TBA Global

TBA’s latest news – 10th of October 2023

Metro Bank Agrees to Rescue Deal with Investors

After a weekend of negotiations, Metro Bank has successfully reached a rescue deal with investors to stabilise its balance sheet. On Sunday evening, the bank announced that it had secured £3.25 billion in funding, which includes £1.5 billion in new equity capital injection from shareholders and £600 million in debt refinancing.

This equity financing was led by Spaldy Investments, owned by Colombian billionaire Jaime Gilinski Bacal, Metro Bank’s largest shareholder, contributing £1.02 billion. His ownership stake will increase from 9% to 53%, making him the majority shareholder. Additionally, Metro Bank is also considering the sale of up to £3 billion in residential mortgages.


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Homeowners Choose “Marathon Mortgages” to Reduce Repayments

According to Experian’s data, one-quarter of young homeowners, those with new mortgages, have chosen repayment terms of 35 years or longer to reduce the monthly repayment burden. The analysis by this credit data company found that from January to March this year, among new homeowners aged 29 and under, 25% chose repayment terms of at least 35 years, compared to about 10% at the typical historical level in January 2020.

First-time buyers and movers are increasingly opting for so-called “marathon-style” mortgages, with some of these transactions having loan terms of up to 40 years, in an effort to reduce monthly repayments and bridge the gap between rising living costs and still-high property prices.

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Waitrose Negotiates Groceries Deal with Amazon

According to industry data from Kantar, Waitrose lost ground to discount stores Aldi and Lidl during the cost-of-living crisis, with its share of the UK grocery market falling from 5.1% in early 2020 to 4.6%.

In an effort to regain market share, Waitrose is in talks with Amazon, planning to sell groceries through the online marketplace to attract more shoppers. According to The Sunday Telegraph, Amazon and the upscale supermarket are discussing potential third-party transactions. In mid-September, Amazon reached a similar agreement with Iceland supermarkets, where Iceland launched its products on the Amazon website, offering thousands of items to Prime members, with Amazon fulfilling the orders from Iceland’s stores.

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Several Landlords Avoid Tax Up to £50 Million

The Real Estate Association has issued a warning, advising property owners against using tax avoidance schemes to reduce the tax burden resulting from rental income. This scheme may involve the use of hybrid partnership structures that violate tax regulations, potentially resulting in tax avoidance of up to £50 million, and has attracted hundreds of landlords seeking to mitigate their tax liabilities.

Less Tax 4 Landlords Ltd operates this scheme, which involves landlords forming a limited company to hold their properties and then transferring these properties to a Limited Liability Partnership (LLP). The LLP then allocates profits to its members, resulting in tax avoidance. The effect of this scheme is that landlords can circumvent the restrictions on mortgage interest deductions, increase the deductible amount of mortgage interest, reduce taxable profits in the real estate business, and lower the Capital Gains Tax (CGT) payable when selling properties.

As a result, landlords pay lower taxes because the transactions related to transferring properties to limited liability partnerships do not require upfront tax payments, and the base cost of the properties (the amount determined based on the market price at the time of sale for calculating Capital Gains Tax) is increased.

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Halifax Suggests House Prices May Continue to Decline Until Next Year

The UK’s largest mortgage lender has indicated that house price declines may continue into next year, although the rate of decline has slowed. Halifax Bank, part of the Lloyds Banking Group, reported that house prices had fallen by 4.7% compared to the same period last year as of September. Last month, prices fell by 0.4%, but the rate of decline was smaller than previously. The bank noted that high-interest rates and mortgage rates would continue to impact the market. Kim Kinnaird, Head of Halifax Mortgages, stated, “Homeowners are inevitably becoming more realistic about their asking prices, reflecting an increasing buyer’s market.” However, she also pointed out that interest rates would remain at elevated levels for longer than many people anticipated, which would suppress demand and “sustain the downward pressure on house prices into next year.”

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