Monthly Archives: May 2016

Weekly Round-up, 27th May, 2016.

Rent rise.

Rents are marching upwards at the fastest pace since last autumn, and have reached the highest levels seen so far this year, according to the latest Buy-to-Let Index from Reeds Rains. Average rents for homes to let across England & Wales have now reached £793 per month, as of April 2016.

On a month-on-month basis this represents an increase of 0.3% – or the fastest monthly rent rises since September 2015. This leaves rents 2.4% higher than at the same point last year – or an extra £19 every month for the average tenant.

A strong acceleration in market rents comes on the back of what was previously a relatively subdued month, when rents saw no change between February and March 2016.

The importance of Internet Access.

Despite one in five (21%) people admitting their household would not be financially secure for any length of time if it lost its main income through unexpected circumstances, many Brits continue to bury their head in the sand when it comes to having a financial backup plan.

Scottish Widows’ latest protection research reveals a quarter (25%) of Brits could only afford to pay household bills for a maximum of three months if they or their partner were unable to work due to long-term illness, and just over a quarter (26%) could only make a maximum of three monthly mortgage payments. A further fifth (18%) admit they aren’t sure how long they would be able to cope with their mortgage payments.

Eight in 10 (81%) Brits consider internet connection as essential and almost three quarters (72%) see a mobile phone as a necessity. By comparison, only 29% think it’s essential to provide financial security for dependents if they become critically ill and only 40% think it’s essential to provide security for dependents if they die. Thus apathy is illustrated in protection take-up rates, as only a third (32%) of people have life insurance, and just one in ten (9%) have taken out critical illness cover. Instead, more than a third (36%) admit they would resort to dipping into their savings if they found themselves in a position where they or their partner were unable to work.

What’s more, despite being acutely aware of their lack of financial provisions, 12% of people would cut back spending on life insurance if they had to make cuts to their outgoings, whilst one in seven (13%) would reduce spending on critical illness cover. In comparison, only 9% of people would cut back on internet access.

Feeling abandoned.

More than a third (36 per cent) of landlords in the UK have had property abandoned by tenants before, according to new figures from the National Landlords Association. Abandonment occurs when a tenant moves out of a property before the tenancy has ended, without informing their landlord. The issue can be costly as it often occurs when outstanding rent is owed. However, the tenant still has a legal right to return and take up residence at any time and it is a criminal offence for landlords to do anything to prevent the continuation of the tenancy. The only option for a landlord is to go through the legal process for regaining possession of an abandoned property which can take months.

While on average a third of landlords have had property abandoned before, more landlords in the North East of England have experienced the problem than anywhere else across the UK, with almost six in ten (58 per cent) having had a property abandoned. Just over half (51 per cent) of landlords in the North have also experienced the issue. At the other end of the scale, three in ten (31 per cent) landlords in the South West of England said they have had a property abandoned before – the lowest proportion across the UK – with a third (33 per cent) of London landlords having had to deal with the problem.

Seven is the magic number.

The Council of Mortgage Lenders (CML) has responded to the Government’s review of the feasibility of introducing a 7-day timescale for switching services across a range of sectors – utilities, communications, and financial services, potentially including mortgages. Specifically the CML has highlighted that needs to be the acknowledgement that there are some major differences in the mortgage market compared with other markets covered in the scope of the call for evidence.

For example there are specific regulatory requirements about the things that lenders need to do before they can agree and complete a remortgage (“switch”), and a valuation of the property is also a necessary component – in combination, these may be harder to complete to a tight timescale than the processes needed in some other sectors. The mortgage market has recently been reviewed by the FCA and will itself already be subject to a targeted competition study in the fourth quarter of this year, and there is a high degree of intermediation which helps consumers to remortgage, and remortgages accounted for 25% of total lending in the mortgage market in 2015.

The CML has highlighted that there is no evidence from the market that would suggest that the timescales to complete remortgages are seen as an obvious barrier to the incentive to do so.

Football is not just a game…

England would get knocked out in the quarter finals of Euro 2016 if the tournament was based on health statistics and not football matches won, a new study has found.

That would be a stage further than Northern Ireland and Wales, who would falter at the last 16 stage, according to research by Durham University. Switzerland, with a life expectancy for men of 81, would narrowly win the final if health figures were the criteria for success, concluded Clare Bambra, Professor of Public Health Geography and Director of the Centre for Health and Inequalities Research.

She ranked the male life expectancy of the teams that have qualified for Euro 2016, and after the Swiss and Iceland were tied, she found Switzerland sneaked through on a penalty shoot-out because of a higher life expectancy for women. The research aimed to show that governments across Europe should learn from each other and share best practice to narrow the differences in health scores. Men in Switzerland and Iceland are on average expected to live up to the age of 81.

England, with a male life expectancy of 79 years, would be winners of their group by beating Russia (63 years), Slovakia (72 years) and Wales (78 years), but losing to Iceland (81 years) in the quarter finals.

The scores also reveal a clear east-west gap with worse health in eastern European countries compared to those in the west. For example, in Switzerland, as winners of group A, baby boys are expected to live up to 81 years old whilst in Ukraine, who finish bottom of group C, it is just 66. Closer to home, Wales and Northern Ireland, with a male life expectancy of 78 years, would get as far as the final round of 16 but miss out on the quarter finals.

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Weekly Round-up, 24th May, 2016.

Lending strong.

The Council of Mortgage Lenders estimates that gross mortgage lending reached £18.5 billion in April. This is 29% lower than March’s lending total of £26.2 billion, but 16% higher than the £16 billion lent in April last year. This is the highest lending total for an April since 2008 (£25.3 billion).

The CML are predicting that as we move past the stamp duty change that came into effect at the start of April, they expect to see a quieter second quarter, as some transactions that were due to take place were brought forward to the first quarter of this year. This is likely to mean that over the next few months buy-to-let takes a back seat as lending is driven by first-time buyers, movers and remortgage customers. The market remains underpinned by strong fundamentals such as increasing wages and rising employment. But it is possible that the uncertainty around the upcoming EU referendum in June will weigh on activity in the upcoming months.

No Contact.

Spending on contactless cards has reached a record £1.5 billion in a month for the first time. Contactless payments totalled £1.508 billion in March, the latest data from The UK Cards Association shows. The milestone comes just four months after contactless spending hit £1 billion, in November 2015. The £0.5 billion mark came in May last year.

One in seven of all card transactions are now contactless, compared to one in 16 a year ago. There were a total of 179.6 million contactless purchases in March, with 67 made every second. On the high street, one in six card purchases is now contactless. Monthly contactless spending has more than trebled in the past year, up from £431.1 million in March 2015. There are a total of 86.5 million contactless cards in circulation in the UK and overall, total payment card spending was £51.9 billion in March, with 1.18 billion transactions in the month.

Bank changes.

In its provisional proposal published this week, the Competition and Markets Authority (CMA) has outlined a wide-ranging package of proposals to tackle the issues hindering competition in personal current accounts (PCA) and in banking services for small and medium-sized enterprises (SMEs). At present, it is hard for bank customers to work out if they are getting good value. Bank charges are complicated and opaque and many customers think it is difficult and risky to change banks.

As a result, nearly 60% of personal customers have stayed with the same bank for over 10 years and over 90% of SMEs get their business loans from the bank where they have their current account. This suggests that competitive pressures are weak, so banks do not need to work hard enough on price or quality of service.

The CMA considered whether the largest banks should be broken up but it came to the view that this would not address the fundamental competition problems. Having more and smaller banks, which customers still couldn’t easily choose between because of lack of transparency on fees and charges, would not significantly improve the market or give customers a better deal. The CMA also considered whether to get rid of ‘free if in credit’ (FIIC) current accounts. Even though FIIC accounts are not really ‘free’, they do work well for many customers, and banning particular products would simply take away choice and risk the overall cost of accounts rising, not falling.

To transform the market the CMA believes banks instead need to be made to provide their customers with the right information so that they can easily find out which provider and type of account offers best value for them. The CMA also proposes to push the development of new online comparison tools and improve the current account switch service (CASS) to make switching banks more straightforward and give customers more awareness of, and confidence in, the process.

Rental Risk.

Almost 5 million renters in the UK have no plans in place to cover their rent if they became too ill to earn for three months or more, even though recent cuts to housing benefits could leave them at risk. The research by YouGov commissioned by Royal London found that over a quarter of renters in paid employment (27%) said they knew someone who had struggled in this situation.

More than one in three renters in paid employment (34%) admit they don’t know how long they could survive. Six in ten people (60%) who had some idea said they could only survive on their savings for three months or less.

Their first port of call would be to apply for state benefits (53%), followed by reducing their household expenses (47%) and then dipping into their savings (39%). The research found that one in ten (7%) renters in paid employment have ever consulted a financial adviser. The most common place people turn to for financial advice is their family and friends.

Nothing to sneeze at.

Four genes help determine whether you are blessed with the neatest of noses or a schnozzle that would shame Cyrano de Bergerac, research has shown. Scientists analysed the DNA of more than 6,000 people to discover why some of us possess narrow, pointy noses while others have hooters that are broad and hefty.

They identified four genes that affect the width and pointiness of the nose, known as DCHS2, RUNX2, GLI3, and PAX1. A fifth gene, EDAR, was found to influence the jut of the chin. The genes are among those that regulate the growth of bone and cartilage, and the shape of the face. GLI3, which drives cartilage growth, had the strongest effect on the breadth of the nostrils. DCHS2 was linked to pointiness, while the bone-growth gene RUNX2 modified nose bridge width.

Senior researcher Dr Kaustubh Adhikari, from University College London, said: “Few studies have looked at how normal facial features develop and those that have only looked at European populations, which show less diversity than the group we studied. What we’ve found are specific genes which influence the shape and size of individual features, which hasn’t been seen before. Finding out the role each gene plays helps us to piece together the evolutionary path from Neanderthal to modern humans. It brings us closer to understanding how genes influence the way we look, which is important for forensics applications.”

All the study participants came from South American countries with mixed ethnic populations. Half the population had European, 45% Native American and 5% African ancestry. Photos of the volunteers were first examined to establish 14 different attributes, including nose bridge width, nose protrusion and the shape of the nose tip. Facial features were also measured using 3D computer simulations. Genetic data was compared with each characteristic trait to see if there was an association.

The findings are reported in the journal Nature Communications.

Weekly Round-up, 6th May, 2016.

Unemployment gap.

The gap in house prices between areas with the highest and lowest levels of unemployment has widened significantly over the past 10 years, according to the latest research from Lloyds Bank.

Average house prices in the 20 local authorities with the lowest rate of unemployment have risen by £89,446 since 2006 – nearly five times the rise for those with highest unemployment, which increased by just £18,657 over the same period. The average house price for those high unemployment areas is £139,520 – which is £102,655 (42%) below the national average price of £242,175. By contrast, areas with the lowest unemployment rates have an average price of £352,224 – £110,049 (45%) higher than the national average.

The 10 areas which have seen the largest falls in unemployment since 2006 recorded an average price increase of £200,155 (76%) to £464,373. Nine of these local authorities are in London, with four (Haringey, Hackney, Southwark and Waltham Forest) seeing average home values almost doubling in the past decade. Over the same period these 10 areas recorded an average decline in unemployment claimants of 2.4 percentage points (from 4.7% to 2.3%) four times the national decline of 0.6 percentage points (from 2.5% to 1.9%).This is in marked contrast to the 10 areas with the poorest unemployment performance where unemployment claimants increased by an average of 0.5 percentage points since 2006, with average house prices growing by only £24,587 (18%). Seven of these 10 areas are in the North West.

Mum and Dad hit the top 10.

Legal & General and Cebr, the economics consultancy, have today published a new report into the role the Bank of Mum and Dad play in helping their children get on, or move up the property ladder. The research shows the Bank of Mum and Dad will lend over £5 billion, providing deposits for over 300,000 mortgages, purchasing homes worth £77 billion in 2016. The Bank of Mum and Dad is the equivalent of a top 10 mortgage lender in the UK and will be involved in 25% of all property transactions that take place in the UK market this year.

Key findings from Legal & General’s ‘Bank of Mum and Dad’ research suggest that this year family and friends will help 300,000 of their loved ones to buy a home and that the Bank of Mum and Dad will help to finance 25% of all UK mortgage transactions. The average financial contribution is projected to be £17,500 or 7% of the average purchase price and over three quarters of purchases – 256,400 of them – will be assisted by the buyer’s parents – with a further 22,500 and 27,000 supported by grandparents and other family members/friends respectively. Generously 57% of Bank of Mum and Dad contributions are gifts, 18% are loans with no interest and 5% are loans with interest. £5bn of mortgages will be supported in this way in 2016, making the Bank of Mum and Dad a top 10 lender.

Insurance pays.

Royal London’s UK intermediary protection business paid 93% of critical illness (CI) claims, paying out over £124m during 2015. The top five reasons for CI claims last year were cancer (63%), heart attack (10%), stroke (6%), multiple sclerosis (5%) and children’s critical illness (3%). The average age for an adult claimant was 48 years old, with an average pay-out of £81,800 and the largest claim paid was for £750,000. The average age of a cancer claimant was 49 years old and the average age of a children’s CI claimant was 13 years old.

The intermediary business also paid 94% of income protection (IP) claims with an average pay-out of £10,145. The top three reasons for IP claims were musculoskeletal conditions (34%), followed by cancer (23%) and mental health conditions (18%). The average claimant was 43 years old, 60% were male and 40% female. Over 40% of claimants had held their plan for four years or less and the average time a claim had been in payment was just under five and a half years.

Not just average.

Figures from the Association of British Insurers show that the average individual income protection (IP) policy pay out, which helps those unable to work due to illness or injury, lasted for 214 weeks (more than 4 years) and was worth £40,000. In 2015, 91.2% of claims were paid out.

The average pay-out in 2015 on a critical illness (CI) insurance policy was £66,200. The percentage of CI insurance claims being paid continues to rise, with 93.1% paid (up from 80% in 2005). There has been a steady rise in the percentage of claims paid since the introduction of the ABI’s Code of Practice on non-disclosure, first issued in 2008, which clarified which medical information customers needed to share with insurers.

The average pay-out on a term life insurance policy was £53,800 with 98.2% of claims being paid. In 2015, insurers paid out more than £1.5 billion in claims and for whole life insurance the average claim payment was £5,900 with almost all (99.99%) of claims paid. In total £389 million was paid out in 2015.

Now they didn’t expect that.

One of the world’s most complex machines has been temporarily immobilised – by a weasel!

The world’s largest atom smasher, the Large Hadron Collider at Cern outside Geneva, has suspended operations because a weasel invaded a transformer that helps power the machine and set off an electrical outage on Thursday night. Authorities say the incident was one of several small glitches that will delay plans to restart the collider by a few days.

Spokesman Arnaud Marsollier said that the weasel died – and little remains of it. Officials of the European Organisation for Nuclear Research, known by its French acronym Cern, have been gearing up for new data from the 17-mile circuit that runs underground on the Swiss-French border.