a property.

Unfortunately for a lot of people, renting is their only option. So, it is crucial that we still have a strong buy-to-let market, allowing more landlords to purchase property in order to let them out.

But personal property as you already mentioned, builds equity. So that can be used for retirement income, a pension pot. There is no equity to bank when downsizing in your later years if you are renting.

I agree, despite playing devil’s advocate earlier, my own view is that I think as long as homes are affordable, as long as there’s enough of them, within reason, and especially if you’ve got, your 90%/10%’s or your 95%/5% loan-to-values, I think that’s very attractive for people to buy their own house for all the reasons you’ve just cited.

But if in 10, 20 years’ time, and heaven forbid, but if there was a situation where there were very few homes available, prices were absolutely outrageous, and you were having to put down 20% – 30% deposits on homes, I could then potentially see the argument for that. Because if you’re talking about having to put down, I don’t know, something like 20, 30, 40, 50, 60,000 pounds on a property, maybe there are potentially better investments.

Especially if you might have a job that you absolutely hate and you’re only doing it because you wouldn’t get that wage anywhere else and the reason for doing that is because you have got a massive mortgage, and that is making you unhappy, then that would be another situation where I would be like, hmm, maybe actually downsizing and getting rid of some of the material aspects to actually be happy, it may be something to look at.

I think in the current climate, homeowning is definitely the way to go. And I think this will help many more people get on the property ladder, which is a great thing.

Marc, SimplyBiz, tell us about your time at SimplyBiz. What did your job involve day-to-day and how do you look back on your time there?

I was at SimplyBiz for two fantastic years, initially working with the member firms, supporting them with business development, keeping their business safe, running events and education campaigns to ensure that they are up to date with the lender’s propositions and any market changes.

I thoroughly enjoyed that. I was then lucky to be given a quick promotion, an opportunity to manage the lender and provider relationships, Sean, which was a great fit for me. I would like to think that I am creative, a sales professional, very likable, and trusting, many might say differently, but that has always helped me when managing corporate relationships.

So, it was a natural, a natural role for me and a natural move within the Mortgage Club. I was able to help both the lender and provider partners gain exposure to members, offer education and insights to their solution.

My role was generating more business for SimplyBiz partners, but also keeping our members updated on what lenders were doing, what criteria and lending appetites they had at that moment, and what was a fit for their clients.

One thing that always stood out for me, because I have worked on both sides of the fence, as there is a lot of broker firms that see high street lenders, they know exactly who they are, and what their criteria is.

They do a lot of business with those because most of what they put forward is kind of vanilla cases and normal sort of mortgages if you will. They also know the other end, which is the big specialist lenders, that they know who to place their adverse, your quirky property construction type cases.

There is a mass of lenders in between. So, for me, it was always trying to make sure that the brokers knew that they could get similar to high street rates with a little bit of extra flexibility with some of the building societies that sit just outside the high street.

It is really important to make sure that they were educated on all of those lenders in between because they actually might be a better fit for clients.

How do you think the lenders dealt with the past 12 months? There are two particular things I would like your views on.

One, remote working, lockdown changes, social distancing, etc.

Secondly, obviously, the stamp duty holiday, and the way lenders then had a rush of business and needed to turn applications around.

Firstly, how do you think lenders dealt with that generally? And secondly, were there any particular lenders that stood out to you that you thought did an amazing job in terms of whether it be their communication or their agility, and the way that they handled the situation?

I think lenders at that time were pushed into a bit of a corner. I dealt obviously quite closely with the lenders, with my role at SimplyBiz.

Things like the mortgage payment holidays. A lot of staff had to be moved into other departments to deal with the call volumes and processing for clients.

Lenders also had to furlough a lot of sales staff because of course they were so inundated with the mortgage payment holidays, and they could not afford to chase more business.

The pause on valuations meant some lenders were hit hardest depending on, the pause on valuation. I suppose it meant that some lenders had to withdraw from the market entirely.

Others had to adapt and utilise desktop valuations when we could not actually go out and physically value a property. That caused a lot of issues. I think some of the specialist lenders were hit pretty hard depending on who they had for securitization. Some had to pull out of lending altogether, whereas one or two had to withdraw their residential range in entirety because of that.

Turnaround times and loan-to-values took a huge hit due to desktop valuations. Criteria changed on a daily basis. So that was so difficult for brokers to try and keep up with and keep track of these changes. Lenders were also at times difficult to get hold of. Some were not clear enough on their SLAs and time-to-offer or completion. So that was a real pain point for brokers when I was at SimplyBiz as well.

Were there any lenders that stood out as doing a great job to communicate, be agile, and react to ever-changing circumstances?

I suppose there’s a couple that spring to mind on the spot, but I am sure there are many, more that did a good job of trying to react.

The likes of Accord came in with the higher loan-to-values probably quicker than a lot of others. So that was a great thing for both clients and brokers to be able to offer higher LTVs.

I think Skipton Building Society were phenomenal in their adapting to change and technology to try and smooth the process over, and the turnaround times for getting things through.

There were many lenders that really pulled out all the stops. There were many that potentially could have done more, but obviously, I will not go into too many names. But those are two that stood out in two slightly different ways of adapting very well.

FS Apprenticeships. You left SimplyBiz and decided to set up FS Apprenticeships. What gave you the idea to set it up?

So, this is an easy one for me and a story that I do love to tell.

Working with and supporting financial advisers over quite a long career in financial services, the growing concern more recently for me was the lack of online digital presence, as the world became much more digital. It was always said that online is now the new high street and there were too many businesses, in my opinion, that did not have a shop window.

So, I began to research solutions for firms that did not know where to start when it came to marketing or did not have any internal knowledge at all, especially digital marketing and social media. These are two areas where there really were improvements that needed to be made across intermediaries.

So, I came across digital and content marketing apprenticeships. Now, even I thought apprenticeships were for electricians or mechanics, you know, I thought they were very trade-focused.

But I found that they did content marketing and digital marketing apprenticeships. There is a full suite of marketing apprenticeships.

Knowing that there was funding available and business owners, cannot be spending too much time on content creation and doing that kind of online digital marketing, where they have got so much else to do.

I just thought this is a fantastic solution for them and I decided to run with it. Before you know it I had hired marketing assessors, so marketing professionals who are a tutor and trainer and assessor for apprenticeships, and I had sat them down and run some training with them on financial services to make them aware of who, say, a mortgage broker’s target audience would be, running through what the businesses look like, and giving them a real insight so they can tailor that learning to mortgage brokers or any firms within financial services.

I reached out to some of the firms that I have dealt with over the years, and so far, they have opened their arms to the opportunity.  The feedback has been that it is a fantastic solution for us, with a limited budget.

The other reason for starting this business was getting young people into the industry that do not have advising qualifications. It might be they are real marketers, they want to be marketers, they enjoy marketing. They know of course financial services is crying out for marketing professionals, therefore, why couldn’t that be an “in” to the industry? That was one for me.

Leaving SimplyBiz in a pandemic to set up on your own. Tell us about that journey. I am guessing it is scary, crazy, time-consuming, all three?!?!

Yes! It was very mixed emotions for me, Sean, I am not going to lie. I was doing something that I really enjoyed with a team that I fit into extremely well. They all became friends, and I will keep in contact with them forever. I learned a lot from them. I was giving up stability and a guaranteed salary and walking out into the land of owning my own business, which was scary to say the least. But that was mixed with excitement, pride, hunger to go off and make my own venture a success.

How do FS Apprenticeships work? I assume you have got your smaller operations, self-employed professionals, who I assume would look at this as either 1) as a time-saving support partner, if you like, or 2) someone to fill a knowledge gap void potentially.  

They might not feel comfortable doing stuff in the digital space.

But alternatively, you could have bigger businesses that do have internal resources, internal teams, who may create the blogs, do the videos, arrange their webinars, do various things in terms of marketing online.

Are you able to work with everyone? Is it a particular niche that you are looking to work with?

Yes, absolutely, the niche that I was looking to offer the solution to initially was more the SMEs that did not have a marketing strategy, or they are outsourcing to a third-party digital agency or marketing agency.

They could have someone with internal knowledge that could own that relationship with that marketing agency.

That is the initial niche area that I am looking at, starting with those brokers that have not got any marketing at all, they might dip their foot in, but are not really making the most of it, or they just have not got the internal resources to do it.

Moving forwards, I suppose, for your larger businesses, it could be a case that they have got a couple of people and they are looking for extra people to come into their business as marketing apprentices, as an extra resource that can actually grow and go through their development with a bigger firm.

How does the government funding work? What are the costs involved in this? What would people be looking at as an outlay? Is there a lot of administration that is potentially involved in them in terms of dealing with this government funding? What is it like in terms of costs and any hidden resources of running this?

Another great reason for using the solution is that the qualifications are funded up to a hundred percent.

So, when I say, “up to,” typically, if you are upskilling a current staff member who is over 18, it would be funded to 95%. That would mean that the employer would need to pay 5% of the qualification. So that would be a maximum of £600, depending on the qualification.

It is heavily government-funded, in order to develop people into being marketers or getting people back into work. So, from a cost perspective, this is one of the biggest USPs. You are using government support, government funding, to help you grow your business.

Plus we are the training provider, and can support the marketing area of the business, your digital and your social media marketing.

On top of the funding, you have also got the cash grants that are available at the moment.

If you are hiring in a new apprentice, in addition to that funding, you receive a cash grant for giving somebody the opportunity, and this is up to £3000, dependent on age.

That was until the budget when good old Rishi made it £3000 for any age group. Again, with that in mind, it is people that may have lost their job because of COVID, you can as an employer give them the opportunity to come in or get back into the industry, or start their career in financial services.

The cash grants for 16- to 18-year-olds are now up to £4,000. If you are looking at it from a business perspective, what does this cost?

It is a very minimal cost to actually get somebody onboard or to put a current staff member onto an apprenticeship in marketing and upskill.

You will get a cash grant for that as well, which can go towards wages of bringing somebody in, or it can go towards, obviously, the platforms that they may need to use and utilise whilst creating content, whatever they want to use that for.

It is given to them by the government really to support them whilst they are supporting other people getting back into work or starting their career with your business.

Playing devil’s advocate. Let’s say I have got lots of introducers, then there are all these amazing new 95%/5% loan-to-value guarantees from the government, stamp duty holiday extended, I am really busy whether I’m doing anything on social media or not.

How would you deal with people responding saying, “Why would I dedicate any time to this? Why would I dedicate any funds to this? Why would I potentially look at doing this, when I have got all this going on, really busy, things are flying, the market looks like it’s going to be really strong for the rest of this year, by the looks of it. Why would I be interested in FS Apprenticeships?”

There are a number of reasons, but I’ll pick on one or two as primaries.

One is you are currently doing well being too busy. But what happens when your competitor starts to ramp up their online presence and brand awareness? Then further down the line, when you are out of sight, because, you have not been creating content, you have not been raising your brand awareness, and building a brand in that time, and your target audience, start to use your competitors because they have invested in content marketing, they have invested in their brand.

They have been, over the course of a few months, raising brand awareness, letting people know who they are, and their core values. Gradually you will start to lose those customers that are with you now. Marketing is not something that works overnight. It is all about building a brand, which can take time. By not making this a priority now, it will affect your business in the future. I can guarantee that a business’s competitors are looking at bolstering their digital marketing now, and you cannot afford not to now when we are well into the innovation of a new digital world.

You cannot afford to not be seen by your target audience, or be trusted by your target audience, or them know your brand, and know who you are and the solution you offer.

There is no great cost to using this solution. The extra revenue your apprentice brings in by creating content and building on that lead generation will more than cover the cost of the hire if you are bringing somebody in.

Plus we (FS Apprenticeships) will take care of all of the training. So, all you need to do as an employer is to make sure that they are spending time learning in order to complete their programme.

If I were to summarise, why in that situation would you use FS Apprenticeships?

It is that all the training is done by FS Apprenticeship and most of the cost is covered by the funding.

The marketing of your business will improve and generate more business as well as retain your current clients. You will have more time to concentrate on the further growth of your business and improve processes within the business.

You can learn more about FS Apprenticeships and how they provide marketing apprentices with training, upskill training for existing staff, with government funding up to 100% here: https://fsapprenticeships.co.uk/