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The green fund with renewable flow of returns

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the green fund with renewable flow of returns

Income from savings and investments is in short supply as a result of widespread company dividend suspensions and low interest rates. But one fund valiantly battling against the income tide is GCP Infrastructure Investments.

Although it is due to trim its income payouts from next year, it will still be paying an attractive annual income in the order of 6 per cent.

This £1billion trust is managed by Philip Kent at investment house Gravis Capital and is listed on the London Stock Exchange.

More than 60 per cent of the trust's investment portfolio is in trendy renewable energy

More than 60 per cent of the trust's investment portfolio is in trendy renewable energy

More than 60 per cent of the trust’s investment portfolio is in trendy renewable energy

It delivers shareholders a stream of quarterly income by investing in a range of biggish infrastructure projects – everything from solar panels to wind energy farms and biomass plants.

The trust lends money to businesses directly rather than by taking an equity stake in them. It then earns an investment return in the form of regular interest payments on the loans it makes that are used to pay shareholders their dividends. Any repayments of loan capital are employed to fund additional investments.

It’s a ‘conservative’ modus operandi with an emphasis on income generation and capital preservation. But as the impending income shave indicates, it’s not without risk.

Although more than 60 per cent of its investment portfolio is in trendy renewable energy, it means the trust’s fortunes are dependent upon energy prices.

Any fall in prices can compromise the profitability of projects it has lent money to, occasionally resulting in the debt it has arranged having to be refinanced at a lower interest rate.

This is the case with a £25million loan it made to help finance a waste wood biomass plant in Widnes, near Liverpool, in 2014.

Although the plant, operated by Danish company Burmeister & Wain, is now fully operational and generating electricity from building and demolition waste, electricity prices are not as high as anticipated, resulting in a diminishing cash-flow from the plant.

This has led to GCP’s £25million loan being restructured at a lower interest rate – eight rather than 10 per cent per annum. It is a contributory factor behind next year’s reduction in quarterly income payments to shareholders, from 7.6 pence per share to 7 pence.

Kent says the trust, whose shares are held equally by private investors and institutions such as pension funds, is well diversified – across some 47 investments.

Two years ago, the trust acquired an £80m stake in the wind farm off the coast of Norfolk

Two years ago, the trust acquired an £80m stake in the wind farm off the coast of Norfolk

Two years ago, the trust acquired an £80m stake in the wind farm off the coast of Norfolk

It is also an occasional equity investor rather than lender. For example, two years ago, it acquired an £80million stake in the Race Bank wind farm off the coast of Norfolk, comprising 91 wind turbines. The income the project generates comes from a mix of Government subsidies and the power it supplies to the National Grid.

Kent, who is running the trust from home in Herne Hill, South-East London, hopes the Government’s promise to invest ‘record’ sums in infrastructure projects will not be deflected by the money it has had to spend on supporting the economy and workforce through the coronavirus pandemic.

‘The need for infrastructure spending has not gone away,’ says Kent. ‘We need to continue to build new schools, hospitals, leisure centres and transport links. The private sector has a role to play in this.’

The trust’s shares are currently priced at £1.15 and trade at a 10 per cent premium to the value of the fund’s underlying assets.

Over the past one, three and five years, it has outperformed the FTSE All-Share Index on a total return basis. Annual charges are 1.1 per cent and the Stock Exchange identification code is 136173J1.

Gravis Capital Management runs assets worth £2.5billion across a range of funds specialising in infrastructure, student accommodation, clean energy and property. 

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Banks refuse to mortgage flats over cladding fears

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banks refuse to mortgage flats over cladding fears

Homeowners stuck in flats they cannot sell due to a red-tape nightmare are now so desperate they are flogging their properties at enormous discounts.

Lenders have been refusing to offer mortgages on tens of thousands of homes after new safety rules were introduced in the wake of the Grenfell Tower fire.

But homeowners say they face bankruptcy if they cannot sell their properties, as many expect crippling bills for repair work and rising mortgage payments.

Lenders have been refusing to offer mortgages on tens of thousands of homes after new safety rules were introduced in the wake of the Grenfell Tower fire

Lenders have been refusing to offer mortgages on tens of thousands of homes after new safety rules were introduced in the wake of the Grenfell Tower fire

The fiasco means growing numbers are now turning to firms that pay cash for unwanted properties at cut prices, Money Mail can reveal.

Some owners have been left with no choice but to accept reductions of up to 40 per cent on their asking price.

While many cash-buying firms offer a legitimate service, the industry is unregulated, and experts say vulnerable sellers could be exploited. 

One trader was kicked out of a private Facebook group for cladding victims in Manchester after a member complained that he had been using it to drum up business.

The companies involved say they expect to make sizeable profits on the flats in future. But others say the properties are too risky even for them.

Kate Henderson, chief executive of the National Housing Federation, says: ‘It’s shocking that people feel forced to accept such low offers for their homes.

‘People will have put all of their life’s savings into buying these properties. Yet now, through no fault of their own, they’re losing all that. This is a desperately stressful situation for them.’

So desperate we’ll accept £100k less 

Jamie Nelson-Singer is selling his flat to a property firm at a 40 per cent discount to avoid bankruptcy.

The 38-year-old bought the two-bedroom flat in Eastbourne for £210,000, 15 years ago.

But earlier this year, he lost his job in aviation due to the pandemic and decided to move abroad with his girlfriend, 31-year-old Elizabeth Eaton.

Trapped: Jamie Nelson-Singer(pictured with girlfriend with his girlfriend Elizabeth Eaton) is selling his flat to a property firm at a 40 per cent discount to avoid bankruptcy

Trapped: Jamie Nelson-Singer(pictured with girlfriend with his girlfriend Elizabeth Eaton) is selling his flat to a property firm at a 40 per cent discount to avoid bankruptcy

Seeking a quick sale, he accepted an offer of £230,000, despite other flats in his building previously fetching £250,000. 

But the deal collapsed after the eight-storey building was found to have flammable cladding.

He then approached a firm who initially said they could buy his flat for £190,000 cash – but it, too, pulled out because of the risks involved.

Jamie considered selling at auction but says he is likely to accept an offer of £155,000 from the home-buying firm Good Move.

He says he is forking out around £8,500 a year in mortgage payments, building fees and other costs on the flat.

He can’t get a buy-to-let mortgage to rent it out and could face a crippling bill to remove the cladding.

Jamie says: ‘I’m not sure what I have done wrong. I worked hard, paid my taxes, only to have everything I paid into my property wiped out.’

Nima Ghasri, managing director of Good Move, says the firm has seen a ‘significant increase’ in inquiries from sellers like Jamie.

‘Our strategy has been to retain these properties and take a long-term view, factoring in any risks and costs to the purchase price,’ she adds.

However, she says the firm has already reached its limit and cannot buy more flats with cladding at this time due to unanticipated demand.  

New rules mean homeowners require an EWS1 form to prove their building is free of dangerous cladding, but there are fewer than 300 engineers qualified to carry out the survey on 1.5 million affected flats. 

Homeowners have been told they may have to wait up to ten years to get the form.

The Government has set aside £1.6 billion to help fund repair work, but MPs expect total costs to amount to £15 billion.

It means some leaseholders face bills of up to £115,000 each to make their homes safe. An estimated 30,000 sales have already collapsed due to the issue. 

MPs and campaigners are calling on the Government to pay for the work to be done, but earlier this week building safety minister Lord Greenhalgh said ‘some costs would fall on leaseholders’. 

Tommy Hughes, director of We Buy Property, says he has bought half a dozen flats with cladding issues at 60 to 70 per cent of market value over the past three months. 

He adds: ‘We hope to be able to make a 10 to 15 per cent profit on these properties somewhere down the line.’

The Government has been contacted for comment.

m.dilworth@dailymail.co.uk

There is just no end in sight to this nightmare 

Sharon and Edward Delahaye face a bill of £30,000 to replace dangerous cladding

Sharon and Edward Delahaye face a bill of £30,000 to replace dangerous cladding

Sharon Delahaye tried and failed to flog her flat for £125,000 at auction, despite it previously being valued at £165,000.

The finance manager says she faces a bill of £30,000 to replace dangerous cladding, which – with rising mortgage repayments – may mean she simply has to ‘hand the keys back’ to the lender.

Sharon, 47, bought the one-bedroom flat in Manchester for £127,000 in 2004 as an investment. 

In January 2018, she and husband, Edward, 50, decided to sell it to pay off the mortgage on their home in Llanelli, South Wales. 

They accepted an offer for £165,000, but the sale collapsed after the buyer could not get a mortgage due to unsafe cladding.

Sharon was then approached by a cash buyer on a Facebook group who said he could offer her £91,000 – which he dropped to £80,000 after he claimed the repair bill would be closer to £50,000, and that was rejected.

Sharon says: ‘We cannot sell, we cannot remortgage and there’s no end in sight for when this nightmare will be over.’

The cash buyer was removed from the Facebook group after Sharon complained.

 We need to re-think fire safety checks

Commentary by ERIC LEENDERS  

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It’s a sinking feeling when, after months of offers, counter offers and searches, a carefully constructed housing chain falls through.

Just recently for me, this was down to a flat further up the chain in a building that didn’t comply with new fire safety rules on cladding.

But in the case of fire safety, it’s important to remind ourselves why what seems like unnecessary red tape is necessary. 

Grenfell showed that building safety rules in this country needed updating and the Government has since introduced stricter standards.

As you would expect, mortgage lenders have been seeking assurances that buildings comply with these new rules.

This gives house buyers the confidence that their properties are safe. But lenders and valuers are not fire safety experts — which is why additional checks are needed.

The EWS1 process was meant to help borrowers buy safe homes, not to obstruct or frustrate them. 

However, updated guidance has stated that all multi-occupancy buildings should undergo an assessment, rather than just those over 18 metres.

This has put additional strain on the system and, compounded by the impact of Covid-19, left many homeowners unable to remortgage or sell their properties.

Lenders have since confirmed that anyone coming to the end of their current fixed-rate mortgage will be able to get the best available new product with their existing provider, regardless of whether they have had an EWS1 assessment. But, clearly, this is not a solution for everyone.

Government, lenders, home builders, surveyors, fire safety experts and other stakeholders must re-think the approach.

As a start, greater clarity is needed on which buildings can be deemed low-risk and therefore not in need of the EWS1 process. 

This would enable fire safety experts to focus on assessing those buildings most at risk.

The UK must also ensure cladding in at-risk buildings is swiftly identified and replaced. 

The sooner we can recognise the scale of the issue, the action required and the role that all can play to fix it, the sooner we can get the housing market moving again.

This post first appeared on dailymail.co.uk

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Covid-19 is forcing many older people to delay retirement

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covid 19 is forcing many older people to delay retirement

Hardship caused by the pandemic is forcing many older people to delay retirement, while also assisting younger generations with money and childcare, new research reveals.

One in five people coming up to retirement expect to carry on working because of Covid-19, and there is a marked increase in working parents dipping into pensions to help children in the past year.

‘Last year more than half of those still at work thought their lifestyle would improve when they retired. This year that number has halved,’ says Interactive Investor, of its latest retirement survey of 12,000 adults.

Looking ahead: A quarter of people still working voiced fears that investment losses suffered in the pandemic meant they would never be able to stop work

Looking ahead: A quarter of people still working voiced fears that investment losses suffered in the pandemic meant they would never be able to stop work

Looking ahead: A quarter of people still working voiced fears that investment losses suffered in the pandemic meant they would never be able to stop work

This found that 21 per cent of people aged 60-65 are putting off plans to stop work because coronavirus has affected their pension fund, and 19 per cent of 66 to 71-year-olds who are still employed also intend to hold onto their jobs.

Some 25 per cent of those postponing retirement expect to wait a further year to stop, 34 per cent an extra two years, 23 per cent three years, 5 per cent for four years and 14 per cent for five years or more.

A quarter voiced fears that investment losses they had suffered in the coronavirus pandemic meant they would never be able to retire. UK stock markets have bounced from their lows early this year, but not fully recovered since the outbreak.

Meanwhile, 51 per cent of retired parents have already helped their children buy property, split by 41 per cent who gifted the money and 10 per cent who made a loan.

(Source: Interactive Investor)

(Source: Interactive Investor)

(Source: Interactive Investor)

And 21 per cent of parents who are still working have already used at least some of their tax-free pension lump sum to help their children buy a home, compared with 14 per cent in last year’s survey.

House prices have experienced a mini-boom since the initial Covid-19 lockdown was lifted this year, defying forecasts that a pandemic recession would deliver a severe shock to the property market.

Meanwhile, lenders have pulled most deals aimed at buyers with small deposits, which is likely to put further pressure on parents to fund them.

II says: ‘The average house price has risen by 1,170 per cent in the past 40 years – from around £20,000 to over £234,000 today. 

‘Parents told us time and again how they had benefited from the house price boom but were now watching their children struggling to become homeowners.’

Its survey also found that 29 per cent of retired grandparents look after their grandchildren, up from 18 per cent in last year’s research.

Older parents who are still working expect to care for grandchildren too after retirement, with 36 per cent anticipating this compared with 20 per cent last year.

Some 44 per cent expect to do voluntary work in retirement versus 52 per cent last year, and 50 per cent see retirement as time to dedicate to themselves versus 55 per cent in the last survey.

(Source: Interactive Investor)

(Source: Interactive Investor)

(Source: Interactive Investor)

Other findings include:

– More than a third of Londoners plans to relocate on retirement, compared to a quarter of people overall

– Some 52 per cent of retirees have not made preparations to fund care costs, but are worried about it 

– Among divorcees, 57 per cent had not discussed pensions when negotiating a settlement. 

– Covid-19 has ‘sabotaged’ pension plans, and a majority of retirees say a stock market crisis is their number one worry.

Moira O’Neill, head of personal finance at II, says: ‘The Covid-19 pandemic has created uncertainty for everyone. With jobs in jeopardy and incomes slashed, many are turning to their parents for help – whether it’s for a cash bailout, support to get on the property ladder or childcare.

‘But the older generation is suffering too, with many having seen their savings rocked.

‘If the Bank of Mum and Dad was a regulated institution there would be urgent calls for a review of its liquidity and the unions would be raising the alarm about unpaid labour! Not surprisingly many older savers are feeling gloomy.’

TOP SIPPS FOR DIY PENSION INVESTORS

This post first appeared on dailymail.co.uk

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Jobs crisis will be worse than feared, says Bank of England official  

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jobs crisis will be worse than feared says bank of england official

A senior Bank of England official has warned Britain’s jobs crisis is likely to be worse than it feared after a surge in redundancies.

Gertjan Vlieghe struck a far more downbeat tone that the Bank’s chief economist Andy Haldane who has hailed Britain’s rapid economic recovery.

With just 11 days before the closure of the Government’s job retention scheme, Vlieghe said around 9 per cent of workers – roughly 2m people – remain furloughed.

Gertjan Vlieghe (pictured) struck a far more downbeat tone that the Bank¿s chief economist Andy Haldane who has repeatedly hailed Britain¿s rapid economic recovery

Gertjan Vlieghe (pictured) struck a far more downbeat tone that the Bank’s chief economist Andy Haldane who has repeatedly hailed Britain’s rapid economic recovery

Although many are likely to be rehired or find work, he is concerned by the sharp rise in redundancies, with vacancies at 60 per cent of the level they were this time last year. 

He added: ‘There is huge uncertainty, but in my view, the risks are skewed towards even larger losses, implying even more slack in the economy than our central projection.’

If the unemployment rate hits the Bank’s forecast of 7.5 per cent by the end of 2020, the total would soar from around 1.5m to 2.6m. 

Figures last week showed unemployment at a three-year high of 4.5 per cent between June and the end of August.

Many firms are warning that the Government’s tiered restrictions just as the job retention scheme is poised to close will them to lay off more staff.

Vlieghe, a Belgian-born economist on the Bank’s Monetary Policy Committee, which sets interest rates, said the economy was 9 per cent smaller in August than in February, before the crisis, adding: ‘We are currently, at best, at the trough of a normal to large recession’. 

With this in mind, he said the Bank is more likely than not to do more to stimulate the economy.

This post first appeared on dailymail.co.uk

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