Colin Sanders shares his thoughts on the pandemic and how we might have been here before

As the U.K. learns to cope with the impact of Covid-19, Colin Sanders - CEO of bridging lender Tuscan Capital - examines some previous examples of sudden shocks to the system and how we might begin to recover from this one.

“Devastating”. “Unprecedented”. “Challenging”. All terms now familiar as we adjust to a ‘new normal’. But is it really so, and have we not been here before?

In the winters of 1968-69 and 1969-70, Britain was hit by a disease destined to be called Hong Kong Flu. Exhibiting many similarities to our present experience, it originated in the Far East and swept through a populace largely unprepared and relatively defenceless.

80,000 Britons lost their lives. But life continued pretty much as normal when compared to the current coronavirus outbreak, and markets soon recovered.

In the late 1980s, the property market boomed following a sudden programme of (in retrospect) ill-advised stimulus packages. The result was an almost-equally sudden and severe collapse followed by recession.

But again, markets recovered and mortgage lending enjoyed not just a new boom but underwent a transformation through new product design and innovation. For better or worse, this included the genesis of ‘specialist lending’.

On a date few will forget, terrorist attacks in the USA in 2001 rocked the world. Passenger air travel disappeared overnight and markets went into freefall. For a time it was difficult to see a way out of the crisis.

But the world adjusted. The new normal included infringements on civil liberties unthinkable only a few months previously; and markets rallied to a point many considered improbable.

Less dramatically, 2004 introduced a new regime of mortgage regulation. Vast amounts of energy and treasure were devoted to its implementation. Some prophesied the demise of swathes of lenders; others that the eligible customer base would shrink drastically. Neither happened.

And then came 2008-9. The Big Daddy (until now) of market shocks. Capital markets collapsed and some of the biggest corporate behemoths ever to have existed faced wipeout - the business equivalent of dinosaur extinction.

Damage to the U.K. lending market was considerable. Few firms survived unscathed and many failed even to survive. Transactions collapsed and funding evaporated. But what followed was a gradual market recovery. Confidence returned and a new generation of lenders emerged to challenge the established system. Bridgers were at their forefront.

Markets, given room, respond to events. Whatever the cause and effect, financial markets generally remain resilient and open to innovation. They will again once conditions improve.

At Tuscan Capital, we have continued to lend throughout the current crisis. This has been made possible by a combination of factors:

  • flexible support from funders;
  • the forbearance of brokers; and
  • an ability to work remotely.

But if I were asked to name one change that would make a significant difference it would be to allow physical property valuations to resume - in a safe way, of course.

Technology can only do so much and AVMs are an unsatisfactory solution for many. Restoring tried-and-tested inspections would get the market moving while preserving risk integrity.

I do not underestimate the seriousness of our present position. But shocks are part of life. It’s how we respond that determines their final outcome.

NB: This article first appeared in the June 2020 issue of ‘Business MoneyFacts Magazine’. For further information, please visit: 


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