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House prices, hired help, debt and inheritance tax

7 September 2016

9:58 AM

7 September 2016

9:58 AM

House price growth slowed in August but buying a property was still 6.9 per cent more expensive than a year ago, new figures show.

The Halifax, part of Lloyds Banking Group, said that the average home in the UK cost £213,930.

Prices in the three months to the end of August were 0.7 per cent higher than the previous quarter – marking a slowdown in the pace of growth. Property values fell by 0.2 per cent in August compared with July, the lender added.

Responding to the figures, Ian Thomas, co-founder and director at online mortgage lender LendInvest, said: ‘There have been a number of external factors that have chipped away at the property market in recent months, from the additional Stamp Duty charge to Brexit, with the traditional summer slowdown weighing in as well. While transactions have certainly slowed in central London as a result, the sentiment we get from buyers around the rest of the country is that it is close to business as usual.

‘September will be a useful barometer for what comes next for the property market, as transactions tend to pick up once the holiday period is over. Nonetheless the fundamentals of the property market are unchanged – we do not have enough homes, and we aren’t building enough homes to address that shortage. That will act as a brake on any house price softening in the months to come.’

Living wage

The Government should ignore calls to limit future increases to the national living wage, a think-tank has said.

The living wage of £7.20 per hour was introduced in April, benefiting more than a million staff aged 25 and over. Some business organisations have been lobbying the government to restrain future increases in the hourly rate.

But the Resolution Foundation said that women, the young and older workers were most likely to lose out if future rises are limited.

Rail compensation

Commuters affected by rail delays of just a few minutes will be able to claim compensation for the first time next month after a sudden change of policy by the Government, according to The Times.

The Department for Transport ruled that enhanced consumer rights will apply to rail passengers next month — abandoning a previous decision to postpone the measures for a year.

Consumer groups said that the move would allow passengers to claim for any delay that could be attributed to train operators rather than receiving a graduated payout that starts when trains run at least 30 minutes late.

Other changes include guaranteeing that passengers are repaid in cash rather than vouchers and being able to claim for losses caused by missed train connections.

Hired help

Brits are reverting back to the Victorian days as almost 16 million people hire in help to take care of mundane household tasks, according to new research by Direct Line’s SELECT Premier Insurance.

Television shows like Downton Abbey have highlighted the benefits of traditional home help and it appears modern Brits are reverting to Victorian living patterns. Nearly a third of people rely on external help to tackle household chores. Window cleaning is the top household task where we hire in help (18 per cent) followed by gardening (eight per cent).

With almost 3.5 million Brits working more than 48 hours a week, it seems many value their free time as highly as the cash in their pocket, choosing to hire external help regardless of the cost.

Debt

The number of people seeking help with debt problems has hit a record high in 2016, with those affected increasingly likely to be younger, working part-time and renting their home, according to new research from StepChange Debt Charity. The charity’s Statistics Mid-Yearbook, released today, shows that over 300,000 people sought advice from StepChange between January and June, the highest half-year number the charity has ever seen.


Those contacting the charity in the first half of the year were struggling with a total of £2.4 billion in unmanageable debt and owed an average of £13,826 each, with credit cards, overdrafts and personal loans the most common source of debt problems. Three in ten of those contacting the charity did not have enough money to pay their essential bills and credit commitments each month.

Savings

Major banks have slashed rates on easy-access accounts to as little as 0.01 per cent for loyal customers. That’s a return of just £1 a year on a £10,000 nest egg — less than the cost of a loaf of bread.

According to the Daily Mail, since the Bank of England cut base rate to a record low of 0.25 per cent last month, banks and building societies have pared rates to the bone.

No fewer than 53 providers have so far cut rates by more than the 0.25 percentage-point drop in the official rate, according to data analysts Moneyfacts.co.uk.

Inheritance tax

The proportion of properties sold in England and Wales above the £325,000 Inheritance Tax (IHT) ‘nil-rate band’ is heading to a record high in 2016, according to new research carried out by Saga Investment Services.

Earlier this year, Saga found that 24 per cent of properties sold in 2015 exceeded £325,000, an increase from 13 per cent in 2009 when the nil-rate band was first set. In fresh analysis of property sales data from the Land Registry for the first seven months of 2016, that figure has edged up to 26 per cent, meaning more than one in four properties were sold over the nil-rate band.

Saga analysed data in 105 postcode areas in England and Wales and found that the biggest areas for growth were predictably in London. In central London, four out of every five properties sold so far this year exceeded £325,000. Almost all properties sold in the EC postcode area for more than £325,000. North London has seen a bigger jump, from 76 per cent to 83 per cent, while South East London has increased from 63 per cent to 71 per cent.

Retirement

Savings levels in the UK are showing signs of steadying at the same time as the number of people expecting to receive a defined benefit pension continues to fall, according to the 12th annual Scottish Widows Retirement Report.

retirementWhile the proportion of people saving adequately for retirement, buoyed by the introduction of auto-enrolment, had been on an upward trajectory since 2013, in 2016 the number stayed static year-on-year at 56 per cent. This levelling off appears likely to continue as nearly two thirds of people believe they won’t be able to save any more in the next 12 months than they do now. At the same time, the proportion of people relying mainly on defined benefit pensions for their retirement income now stands at 24 per cent, down from 28 per cent last year, and well below the 36 per cent recorded in the first edition of the Retirement Report in 2005.

Property prices

New Zealand has the world’s most frenetic property market, with prices in Auckland now outstripping London, and possibly dashing the hopes of British buyers hoping to escape Brexit, The Guardian reports.

In a global ranking of house price growth by estate agents Knight Frank, New Zealand was second to Turkey, but once the impact of inflation was stripped out it came top with 11 per cent annual growth.

Canada was the only other country to see price growth of 10 per cent or more over the past year. It also recorded the fastest price rises of any country over the past three months.

Meanwhile once white-hot property markets in the far east are cooling fast. Taiwan saw price falls of 9.4 per cent over the past year, putting it at the bottom of Knight Frank’s ranking. Hong Kong and Singapore have also seen significant reductions in house prices.

Pensions

Government plans to extend pension freedoms to people who are already retired suffered a setback yesterday when the leading pensions broker said that it would not take part.

The Times reports that the Government wants to foster a secondary market in which people who have already bought an annuity giving them an income for life could sell it back for a lump sum. It wants to give the five million people locked into annuity deals the same opportunity as the non-retired, who no longer have to buy an annuity with their pension pots.

However, Hargreaves Lansdown, the biggest broker of guaranteed pension incomes known as annuities, said that it would not offer the service because of concerns that it would not be a good decision for many customers.

Students

Tens of thousands of students heading to university for the first time are at risk of being rejected for current accounts and overdrafts because they are from the wrong part of the country, the Daily Mail reports.

An estimated 20,000 teenagers are set to be turned down for accounts that offer interest-free overdrafts for students. And as many as 40,000 could find they will not be able to get the overdraft level being offered by banks.

Experts warned that those from poorer areas were among those at highest risk of having their applications rejected.

Energy

The number of people switching energy supplier is increasing but two-thirds of households are still stuck on expensive standard variable tariffs, according to new Ofgem figures.

The regulator said that 3.8 million gas and electricity accounts switched in the first half of the year, up 30 per cent on the same period last year, The Telegraph reports.

The actual number of households that opted to switch is likely to be significantly lower, since many opt for ‘dual fuel’ tariffs and so switch both gas and electricity at the same time. Ofgem said that 2.2 million electricity accounts and 1.6 million gas accounts were switched.

Brexit

One in three UK investors claim the outcome of June’s EU Referendum has put them off investing in most traditional asset classes, according to research from peer-to-peer lender ThinCats.

In the last two months, 13 per cent of active investors claim they have steered clear of currency markets after the value of Sterling plummeted. Fixed income assets are also suffering, with 10 per cent of active investors saying they had pulled away from government bonds, while 9 per cent had been discouraged from investing in equities.

Schools

Over a quarter of parents with children of a school age have either bought or rented a new property in order to secure an address within their desired school catchment area, according to new research from Santander Mortgages.

The study also found that families are prepared to spend an 11 per cent premium – which equates to an average £23,707 in the current property market – in order to move to their desired catchment area. This is just under the average full-time salary in the UK, which currently stands at £27,600. On a regional basis, those living in London are willing to pay the highest premium  – equating to an eye-watering £71,539 in the current property market.

Sports Direct

Sports Direct faces a shareholder revolt at its annual general meeting today with investors dissatisfied despite the firm’s pledge to improve staff working conditions.

Investors believe founder Mike Ashley, who owns 55 per cent of the firm, wields too much control. The firm has said its chairman Keith Hellawell will stay despite calls for his resignation.

The meeting comes after a critical report by the chain’s lawyers.


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