Year: 2019

Help-to-buy ISA: last chance to get up to £3,000 of free government cash

If you plan to be a first-time buyer, getting a help-to-buy ISA is a no-brainer – but you need to get a move on

Rupert Jones, The Guardian

Sat 12 Oct 2019 07.45 BST

Time is running out if you haven’t taken advantage of the government’s offer of free money towards buying your first home.

That’s because the help-to-buy ISA – with which the government will give you up to £3,000 with only some strings attached – closes to new savers on 30 November. Provided you are in before that date, you can continue tucking money away for another 10 years.

So if you, or your offspring, are over 16 and have never owned a home but may well want to in the future, you might want to reserve your spot by signing up now. You can open an account with as little as £1, and don’t have to pay in every month, so some might say it’s a no-brainer to grab one now before they are withdrawn from sale.

However, to slightly confuse matters, there is another account that also offers a government cash bonus for savers: the lifetime ISA. So should you get that instead – or take out both? Here we run through what you need to know.

What is the help-to-buy ISA?

It was launched at the end of 2015, and the accounts are available from banks and building societies. If you are saving up to buy your first home and you put money into a help-to-buy ISA, the government will boost your savings by 25%. So for every £200 saved, first-time buyers can receive a bonus of £50.

You can save up to £200 a month, though to kick start your account, in the first month you can deposit a lump sum of up to £1,200. The minimum government bonus is £400. That means you need to have saved at least £1,600 into your ISA before you can claim your bonus. The maximum government bonus is £3,000. To receive that, you need to have saved £12,000

What does the money have to be used for?

To buy a home up to the value of £250,000 outside London, or up to £450,000 in the capital. That price cap will be problematic for some. This must be your only home, and it can’t be rented out or used as a holiday home. However, the government won’t claw back bonuses from people whose circumstances change after they buy, and who need to rent out their property as a result.

Who’s eligible?

To qualify, you must be 16 or over and be a first-time buyer – defined as someone who doesn’t own, and has never owned, a home anywhere in the UK or the world. If you have paid into a cash Isa this tax year, you will have to transfer the money over. A help-to-buy Isa has to be opened by the individual themselves – you can’t open one on behalf of someone else.

Can I open one with my partner?

If you plan to buy a home with someone else who is also a first-time buyer, they can open their own help-to-buy ISA. So a couple who save £24,000 between them can get a further £6,000 from the government.

What happens after 30 November?

They won’t be available to new savers any more – but if you opened your account before then, you can keep saving into it until November 2029, when accounts will close to additional contributions. You must claim your bonus by 1 December 2030.

Do I have to save £200 every month? No, the amount you save every month is up to you, as long as you don’t go over £200. However, you can’t roll over your allowance. So if you don’t save any money during January and February, this doesn’t mean you are allowed to save £600 in March.

Can I withdraw money from my help-to-buy ISA?

Yes, you can take out your money at any time.

So how does it work with the bonus money?

When you are close to buying the property, you will need to instruct your solicitor or conveyancer to apply for it, and this cash will then be added to the money you are putting towards your first home. But you only get the bonus money on completion – you don’t get it at the exchange stage, where buyers typically put down a 5% or 10% deposit to guarantee the purchase. However, you may be able to get the seller to agree to a smaller deposit at that point, on the basis that the bonus cash is on the way.

Will the interest I’ve earned count towards my bonus?

Yes, your bonus will be calculated based on the amount you have in your account when you close it.

Who offers these ISA’s?

Lots of banks and building societies. Top of financial information firm Defaqto’s table is Barclays, which is currently offering 2.58% interest on an account that can be opened with £1. Providers currently paying 2.5% include Nationwide, Nat West and Virgin Money, it adds.

Can I take advantage of the lifetime ISA too?

Yes, you can save into both schemes if you meet the eligibility criteria – but you will only be able to use the bonus from one to buy a house. The lifetime ISA lets you save for either a property or retirement. You can put away up to £4,000 each year and receive a government bonus of 25%. The money invested can be withdrawn after age 60, or earlier if it is being used to buy a first home worth up to £450,000 in the UK. Savers have the potential to earn a total of £32,000 in bonuses if they pay in the maximum £128,000 over 32 years from age 18. But to be eligible, you must be aged 18 to 39. And there is a hefty penalty if you withdraw money for any reason other than buying your first home, reaching 60 or if you are terminally ill.

 

10 pros and cons of the Help to Buy ISA

The Help to Buy ISA, which gives you free money from the Government, is only open to new applicants for another six weeks. Here’s a reminder of what it’s all about.

By Annabel Dixon

September 13, 2019

Zoopla

Interested in the Government’s Help to Buy ISA? With the deadline for applications closing in just six weeks, you’d better get your skates on.

The Help to Buy ISA is a special savings account designed to help first time buyers get on the property ladder.

You can make a regular saving of up to £200 a month into the account (with an additional boost of £1,200 in the first month) and any interest you receive on your cash will be paid tax-free.

When you come to buy a home, the Government will top up your savings with a bonus of 25% – also tax-free. The maximum bonus available is £3,000 which applies to £12,000 savings.

Although the Help to Buy ISA will shut to new applicants on November 30, if you already have an account you can keep saving into it until November 30, 2029 when it will close to additional contributions too.

Still not sure? Here’s 10 pros and cons to the accounts.

10 pros of the Help to Buy ISA

1. Tax-free interest

As the account is an ISA, it accounts for part of your annual ISA allowance and you won’t pay tax on any interest you earn.

2. The Government’s 25% bonus

The effect of this currently outstrips even the top savings rates on the market.

3. Keep saving for as long as you like

Once the account is open, you can pay in £200 a month indefinitely until November 2029. You will have to claim your bonus by December 1, 2030 (although this could change under a different Government).

4. Access to your cash

You can get your hands on your savings – plus the tax-free interest they’ve generated – at any time. But if this is before you buy a home, you’ll forfeit the Government bonus.

5. You can have one account each

So, if you’re buying as a couple, the maximum bonus is £6,000.

6. Use it on any kind of property

That means a new-build or re-sale. You don’t need to go through your local housing association. It just has to be in the UK and bought for you to live in.

7. Plenty of providers

Take your pick and compare interest rates from the likes of Barclays, Lloyds, Nationwide, NatWest, Santander and Virgin Money. You can find a comprehensive list of providers on the Government’s website.

8. Free to switch

If the rate becomes uncompetitive, you’re free to switch to a better account. Just make sure you carry out an official ISA transfer to retain the tax-free status on your cash.

9. Don’t have to dump previous years’ ISAs

They can sit alongside your Help to Buy ISA. However, you can only pay into one cash ISA (such as Help to Buy) and one stocks and shares ISA in any single tax year.

10. Can be used in conjunction with other first time buyer schemes

Such as the Government’s Help to Buy and shared ownership schemes.

 

10 cons of the Help to Buy ISA

1. Saving can be slow

With maximum contributions standing at £200 a month, it will take 4 to.5 years worth of saving to claim the maximum £3,000 Government bonus.

2. Strictly for first time buyers

To qualify for the account, you must never have owned a home (or even a share of one) in the UK or anywhere else in the world. This also applies to couples, so if one partner owns or has previously owned property (including inherited), that person will not be eligible.

3. Minimum savings to get bonus

You’ll need a balance of at least £1,600 to qualify for the 25% Government bonus which, in this case, would be £400.

4. No interest paid on Government bonus

You’ll just get the flat 25% of the balance you’ve managed to save between £1,600 and £12,000.

5. Price cap on property value

Homes you can buy with the account must cost less than £250,000 – or £450,000 in London – and be bought with a mortgage. If you’re buying under a shared ownership scheme, these caps apply to the whole property value, not just the share you are buying.

6. You can’t put the Government bonus towards your initial deposit

That’s because it’s only paid on completion to prevent savers from nabbing the bonus and then pulling out of the purchase.

You can still use the funds you’ve saved into the Help to Buy ISA yourself, plus the tax-free interest, for the lump sum deposit, which is paid at exchange of contracts, but you will have to wait until completion to add the Government bonus.

This should be explained to the seller through your solicitor, so they are comfortable that the Government bonus will be forthcoming

7. Bonus will be paid to your solicitor

The Government pays its bonus direct to your solicitor or property conveyancer just before completion – and they will need to apply for it on your behalf. You are likely to be charged £50 (+VAT) for them to make the bonus application.

8. Not available as stocks and shares

Unlike the Lifetime ISA- which also pays a tax-free Government bonus – the Help to Buy ISA is available as just cash.

9. Time limit to open an account

Banks and building societies will pull their Help to Buy ISAs off the shelves in December 2019.

10. Transfers in from existing ISAs are limited

You can make a ‘transfer in’ from an existing ISA into a Help to Buy ISA, but only if the balance being transferred is £1,200 or less. That’s because this is the maximum you can open the account with.

 

How much do the seasons affect property prices?

Estate agent comparison website, GetAgent.co.uk, has been crunching the numbers and looked at the seasonal impact on property transactions, sold prices and the premium carried by seasonally influenced road names.

The firm looked at the change in transactions and sold prices across each season last year, as well as the current sold prices for road names with a seasonal twist to have sold so far this year.

According to the figures, last year the average price for property transactions was at its highest during the summer months at £265,546, up 20.5% from the spring average of £220,366.

While Brexit uncertainty has seen property prices stutter for much of the nation, there could be more bad news on the horizon and more than a cold snap in the weather as we head into Autumn. Last year, the average sold price dropped -7.7% between the summer and autumn months to £244,984 and the market froze further during the winter months with a -17.4% fall in sold prices. Transactions also dropped -1.8% between summer and autumn and -1.1% between autumn and winter.

With Brexit still a factor, it looks as if things may get worse before they get better for UK home sellers.

The bright side?

While the autumn and winter months aren’t great for the market as a whole, they could see home sellers with seasonal road names quids in. So far this year, road names containing winter in them have seen property sell for an average of £284,741, considerably higher than the national average. Autumn ranks second with an average sold price of £281,380, closely followed by summer at £280,576, with spring ranking the lowest but still at a notable £263,146.

Colby Short, Founder and CEO of GetAgent.co.uk, commented: “While the dark clouds of political uncertainty continue to overshadow the health of the UK property market, seasonal trends show that prices and transactions are due to dip even further.

Seasonal swings are a factor that influences many different areas of business, not just property, however, when coupled with an already uncertain landscape, they can make mediocre market conditions seem a lot worse than they really are.

While home sellers won’t welcome an even tougher time to sell and for the price that they would like, those with the Brexit silver bullet of a winter of autumn related road name should be able to defy the doom and gloom to secure a good price for their home.”

 

Warren Lewis | PROPERTY REPORTER

24th September 2019

 

 

 

Bank of England forecasts low interest rates for longer

By Szu Ping Chan

Business reporter

BBC News

The Bank of England has signalled that prolonged Brexit uncertainty will keep interest rates lower for longer.

Policymakers said the UK would avoid falling into recession this year, but warned that Brexit and trade worries were weighing on the economy.

The Bank kept interest rates on hold at 0.75%.

The Monetary Policy Committee (MPC) that sets interest rates also warned that a no-deal Brexit would hit the economy.

Policymakers said it would lead to weaker growth, higher inflation and a further drop in the value of the pound.

However, the Bank stressed that interest rates could move up or down if the UK left the European Union without a deal.

The minutes of the Bank’s September meeting said that policymakers would have to balance raising interest rates to keep a lid on inflation against cutting them to support growth.

How does the Bank see the outlook?

The UK economy contracted by 0.2% in the three months to June. The Bank expects the economy to expand by 0.2% in the third quarter of this year.

While this is weaker than the 0.3% growth predicted last month, it means the UK is expected to avoid a technical recession, defined as two consecutive quarters of economic decline.

A survey by the Bank showed that consumer spending remained robust, with many families choosing to spend more time in the UK this summer rather than go abroad because of the weaker pound.

It said the increase in “staycations” had boosted spending on restaurants and hotel accommodation.

The Bank also said the government’s decision to inject more money into departments in the latest Spending Review would boost UK growth by around 0.4% over the next three years.

What about Brexit?

The MPC said that the ongoing uncertainty over the UK’s relationship with the EU risked a further period of “entrenched uncertainty”.

They said ongoing uncertainty would lead to weaker growth and less inflationary pressure, reducing the Bank’s need to raise interest rates.

The minutes of the meeting said: “The longer those uncertainties persisted, particularly in an environment of weaker global growth, the more likely it was that demand growth would remain below potential.”

However, policymakers repeated that more clarity that the economy was heading towards a Brexit deal meant that increases in interest rates would be needed over the next three years.

Why does the Bank think rates will stay low for longer?

The Bank of England, like many of us, is on hold, and in a Brexit holding pattern too.

Although there is no change in the Bank of England’s interest rate decision, marking out the UK from its counterparts in the US and euro zone, there are interesting Brexit developments in September’s deliberations of the Monetary Policy Committee.

For the first time, the Bank has felt the need to signal a direction of travel for interest rates in the now plausible scenario of “political events” leading to “a further period of entrenched uncertainty” about Brexit.

The committee concluded that the longer that uncertainty continues, particularly against a background of a weak global economy, the more likely that growth, and also inflation will slow.

The implication of these minutes being that UK base rates would also remain lower for longer.

It has until now signalled that rates are likely to rise gradually back from its post-crisis lows only if there was a “smooth Brexit”, a deal with a transition.

Or else under no-deal, amid exchange rate falls, inflation rises and slower economy, there could be either cuts or rises.

What did the MPC say about the global economy?

Policymakers said the US China trade war had intensified over the summer, which would continue to weigh on overall growth.

Manufacturing output continued to be weak, and while policymakers said the direct economic impact of ongoing trade tensions was likely to be “relatively small”, they said the trade war was “having a material negative impact on global business investment growth”.

They did not say how the recent attacks on Saudi Arabia’s oil supply would affect inflation except to say that prices had risen sharply following the attacks.

It’s an autumn mortgage bonanza

If you have a 10 per cent deposit or equity in your home, banks will fight for your business

Carol Lewis

September 14 2019, 12:01am, The Times

Homeowners and would-be buyers have a phenomenal choice of cheap mortgages after a flurry of new deals.

The number of loans available to those with a deposit, or equity, of 10 per cent or more has been boosted by the unprecedented arrival of 65 products in the past month.

Unfortunately, those struggling to get on to the ladder are missing out on the bonanza, after 11 products requiring only a 5 per cent deposit were withdrawn. With more than £26 billion worth of mortgage deals due to mature next month, lenders are competing hard for remortgage customers. According to Moneyfacts, a financial data analyst, most of the deals are for those with deposits or equity of between 20 and 25 per cent.

The new products have lowered the average rates available on five-year fixed-rate mortgages — the most popular loan on the market. The 80 per cent loan-to-value (LTV) mortgages had the largest drop in interest rates with the average falling from 2.87 per cent in August to 2.77 per cent this month. The average two-year fixed rate is 2.45 per cent compared with 2.51 per cent a year ago.

This average, however, disguises just how cheap some deals are getting. The best two-year fixed rate is from HSBC at 1.24 per cent, 60 per cent LTV, with a £999 fee. Darren Cook, a finance expert at Moneyfacts, says: “It seems that lenders have taken heed of the Prudential Regulation Authority’s warning about reducing rates on riskier, higher loan-to-value mortgages. As a result, the number of mortgages available at 95 per cent loan-to-value has fallen from 391 to 380 over the past month and the average five-year fixed rate at 95 per cent loan-to-value has increased by 0.01 per cent.

“Borrowers with a 5 per cent deposit may benefit from waiting until they accumulate a 10 per cent deposit to secure a more favourable rate and have a greater choice of products. There is double the number of mortgages at 90 per cent loan-to-value compared with the 95 per cent,” he says.

Chris Sykes of Private Finance, a mortgage broker, says that it isn’t only off-the-peg mortgages that are having a bumper season. “Many mainstream lenders are coming out with bespoke mortgage ranges that offer a far greater degree of criteria flexibility. HSBC, Natwest, Skipton, Bank of Ireland, Santander, Halifax and other mainstream lenders are hoping to attract the high-net-worth clients that would previously have been ineligible with them.”

This should make deals easier for the self-employed, small business owners and those paid primarily in bonuses, who have found it hard to get loans since stricter lending criteria were brought in under the Mortgage Market Review. The review, instigated in the wake of the financial crash and put into action in 2014, made banks much more cautious about lending.

Bespoke lending can offer greater flexibility on affordability criteria, for instance, taking account of bonus payments or fixed-rate terms for periods other than the usual two or five years. Some, such as Clydesdale, have loans designed for particular professions.

Despite the fall in the number of 95 per cent LTV products, first-time buyers are still the largest property buying group and a key target for lenders. Halifax launched a 100 per cent mortgage for them this week — with the catch that they will need to persuade mum and dad to lock away some savings as security.

The Family Boost mortgage is fixed at 2.9 per cent for three years up to a maximum loan of £500,000 and 10 per cent of the purchase price is deposited as savings, which attract a respectable 2.5 per cent interest. Either the borrower or family member must have a Halifax reward or ultimate reward current account.

Russell Galley, a managing director at Halifax, says: “As part of our commitment to lending £30 billion to first-time buyers by 2020, we are offering families a way to help give the next generation the boost that they need to get on to the property ladder, while providing competitive rates to buyer and supporter.”

According to Halifax, the average deposit for those buying their first home is £41,099, 52 per cent higher than it was in 2009, at £27,059.

There is good news too for those contemplating retirement. Hodge Lifetime, a subsidiary of Hodge Bank, launched a fixed-for-life retirement interest-only mortgage for people aged 50 or over. The loan is repayed when you, or your relatives, sell your house. The bank offers a fee-free version at 4.55 per cent and one with an arrangement fee of £995 at 4.35 per cent at 70 per cent LTV.

 

 

Look To Your Broker For A Guiding Hand When Buying During Brexit

As the nation collectively bemoans the sluggish progression of the UK’s departure from the European Union, those looking to move house could be forgiven for delaying their decision until there is more certainty. We speak to Rob Clifford, chief executive at national mortgage network, Stonebridge, for his take on the current market and what you should consider when looking for your next mortgage product.

It would be easy to suggest that the ongoing Brexit pantomime, and talk of an economic downturn in the event of a disorderly departure, could prompt would-be homebuyers to hold off making a mortgage application.

However, while the country’s political progress may seem woeful, the mortgage market hasn’t been idly standing by. Recent figures from UK Finance show that lenders approved just over 14,000 more mortgages in the first six-months of this year, compared to the same period of 2018, which demonstrates encouraging confidence in the market.

As a prospective buyer, conditions certainly look favourable, despite the fact that the UK has not yet struck a Brexit deal.

At this point, we are in no doubt that Brexit has been a factor getting in the way of any significant growth in house prices, with London in particular experiencing a marginal decline in property values over the past two years according to figures released by Nationwide. Depending where in the country you are looking to buy, now could be a great time to get a good deal. However, with Bank of England governor Mark Carney warning of potential drops in house prices in the event of no-deal, it is natural to be nervous.

The thing to keep in mind with any purchase of this magnitude, is what house prices will do over the long-term, rather than within the next 12 months. If you’re planning on living in your next home for a number of years, as the vast majority of people do, then a short-term dip in value is hardly likely to impact the eventual sale price.

With the Bank of England’s base rate remaining unchanged from its current 0.75% level, a mere 0.25% increase from where it bottomed out in 2017, mortgage products remain exceedingly good value for buyers in the short term. If you do decide that now is the time to purchase your next home, there are a few things to keep in mind.

Believe it or not, the Brexit process won’t last forever, and it is wise to plan for a gradual increase in interest rates and therefore the cost of your mortgage. So, shop smart. Whether or not you take advantage of the Government-backed Help to Buy scheme, or have a sizeable deposit, make sure your plans factor in any potential rate increases. This is especially important with new build homes on the government scheme, as you will obviously need to be able to pay back your equity loan, as well as the mortgage on the property.

More good news for borrowers is the fact that many lenders are reducing mortgage product fees and rates. Research from moneyfacts.co.uk shows that 95% loan to value (LTV)  mortgage products have one of the lowest average fees at £914, down £46 from 2018’s average, while interest rates have also fallen on this product over the past 12-months from 3.98% to 3.25%.

As a buyer, this means you may be able to get into your next property sooner than expected, but it is crucial that you properly consider the many dozens of lenders (banks, building societies and specialist lenders) competing for your business and the myriad of deals available. Alongside affordability in the face of potential interest rate rises, be mindful of your LTV and work with your chosen broker to ensure the deal suits your lifestyle and circumstances.

While it may seem a confusing time to be buying a property, there are plenty of opportunities amid the uncertainty. Whether you’re a first time-buyer or moving to another property, building a relationship with a trusted mortgage broker can pay dividends. With access to exclusive deals, and expert knowledge of the markets, they will guide you through the thousands of mortgage products available in the market, helping you pick one that meets your current and future needs.

By Stonebridge

 

 

What an election may mean for your finances

We look at the possible outcomes for tax, pensions, savings and property under a new government

Carol Lewis, September 7 2019, 12:01am,

The Times

There is a much-cited dictum that people vote with their wallets. Hence politicians tend to focus on personal finance — income tax, stamp duty and pensions — in the lead-up to a general election.

Within the next day or two we could learn the likely date of the next election. However, with politicians short of time and their attentions focused on other matters, the party manifestos are likely to be more piecemeal than usual.

Steve Webb, the director of policy at Royal London, an insurer, says: “If a new government ends the uncertainty over Brexit, one way or another, this could improve the economy and investment returns. But if it mishandles Brexit, there could be serious economic consequences for people’s wages and investments.”

So how will an election hit our wallets?

Interest rates
While rates are widely expected to plummet to offset a no-deal Brexit, a key consequence of a Labour win could be the opposite. Webb says: “If a Labour government was expected to borrow heavily, this could lead to a sharp increase in interest rates.”

This might be good news for savers and those buying annuities, but bad news for those with mortgages. Webb says: “Higher interest rates would also reduce deficits in company pension funds.”

Income tax
During his campaign to become the Tory party leader Boris Johnson pledged to raise the threshold for higher-rate income tax in England from £50,000 to £80,000. At present 40 per cent tax is levied on income of between £50,000 and £150,000. Scotland and Wales set their own tax bands. This policy would not be all good news for higher-rate taxpayers because they could lose tax relief on their pension savings.

Steven Cameron from Aegon, an insurer, says: “An increase to benefit higher earners will be partly offset by a proposed increase in national insurance contributions and the loss of higher-rate tax relief on pension contributions.”

Webb believes that “other, less high-profile tax rises” could be introduced to pay for the tax cuts.

If Labour won an election, Webb says: “Labour has a radical policy agenda, which would seriously dent the incomes of the wealthy. Labour has talked about increases in income tax for higher earners, increases in corporation tax, increases and reform of inheritance tax, and increases in capital gains tax.”

Labour has proposed that the 45 per cent additional income tax rate will kick in at £80,000 rather than £150,000 with a 50 per cent rate to apply to income over £123,000.

Pensions
The Conservatives have promised to look at the pension tax rules for higher earners after it emerged that NHS workers were cutting their hours to avoid paying more tax.

The tapered allowance — which whittles down the amount you can save tax-free into a pension once you earn over £150,000 from £40,000 a year to £10,000 — is particularly unpopular. Cameron says: “The pension lifetime and annual allowances are a disincentive to work and we need action across the board, not only for the NHS.”

Labour has indicated that it might reduce pension tax relief, while the Liberal Democrats have said that they would introduce a flat 20 per cent rate of tax relief on pension contributions and abolish employee national insurance payments on the contributions.

Housing
Private landlords haven’t had it easy under the Conservatives, but they are unlikely to fare any better under a Labour government.

George Bull, a senior tax partner at RSM, an accountancy firm, says: “John McDonnell’s recent suggestion that a Labour government would give private tenants the right to buy their homes at a discount is causing consternation, coming hard on the heels of Conservative government restrictions to the tax regime for private landlords.”

The Conservatives have hinted that they could look at reforms to stamp duty and greater incentives for first-time buyers, including an extension to the government’s Help to Buy scheme and a continuation of its Lifetime Isa (Lisa). The Scottish National Party said that it would abolish “gimmicks” such as the Lisa.

POSSIBLE POLICIES

Conservatives
• Raise the 40 per cent income tax threshold from £50,000 to £80,000
• Replace the pension triple lock (which states that the basic state pension will rise by a minimum of either 2.5 per cent, the rate of inflation or average earnings growth) with a double lock (inflation and earnings) from 2022
• State pension age to increase to 67 by 2028 and 68 by 2046
• Reduction in pension tax relief for high earners
• Means-tested winter fuel payments

Labour
• The 45 per cent additional income-tax rate threshold to be lowered from £150,000 to £80,000
• A 50 per cent tax rate to apply to income of more than £123,000
• Freeze state pension at age 66
• Keep the pension triple lock until 2025
• Add 20 per cent VAT on private school fees
• Give private tenants the right to buy their homes at a discount*
• Large businesses to transfer up to 10 per cent of shares to a fund held by employees*

Liberal Democrats
• Limit the tax-free lump sum that can be withdrawn from pensions to £40,000
• Keep the triple lock on pensions
• Flat rate of tax relief on pension contributions of 20 per cent
• Abolish employee national insurance on pension contributions
• End winter fuel payments for higher-rate taxpayers

Scottish National Party
• Opposed to lowering income tax thresholds for higher earners
• Have pledged to campaign to keep the pensions triple lock
• Opposed to an increase in the state pension age beyond 66
• Extend eligibility of winter fuel payment to families with severely disabled children
• Business rate exemption on private schools to be lifted

 

 

House price growth is slowing but buying still beats renting

Louisa Clarence-Smith, Property Correspondent

August 20 2019, 12.01am

The Times

 

The era of dizzying rises in the price of property may be over but research suggests that owning a home still makes more financial sense than renting because of low mortgage interest rates.

The monthly cost of paying the interest on a new mortgage is now 62 per cent lower than renting, according to Capital Economics, a research consultancy. It found that the average monthly rent for a property was £859, compared with the £323 average monthly interest on a new mortgage.

In comparison, between 2010 and 2018, the average interest on a mortgage was 55 per cent lower than the average rent. Paying the interest on a mortgage in the 2000’s was only 27 per cent cheaper than paying the rent.

Hansen Lu, an economist at Capital Economics, said: “The era of sustained, rapid house price growth appears to be over. But even so, the cost of owning a home is still favourable compared with renting and is likely to stay that way. That suggests that the strong preference that households have for owner occupation will be sustained.”

House price inflation has slowed since the Brexit vote in 2016 as a result of price falls in and around London, particularly for more expensive homes affected by higher stamp duty. Government figures this month showed that in the year to June house prices across the country rose by 0.9 per cent to an average of £230,000, the weakest growth rate since 2012.

Brexit uncertainty is weighing on the housing market, with property sales at their lowest level since the global financial crisis, according to Savills, an estate agency.

The Bank of England has forecast that house prices could fall by as much as 30 per cent in the event of a chaotic no-deal Brexit.

However, Mr Lu said that while a collapse in house prices or a steep rise in interest rates could make buying a home much less attractive in the short term, there remained a “big picture” case for buying over renting.

Capital Economics said that mortgage payments had fluctuated broadly in line with rents over the past decade.

Most borrowers fail to qualify for comparison site mortgage deals

Kate Palmer

August 18 2019, 12:01am

The Sunday Times

Fewer than four in 100 people looking for a mortgage are actually eligible for the deals found by comparison websites, research for The Sunday Times shows.

Analysis of searches made by 11,000 borrowers shows that just 385 — or 3.5% — would qualify for the mortgages they are shown.

Many comparison websites have a simple calculator for borrowers that asks for the property value, size of deposit and loan length. They then see a list of available deals that fit these criteria — but the loans will depend on lenders’ affordability tests, which scrutinise expenses such as gym memberships, private school fees and spending on credit cards.

The credit reference giant Experian found that only a tiny number of people will actually be eligible for these deals, which represent about 73% of available mortgages. They exclude niche products, such as home loans only available through brokers or offered by private banks.

Homebuyers who fail to pass the tests are either declined outright or offered less money than hoped for.

Borrowers have more luck if they use an eligibility tool, where they input salaries, spending commitments and debts. Experian said 22% of borrowers would qualify for the deals found this way.

Some websites, such as Compare the Market, offer even more detailed eligibility checks, which include a search of the borrower’s credit profile. These are time-consuming to complete, but mean that borrowers are more likely to be accepted for any of the deals they see.

Lisa Fretwell, from Experian, said: “People don’t want to leave anything to chance when buying their dream home — they want to find affordable mortgages they will be accepted for.”

Help to Buy continues to grow and could be extended beyond 2023

The number of homes bought through the Government’s flagship Help to Buy scheme increased by 9% in the 12 months to March 2019 with the figures also rising for first time buyers.

The data published by the Ministry of Housing, Communities and Local Government (MHCLG) show that 52,404 home sales were completed under the scheme during the 12 month period, the first time it has reached over 50,000 in a year.

Some 43,248 of these homes were bought by first time buyers using the Help to Buy scheme, a rise of 11% year on year, dispelling the myth that it does not help those taking their first step on the housing market.

In London there were 6,115 purchases using Help to Buy, up 30% year on year and first time buyers made up 95% of sales in the capital, some 5,838 homes.

The average price of properties bought through the scheme across England reached £300,487, up 4% from £288,462 at the same point in 2018.

Since it was launched in April 2013 some 221,405 homes have been bought using the scheme with 81% of them going to first time buyers. The mean purchase price of a property bought under the scheme since the start was £260,218, with buyers using a mean equity loan of £56,257.

Help to Buy offers buyers who have a deposit of 5% an interest free Government loan of up to 40% of the purchase price of new build homes in London and 20% in the rest of the country.

Now it could be extended beyond its current end date of 2023. The newly appointed Secretary of State for Housing, Robert Jenrick, said it will be considered. ‘This is a new administration, a new Chancellor, I think all options are on the table. I intend to have further discussions with Sajid Javid in the weeks and months to come,’ he said.

 

PropertyWire

26^th July 2019