Weekly Round-Up: 25th May 2018
Your Data, your choice
Today marks the biggest change to UK data protection law in a generation. The General Data Protection Regulation (GDPR) is an evolution of the current Data Protection Act (1998) and comes into effect. Regulated by the Information Commissioner’s Office (ICO), the new law gives people more control about how their data is used, shared and stored and requires organisations to be more accountable and transparent about how they use it.
For the last two years, the ICO has been helping organisations prepare for the new law by producing guidance and targeted online resources, holding and speaking at dozens of events and setting up a dedicated helpline for small businesses. Now it is launching a long term campaign to help people understand why their data matters and how they can take back control.
The collaborative public information campaign ‘Your Data Matters’ aims to increase the public’s trust and confidence in how their data is used and made available. The ICO highlights that almost everything we do – keeping in touch with friends on social media, shopping online, exercising, driving, and even watching television – leaves a digital trail of personal data. People should know that sharing their data safely and efficiently can make their lives easier, but that digital trail is valuable. It’s important that it stays safe and is only used in ways that people would expect and can control.
The GDPR gives people more and stronger rights when it comes to their personal data. Your Data Matters will help people understand how they can exercise those rights. The ICO has collaborated with a range of public and private sector organisations to produce publicity materials that can be used by anyone wanting to spread the message to their customers or clients. The ICO has also launched a new Twitter account for the public, @YourDataMatters, to complement its successful @ICOnews account, which has 63,500 followers.
Slow Down in the City
According to the most recent data from the Office for National Statistics average UK house price annual growth has remained steady recently between 4 – 5%. Over recent years, UK house price growth has been strongly driven by London. However, the rate of growth in London has been slowing down, and is now appears to be negative for the first time since 2009.
In the case of London, the ONS highlight a fall in demand relative to supply meaning the market is reaching a new equilibrium with a lower price, so more people should be able to afford to purchase a home. One challenge is that the supply of houses is not necessarily straight-forward. Its slow, expensive and subject to numerous planning regulations by national and local government with reforms to Stamp Duty Land Tax (SDLT), along with reductions in mortgage interest relief, contributing to an increase in price particularly for second-home buyers – this includes those buying with buy-to-let mortgages, for instance. This partly explains why demand was already falling from the spring of 2016, when these changes took effect.
The ONS observations suggest that the fact that the UK voted to leave the European Union may have deterred foreign buyers, not only from the EU but also further afield. For Europeans, there has simply been a fall in demand as net migration from these countries has fallen. For many overseas buyers (and indeed some domestic buyers), a house in London isn’t just a home. London property is an asset which usually turns a profit (either to let, or to sell later) much higher than elsewhere in the UK, as evidenced by the relatively high foreign ownership. With the referendum and subsequent uncertainty regarding Britain’s political and economic environment, perceptions of the future value of London property have been adversely affected. This is what you might call a fall in ‘speculative demand’.
As an incentive Chancellor Philip Hammond announced the abolition of SDLT for first-time buyers in the last Autumn Budget. Given the average house price in London is £472,000, this is more likely to benefit home-buyers outside of London, as the relief only applies to properties worth up to £300,000.
The average price of a flat in the UK has risen by £75,074 over the last five years, equivalent to £1,251 per month, according to new research from Halifax. Despite their popularity dipping, the average price of a flat has grown from £157,061 in 2013 to £232,135 in 2018. Flats now account for 15% of all home sales. Although six in every 10 property sales last year were either terraced or semi-detached properties, flats have increased in value by 48%, compared to 39% for all property types over the same period.
Meanwhile, terraced homes have seen average prices rise by £60,482 (41%, the second largest increase in percentage terms) since 2013, while detached homes recorded an increase of £73,638, although this is the smallest increase in percentage terms at 27%. Terraced properties remain the most popular property type among first-time buyers. However, the proportion of sales has cooled slightly over the past five years from 40% to 37%, whilst the popularity of detached properties has increased from 6% to 8%. Terraced homes remain the most affordable property type in the UK with an average price of £208,311, followed by semi-detached (£225,123) and flats (£232,135). It’s a different story outside London, as flats are the most affordable properties (£166,386), followed by terraces (£184,529).
However, only buyers in the North can snap up a terraced home for less than £125,000 – below the lowest stamp duty threshold – with terraces in the region costing £116,740. Five years ago, seven regions had the average price for a terraced home below £125,000. Flat prices in London have more than doubled over the last five years, contributing significantly to the national increase. The average price of a flat in the capital now stands at £393,235 – £276,377 more than flats in Wales (£116,858). Despite a rise in value, the popularity of flats appears to be waning across the regions. They are the best performing property in only two out of 11 regions – North West (51%) and the South East (50%, joint top with terraced homes).
People in the UK are under-protected should serious illness strike, according to new research from Scottish Widows. Despite more than a fifth (21%) of people admitting their household wouldn’t survive financially if they lost their income due to long-term illness, fewer than one in 10 (9%) have a critical illness policy. People are, in fact, more likely to insure their mobile phones (12%) than to protect their own health.
Taking out life insurance also appears to be falling down the population’s priority list, with just 27% having a life policy, equivalent to 14 million people. This has dropped by 7percentage points compared with 2017, a year-on-year decrease of 3.6 million individuals.
This is an especially precarious position for the two-fifths (42%) of UK households that are reliant on just one income, and it’s clear that many are in lack of a ‘Plan B’. Despite 43% of people saying they’d rely on their savings if they or their partner were ill and unable to work, a third (35%) admit their savings would last no more than three months if unable to work and more than half (54%) say they’d last no longer than a year. Three in ten (30%) – or 15.5 million people  – say they aren’t saving anything at all.
One in five (19%) say they’d rely on state benefits if they or their partner were unable to work for six months, but at a time when welfare reform is resulting in significant changes to benefits such as child and working tax credits, income-based job seeker’s allowance, income support, housing benefits and bereavement benefits. On top of this, people are leaving themselves and their families unprepared for other aspects of illness or bereavement. One in five (20%) people aren’t sure who would take care of them if they fell ill, and nearly half (48%) don’t have the protection of a will, power of attorney, guardianship or trust arrangement in place for their families.
The research also reveals that a lack of trust and understanding could be contributing to the UK’s protection gap. On average, people think that just a third (34%) of individual protection claims are paid out by insurance providers each year, based on the misconception that insurers will do anything not to pay. In reality, however, virtually all protection insurance claims (97.8%) were paid in 2017. In addition, almost four-fifths (78%) of people are unaware that cover often comes with practical advice and emotional care, as well as financial support, without having to make a claim.
Weekly Round-Up: 18th May 2018
IO, Lets go
Figures out this morning from UK Finance show the number of interest-only mortgages has almost halved in the past six years. There are currently 1.7 million outstanding interest-only mortgages (including partial interest-only), down 46 per cent since 2012, when this data was first collected. The total value of the interest-only mortgage book is £250 billion, down 37 per cent in the same period.
There has also been a particularly steep decline in higher loan-to-value mortgage as many borrowers continue to redeem ahead of schedule or switch to a repayment mortgage. However, the trade body for Banks and Lenders highlight that there remains plenty more work to do over the coming years to ensure that those remaining borrowers who have so far been reluctant to engage have viable repayment plans in place.
UK Finance continue to encourage all borrowers with interest-only mortgages to contact their lender or broker as soon as possible, as the sooner they do so the more options will be available. They will also be developing new best practice for lenders in this area, to reflect the changing regulatory landscape and help the industry engage successfully with more borrowers.
UK Finance’s Mortgage Trends Update for March 2018 has revealed a small increase in lending to first-time buyers compared to a year earlier, while remortgaging levels softened slightly after a busy start to the year.
There was £5.1bn of new lending to first-time buyers in the month, up two per cent year-on-year. 31,200 new first-time buyer mortgages were completed in the month, some 1.9 per cent fewer than in the same month a year earlier. The average first-time buyer is 30 and has a gross household income of £42,000. New lending to homemovers in the month was £6.1bn of, 4.7 per cent down year-on-year. There were 28,400 new homemover mortgages completed in the month, some 7.8 per cent fewer than in the same month a year earlier. The average homemover is 39 and has a gross household income of £56,000.
The £5.6bn of remortgaging in the month was 9.7 per cent down year-on-year. There were 32,400 new homeowner remortgages completed in the month, some 12 per cent fewer than in the same month a year earlier.
5,500 new buy-to-let home purchase mortgages completed in the month, some 19.1 per cent fewer than in the same month a year earlier. By value this was £0.8bn of lending in the month, 20 per cent down year-on-year. UK Finance research suggests the recent softening of the buy-to-let market is mostly down to a number of recent tax and regulatory changes including the limiting of landlords’ Mortgage Interest Tax Relief (MITR), the three per cent Stamp Duty Land Tax (SDLT) surcharge and new underwriting requirements introduced by the Prudential Regulatory Authority (PRA). There were 12,600 new buy-to-let remortgages completed in the month, some 0.8 per cent more than in the same month a year earlier. By value this was £2.0bn of lending in the month, the same year-on-year.
The Fraud Fighters
An innovative new team of fraud-fighters has already frozen £1million from fraudsters trying to trick people known as ‘money mules’ into receiving and transferring cash. Lloyds Banking Group’s ‘mule-hunting team’ was formed to stop the movement of money from scams, shutting down fraudsters’ attempts to shift money using cutting-edge defences developed by specialists from across the bank.
The offer of quick cash is being used by criminals – most commonly on social media – to recruit money mules. Last year, 8,652 18-24 year-olds in the UK were already lured into working with fraudsters between January and September.
If caught moving fraudulent funds, mules risk being left with no bank account and a damaged credit score, meaning they could be unable to apply for a mortgage, loan or even a phone contract in the future – as well as facing up to 14 years in prison.
As part of the industry-leading pilot, the Lloyds Banking Group team has developed a number of new techniques to rapidly analyse data, spotting tell-tale signs, patterns and behaviour to halt fraudsters in their tracks. It can identify mule accounts and block them using the new defences and has already stopped more than £1 million being transferred to fraudsters’ accounts since the beginning of 2018.
For all of the frozen funds, Lloyds Banking Group is contacting the sending banks in order to help them get the money back to the victims. The bank is now planning to roll-out the trial, incorporating these new methods into its state-of- the-art fraud systems, to help stop fraudsters getting away with their ill-gotten gains.
Its Dying Matters Week and research from Royal London shows one in three adults (33%) have dealt with the financial affairs of someone who has died, yet only a quarter (23%) have their own comprehensive file of financial information.
Royal London has a top five list of things to-do, to help loved ones after an individual has gone. The first step is to write a will that ensures that the right people inherit and while most of us know how important it is to have a will and keep it up to date, many of us don’t do it. Royal London research shows that three in five adults (60%) don’t have a will, and a quarter (26%) of those are aged 55 and above. It’s especially important for cohabitating couples to have a will, as the surviving partner does not automatically inherit any estate or possessions left behind.
If there are children in the family it’s important to decide on guardians, but three in five (58%) parents with children under 18 haven’t chosen guardians should they die. Parents need to think about who they would want to step into this role and ask them if they’d be happy to do so. They then need to be included as guardians in the will. More than one in 10 (12%) adults admitted that it would be very difficult for anyone to handle their financial affairs after they died. Pulling together all personal and financial information into one simple document can really help loved ones. Royal London has produced a ‘When I’m Gone List’ to help keep note of all important financial documents and funeral wishes in one place.
Royal London’s research shows that the average cost of a funeral is around £3,800, with one in six people (16%) saying they struggled with the cost. Having a plan in place to pay for a funeral will mean the family won’t have to find several thousand pounds at a difficult time. And finally having a conversation with the family can remove a great deal of uncertainty for them at a difficult time. Royal London research shows that for those that have had to arrange a funeral, two in five (41%) were not left any instructions from the deceased. Starting a conversation might include talking about funeral wishes with loved ones or showing them where important documents are kept.
Weekly Round-Up: 8th May 2018
Wellbeing at Work
The eighteenth annual survey report from the Institute of Chartered Institute of Personnel and Development (CIPD) examined trends in absence and health and well-being in UK workplaces. The survey of over 1,000 HR professionals provided important insights into one of the most pressing issues of the modern workplace: the health and well-being of people at work.
There are grounds for optimism in the survey with indications that more employers have a standalone well-being strategy in support of their wider organisation strategy, hopefully reflecting the growing recognition that organisations need to take a strategic and integrated approach to people’s health and well-being. Most organisations believe their health and well-being activities are having a positive benefit. There are also grounds for concern. The survey reveals that mental ill health is an even more significant issue for organisations than it was in 2016: over a fifth (22%) now report that mental ill health is the primary cause of long-term absence compared with 13% in 2016, and there has also been a significant increase in the number of reported common mental health conditions among employees in the past 12 months.
Employers’ recognition of mental health as a workplace issue has clearly increased in recent years, and it’s encouraging that the CIPD survey shows the proportion raising awareness of mental health across the workforce has increased from 31% in 2016 to 51% in 2018. The reasons for work-related stress and mental-health-related absence affecting people’s psychological health tend to be external and outside the organisation’s control.
The ageing population means many workers have increased caring responsibilities that can put pressure on their work–life balance, for example, and the wider political and economic climate – such as the uncertainty created by Brexit – can also influence people’s sense of well-being. Further, the survey shows the mixed impact of technology on mental well-being, with 87% of our respondents citing an inability to switch off out of work hours as the main negative effect on employees.
Pays to be savvy
63% of UK consumers have undertaken some form of ‘savvy spending’ since the start of 2018 according to the latest Lloyds Bank Spending Power Report. In the monthly Ipsos MORI survey of over 2,000 bank account holders in the UK, 47% have actively searched for vouchers and discount codes before spending. A quarter (24%) have chosen to spend money with a specific brand because they received a voucher or discount code for it, whilst 18% have joined a mailing list in order to gain access to exclusive deals and discounts.
The Lloyds Bank research has found that women (72%) are much more likely than men (54%) to claim to have used various methods of ‘savvy spending’ to save money. Over two thirds (68%) of women report using vouchers, discount codes, rewards and/or cashback when spending money compared to 51% of men, and a third (34%) of women have signed up to a mailing list or loyalty scheme to gain access to discounts compared to fewer than 1 in 5 (19%) men. Women are much more likely to report that they are saving towards a short (34% vs. 21%) or long term (29% vs. 16%) goal, which may be their motivation to take advantage of these techniques.
Perhaps unsurprisingly, parents are more likely to undertake some form of ‘savvy spending’, with a higher proportion of this group claiming to have used vouchers, discount codes rewards and cashback (68%) than those without children (56%). Those earning over £35,000 (68%) and individuals aged 34 and under (70%) also report using these methods more than their counterparts (54% of those earning up to £34,999, and 55% of those aged 35+).
Away from the make-up of the savvy spender, our research shows that 71% of those who have used the techniques feel they have saved on holidays and days out since the start of 2018. Over half (55%) of shoppers are saving on their everyday groceries and dining habits, whilst just 29% report making savings on their bills.
Take the strain
More than half of people in the UK with debt are struggling according to a new poll that reveals most people take on the strain themselves rather than seek help. The Nationwide Building Society poll of more than 2,000 UK adults reveals that of those in debt, 57 per cent are experiencing debt problems and feel like they are ‘juggling’ their debts. The research was commissioned to encourage people in persistent or problematic debt to ask for help from their building society or bank as early as possible, rather than struggle alone.
Money worries can lead to emotional issues, with the research showing almost one in three (29%) feel stressed, anxious (28%), depressed (20%) and embarrassed (16%) when thinking about the debts they have. The survey also highlighted that more women experience negative feelings about their debts, with more than a third (36%) reporting feelings of stress, compared to a fifth of men (22%). According to the survey, almost six in ten (58%) say they have never sought help with managing their debts. Among those who do seek help, just seven per cent approached their financial services provider, whereas more than a fifth asked for help from friends and family (21%).
While only a small number of Brits with debt have asked for support from their financial services provider, nearly half (45%) of all respondents stated that the responsibility for managing debt should be shared equally between lender and borrower. However, more than one in ten (12%) have used a debt counselling service in a bid to get out of the red.
Traditionally stroke is associated as a condition that affects older people, but in fact one in four now occur to people of working age or younger: that number is set to rise as the working population gets older according to RedArc who work with insurers, intermediaries, employers and membership organisations, to add value to insurance products and employee assistance programmes. RedArc statistics show that 60 per cent of the stroke patients that the organisation treats are between the ages of 40 and 59 – well within the confines of what is considered traditional working age.
With many health conditions and disabilities more prevalent in older workers, employers will increasingly need to support employees to remain healthy in the workplace, and to have strategies in place to ensure a smooth return to work from serious illnesses.
May is stroke awareness month and RedArc advise organisations who currently feel un- or under-prepared in supporting stroke survivors in the workplace helping them to understand the signs of a stroke and the actions they need to take. A stroke occurs when the blood supply is cut off to the brain which can cause some areas of the brain to be damaged or die. The individual can be left with serious physical and mental impairments, depending on where it happens in the brain.
For survivors of stroke, under the Equality Act 2010, an employer has a responsibility to ensure that a disabled employee has the same rights and access to opportunities as able-bodied staff. This may mean that the employer needs to make a number of reasonable adjustments to the individual’s working environment and working practices.