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Rise in middle-class pawnshops: New clients in leafy suburbs are now using them to pay tax bills and school fees
Pawnshops used to be confined to seedy back alleys. But they’re rising up the social ladder in the cost-of-living crisis, with shops thriving in middle-class havens like Harrogate in North Yorkshire.
There’s even a pawn shop in the City of London for merchants whose bonuses have been disappointing. People pawn luxury goods from Rolex watches and diamonds to art and Rolls-Royce cars in exchange for quick cash. They even turn to pawnshops to help pay for school fees.
James Constantinou, the founder of Prestige Pawnbrokers, has opened a new store near Leadenhall Market in the city.
“Most people wouldn’t expect a pawnbroker to be there,” says Constantinou, who stars on the Posh Pawn TV show.
He has also settled in the affluent London suburb of Richmond and in the stock market town of Weybridge in Surrey.
Pawn stars: James Constantinou and colleagues in Channel 4’s Posh Pawn
Pawn shops – identified by three golden balls, a symbol of Sinterklaas, who rescued three girls from poverty by lending each a bag of gold so they could get married – allow people to offer items such as jewelry as collateral for loans. These often have interest rates in excess of 100 percent per annum but, crucially, do not require a credit check. The items are confiscated if the loan is not repaid – or people may sell their property instead of repaying the loan.
Two pawnshops, H&T and Ramsdens, are publicly traded and their shares have soared over the past year. Ramsdens is up 36 percent, while H&T is up 48 percent. Both reported thriving business in the run-up to Christmas.
People are turning to pawnbrokers as an alternative to regular banks and to payday loans, which have been suppressed by regulators.
H&T, with 267 stores and a market capitalization of £195 million, had a pledge book – the value of outstanding loans – of £99 million at the end of 2022, compared to £67 million in 2021.
Ramsdens, with more than 150 stores and a market value of £77 million, saw its loan book grow by more than 40 per cent to £8.6 million in the 12 months to the end of September alone – before the Christmas rush.
Still, industry insiders say they’re nowhere near the “peak pawn.”
Constantinou says consumers are desperate for short-term cash but banks won’t lend, adding: “Our phones are ringing the bell.” London’s oldest pawnbroker, Suttons & Robertsons, founded in 1770, saw a “great jump in business” in December, which continues this year, according to managing director Jim Tannahill.
In the pre-Christmas rush, more than half of new customers were first-time customers at pawnshops who used their loans for things like paying private school fees and tax claims due in January.
Ramsdens boss Peter Kenyon says a “very simple” business model without time-consuming credit checks appeals to people who need money quickly. More customers are flocking to his stores to pawn items like necklaces, rings, and watches “across the spectrum of society,” he says.
The industry is still controversial. Interest rates are high and the costs of H&T and Ramsdens, among others, are just under 120 percent per annum. The companies argue that this is still much less than payday borrowers.
“Many people will try to argue that pawnshops are taking advantage of the cost-of-living crisis,” says Kenyon. ‘But it offers the consumer an immediate solution and then time to tidy up.’