Foreign landlords leave Britain
There has been sharp fall in the proportion of Buy To Let property in the UK owned by foreign landlords, says the Mail. In 2010 they accounted for 12 per cent of all residential property let in the UK, but in 2017 that had fallen to just 5 per cent. In London, the ratio has fallen from one in four homes to one in ten over the same period. The biggest decline has been in European ownership. Experts say the tax changes, including liability to capital gains tax for foreign investors when they sell, have deterred people, but lower expectations for price rises in the South East have also played a part.
Are you really covered?
The Mail ran the story of a 66-year-old nurse who had a mastectomy to treat cancer, but was refused a pay out on her critical illness policy because her specific condition wasn’t covered. Experts pointed out that policies taken out today (hers was started in 2001) have wider coverage, and that medical advances mean the scope of cover with these policies is bound to change, so that regular reviews of these types of policy is essential.
Too little risk?
Are young savers who are auto-enrolled into the NEST pension scheme taking too little risk, asked the Mail. The reason it asked is that NEST’s ‘default’ option for younger savers (aged 22 to 27) is a cautiously-invested fund with a large proportion of its money in safe investments. Yet, as experts agree, over the long term riskier investments like shares are virtually certain to deliver much higher returns, so most investment advisers would recommend young people to allocate their savings to a fund investing almost exclusively in shares. NEST argues that its approach is valid because young ‘first-time’ savers are nervous and may opt out of the scheme if they incur losses in the early years. Experts argue that better communication, so that savers understand that paper losses on their funds in the first few years don’t matter, is what’s needed.
Thousands overpaying student loans
The Telegraph used a Freedom of Information request to discover that almost 90,000 people continued to make payments on their student loans in 2015-16 even though the loan had already been repaid in full. It says this is largely due to delays in the information collected by HMRC being passed on the Student Loan Company, but also says people often have to wait a long time for repayments if they have overpaid. The number of people affected has risen by 80 per cent in the past six years.
Half of pensioners ready to move
Almost half of Britain’s retired population would be prepared to move and downsize, potentially releasing almost 3 million extra bedrooms, says the Telegraph. With pensioner numbers set to rise from 5.7 million today to over 11 million by 2036, downsizing could help to deal with the country’s chronic housing shortage. A survey showed 10 per cent of retired people would be motivated to downsize by a stamp duty concession, but experts said the real problem was that there weren’t suitable properties for them to move into, since far too little new building was designed to be suitable for older people.
200,000 may have overpaid tax on pension withdrawals
Under the new pension freedom rules, people can easily take one-off withdrawals from their funds. In fact, says the Telegraph, 242,000 people did so last year, and most had tax deducted from their payments under HMRC rules at rates assuming they would take the same amount every month for the rest of the tax year. If they didn’t in fact make those further withdrawals, the system would result in more income tax being paid than was in fact due. Yet only 43,000 of them had made a tax reclaim, so the Telegraph concluded that up to 200,000 people may well have paid too much tax and didn’t understand that they could get it back.
Borrowers take advantage of cheap loans
Wealthy borrowers are taking advantage of cheap mortgage loans to invest in a growing range of assets, says the Financial Times. Previously, such loans might have funded Buy-to-Let investments, but with the recent tax changes, commercial property has become a more favoured investment. More sophisticated borrowers are also investing in private equity and alternative assets.
Investors flock to AIM for tax savings
A little-known tax break is attracting investors to shares in companies listed on the Alternative Investment Market (AIM), says the Financial Times. Many of these companies qualify for Business Property Relief, which means that after you have owned shares for over two years they are exempt from inheritance tax. There are now many AIM portfolio services for investors and some have generated substantial gains over the past year.
Interest-only crunch ahead
Crunch time for interest-only mortgages is 2022, says the Financial Times. This is when the majority of interest-only mortgages taken out between 2003 and 2009 reach redemption – but will borrowers be able to repay? A great many probably won’t: some will have banked on paying off their mortgage when they downsized, but that is highly dependent on the state of the property market. Today, it is harder to get an interest-only mortgage – higher deposits are usually required, and there are tougher ‘affordability’ tests.
A State pension at 68… or perhaps not
The Financial Times personal finance editor Claer Barrett mused about the government’s announcement that the state pension age will rise to 68 in 2037, seven years earlier than previously planned, and a move expected to save taxpayers £74 billion. As someone affected by the move, she said she feared the numbers of older people living longer would make the state pension unaffordable by the time she came to retire and that means-testing might be introduced. The only answer is to save more.