Monthly Archives: September 2018

Weekly Round-Up: 28th September 2018

Time to Remo

Credit CardAccording to UK Finance, the trade body representing high street banks, remortgaging continued to dominate in August, as homeowners took advantage of a competitive market to lock into attractive deals. Growth in credit card spending also remained fairly strong, reflecting the boost to retail sales from the warm weather as well as the growing use of credit cards as a preferred means of payment.

Gross mortgage lending for the total market in August was £24.1bn, some 1.2 per cent lower than a year earlier however the number of mortgage approvals by the main high street banks in August rose by 0.7 per cent compared to the same month a year earlier. Within this, remortgaging approvals were 9.2 per cent higher than for the same period a year earlier. There was a fall in house purchase and other secured borrowing of 4.3 per cent and 2.1 per cent respectively.

Credit card spending was 7.6 per cent higher than a year earlier, with outstanding levels on card borrowing growing by 5.8 per cent over the year. Outstanding overdraft borrowing was 7.2 per cent lower compared to the same time last year. Against this personal deposits grew by 1.2 per cent in the last 12 months. Deposits held in instant access accounts were 4.3 per cent higher than a year earlier.

Overall, according to UK Finance, the economic outlook remains mixed as household incomes continue to be squeezed by rising inflation.

Away at college

StudentsParents expecting to send their children to university believe it will cost them on average, £17,165 over the length of the average degree course, the latest Lloyds Bank Spending Power Report has revealed. Ten years ago, this would have been enough to cover the total cost of tuition fees at every university in the UK, with some change left to spare. Now, two thirds (66%) of parents who anticipate sending their child to university expect to support them financially while at university. On average, these parents think they will have to spend £5,721 annually on their student offspring, which is actually less than one year’s tuition at many institutions today.

Just over one in ten (14%) parents are not anticipating helping their child financially while at university. The amount is potentially as large as it is because parents feel they will have to support on all aspects of university life. Just under two thirds (65%) believe they will have to support with accommodation costs, and a similar number (64%) on items essential for study. Over half (58%) said they anticipate supporting tuition fees and even support their travel to and from their child’s travel to and from their classes (52%). However, just under one in four (23%) are prepared to fork out for luxuries.

For parents earning over £35,000, just over one in four (26%) will be prepared to help with luxuries compared to just 17% of those earning under £35,000. For these lower earners, over two thirds (68%) would spend the extra money on items essential to their child’s study. Families more generally are reporting muted confidence in their own finances, preferring to squirrel money away rather than spend. Almost a quarter (23%) think they will have much more money in six months’ time, with 78% planning to save this extra income against 37% planning to spend.

The need for families to save the change could be a direct result of continually high living costs. An analysis of Lloyds bank own data has shown that year-on-year change in consumer essential spending rose 3.1% in August. Fuel spend rose sharply year-on-year by 10.4%, and Gas and Electricity spend rose by 6.3%.

Not living longer

FuneralIn their latest analysis of trends in the average number of years people will live beyond their current age measured by period life expectancy, analysed by age and sex for the UK and its constituent countries, the Office for National Statistics has stated that life expectancy at birth in the UK did not improve in 2015 to 2017 and remained at 79.2 years for males and 82.9 years for females.

The slowdown in life expectancy improvements in the UK has continued, as 2015 to 2017 saw the lowest improvements in life expectancy since the start of the series in 1980 to 1982. Some decreases in life expectancy at birth have been seen in Scotland, Wales and Northern Ireland whilst in England life expectancy has remained unchanged from 2014 to 2016. This slowing in improvements is reflected in the chances of surviving to age 90 years from birth, which has also seen virtually no improvement since 2012 to 2014.

Within the UK, life expectancy at birth declined by 0.1 years in 2015 to 2017 for males and females in Scotland and Wales, and for males in Northern Ireland; life expectancy at birth remained unchanged from 2014 to 2016 for females in Northern Ireland and males and females in England. Life expectancy at age 65 years in the UK did not improve for males and females in 2015 to 2017 and remained at 18.6 years for males and 20.9 years for females.

Across all four UK countries, life expectancy at age 65 years remained the same in 2015 to 2017 except for males in Northern Ireland where a decline of 0.1 years was seen. Around one in five newborn males and one in three newborn females in the UK in 2015 to 2017 could expect to live to at least age 90 years; the chance of survival to age 90 years has remained virtually unchanged since 2012 to 2014. In the UK life expectancy remained lower than in many other comparable countries internationally.

HMO warning

To letWith an extension of the rules bringing a wider range of houses in multiple occupation (HMO) into the mandatory licensing regime coming into effect on 1 October, landlords have less than one week to apply for a licence. The Government made the announcement about mandatory HMO licensing in January, but many industry commentators are concerned that landlords may not have applied for their licenses and are encouraging all owners to make sure they do so before 1 October to be compliant.

This licensing requirement applies to all properties that is occupied by five or more persons or by persons living in two or more separate households, and meets the standard test under section 254(2) of the Act, the self-contained flat test under section 254(3) of the Act but is not a purpose-built flat situated in a block comprising three or more self-contained flats, or the converted building test under section 254(4) of the Act.

Properties that fall into scope of the new definition but are already licensed under a selective or additional scheme, will be passported over to the new scheme at no cost to the landlord. A few Landlords maybe under the misconception that there was a six-month grace period, as was originally proposed. This is not the case and it is important that no-one is found committing an offence through ignorance.

Feedback to the National Landlords Association (NLA) suggests that a number of landlords have tried to apply for licenses, but the local authority has purported not to know anything about it or simply didn’t have the systems in place to process the applications. The NLA is calling for all local authorities to be up to speed with the changes and the challenges being faced in implementing them.

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Weekly Round-Up: 21st September 2018

Licensing Laws

HousesIn England on 1 October, the criteria for what kind of House in Multiple Occupation (HMO) needs a mandatory licence is being extended. The UK Government announced in May 2015 that it would be changing the criteria for Mandatory HMO Licensing in England in a bid to address poor conditions and overcrowding in the private rented sector. This means that from October this year, all HMOs must be licensed if they house five or more occupants, from at least two unrelated households irrespective of the number of storeys that the property has.

Local Authorities will determine whether a property meets a specific test to conclude whether it will need to be licensed. This includes: ‘The Standard Test’; ‘The Self-Contained Flat Test’; and ‘The Converted Building Test’. Previously a large HMO had to have a mandatory licence when it housed five or more occupants from at least two unrelated households, but only if the property had at least three storeys. Since 6 April 2016, all large HMOs have had to be licensed with the local Council, typically licences last for a maximum of five years.

If a property is currently licensed under a mandatory or additional scheme, the existing licence will remain valid until it expires. This means that Local Authorities must only enforce existing conditions of the licence until expiration. These landlords should receive necessary information from their Council about the new requirements prior to the expiration of their current licence. The new mandatory licensing conditions will then apply from the renewal of the existing licence. Further changes mean that rooms used for sleeping in will have to adhere to minimum room sizes. For example where there are children aged 10 and under the room size is 4.64 square metres, a person aged 10 and over is 6.51 square metres and where its 2 people aged 10 and over the room size is 10.22 square metres.

Operating without a licence, failing to comply with an Improvement or Overcrowding Notice, breaching conditions of the HMO licence, and breaching Management Regulations will be a criminal offence and can result in prosecution with an unlimited fine or a Fixed Penalty Notice of up to £30,000 and a Rent Repayment Order (RRO) of up to 12 months’ rental income. Landlords should also be made aware, that where they have a licensable property and they fail to attain a licence, they will not be able to issue tenants of that property with a Section 21 notice.

In the slow lane

New House KeysAccording to the Office for National Statistics, the UK House Price Index average house prices in the UK have increased by 3.1% in the year to July 2018 (down slightly from 3.2% in June 2018). This is the lowest UK annual rate since August 2013 when it was 3.0%. The annual growth rate has slowed since mid-2016 and has remained under 5%, with the exception of October 2017, throughout 2017 and into 2018. Introduced in June 2016, it includes all residential properties purchased for market value in the UK. It should be noted that, as sales only appear in the UK HPI once the purchases have been registered, there can be a delay before transactions feed into the index.

This slowdown in UK house price growth over the past two years is driven mainly by a slowdown in the south and east of England. The lowest annual growth was in London, where ONS data indicate prices decreased by 0.7% over the year, down from an increase of 0.3% in the year to June 2018.

The average UK house price was £231,000 in July 2018. This is £6,000 higher than in July 2017 and £2,000 higher than last month. On a seasonally adjusted basis house prices in the UK increased by 0.3% between June 2018 and July 2018, compared with an increase of 0.5% in average prices during the same period a year earlier (June 2017 and July 2017).

Detached houses showed the biggest increase, rising by 4.6% in the year to July 2018 to £352,000. The average price of flats and maisonettes increased by 0.6% in the year to July 2018, to £208,000, the lowest annual growth of all property types. Weaker growth in UK flats and maisonettes was driven by negative annual growth in London for this property type. London accounts for around 25% of all UK flats and maisonette transactions.

Protect the young

Close up of credit cardsNew data from Barclays has revealed that young people are five and a half times more likely to fall victim to scams than those over 65, with 30 per cent of 18-24-year-old scam victims not believing ‘there is not much to do’ to protect themselves in future. However, impersonation scams, where a criminal pretends to be from the police or the victim’s bank and asks the victim to make a payment, sees the largest concentration in the over 65s. These can be particularly devastating, with a third of cases reported to Barclays over £5000.

Nearly two thirds of high value shopping scams are from London, East and South East England, whilst Plymouth, Sheffield and Southampton are also identified as scam hotspots with one in 10 people (11 per cent) in the cities having been scammed in the last year. Looking at the last five years, this figure in London jumps to one in five people (19 per cent), 17 per cent of people in Plymouth and one in 10 (13 per cent) people in Sheffield. Looking at the UK as a whole, this translates to one in five people being a victim of scam, with exactly half of the victims (50 per cent) under the age of 34.

Barclays top tips for preventing scams include never share your PIN, Passcode or Password with anyone – even if they claim to be from the police or your bank, do not click on any links, or open any attachments in emails from people you don’t recognise, and no genuine bank or the police would ask you to transfer money to a ‘safe account’ – so ignore anyone who asks you to do this, whether it’s by phone, email or any other method.

Resilience required

Backup planMillions of UK adults do not feel financially resilient and would not be able to manage a financial shock or loss of income, according to a new report from Zurich UK. Developed with neuroscientist Dr. Jack Lewis, the Cost of Resilience examines the impact that money, including having products designed to protect and insure against loss, have on feelings of resilience.

According to the research, one in three (34%) adults, the equivalent to more than 17.6 million adults  across the UK, say they would not be able to recover quickly from an unexpected financial shock, such as an unanticipated period without household income or a sudden need to spend a significant sum. A further one in seven (15%) have no idea whether they would be able to cope or not. Yet, the report found that almost a quarter (24%) of UK adults have no savings to fall back on and almost the same number (26%) do not feel in control of their life.

While a third said they would struggle to recover from a financial shock or loss of income, only one in ten (11%) have Income Protection, a financial product that shields your pay against being unable to work through illness or injury. Instead, people are more likely to have insurance for their home (71%), holidays (70%) and mobile phone (18%). The report also found that should an individual experience a financial shock or loss of income, UK adults would struggle to make financial sacrifices, with giving up the family home (51%), car (37%) and holidays (23%) proving the most difficult. More than one in ten (11%) have no idea of the impact a financial shock would have on their household income and they wouldn’t know what sacrifices they’d have to make.

Weekly Round-Up: 14th September 2018

On Hold

Pound CoinsAt its meeting ending on 12 September 2018, The Bank of England’s Monetary Policy Committee (MPC) that sets monetary policy voted unanimously to maintain Bank Rate at 0.75%. In their most recent economic projections, set out in the August Inflation Report, the MPC anticipates GDP to grow by around 1¾% per year on average over the forecast period, conditioned on the gently rising path of Bank Rate implied by market yields at that time.

Although modest by historical standards, the projected pace of GDP growth was slightly faster than the diminished rate of supply growth, which averaged around 1½% per year. According to the MPC, CPI inflation remains slightly above 2% through most of the forecast period and in anticipated to reach the target in the third year.

The BoE highlighted that UK GDP grew by 0.4% in 2018 Q2 and by 0.6% in the three months to July, with the unemployment rate falling to 4.0% and the number of vacancies rising further. Regular pay growth has risen further to around 3% on a year earlier. CPI inflation was 2.5% in July. The Bank is still concerned about further protectionist measures by the United States and China, which, if implemented, could have a somewhat more negative impact on global growth than was anticipated at the time of the August Report. The MPC continues to recognise that the economic outlook could be influenced significantly by the response of households, businesses and financial markets to developments related to the process of EU withdrawal. Since the Committee’s previous meeting, there have been indications, most prominently in financial markets, of greater uncertainty about future developments in the withdrawal process.

The Committee judges that an ongoing tightening of monetary policy over the forecast period is still appropriate to return inflation sustainably to the 2% target however any future increases in Bank Rate are likely to be at a gradual pace and to a limited extent.

Learning the hard way

StudentsWith nearly two-and-a-half million students planning to start or return to university this September with as much as £3,000 worth of possessions, the Association of British Insurers (ABI) is urging students to make sure their valuables are insured and to protect their belongings against theft or damage as the new year kicks off. Given the National Union of Students estimate that 1 in 5 students are victims of crime while studying at college or university, the ABI is issuing top tips to remind students of what they should be doing to keep their possessions protected:

The first is to check an existing home insurance policy to see whether cover can be extended to cover possessions at university, or there may be insurance cover already in place in student halls. There is a word of warning to check the limits on the value of possessions in these policies and if too small, students should consider taking out a separate policy. The ABI also encourages Students to avoid leaving valuables like laptops unattended when they are out and about, as this increases the chance of theft.

Valuables at home when the room or property is unoccupied should either be hidden or kept out of view. Students can security mark their valuables with their details or register them on www.immobilise.co.uk, a police-supported national property register, to help police identify valuables if they do go missing.

Finally for those moving into student halls, to minimise risk, remember to shut windows and lock the door when out of your room. For those moving into private accommodation, make sure your front and back doors are strong and secure, with good quality locks.

With students taking on average more than £3,000 worth of stuff with them to university, it’s vital they make sure they have proper protections in place. Students moving into privately rented accommodation may be unaware of the burglary risk in their area and ensuring the right cover is in place will mean one less thing to worry about further down the line.

Remo July

HousesThe residential remortgaging market saw its strongest July in over a decade, as homeowners pre-empted the latest Bank of England rate rise by locking into attractive fixed-rate deals according to UK Finance, the trade body representing High Street Banks. There was also considerable growth in remortgaging in the buy-to-let sector, showing that while recent tax and regulatory changes are impacting on new purchases, many existing landlords remain in the market. The number of first-time buyers has returned to modest year-on-year growth. However, according to UK Finance, affordability remains a challenge for many prospective borrowers, underlining the importance of clarity over the future of schemes such as Help to Buy.

In numbers there were 46,900 new homeowner remortgages completed in the month, some 23.1 per cent more than in the same month a year earlier. The £8.7bn of remortgaging in the month was 26.1 per cent more year-on-year. There were 32,600 new homemover mortgages completed in July, some 3.8 per cent fewer than in the same month a year earlier, the average homemover is 39 and has a gross household income of £57,000.

There were 31,400 new first-time buyer mortgages completed in July, some 1 per cent more than in the same month a year earlier and 5,500 new buy-to-let home purchase mortgages completed in the month, some 14.1 per cent fewer than in the same month a year earlier. There were 14,700 new buy-to-let remortgages completed in the month, some 7.3 per cent more than in the same month a year earlier. By value this was £2.4bn of lending in the month, 9.1 per cent more year-on-year.

Living longer

Health Monitor_300x200pxA new report by Public Health England titled The Health Profile for England report has highlighted that, as a society, people are living longer with life expectancy in England reaching 79.6 years for men and 83.2 for women. We are also healthier at every age group than ever before however, stubborn inequalities persist – in the richest areas people enjoy 19 more years in good health than those in the poorest areas.

A major theme of the Health Profile for England report is future trends in health, which will aid policymakers to prioritise efforts to prevent ill health not just deal with the consequences. Some of the most notable findings suggest that the number of people aged 85 years old or more has more than tripled since the 1970s and will include more than 2 million people by 2031. The death rate for dementia and Alzheimer’s disease – already the leading cause of death in women – may overtake heart disease in men as early as 2020 and is likely to become the leading cause of death in men too

The number of people with diabetes is expected to increase by a million – from just under 4 million people in 2017 to almost 5 million in 2035 and in the last 7 years, smoking prevalence has dropped by a quarter to 15% and as little as 10% of the population could still be smoking by 2023. UK women’s health is faring worse than their European counterparts, ranked 18th lowest out of 28 EU member states for premature death. UK men are doing better by comparison and are ranked 10th.

Low back and neck pain and skin disease (dermatitis, acne and psoriasis) are the 2 leading causes of morbidity for men and women, with hearing and sight loss also ranking highly for both sexes. Mental health problems and substance use affect younger adults the most, accounting for more than a third of the disease burden in those aged 15 to 29 years.

The new report also shows that good public health is not defined by health policy alone – a high-quality education, a well-designed and warm home, a good job and a community to belong to are just as important.

Weekly Round-Up, 7th September 2018

Driving remortgage

HousesAccording to the latest analysis by UK Finance, July saw steady growth in gross mortgage lending, driven largely by remortgaging as homeowners locked into attractive deals in anticipation of the recent base rate rise. Card spending has also strengthened, reflecting increased expenditure during the holiday period and an uplift in retail sales due to the World Cup and warm weather. However UK Finance suggest that the broader economic outlook remains mixed, with households continuing to see their incomes being squeezed by rising inflation. This may explain the shift towards deposits held in instant access accounts, as consumers opt to keep their money close to hand.”

Putting more detail on the figures, UK Finance published gross mortgage lending figures for the total market in July of £24.6bn, some 7.6 per cent higher than a year earlier whereas the number of mortgage approvals by the main high street banks in July fell by 0.8 per cent compared to the same month a year earlier. Within this, remortgaging approvals were 2.8 per cent higher than for the same period a year earlier. There was a fall in house purchase and other secured borrowing of 0.6 per cent and 11.7 per cent respectively.

Credit card spending was 8.1 per cent higher than a year earlier, with outstanding levels on card borrowing growing by 5.3 per cent over the year. Outstanding overdraft borrowing was 4 per cent lower compared to the same time last year and personal deposits grew by 1.2 per cent in the last 12 months. Deposits held in instant access accounts were 3.8 per cent higher than a year earlier.

Back to school

FamilyProviding their children with a good education is a priority for most parents and is often on the list of key considerations for families looking to decide where to live. While there is most definitely a premium attached to some neighbourhoods surrounding the best state schools across the country, there are also many that come in under the county average, particularly outside of London and the South East where homes remain more affordable versus average earnings according to the latest research from Lloyds Bank. House price growth in areas with top performing state schools has significantly outpaced the rest of the country in the last five years for example house prices near top schools grew by 35% (£104,365), compared to the English average of 20% (£49,082) over the last five years. The average house price in areas close to top performing state schools is now £400,850 compared to the average of £293,824 – a difference of £107,026.

Two thirds (21) of the top performing schools are in locations where average house prices have grown by at least £80k in the past 5 years and half (10) of which are in Greater London. House prices in the postal districts of the top 30 schools are on average £30,968 (8%) higher than other locations in the same county (or local authority in London). The largest premium (149%) is nearby to Beaconsfield High School in Buckinghamshire (ranked 29th) where homes are now worth over £1million when compared to the county average of around £600k. This is twice the premium of Cheshire, home to Altrincham Grammar School for Girls (ranked 10th) and Loreto Grammar School (ranked 20th) which has the next highest house price premium when compared to the country average (£434,756 compared to £249,829 or 74%).

Out of top 30 schools, 11 are priced under the English average. Properties close to the High School for Girls in Gloucestershire (ranked 19th) are £129,982 (44%) below the county average, followed by King Edward VI Handsworth School in the West Midlands (ranked 6th) at £86,953 (42%) below the county average and Kendrick School in Berkshire (ranked 12th) at £135,919 (32%) below the county average. The most affordable are properties near King Edward VI Handsworth School in the West Midlands (ranked 6th) where house prices are just 3.7 times average local earnings.

The average house price in the postal areas of the top 30 schools is nearly 10 times (9.9) average local earnings – compared to 7.9 across England. Homes close to the Henrietta Barnett School in Barnett (the best performing state school in the country) are the least affordable at 22.2 times gross average annual earnings in the area.

Support for the bereaved

FuneralHigh funeral costs have left many families taking on a mountain of debt, with research showing a huge increase in the amount being borrowed by the bereaved over the last five years. The Mutual Insurer Royal London are calling for more support to be offered to families struggling to pay for funeral costs, and as a result being forced into debt.

This new research from Royal London reveals that the average cost of a funeral is £3,757, with costs having stabilised this year (£3,784 in 2017). The Royal London National Funeral Cost Index, in its fifth year, shows that London has consistently been the most expensive region in the UK for a funeral, with the average funeral costing £4,838. Kensal Green, in London, remains the most expensive location, with the average cost of a funeral at £7,489. Burial funerals in Kensal Green have also increased and now cost almost £12,000. Northern Ireland also remains the least expensive region, with a funeral in Belfast costing an average of £2,950.

One in 10 (12%) took on debt to pay for a loved one’s funeral, with the average amount of debt taken on by individuals rising to an all-time high of £1,744. Of those who struggled with funeral costs, three in 10 (28%) people borrowed money from friends and family and one in five (21%) took on debt. Sadly, one in 10(9%) continue to sell possessions to give their loved ones a decent send-off.

Families struggling with funeral costs could be entitled to help from the Government to pay for necessary costs but the research found that the support offered is inadequate. Funeral director’s fees, a coffin, hearse and collection and care of the deceased are not seen as necessary costs by the Government and only up to £700 is offered to bereaved families to cover costs. This leaves bereaved families with an average shortfall of £1,500 if they use the services of a funeral director.

In the fifth year of Royal London’s research into funeral costs, the average cost of a UK funeral has risen by 6%, from £3,551 in 2014 to £3,757 in 2018. Individual funeral debt has increased at a much higher rate – 34% – in the last five years, with people now taking on an average debt of £1,744, compared to £1,305 in 2014.

Healthy Heart

Health Monitor_300x200pxPublic Health England (PHE) is calling for adults across the country to take a free, online Heart Age Test, which will provide an immediate estimation of their ‘heart age’. If someone’s heart age is higher than their actual age, they are at an increased risk of having a heart attack or stroke. Cardiovascular disease (CVD), with stroke and heart attack being the most common examples, is the leading cause of death for men and the second leading cause of death for women.

A quarter (24,000) of CVD deaths are in people under the age of 75, with 80% of these preventable if people made lifestyle and behaviour changes to improve their heart health (around 19,200 deaths per year – the equivalent to 50 deaths a day or one every 30 minutes). Knowing their heart age helps people to find out whether they are at risk and consider what they can do to reduce this risk. High cholesterol and high blood pressure can both increase someone’s heart age, making them up to 3 times more likely to develop heart disease or have a stroke. In England, one in four adults have high blood pressure, yet a further 5.6million are living with the condition undiagnosed, placing millions of lives at risk of premature death and ill health.

The Heart Age Test asks a number of simple physical and lifestyle questions and provides an immediate estimation of someone’s heart age, as well as a prediction of the risk of having a heart attack or stroke by a certain age. It also gives suggestions on lifestyle changes to help people reduce their heart age such as losing weight, quitting smoking, exercising regularly and cutting back on alcohol.  The Heart Age Test has been completed more than 1.9 million times and four out of five (78%) people have a heart age higher than their actual age. Worryingly, 34% have a heart age over 5 years and 14% at least 10 years over their actual age.