Pawn industry gets a boost from the woes of City slickers

Timothy Barber
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THE old-fashioned interior of Suttons &amp; Robertsons isn&rsquo;t really the kind of place you&rsquo;d associate with cutting-edge modern art. Across the road from Victoria station, the venerable pawnbroking establishment &ndash; London&rsquo;s oldest &ndash; with its oak-lined, private pledge booths in which customers can exchange expensive items in return for a loan, harks back to an age before the gaudy sensationalism of Damien Hirst or Banksy.<br /><br />Yet works by both those artists, as well as pieces by Picasso and other modern masters, have recently made their ways through the doors. With the art market having tumbled in the recession, it seems some of those who waded into it at the top &ndash; it was in the middle of last year, for instance, that Banksy prices were rocketing from nowhere into six-figure territory &ndash; have suddenly seen themselves a bit light of pocket.&nbsp; <br /><br />Jim Tannahill, Suttons and Robertsons&rsquo; group director, says: &ldquo;The past 12 months has seen an enormous uplift in enquiries of loans against fine art and antiques, with many customers telling us they have tried to sell items but have failed to achieve a satisfactory price.&rdquo;<br /><br />While most of the economy languishes in the doldrums, it&rsquo;s been a heady year for the pawnbroking industry. With the recession applying financial pressures and mainstream lines of credit drying up, people have had to find other ways of raising money, while pawnbrokers have also been taking advantage of the surging price of gold. <br /><br />Yesterday high street pawnbroker H&amp;T announced that it is trading well ahead of expectations for the year, while rival Albemarle &amp; Bond said last month that its pre-tax profits had risen 42 per cent for the year to 30 June. Both have been setting up new shops and stalls for punters to cash in gold jewellery while prices are high, but volumes in the traditional pawnbroking businesses have been up too.<br /><br />Suttons &amp; Robertsons operates at the highest end of the market with average loans of &pound;2,000 (10 times the high street average), and business has been similarly fulsome from its rich but cash-strapped clientele. Seeing which way the wind has been blowing, in August the company opened a second premises in South Kensington &ndash; nearer to the doorsteps of its natural clientele &ndash; replacing fusty pledge booths with swish sofas and designer interiors. The idea is to attract younger customers with acquired bling rather than family heirlooms, and the borrowing average there has trebled to &pound;6,000.<br /><br />Nevertheless, Tannahill says the pawnbroking industry still labours under something of a stigma &ndash; after all, it&rsquo;s an industry that essentially depends upon the financial problems of its customers for business. But as he points out, it isn&rsquo;t out of selling on pawned items that brokers make money &ndash; the vast majority of customers repay within the six-month loan period and get their assets back. When customers do default, their item gets sent to auction, and if it sells for more than the loan plus interest, the difference is returned to the client.<br /><br /><strong>REDRAWING THE LINES</strong><br />&ldquo;People need a short term loan for all sorts of reasons such as holidays, cars, investment opportunities, even to pay the school fees,&rdquo; says Tannahill. He also believes City people use the service to cover themselves in advance of receiving their bonuses.<br /><br />Another company redrawing the lines of the pawnbroking business, and seeing the City as one of its main sources of business, is Borro, the UK&rsquo;s first online pawnbroker. It has flourished since opening for business last year, and the online nature of the business hasn&rsquo;t prevented it from operating near the top end of the market, with average loans of around &pound;1,000. As well as its stock in trade of jewellery and watches, it has made loans against cars including Aston Martins and Ferraris, as well as art by the likes of Henry Moore and, once again, Banksy. While its business is principally online, Borro has a City consultancy in Chancery Lane where clients can get items valued by its experts.&nbsp; <br /><br />&ldquo;60 per cent of our customers have never done this before,&rdquo; says Paul Aitken, Borro&rsquo;s managing director. &ldquo;Attitudes to pawnbroking are changing, and will carry on changing.&rdquo;