BUSINESS REVIEW – June 2019

Spotlight on issues affecting business

REFORMS PROMISE FIRMS GREATER PROTECTION

A consultation has been launched on government proposals to enhance the role of Companies House, increase the transparency of UK corporate entities and help combat economic crime.

The proposed new measures are part of a substantial package of reforms to Companies House, designed to tackle misuse of its register. A clear aim of the reforms is to increase the transparency of company ownership and management, while providing business owners with greater protection from fraud.

Specific proposals include: a robust identity check for company directors and people with significant control; a cap on the number of directorships individuals can hold; enhanced systems to protect personal information held on the register; and the establishment of effective links between records held by Companies House and other government bodies.

Companies House Chief Executive Louise Smyth commented: “This package of reforms represents a significant milestone for Companies House as they will enable us to play a greater part in tackling economic crime, protecting directors from identity theft and fraud, and improving the accuracy of the register.

One group that the government is particularly keen to hear from is company directors and officers of other corporate entities. The consultation period closes on 5 August 2019.

MARKETING LOW PRIORITY FOR MANY SMALL FIRMS

A new survey has revealed that almost six out of ten small businesses spend less than five hours per week on marketing, with stress being a major contributing factor restricting the amount of time business owners devote to marketing.

The report suggests the complexity of today’s small business environment is making marketing much more difficult. Indeed, with a bewildering range of marketing options available to businesses, it can be a stressful environment for owners who lack the resources to take advantage of these opportunities.

Conducted by OutboundEngine, the research found that a lack of finances (29%), time (22%) and marketing know-how (14%) were the factors most commonly cited by business owners as major hurdles in delivering an effective marketing strategy. While 58% of businesses spend under five hours per week on marketing according to the survey, 22% spend five to ten hours, and only 4% spend more than 20 hours each week.

However, the survey did highlight a clear correlation between spending more time on marketing and achieving business growth: more than 79% of respondents, who spent five to ten hours per week on marketing, experienced growth in 2018, compared to just 52% of those who spent less than five hours.

EMPLOYEES RANK HAPPINESS ABOVE PAY

A recent survey has revealed that over half of all UK employees are more concerned about being happy at work than the level of their salary.

The ‘Happiness Poll’ conducted by Wrike, surveyed 4,000 employees across the UK, France, Germany and the US, questioning respondents on issues relating to culture, pay and collaboration. It sought to identify what makes people happy at work and how that impacts on their productivity.

In the UK specifically, the findings suggest that levels of happiness are generally relatively high, although it was found that ‘doing meaningful work’ and feeling connected to a purpose was the most critical factor in terms of employee happiness, ranking even higher than pay. In addition, more than half of all UK respondents said they had taken a pay cut in order to accept a job that made them happier.

The research also corroborated other studies that have found a strong link between happiness and productivity, with this particular survey suggesting that 91% of happy employees felt they were ‘very productive’ at work. These findings therefore stress the need for employers to create a happy working environment if their workforce is to be truly productive.

CRUNCH TIME FOR LATE PAYMENTS REFORM

The Federation of Small Businesses (FSB) has urged Theresa May to use her final days in office to push through the late payments reforms package unveiled in the 2019 Spring Statement.

Chancellor Philip Hammond announced the package of measures designed to crack down on the scourge of late payments when delivering his Spring Statement on 13 March. The proposals will make the audit committee of every large business responsible for its payment practices; require listed companies to report their payment performance in their annual report; and strengthen the Prompt Payment Code.

And FSB National Chairman Mike Cherry is now calling on the Prime Minister to ensure her Government delivers on the promises made to the small business community, and to do so in June. Mr Cherry commented:

As Theresa May’s time in office draws to a close, we are now at crunch time for the promised late payments package we have worked hard with the government to secure. We are fast running out of time for the outgoing administration to secure this as their lasting and transformational small business legacy. We cannot afford to have these crucial reforms lost at the last fence, as attention turns to the leadership contest, a new administration and the upcoming Brexit deadline.

HIGHER MINIMUM WAGE DEEMED AFFORDABLE

In its ninth annual report on low pay, think tank, the Resolution Foundation, has declared the National Minimum Wage ‘a 20-year policy success story’ and suggested the UK can afford ‘an even higher minimum wage’.

Following rate increases on 1 April 2019, the National Living Wage (NLW) for employees over the age of 25 rose to £8.21 per hour and for those aged 21 to 24 the rate increased to £7.70 per hour. The National Minimum Wage increased to £6.15 per hour for 18 to 20-year olds and to £4.35 per hour for employees aged 16 or 17. For apprentices, the minimum rate stands at £3.90 per hour.

The report highlights that since the introduction in 2016 of the higher NLW for over-25s, the percentage of employees in low pay (defined as those who are paid less than two-thirds of median hourly pay) has declined from 20.7% in 2015 to 17.1% in 2018. While this is clearly good news for employees, the think tank warns that the minimum wage is now approaching a crossroads and policy makers must decide ‘how fast to boost wages for the lowest earners while managing the inevitable risks to employment.’

RESIDENTIAL PROPERTY REVIEW MAY 2019

Our monthly residential market review provides background to recent developments in property markets, as well as to give an indication of how some key issues could impact in the future.

Calls for a compulsory ‘snagging retention’ on new builds

A recent survey by New Home Review has revealed that more than nine out of 10 new-build homes in the UK have defects and almost 40% of new builds fail to meet their original deadline.

Following on from this, the HomeOwners Alliance have launched a campaign aimed at clamping down on developers of new-build homes who leave buyers with an unacceptable list of ‘snags’ and defects, ranging from poor finishes and ineffective insulation, to dangerous structural and electrical problems.

The Homeowners Alliance campaign proposes introducing a snagging retention of at least 2.5%, whereby new-build homebuyers retain a percentage of the cost of their house, until all faults are fixed, only handing this over six months after moving into their new home.

Currently, snagging retentions are common practice for commercial clients but are not generally available to individual new home buyers.

Brexit delay sees an increase in property listings

According to the latest property supply index, there was a surge in owners listing their properties in the days after Brexit was delayed again, with listings up 0.8% in April, month on month.

Analysis by online estate agent, Housesimple, revealed that almost half (49%) of major UK towns and cities saw a rise in new properties coming onto the market in April compared to March.

The overall picture in London showed new listings down by 1.4% in April compared to March, but four in 10 boroughs actually saw supply levels rise, with the biggest rise occurring in Kensington and Chelsea, with listings up by 17.3%.

Regionally, the biggest month on month rise was in Stevenage at 69.4%, followed by a rise of 43.8% in Salford, while Chichester saw a rise of 33.8%.

Sam Mitchell, Housesimple Chief Executive Officer said: “This latest six month delay provides a wider window of opportunity for homeowners to market while interest rates remain competitive and attractive to buyers“.

Increase in average rents in the UK

Data from Landbay Rental Index shows the average rent paid for a property in the UK is now £1,218 per month, up by 0.96% in the 12 months to April 2019.

Excluding London, the average rent in the rest of the UK was £773 per month, with Scotland recording the highest annual growth at 1.78%; Edinburgh being Scotland’s rental hotspot with an annual increase of 5.44%.

John Goodall, CEO of Landbay said: “Landlords can rest assured that there is decent rental growth to be found across the UK, particularly if they look north of London“.

Stamp Duty receipts fall

Tax receipts from Stamp Duty on property sales fell by £1bn over the last tax year, to a total of £11.9bn according to latest figures from HMRC.

However, Capital Gains Tax, which is payable when buy-to-let homes are sold, rose to £9.2bn, up from £7.8bn a year earlier.

The decline in Stamp Duty has been blamed on a decline in buy-to-let purchases and a slowdown in the higher end of the property market, in addition to the majority of first-time buyers having been removed from the tax.