Weekly Round-Up: 1st June 2018
According to the Nationwide Building Society UK annual house price growth slowed modestly in May to 2.4%, from 2.6% in April. House prices fell by 0.2% over the month, after taking account of seasonal factors. Annual house price growth has been confined to a fairly narrow range of c2-3% over the past 12 months, suggesting little change in the balance between demand and supply in the market over that period. The Society suggests that there are are few signs of an imminent change with surveyors continuing to report subdued levels of new buyer enquiries, while the supply of properties on the market remains more of a trickle than a torrent.
Looking further ahead, Nationwide highlight that much will depend on how broader economic conditions evolve, especially in the labour market, but also with respect to interest rates. Subdued economic activity and ongoing pressure on household budgets is likely to continue to exert a modest drag on housing market activity and house price growth this year, though borrowing costs are likely to remain low. Overall, they continue to expect house prices to rise by around 1% over the course of 2018.
In the report, data from the Ministry of Housing, Communities and Local Government shows that, over the last 20 years, the total housing stock in England has increased from 20.6 million to 24 million dwellings, a rise of 16%. There have been significant shifts in the ownership of the stock, which in turn has influenced trends in property type over time with the most striking shift being in the proportion of the stock owned by private landlords. While last year’s data showed a small decline in the stock of privately rented dwellings, they still account for 20% of the total stock, double the proportion in 1997. The counterpart of this shift has been a decline in the proportion of homeowners (from 68% to 63%) and social landlords (from 22% to 17%).
Britain is a nation of green-fingered gardeners, who invest significant time and money in private outdoor spaces, according to new research from Lloyds Bank.
More than nine in ten (92%) of the population have access to a private outdoor space such as a garden, allotment or balcony, and almost eight in ten (79%) have their own private garden. People are proud of their patches, spending an average of five and half hours per week on maintenance. The north east of England is Britain’s most green-fingered region, committing an average of seven hours per week to garden maintenance, while those in the south west with a private garden dedicated just five hours per week in the summer of 2017.
Unsurprisingly, those over 55 spent an average six hours a week in the garden last summer while those under 34 spent less than four hours per week tending to their turf. Gardens come at a cost, with Brits spending an average £170 on their outdoor spaces during British Summer Time (April – September) and, interestingly, taking the time to shop in store more often than online. Of those surveyed, 8 in 10 (79%) opted to purchase outdoor plants and seeds in store, 7 in 10 opted to purchase tools and equipment (70%) and house plants (68%) in store, and more than half (52%) headed to a store to choose their fencing, decking or garden buildings.
Almost a third (32%) of those with a private garden paid for garden maintenance services last summer, spending on average £195. This figure is higher for those aged over 55, who spent on average £207 on maintenance services. Two fifths of Brits fund the cost of their gardens from regular income while a further 15% make use of a credit card or loan.
The Financial Conduct Authority (FCA) has announced new proposals designed to protect millions of people who use overdrafts and high-cost credit. The changes the FCA are consulting on follow an in-depth review into the high-cost credit market and are expected to reduce the costs for consumers and give them greater control over their finances. These changes are wide-ranging and some specific proposals are being consulted on from today. In addition, the FCA will gather additional evidence and carry out further analysis before any formal decisions can be made on a number of other issues.
High-cost credit is used by over three million consumers in the UK, some of who are the most vulnerable in society and the FCA have proposed a significant package of reforms to ensure they are better protected including the possibility of a cap on rent-to-own lending. Overdraft costs will be made more transparent and prevent people unintentionally dipping in to an overdraft in the first place. In 2016 firms made an estimated £2.3 billion in revenue from overdrafts; 30 per cent of this was from unarranged overdrafts. The majority of unarranged overdraft charges are paid by only 1.5% of customers, who pay around £450 per year in fees and charges./p>
The FCA is also consulting on mandatory rules to make it easier for customers to manage their accounts which include mobile alerts warning of potential overdraft charges and stopping the inclusion of overdrafts in the term ‘available funds’.
As part of the review the FCA looked closely at the rent-to-own sector. Costs for the 400,000 customers can be high – sometimes exceptionally. The FCA has seen examples where people have paid over £1,500 for essentials like an electric cooker, which could be bought on the high street for less than £300.
The FCA will now carry out the detailed assessment of the impact that a cap could have on the rent-on-own sector and how it might be structured. Additionally, the FCA intends to strengthen protections for vulnerable users of high-cost credit in stores and at the door, by introducing new requirements to raise standards in disclosure and sales practices.
The FCA has already transformed some high-cost sectors, with firms making substantial improvements and paying more than £900 million in redress to customers across consumer credit. The series of measures announced today builds on this work./p>
Not to me
The results of Royal London’s second State of the Protection Nation report reveal that the top reason people gave for not taking out protection was that they think premiums are too expensive (69%). They also believe they won’t get ill and they don’t need insurance. Despite this many people want to protect their lifestyle and loved ones from the financial impact of dying or becoming seriously ill. Nearly half of advisers (49%) feel that consumer inertia is one of the greatest barriers to people buying protection, sending out a clear message that education is key to removing the barriers.
Nearly half of the people surveyed (46%) felt they were unlikely to go on sick leave for three months or more, 44% thought they were unlikely to have an accident that meant they were unable to work and a third (34%) felt it was unlikely they would contract a serious health condition or illness. Research from Pacific Life Re1 shows that the chance of being off work for two months or more before age 65 is 26% for males and 37% for females. Even if illness struck nearly half (43%) felt they could manage for a year if they were unable to work due to serious illness or injury, 55% said they would manage for six months and 71% would manage for three months. Yet the reality is only 2 in 5 could survive financially for more than six months if they were unable to work.
Despite only a small percentage of consumers saying they had life insurance (3%), critical illness cover (3%) and income protection (5%) through their employer, the majority of people felt they didn’t need income protection (58%), critical illness cover (47%) and life insurance (34%). The industry and advisers believe in the value of products available, but consumers are still reluctant to buy insurance.
The results revealed inertia plays a part in people’s decision not to buy, as 20% of full-time working people recognise they need income protection but don’t have a policy. Over a third (38%) of people working full-time feel they don’t need income protection, but just 8% said they didn’t need it because they had cover with their employer. Royal London’s figures show that 58% of people with a mortgage have life cover in place if the home owner dies, leaving 42% unprotected. But worryingly 71% of people with a mortgage would have no protection in place if they were diagnosed with a critical illness, and 81% of mortgage owners have no income protection in place. The reason this is concerning is that people are far more likely to be diagnosed with a critical illness or have an injury that stops them working than to die before retirement age so more people should consider critical illness or income protection.
A quarter (25 %) of people who don’t own any life insurance, critical illness cover or income protection said they were confident that this lack of cover was in line with their needs. This figure doesn’t get much better when they look at those in full time employment (30 hours a week or more) with 27 % saying they were confident.