Monthly Archives: January 2017

Weekly Round-up: 27th January 2017

Keep on Moving

The number of people moving home has fallen for the first time in five years, according to the latest Lloyds Bank Homemover Review. The number of homemovers is estimated to have reached 354,000 in 2016 – down 4% from 2015 when homemover numbers totalled 367,300. This is the first annual decline since 2011, following four successive years of growth. Overall, the current number of homemovers has grown by 12% since the lowest point of the recent housing downturn in 2009 – when the number of people moving home was 315,000, the second lowest since records began. However, the current figure is 50% below the level of 712,000 a decade ago.

According to the Bank, in 2016 the average house price paid by homemovers increased by 7%, from £273,510 in 2015, to a record high of £291,777. Since falling to £199,645 at the depths of the housing downturn in 2009, the average price has grown steadily by 46% (or £92,000).

Most regions across England and Wales have also seen average property values increase significantly since 2009. In London, homemovers have seen the average price rise by 75% (or £240,977) to £560,946 – the highest on record. This is three and a half times higher than in Northern Ireland (£162,696) – and £165,407 higher than the second most expensive region, the South East (£395,538). Only Northern Ireland has an average price paid by homemovers that is lower than in 2009; down by 3% (or -£4,187).

Lloyds’ research suggests that, over the past decade, there has been a trend amongst homemovers to choose a longer term mortgage, which extends beyond the traditional 25 year term. In 2006, more than four out of five (83%) of homemovers had a mortgage term of between five and 25 years, whilst the remaining 17% were for over 25 years. In 2016, 39% of mortgages were for a term of between 25 and 35 years, while the number of mortgages for terms of five years up to 25 years fell to 61%.

Two Four Six

The Council of Mortgage Lenders estimates that gross mortgage lending reached £20.4 billion in December. This is 4% lower than November (£21.2 billion), and 4% higher than December 2015 (£19.7 billion). This brings the estimated total for the year to £246 billion, a 12% increase on 2015’s £220 billion and the highest annual gross lending figure since 2008.

Gross mortgage lending for the fourth quarter of 2016 was therefore an estimated £62 billion. This is a 3% decrease on the third quarter and closely matches the 61.8 billion lent in the fourth quarter of 2015.

The trade body for Lenders in the UK suggests that the housing market, much like the wider UK economy, ended 2016 on a generally positive note. With approvals for house purchase having recovered strongly of late, this should feed through to lending figures in the early months of 2017. Highlighted in the release is the lack of properties on the market, which adds to the challenges facing would-be buyers alongside uncertainty associated with political factors and prospective changes to the tax treatment of landlords.

It pays to shop around

As households face rising bills for fuel, car insurance and train fares, the cost of home insurance too has also risen over 2016 according to the AA. The Shoparound premium, (an average of the five cheapest premiums, quoted from the broker, the direct market and price comparison sites, for each risk in a nationwide basket of risks representative of the insurance buying public), indicates that the cost for buildings cover rose by 7.6%, increasing by 1.1% over the last quarter to £114.43.

Meanwhile the cost of contents cover rose by 3.5% over the year, but rallied over the final quarter to drop by 5.7% to £60.69. The benchmark AA British Insurance Premium Index shows that the Shoparound premium for a new combined home buildings and contents policy rose by 4.4% over 2016. In the last quarter the Shoparound premium increased by 0.3% from £156.76 to £157.27. AA Insurance who compile the figures highlight that 2016 was a year when home insurance has not been far from the headlines. It began with more than 16,000 homes flooded. Then in April Flood Re the government supported, industry-led and financed scheme to deliver affordable home insurance for households at flood risk was launched. Insurance Premium Tax (IPT) also increased to 10% from October, and will rise again to 12% in June 2017.

The AA believes that the rise in the cost of buildings cover over the last quarter – albeit little more than a £1 added to the Shoparound premium – and of combined policies suggests that premiums are now unlikely to fall, especially when you see the costs of claims including managing fraud overtakes premium income. Indications have been that insurers have been using their reserves to help stay competitive which is unsustainable in the longer term.

In a state

Consumers need help to better understand the benefits of taking out protection products according to State of the Protection Nation a new study released today from Royal London. The research finds that many barriers to buying protection products are due to perception and can be overcome with better education. The study of 2,000 people found that while a quarter of UK adults have a life insurance policy (26%), just 6% have critical illness cover and 4% have income protection insurance.

For each product, the same barrier is top – price – with nearly one in three who don’t have life insurance, critical illness cover or income protection saying they think the products are too expensive (29%, 32% and 31% respectively). Analysis of premiums Royal London customers pay reveals the average life insurance premium is £21.28 per month for over £120,000 of cover and the average critical illness cover premium is £30.58 per month for over £71,500 of cover.

The second most common barrier was people not seeing the benefit of the product. Yet almost two fifths (38%) say it is important to ensure that their family and dependents are looked after financially should they die and half (47%) agree that life insurance is essential for anyone with a mortgage or dependents. This shows that with better education, from the industry and advisers, more people could be better protected.

The third barrier is not trusting insurance companies to pay out in event of the claim.  Yet the most recent industry figures show insurers pay out in 97.2% of all claims.

The research reveals that more people see a need for the products than actually have them, suggesting that with greater action on the barriers the UK could be better protected. While one in 10 (9%) say they see the need for income protection just 4% hold it and while 12% say they see the need for critical illness cover, just 6% hold it. For life insurance, however, take up matches perceived need, where 27% see the need and 26% hold it. Those with children under 18 are much more likely to believe that all three types of product are needed, in particular critical illness cover (21% compared to 9% who don’t have children).

Royal London also found more work needs to be done to help people understand what could happen to them during their working life. According to the research, respondents were more likely to think they will die (22%) within their working life than be made redundant (15%), contract a serious health condition or illness (15%), go on sick leave for three months or more (11%) or have an accident preventing work (9%). Yet a quarter (25%) of those polled had been made redundant or lost their job at some point, whilst one in seven (15%) have been off sick for three months or more or been diagnosed with a serious health condition or illness.

Tax Ha Ha voidance

Underwear, holiday flights, luxury watches and designer clothing are among the most “ludicrous” expenses claims recently seen by HM Revenue and Customs.

HMRC released a list of the strangest expenses claims it received from customers trying to claim back on their 2014-15 self-assessment returns.

The expenses claims, which were rejected, include a painter and decorator claiming for Armani jeans as protective clothing, a claim for underwear for personal use, luxury watches as gifts for staff from a company with no employees and international flights for dental treatment ahead of business meetings. Another unsuccessful claim was made for pet food for a Shih Tzu “guard dog”. Claims which were also rejected included those for betting slips, Friday night “bonding sessions” costing thousands of pounds and holiday flights to the Caribbean. Amongst other claims were the cost of a garden shed for private use – plus the costs of the space it takes up in the garden and caravan rental for the Easter weekend.

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Weekly Round-up: 20th January 2017

Time to change

New research from global investment company Standard Life reveals that the significant events of 2016 influenced the way over half of UK adults managed their finances, with 16% putting off making some important financial decisions last year as they are now more cautious. An additional 11% of UK adults said all the change and uncertainty made them worried about their finances and unsure what to do.

However, the events of 2016 also drove some people to take action, with almost one in ten (9%) responding by becoming more proactive and taking more control of their finances. In addition, one in ten (9%) responded to the uncertainty by focusing on being more prudent and cutting costs where possible, while 12% said saving more became their priority, and they created a bigger buffer against any potential bad times ahead. The research also revealed that the most popular financial goal for 2017 is to “save more than in 2016″, with saving up for big ticket items like a holiday popular too. Almost one in five (18%) UK adults are planning to tighten their belts and cut costs in 2017 and for some (16%) paying off debts is a priority.

When asked if all the uncertainty and change experienced in 2016 had altered how likely they were to invest in stocks and shares, 6% of UK adults said they were more likely, 7% said they were less likely and 20% said it hadn’t changed anything for them. Over 55% said they don’t invest or plan to invest in stocks and shares and a further 11% said they hadn’t given it much thought.

The research also found that almost a third (30%) of UK adults still have no idea how much money is in their pension, and the majority are out of touch with how stock markets performed in 2016. Just one in five UK adults (21%) recognised that stock markets mainly climbed over the course of the year and almost a quarter of adults (24%) wrongly believe that the markets mainly fell.

Belt tightening?

According to the January Money Statistics report published by the Money, people in the UK owed £1.512 trillion at the end of November 2016. This is up from £1.460 trillion at the end of November 2015 – an extra £1017.04 per UK adult. The average total debt per household – including mortgages – was £55,982 in November. The revised figure for October was £55,856.

Per adult in the UK that’s an average debt of £29,930 in November – around 113.2% of average earnings. This is slightly up from a revised £29,836 a month earlier. Based on November 2016 trends, the UK’s total interest repayments on personal debt over a 12 month period would have been £50.574 billion. That’s an average of £139 million per day.

This means that households in the UK would have paid an average of £1,873 in annual interest repayments. Per person that’s £1,001 – 3.79% of average earnings.

For Sale or not

The number of house sales in the UK faltered in December, and predictions for expected new sales over the next three months were also pared back, according to the Royal Institute of Chartered Surveyors December 2016 UK Residential Market Survey.

While it remains to be seen if this is a temporary setback, 1% more chartered surveyors saw a fall rather than a rise in sales last month, and figures for predicted sales over the next three months across the UK also saw a noticeable slow down with only 4% more respondents anticipating an increase in sales during the coming three months down from 18% previously. However, some parts of the UK reported a rise in sales over December, with Wales, the South West, and the North East all seeing an increase.

Supporting the predicted slow start to 2017, the survey showed that the number of new house buyers rose only marginally in December following much stronger figures for the previous four months (+7% net balance).  New instructions to sell also failed to see any pick-up, marking the tenth straight month without any improvement (0% net balance). Respondents to the survey continue to highlight low stock levels as a key concern and a lack of choice for would-be buyers is weighing heavily on the UK housing market.

Looking at the continued growth in house prices, 24% more chartered surveyors saw a rise rather than fall in prices in December, from +29% in November. Although this suggests prices are still rising firmly, the latest figure does end a run of four successive months of higher house price balances. Regionally, Central London is the only area where in which prices are falling with the price indicator having remained in negative territory for ten consecutive months.

Non-claimants

A Freedom of Information request to HM Revenue & Customs by Royal London has revealed massive non take-up of a scheme designed to help grandparents who make sacrifices to help their daughters get back to work after the birth of a child. The FOI figures reveal that a scheme designed to help grandparents across the country is benefiting an average of just two grandparents per Parliamentary constituency.  This is a tiny fraction of those who could benefit, at no cost to them or their children.

Under current rules, if a mother goes back to work after the birth of a child she can sign a form that allows a grandparent (or other family member) to receive National Insurance credits for looking after the child. A grandparent who gives up work to look after the grandchild would otherwise be losing out on valuable state pension rights. If a working age grandparent misses out on one year of state pension rights because they are spending time with a grandchild instead of doing paid work, this would cost them 1/35th of the full rate of the state pension or £231 per year.  Over a 20 year retirement this would be a loss of over £4,500.

The FOI reply from HMRC shows that this system, known officially as the ‘Specified Adult Childcare Credit’, is so little known just 1 ,298 grandparents (and other family members) benefited in the year to September 2016. This is actually a smaller number than two years earlier when 1,725 were benefiting. But calculations by Royal London suggest that there could easily be over 100,000 grandparents of working age who could benefit if the scheme was more widely known.

Lucky for some

Homebuyers could save around £9,000 on the cost of a property – if they are willing to live at “unlucky” number 13 – research suggests.

Key to house number 13Nearly one in three (30%) homeowners would be less likely to buy a house if it was at number 13, according to a survey from property website Zoopla. But buyers who are not put off may be able to find a bargain, as analysis of Zoopla’s website found homes with this number are typically £8,974 cheaper than the average UK property, which is valued at £300,012.

The research, released to coincide with Friday the 13th, found that more than two-fifths (43%) of people consider themselves to be superstitious. Nearly a quarter (23%) of those surveyed said they would not exchange or complete on, or even move into, a property on Friday the 13th. Nearly half (46%) of people have a lucky number, and a further one in five (19%) would be more likely to buy a property if it featured their favoured digits.

While seven was found to be the most popular lucky number, the research also found that many people believe the number 13 attracts good luck rather than bad. Thirteen was identified as the next most popular lucky number in the survey, after seven.

Zoopla’s analysis of property numbers on its website also found that number one tends to be the most expensive door number, with the first home on the street typically valued at £319,318. Number 100 tends to be the next most expensive property, with an average value of £311,107, with number two ranked in third place, with a typical value of £308,468.

Weekly Round-up: 16th January 2017

On the ladder

Communities Secretary Sajid Javid has announced that £7 billion has been identified to expand the government’s affordable housing programme to meet the diverse housing needs of the country. Housing providers can now apply for a share of the fund, which was allocated an additional £1.4 billion at the Autumn Statement to deliver 40,000 new affordable housing starts across the country.

Alongside this extra funding, the government is expanding the existing affordable homes programme to offer a wider range of ways of helping people into home ownership and to provide support for those that need affordable housing. By expanding the variety of tenures available, which now includes Affordable Rent, Shared Ownership and Rent to Buy, the programme will help meet the housing needs of a wider range of people in different circumstances and at different stages of their lives.

This includes homes for Rent to Buy which will be let with rents set at or below 80% of the local market rent for a set time period, giving tenants the opportunity to save for a deposit and then the option to buy their current home. The £7 billion programme is designed to deliver more than 200,000 homes.

How much can I save?

The remortgaging rush is expected to continue in 2017, with almost a third (31%) of eligible homeowners planning to cash in on low interest rates and 25% of those preparing to remortgage in January, according to research from TSB.

However the potential savings they could be making are being underestimated by nearly half. According to the survey of 2,000 homeowners, the average saving they expected to make from remortgaging their property was estimated at £49 a month. This compares with analysis from the Bank that suggests an estimated average of £96 per month, or £2,300 across the life of a two-year fixed term on a £100,000 mortgage.

Despite these potential savings, the research indicates that some homeowners remain unaware of the opportunity altogether. More than half (54%) aren’t able to correctly identify the Bank of England base rate as 0.25% and 15% of homeowners who aren’t considering remortgaging say they won’t be doing so because it’s too much effort or it hasn’t crossed their mind.

Exchange of views

Greater economic uncertainty has contributed to the pound declining in value against the majority of major currencies in the past year, according to latest research from Lloyds Private Banking. Over the past 12 months, the pound has fallen in value – to varying degrees – against 56 of the 60 currencies analysed.

This followed a good year for the pound in 2015 when sterling gained in value against more than three-quarters of the currencies surveyed. Overall, the pound has fallen by 11% against a trade-weighted basket of currencies over the past two years. The pound lost at least a fifth of its value against nine major currencies. The biggest declines were against the Brazilian real (-28.4%), Russian rouble (-28.0%) and the Icelandic krona (-27.9%).

The Brazilian real was notably one of the currencies the pound rose most against in 2015. Overall, the pound is largely unchanged against the Brazilian real compared to two years’ ago. The pound fell by 17.0% against the US dollar over the year, from $1.49 to $1.24; taking the pound to its lowest year end level against the dollar since 1984.

Sterling declined by less against the euro (-13.3%) as the euro-zone economy continued to struggle to gather pace with the European Central Bank (ECB) easing monetary policy further in 2016. The pound decreased in value by 11.0% against the Chinese renminbi as mounting concerns about the sustainability of the build-up in debt in China and doubts about the economy’s ability to maintain recent growth rates limited the pound’s losses against the Chinese currency.

Work Tech

Health medical care_300x194pxThe workplace could be the best place for the mass adoption of health tech in the UK helping to improve and maintain employees’ health through company wellness programmes – if only workers got more support from their employers. And, despite the recent explosion of health tech ownership in the UK, leading to lots of personal data being generated, there are doubts from data academics about whether this information is being used to the best effect by individuals alone.

The third annual AXA PPP Health Tech & You State of the Nation online survey shows that 57% of the British workforce would be open to wearing a company paid-for fitness band or similar device during working hours to help monitor their health and wellbeing, as long as this was supplied to them free of charge by their employer. This figure increases to nearly two-thirds (63%), if employers offer workers the device and a financial bonus for wearing it at work. However, only a small number of UK workers (5%) say their employer currently provides health technology to workers – despite the potential benefits.

One of the most surprising findings from this latest survey is that employees aren’t shy about sharing their health data with their employers to help them improve the health and wellbeing of the workforce. Of those who would be likely to wear a fitness band at work, over half (58%) said they would be comfortable to share the data generated with their employer if it helped with the organisation’s employee health and wellbeing programmes.

Always believe in your soul

A substantial amount of gold – described as “potential treasure” – has been found hidden in a piano. The discovery of the “stunning” cache of gold items was made by the new owners of the upright piano when they decided to tune the instrument, which they had been given. They “swiftly reported” their discovery, and the items are being kept safe in an unknown location “under lock and key”.

Gold BarsExperts said that the hoard appeared to have been deliberately hidden inside the piano, which was made by Broadwood & Sons of London. They are not revealing details of the treasure, while the search is on to find the potential owners. Peter Reavill, of the British Museum’s Portable Antiquities Scheme, said: “We can’t say what it is exactly because we are trying to track down the potential true owners. The current owners did not know what to do but they came to the museum and they laid it all out on the table. They laid this stuff out and I was like ‘whoa’, I’m an archaeologist and I’m used to dealing with treasure but I’m more used to medieval broaches. I have never seen anything like that.” He added: “It’s a stunning assemblage of material.”

The objects were “highly unusual in nature”, were made mostly of gold and appear to have been deliberately hidden within the last 110 years. Experts are searching for the family of whoever put the treasure into the piano. If they are traced, they have a claim. If not, the items belong to the crown.

Investigations so far have revealed that the piano, after it was made by Broadwood & Sons of London, was sold to a music shop or wholesaler in Saffron Walden, Essex. The recent history of the piano has been traced to around 1983 where it was purchased by a local family in the Saffron Walden area. An inquest has now been opened to determine whether the hoard, discovered before Christmas in the piano in South West Shropshire, qualifies as treasure under the terms defined by the Treasure Act (1996).

For a hoard less than 300-years-old to be treasure, it must be substantially made of gold or silver, deliberately concealed by the owner with a view to later recovery and the owner, or his or her present heirs or successors, must be unknown.

Compliance Update

Mortgage Protection

“I don’t wanna talk about it.”

No, not the Rod Stewart classic (double A-side with The First Cut is the Deepest!) but a line often used by mortgage customers when the conversation turns towards protection. If it isn’t that, then it might be:

“I don’t need any cover right now”, “I’m not sure the budget will stretch to it” or “Can we discuss it later?”

This can be dangerous territory for an adviser for many reasons. First of all, ‘later’ may never happen. In many cases, it doesn’t. Then what if the customer subsequently suffers an event causing loss of income, critical illness or death. Who will remember they came out with the classic line “I don’t want to talk about it” all those months or years ago?

When thinking about de-risking your business this is a challenge that you want to be able to defend. Believe me, I have seen just this scenario play out for real and it can be a very testing time for all parties.

With this in mind we have developed a Protection Disclaimer Form that can be used with the customer at this point in the conversation. This document explains some of the risks, for example spelling out that Support for Mortgage Interest rate (SMI) is only payable up to a maximum of £200,000 of lending and involves a waiting period of 39 weeks.

The form requires the customer to consider protection and to sign to say that they do not wish to proceed and provide a reason why. In doing so it may make them stop and think about their position and reconsider this, which could result in a conversation that might not have taken place.

In this scenario, having this document on file, signed by the customer, could just well save your bacon one day.

The Protection Disclaimer Form is available now on the Compliance Documents section of the members site.

Weekly Round-up: 6th January 2017

Steady as she grows

The Council of Mortgage Lenders (CML) has published its new housing and market forecasts, and also reported gross lending of £21 billion in November – up by an estimated 3% on October, and also 3% up on a year ago.

The CML’s lending forecasts for 2017 have been revised downwards from the previous expectations of a year ago, reflecting in their words the economic uncertainties as well as new tax burdens and regulatory changes in the housing and mortgage markets. The CML now expects gross lending of £248 billion in 2017 and £252 billion in 2018, with net lending of £30 billion in each of those years.

Their director general Paul Smee has suggested that the mortgage market is likely to plateau rather than grow much for the next couple of years with property transactions looking set to drift down slightly. The CML do not expect house prices to fall, and net lending would appear unlikely to get above £30 billion in 2017.

Time well spent

Spending time with family is more important than earning more money, moving up the housing ladder, and having nice cars and holidays, according to latest research from Lloyds Private Banking.

However, what is important to people differs depending on how wealthy they feel. Just under half (47%) of those that feel wealthy say spending time with family is important, compared with 54% for those that feel like they are struggling, and 59% overall.

Beyond spending time with family, those that feel wealthy place the greatest importance on using their money to build a nest egg of savings (31% say this is important) and having annual holidays (22%). As could be expected, this group say that managing their level of borrowing was the least important aspect in their lives, with just under half (45%) saying so.

At the other end of the spectrum, over a quarter of those who feel they are struggling place the greatest importance on their level of income in the next few years (28%) and managing their level of borrowing (27%). When it comes to the least important things in life, having a nice car (38%) and progressing up the housing ladder (36%) are the lowest priorities.

London, Yorkshire & Humberside and the South East are the happiest regions (65-67%), with around two thirds of people saying overall that they are happy. Just over half, (55%) of people living in Wales say they are happy, which is the lowest percentage of all the areas of the UK, and could be as a result of one in five (20%) saying they are struggling financially. Wales also has the lowest average household income at just under £27,500.

However, almost two thirds (65%) of people from Wales say they are in good health, which is only behind London (67%) when comparing across the UK. It isn’t all plain sailing for those that live in the South East, as despite having the second highest average household income, and one of the highest proportions of people that feel well off or wealthy, it has the lowest proportion of people that say they are in good health (56%).

Debt Fuel

According to the latest statistical release by the Bank of England, household debt excluding mortgages has risen to its highest level since just after the financial crisis of 2008. The data shows that personal debt grew 10.8% in the year to 30 November to £192.2bn in the UK – the highest level since December 2008.

Charities such as Step Change are calling on the government to adopt a scheme that gives problem debtors 12 months’ breathing space to get back on track, a scheme that is already in force in Scotland.

Bank of England statistics show that personal debt, including credit cards and bank loans but not including mortgages or student loans, has been growing at a yearly rate of 10% for the past six months.

First to post

British Friendly is the first insurer to publish their claims statistics for the whole of the previous year. In 2016 British Friendly paid 96.13% of income protection claims, with over half of all claims (52%) authorised in one day or less. The remaining 3.87% of claims were declined (the main reasons are non-disclosure 1.93%, not meeting the definition 1.71%)

The insurer also released its 10 year claims data last year, paying over 96% of income protection claims on average since 2006.The top three reasons for claiming in 2016 were unchanged from 2015 as follows:

  • Orthopaedics (musculoskeletal conditions) – 39% of paid claims
  • Viral illness /respiratory – 22% of paid claims
  • Psychiatric conditions – 13% of paid claims

Other reasons for claiming in 2016 included digestive (6%), cardiovascular (4%), cancer (3%), neurological (2%) and rheumatological (2%) conditions. The age bracket with the most claims was between 50-59 years for both men and women.

Have you checked your room?

Where in the world might you find a Sikh ceremonial helmet, a British Blue Shorthair cat called Yoda and an antique stained glass window? Travelodge’s Lost and Found office, of course.

The hotel chain has revealed some of the more unusual items left behind in rooms at some of its 525 UK properties during 2016. One customer staying at Harrogate Travelodge forgot their Shitsu, Harold – only realising their error after driving for 40 minutes down the M62.

In Manchester, a trio of prosthetic legs, each with one designer shoe, were left behind. The legs wore Valentino, Gucci and Miu Miu.

A Swarovski crystal-encrusted waving cat – a lucky charm in Chinese culture – was so sorely missed by one business guest that he arranged a special overnight courier to collect and return it. Another business customer staying at Bank Travelodge left behind his annual company accounts and one CEO was in such a hurry to get to his meeting that he forgot his teddy bear, which has been his companion for 40 years.

All items left behind in Travelodge hotels which have not been claimed within three months are donated to local charity shops.