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Cheltenham house prices rise while Perth sees biggest fall as market slows

House prices in the Gloucestershire town of Cheltenham rose more rapidly than in any other part of the UK in 2017, while Perth in Scotland saw the steepest fall, according to data from mortgage lender Halifax.

Homes in Cheltenham, a former spa town on the edge of the Cotswolds, jumped by 13% during the year, up £36,033 to £313,150, nearly five times the average UK increase of 2.7%.

The UK housing market has slowed considerably compared with last year, when the national average growth rate was 7.5%. Now forecasters are predicting increases could slow to a halt in 2018 amid uncertainty over Brexit.

While 15 of the fastest 20 risers were recorded in London and the south-east, towns in Wales, Yorkshire and the East Midlands also made the top 20, unlike last year when the list was dominated by the capital and southern England.

The seaside towns of Bournemouth and Brighton were in second and third place respectively, both experiencing price rises of more than 11%.

Huddersfield in Yorkshire also made the top 10 with growth of 9.3%, while Swansea saw the biggest jump of any area in Wales, up 7.7% to £164,895.

The largest increase in cash terms was felt in the London borough of Richmond upon Thames, where a 7.6% rise in house prices saw the average home rise by £45,463 to hit £646,112.

The average in Richmond is now more than three times the price of a home in Perth the area that saw the largest fall in prices.

According to Halifax, which based its data on successful mortgage applications in 119 towns and 24 London local authorities, homes in Perth declined in value by 5.3%, or £10,125 in cash terms, to an average of £190,813.

That puts Perth at the top of a list of just 13 towns or city boroughs where house prices fell in 2017, eight of them in either Scotland or Yorkshire and the Humber.

“Generally speaking, property prices in these areas have been constrained by lower employment levels or relatively weaker economic conditions when compared to those areas that have seen house price growth,” said Russell Galley, managing director of Halifax.

Stoke-on-Trent saw the second biggest fall, down 4% to an average of £152,340, with Paisley in Scotland in third place, after a 3.6% fall to £123,665.

Other towns where house prices fell include Wakefield, Rotherham and Barnsley in Yorkshire, as well as Dunfermline and Aberdeen in Scotland.

While the vast majority of towns saw an increase in 2017, housing market commentators have predicted the steady increases seen in recent years could grind to a halt in 2018, particularly in London and the south-east, citing the twin spectres of Brexit and rising interest rates.

Of the two big lenders that operate closely watched price indices, Nationwide has said it expects property values to be “broadly flat in 2018, with perhaps a marginal gain of around 1%”.

Halifax allowed itself some room for manoeuvre by predicting UK growth in the range of 0% to 3%.

However, the prognosis for London – which according to the estate agent Savills has recorded house price growth of 70% over the past decade – is more downbeat, with many economists forecasting that prices in the capital will slide into negative territory.

According to a Reuters poll of 28 housing market specialists published last month, property prices will rise by 1.3% nationally, but fall by 0.3% in London. The former figure is less than half the current rate of consumer price inflation.

Forecasters have pointed to economic and political uncertainty leading up to the UK’s exit from the European Union in 2019, as well as the rising cost of mortgages if the Bank of England raises the base rate again, having increased it for the first time in a decade from 0.25% to 0.5% in November.

Such predictions are likely to be welcomed by the burgeoning numbers of aspiring first-time buyers who currently cannot afford to join the housing ladder.

However, shortages of homes for sale and continued low levels of housebuilding are likely to support prices, while last month’s abolition of stamp duty for all homes up to £300,000 bought by first-time buyers could provide a boost to those looking to get on the ladder – provided it does not push up property values.

Source: The Guardian

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Crawley Buy To Let Property Investor Fined For Illegally Evicting Tenants

A Crawley buy to let property investor has been fined after being found guilty of illegal eviction, having discarded his tenants possessions and changed the locks of her rental property.

Mitesh Patel, 44, of Chanctonbury Way, Southgate, Crawley, was fined £1,700 for his offence. He had dumped the possessions of his tenants, a couple he was attempting to evict, on the lawn outside their rented flat. He had also changed the locks to the property to prevent them from returning.

Mr Patel was also ordered to pay costs of £3,000 for the offence, as well as £300 in compensation at Horsham Magistrates’ Court on December 18 for illegally evicting the Crawley couple from their home in his property. He was found guilty of breaching the Protection from Eviction Act 1977.

Crawley Borough Council explained that the couple had approached the council in order to report the eviction. The pair had returned to their rented property in February 2017, and were greeted with the sight of their possessions on the lawn outside their flat. They then discovered that the locks had been changed. Not only did the actions of Mr Patel breach eviction law, they were also caused serious distress to the tenants through his improper actions.

Mr Patel had pleaded not guilty to the breach of the Protection from Eviction Act 1977 in front of the court.

Crawley Borough Council has since helped the evicted couple to find alternative privately rented accommodation. This was done through the council’s ‘Rent Deposit Scheme.’

Council leader Peter Lamb spoke out about the case after the hearing. He commented: ‘Rogue landlords cannot just evict privately rented tenants whenever they want. They must follow the correct legislation and issue notices in the right way. Landlords who break the law now know that we are serious about protecting tenants’ rights.’

Source: Residential Landlord

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2018 for consumers: price rises, volatile pound and interest rate hikes

Looking back over the year that is gone, there were few signs of relief for the average household. The knock-on effects of the Brexit referendum resulted in price rises on everyday items from butter to electronics while the Bank of England increased interest rates for the first time in a decade, leaving the banks open to increase the mortgage repayments of homeowners.

While inflation is creeping up – it was 3.1% in November – wage growth has not matched the rise, resulting in a squeeze on the average household budget.

Even the family’s annual holiday in the sun is now more expensive as the weaker pound affects the price of travelling abroad.

With those grim developments behind us, what does 2018 hold for the average household, and are there any signs of relief?

More price rises

Weaker sterling meant that even everyday products such as butter and tea cost more this year. Apple, Sonos and Microsoft have also hiked their prices.

Unfortunately, it is expected that the hikes will continue in 2018, according to retail analyst Jonathan De Mello at Harper Dennis Hobbs. “Unless a ‘hard’ Brexit can be avoided, it is inevitable that UK consumers will face price rises for everyday goods in 2018 and beyond,” he said.

“ Inflation is high currently and the government is finding it difficult to keep it under control. The recent interest rate rise was an attempt to do so, but sterling is still very weak – meaning retailers that import their products (ie most of them) will face increased costs, which given tight margins will have to be passed on to the consumer.”

“The major additional downside risk to this is a hard Brexit – this would lead to tariffs on trade to and from the EU – increasing costs, inflation and therefore prices on the high street further.”

Sterling trouble

Families heading to the sun have been depressed when looking at the exchange rates for their two weeks on the continent. At its lowest point this year, £1 got just €1.08 – down from €1.31 in the month before the Brexit referendum in 2016.

What happens to the pound over the next year – and the subsequent knock-on costs for holidays – will again be largely dependent on how the Brexit talks progress, said David Lamb of Fexco, an Ireland-based financial services company.

“The ongoing uncertainty over how Britain will extricate itself from the EU will continue to drive both the news agenda, and by extension, sterling sentiment,” he said. “We should expect a volatile ride for the pound throughout the next stages of Britain’s negotiations with the EU. Any signs of significant progress will see the value … soar, while hints that talks are running into trouble will cause it to fall.

“In that respect 2018 won’t differ that greatly from this year. During 2017, sterling has traded in a range that has taken it both 5% higher and 5% lower, pivoting around a midpoint of €1.14. Nevertheless, year-on-year sterling is only down by about 3% versus the euro, which given how far it fell in the immediate aftermath of the EU referendum, is pretty stable.

“If we do see some movement in trade talks next year there is no reason sterling couldn’t test this year’s April high of €1.20 – but for that to happen, investors will want to see evidence of real, substantive progress.”

Another rate rise?

November saw the first interest rate rise in 10 years, resulting in millions of homeowners facing higher mortgage payments. Bank of England governor Mark Carney said the move was not part of a sustained trend but it is anticipated that there will be two further quarter-point rises by the turn of the decade. The move last month brought the interest rate from 0.25% to 0.5%, adding £22 to the cost of the average variable rate mortgage.

Ray Boulger of mortgage broker John Charcol has predicted that the interest rate will go up by one quarter by the end of 2018, bringing it to 0.75%.

“There is likely to be one 0.25% bank rate increase in 2018, or possibly two, but as for several years much larger increases have been factored in to the mortgage affordability assessment, this should not put those who have obtained a mortgage recently under financial pressure,” he said.

“However, an immediate impact of any bank rate increase is likely to be the maximum amount available to new borrowers. The financial policy committee mandates that lenders assess affordability in most cases on the basis of a 3% increase in the revert-to rate, normally a lender’s standard variable rate (SVR), and so any increase in the bank rate automatically reduces the maximum mortgage available unless lenders don’t pass on the increase in their SVR even if, as with November’s increase, the cost of fixed rate mortgages doesn’t increase.”

Energy prices

Government plans for a cap on electricity bills and gas prices would affect some 11 million households from 2019 at the earliest and apply to those on a standard variable tariff, the expensive plans that customers are moved to when cheaper, fixed deals end.

This planned legislation could result in energy suppliers putting up prices in advance of it being introduced, according to Emma Bush from comparison website uSwitch.com.

“The threat of a widespread price cap could see some suppliers removing their cheaper deals and pricing up towards the level of an anticipated cap, although if it is introduced it’s not expected to happen before 2019,” she said. “A cap could lull consumers into a false sense of security whereby they think they are on a competitive tariff. If energy companies don’t fear losing their customers they won’t feel the pressure of competition to keep their prices and their costs low, resulting in a lose-lose situation for consumers.”

“With savings of up to £491 available for households switching away from expensive standard variable tariffs, our advice is always to run a comparison and protect yourself against potential price rises by switching to a cheaper fixed-term deal.”

House prices

Recent reports have speculated that while the price of houses nationwide will probably increase marginally over the coming year, there will be drops in London, continuing a trend seen in the last few months.

Rightmove has predicted that prices will rise across England and Wales by 1% in 2018 but that there will be a 2% drop in the capital. Such a rise in overall prices would be the lowest annual increase since 2011. A report from Savills predicts that house price growth in London will lag behind other regions for the next five years.

A separate report last week, this time from the Royal Institution of Chartered Surveyors, predicted that house prices across the south-east will drop as well as those in the capital. Again, the Rics said that higher prices in areas such as Scotland, Wales, Northern Ireland and north-west England would stop an overall nationwide drop.

And finally … pricier pop

The sugar tax is expected to come into force in April. Under the new rules, producers or importers of soft drinks will have to pay a sugar tax of 18p per litre on drinks containing 5g or more of sugar per 100ml and 24p per litre more if their products contain 8g or more per 100ml. The Treasury expects the levy to raise £385m a year. The move has been opposed by the industry, which says it will disproportionately affect poor people.

The money gathered from the new tax is earmarked to be used on increasing the funding for sports in schools.

Source: The Guardian

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Over 11,000 homes have stood empty for at least 10 years, data shows

More than 11,000 homes across the country have been lying empty for longer than a decade despite the housing crisis and rising homelessness, according to new research by the Liberal Democrats.

The data was collected through freedom of information requests to about 275 councils, which showed 60,000 properties had been empty for two years or more, 23,000 for five years or more, and over 11,000 have stood empty for at least 10 years.

Vince Cable, leader of the Liberal Democrats, told the Guardian: “At a time when the homelessness crisis is worsening and more and more people are sleeping out in the cold on our streets, it is a national scandal that thousands of homes across the country are sitting empty.”

Government data suggests about 200,000 homes have been empty for six months or more but information on longer-term vacant properties is not routinely published.

The Lib Dem research also showed that just one in 13 councils are making use of empty dwelling management orders (EDMO) – the powers that can be used by local authorities to take over properties that have been empty for at least six months.

Only 19 of the 247 councils in England and Wales that responded had used an EDMO in the past five years. Of these, only six had used one in the past year. In total, councils returned about 23,000 empty homes back into use, including through direct action and the work of empty home teams.

The Liberal Democrats are calling for reform of EDMOs and tougher powers for local councils to be able to bring long-term empty homes back into use.

“These homes could be turned into affordable places to live for some of the most vulnerable people in our society. The government needs to urgently review the current system which is clearly not working,” Cable said.

“Councils need to be given the powers and resources to bring empty homes back into use. This must form part of a wider package to tackle the housing crisis, including building more homes on unused public sector land and clamping down on land-banking.”

The areas that responded with the largest number of homes empty for six months or more were Durham with 6,500, Leeds with 5,724, Bradford with 4,144, Cornwall with 3,273 and Liverpool with 3,093.

The government announced at the budget that it would try to encourage owners of empty homes to bring their properties back into use by allowing local authorities to increase the council tax premium from 50% to 100%.

However, the charity Empty Homes said at the time that the council tax increase would do little to deter those buying properties as investment as “for a very wealthy buyer spending millions, 100% council tax is not really enough of a disincentive”. The charity said it would be more helpful if the government carried out a review into why overseas buyers kept their properties empty.

A spokesman for the Department for Communities and Local Government said: “We’ve given councils a range of powers to bring empty homes back into use and the number of empty homes is down a third since 2010 to its lowest since records began.

“At the same time, we’re implementing the major changes to law and investing over £1bn to 2020 to tackle homelessness and rough sleeping.” After the Grenfell fire, data accidentally released by Kensington and Chelsea council revealed a string of oligarchs, foreign royalty and multimillionaire businesspeople as the owners of vacant properties in the borough where the deadly disaster left scores of people homeless.

Owners of the 1,652 properties listed as unoccupied by Kensington and Chelsea council included a Ukrainian billionaire fighting extradition to the US, a former mayor of New York, a high-profile luxury property developer and a senior television executive.

Source: The Guardian

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Strong growth in UK commercial sales in 2017 may not be repeated in 2018

Commercial transaction volumes in the UK are expected to reach around £50 billion for 2017 as a whole, some 15% more than sales recorded in 2016 despite Brexit and political uncertainty.

Such a strong performance in the face of continued political upheaval and economic uncertainty demonstrates that there is a long term investor commitment and confidence in the UK real estate market, according to the latest analysis from real estate services firm JLL.

The report says this is especially true of international investors, which account for around half the total volumes across the country, and 80% or more of those in London.

Indeed, investment into London’s office property has surged this year reaching £12.5 billion by the end of the third quarter, the strongest first nine months on record and 44% up on 2016.

According to Neil Prime, head of Central London Markets at JLL, while the weak pound has helped international investors get a better deal for their money, their investment criteria remains stringent; a global gateway city with strong fundamentals and that hasn’t changed.

‘Amid all the Brexit noise, negative political sentiment and pessimistic forecasts, there is some uncertainty but central London office market fundamentals remain sound in terms of supply. We are seeing new sources of occupier demand from life sciences and sustained activity from the technology, media and telecoms sector which will offset financial sector weakness,’ he explained.

The research shows that interest in prime London assets has been particularly strong from Hong Kong and mainland Chinese investors. In 2017 nearly £1 of every £2 invested in London offices was from Hong Kong. Food conglomerate Lee Kum Kee paid £1.3 billion for the Walkie Talkie building while Hong Kong-listed CC Land’s signed a £1.15 billion deal for the Leadenhall Building.

According to Alistair Meadows, head of Capital Markets in the UK, interest from Hong Kong is unlikely to change substantially in the short term. ‘The capital coming in from Hong Kong is a combination of private family money that is seeking to diversify and invest outside the territory, and mainland Chinese money that has been channelled through Hong Kong,’ he said.

‘While some capital controls have been introduced that will likely moderate the flow of capital from mainland China, suggesting volumes may be lower going forwards, we believe this trend is set to continue,’ he added.

German investors have also been active in the London market with Deutsche Asset Management, Union Investment and Deka Immobilien making significant acquisitions while Singapore’s sovereign wealth fund such as GIC, and Canadian pension funds such as CPPIB have all added to their UK holdings.

While traditional assets continue to hold their appeal, many investors are increasingly turning their attention to alternatives, a rapidly growing sector in the UK which is forecast to make up 30% of the commercial market for 2017.
‘We’re seeing both domestic and international investors looking at sectors such as retirement living, healthcare, student housing and build-to-rent as areas of investment opportunity that offer value, and prospectively sustainable and resilient income streams,’ Meadows explained.

But he warned that with Brexit very much an unfolding event, 2018 could bring many unanswered questions. ‘Political uncertainty remains the biggest threat. and there are some big question marks over how the Brexit negotiations will unfold, especially in relation to migration and skilled labour, which have a major impact on the UK’s construction and service industries,’ he pointed out.

Despite more multinationals firming up plans for post-Brexit operations, the London office market remains resilient. ‘While there is continuing uncertainty about the flow of financial services jobs out of London, the extreme downside risk to Brexit related jobs is, we believe, overstated,’ said Prime.

‘In the current environment, the market looks stable and while unlikely to deliver widespread growth, an increase in office rents is forecast to return from 2019. Office occupiers will seek flexibility, employees will seek the best places and location and asset choice selection will be key to investor performance,’ he added.

And to sum up Meadows said that while investment volumes in 2018 may not match their 2017 growth of 15% or more, international investors are keeping a very close eye on the market. ‘The fact that long term institutional global capital has continued to invest in the UK this year despite the uncertainty bodes well for the future,’ Meadows concluded.

Source: Property Wire

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New plans to build apartments on old brewery site revealed

The latest stage of plans which could see hundreds of homes built at a former old brewery have been unveiled – with 18 new apartments planned for the site.

An application has been submitted to Broxtowe Borough Council‘s planning department by developer Fairgrove Homes.

The company wants to build the new apartments as part of a wider project to redevelop the site of the old Hardys and Hansons brewery, off Harvey Road, Kimberley.

The former brewery was sold to Greene King in 2006, but it was abandoned five years later and was left to fall into disrepair.

It has since been split into a number of smaller development plots and sold to developers, who could eventually build up to 350 homes on the site.

Another application was submitted to the council in October. This sought permission to build 14 new townhouses in the brewery yard.

Originally the plan was to build a three-storey apartment block of 24 one bed rooms. This was approved in 2015.

But the developers chose to instead revise the plans after some opposition from the public, and the plans were re-submitted to seek permission to instead build townhouses, with the company saying it felt there was “more of a need for family homes”.

Chairman of the Kimberley Chinemarelian Historical Society and Kimberley Town Councillor Roy Plumb, 76, welcomed new of the latest planning application.

He said: “This will make the Kimberley area a lot more attractive for people. It is certainly one of the biggest developments we have had since the Victorian-period.

“Of course it would have been great to keep the brewery, but it couldn’t happend. A mixed residential development was the only viable option.

“The developer is keen to retain the heritage of the site, and is forward-thinking with this. The homes will be in-keeping with the site itself.

“It will develop the site into a 21st century living space, and it won’t look out of place for the area.”

The latest application, submitted in December, seeks permission to develop 18 two-bed apartments in the already existing Grade II listed maltings building.

Planning documents submitted by the developer state: “The alterations to the existing building externally are very little and barely constitute development. They will be very minor and will barely impact on the character or appearance of the area.

“The condition of the building is deteriorating rapidly since the closure of the brewery some plus 10 years ago.

“They [the apartments] will enable the building to be put back into viable usage in the long term, and will bring substantial improvements to the area long-term.”

A final planning decision on both this latest application and the one submitted in October has yet to be made by the borough council’s planning committee.

The brewery was originally opened in 1832 and was the major employer in the town with over 200 employees.

Many of the buildings are from the 1850s and 1860s, although over the years new buildings and warehouses have been continually added.

Fairgrove Homes is already developing 23 new-build homes and four conversions on the another part of the site, including 10 detached houses.

Source: Nottingham Post

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Property investment strategies for 2018

As we approach the end of 2017 there are an array of differing opinions about the worldwide real estate sector and specific country markets. On one hand there were high hopes that Donald Trump would bring about a new era of growth for US real estate but so far his policies have fallen flat. After voting in favour of Brexit, there were also high hopes that the UK would prosper as a truly independent nation but these have started to falter. While European markets are mixed to say the least, the current focus on the UK and Brexit negotiations has given struggling European property markets a period of respite. So, what are your property investment strategies for 2018?

CAPITAL GROWTH INVESTMENT STRATEGIES

While short-term speculators, sometimes referred to as “flippers”, often attract derogatory comments and negative press coverage, they are a vital part of the liquidity of worldwide property markets. The truth is that even in the direst of circumstances there will be situations where properties are undervalued and there is potential for a short-term gain. However, whether property investment for capital growth will be as easy for less agile investors remains to be seen.

The UK housing market seems to have turned down from its August peak, the performance of the US housing market varies widely and there is still a significant hangover of property in Europe. It might be more challenging to utilise a successful capital growth policy in 2018 but if it was easy then everybody would be doing it.

RENTAL INCOME INVESTMENT STRATEGIES

Whether looking at traditional buy to let or HMO investments there are some very attractive rental income yields on offer in the UK and further afield. As property prices become more subdued, amid short to medium term economic and political concerns, there is the opportunity to cherry pick some double digit rental income yields. While some will point out government policies to increase the number of new builds per annum, this has been “on the cards” for decades now and little has been done. As a consequence, demand for rental property is likely to remain strong, offering support to some of the more attractive yields.

When you also consider UK base rates are at near historic lows, and unlikely to push too far ahead in the short to medium term, high single digit and potential double-digit rental yields look even more attractive. Rental income investment strategies offer the best returns on a long-term investment horizon as well as the opportunity to build up a sizeable portfolio. Unfortunately, many investors want to bank capital gains tomorrow and, as we have seen in the cryptocurrency sector, many are prepared to follow like sheep into markets in which their knowledge is at best sketchy.

CONCLUSION

There will always be opportunities to lock in attractive rental yields as there will always be opportunities to bank short-term capital gains. In the short to medium term the cost of finance is likely to increase a little although house prices in areas such as the UK may come under more pressure in light of Brexit. There will be opportunities aplenty, chances to flip undervalued properties for capital gain as well as locking in extremely attractive rental yields. However, this may take more in depth research during 2018 with so much uncertainty in the UK and around the world.

Source: Property Forum

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UK housebuilders to prefabricate hundreds of homes in factories

One of Britain’s major housebuilders is to prefabricate up to a quarter of its homes in a factory, in the latest attempt by the construction industry to tackle the housing shortage.

Berkeley Homes, which builds 4,000 homes a year, is planning to create a facility in Kent next year where builders will work to produce up to 1,000 houses and apartments annually which will then be craned on to sites.

Another company, nHouse, is setting up a factory in Peterborough with the capacity to build 400 homes a year, complete with light fittings, bathrooms, bookshelves and kitchens. Production is expected to start in January.

It claims it can build a house in 20 days in the factory which can then be erected on site in half a day. Several other developers, including Legal and General and Urban Splash, have also launched prefab home divisions.

Fears of a shortage of skilled construction workers caused by an ageing workforce and an exodus due to Brexit are part of the reason for the revival of prefabrication, which last provided a significant number of homes after the second world war.

The government has set a target of building 300,000 homes a year by the middle of the next decade. Despite recent increases in activity, the last annual figure was 190,000.

A Berkeley spokesman said: “We have acquired a 10-acre brownfield site from the Homes and Communities Agency to build a factory for modular homes in Ebbsfleet, Kent. This will have the potential to deliver up to 1,000 homes a year.

“Construction of the factory could begin next year. While the speed of production and the impact on skills and labour are important factors, our real driver is the quality we can achieve with modular housing.”

The nHouse has been designed by the architect Richard Hywel Evans and is made in four modules from engineered pine panels which are transported on the backs of lorries and are then clipped together on site and connected to pre-existing services. Its built-in features include solar panels, a robot vacuum cleaner and even a drone landing pad – looking forward to a time of aerial deliveries.

A three-bed house is on sale to developers or individual householders from £170,000 to £185,000, which is about the same price as a standard house built using wet trades.

Nick Fulford, the director of nHouse, argues that with 100 workers operating on an indoor production line rather than on muddy building sites in the elements, the homes will suffer from fewer snagging problems.

Source: The Guardian

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Eight things that will (probably) happen in 2018

1. Prices will continue to rise more than your pay for most of 2018

The cost of living is increasing at a near six-year high of 3.1%, having more than doubled during 2017, largely as a result of the fall in the value of the pound following the EU referendum in June 2016. Meanwhile, average wage growth is running at 2.3% (or 2.5% if you include bonuses) which means that real earnings are falling.

Household energy costs, petrol and car insurance have been among the worst culprits for price rises. Most of the big energy companies hiked tariffs during the year, with British Gas adding 12% to electricity bills in August. This time last year the average price of petrol on Britain’s supermarket forecourts was 111.9p a litre, but now it’s 116.5p. There’s not much we can do about that, unfortunately, although most experts are expecting a flat or mildly falling oil market in 2018 as US shale production continues to rise, offsetting attempts by the Organisation of the Petroleum Exporting Countries (Opec) to increase prices.

Car insurance has rocketed by an average of £200 over the past five years, according to Comparethemarket.com. Between September and November 2012, the average motor insurance premium stood at £559, but today premiums for the same three months have reached an average of £758 – a rise of £199. After years of increases in insurance premium tax, 2018 is unlikely to see further hikes so the inflation rate in car insurance may finally begin to slow.

Most economists expect the general price squeeze to continue through 2018, although there is some light at the end of the tunnel; the Bank of England is forecasting inflation to slip back to 2.4% by the end of 2018. Meanwhile, wage growth is expected to at least maintain its current rate, or moderately accelerate to above 2.5%, so Christmas 2018 could see the first recovery in real earnings for years.

2. Train fares will jump on Tuesday

The bad news is that the first big price rise of 2018 is just days away: on Tuesday UK rail fares will rise by 3.4% – the largest increase for five years. The rise covers “regulated” fares such as season tickets and long-distance journeys. But other fares can be raised or dropped at the train operators’ discretion. The price of an off-peak trip from Preston to Manchester goes up 6.6% to £16 from £15, while a London to Slough off-peak ticket is increasing by 9% from £9.60 to £10.50.

3. Letting agency fees will (eventually) be abolished

Tenants in England typically pay £404 every time they move, according to campaign group Generation Rent – and more than £800 in some parts of London. There can also be additional charges for tenants on low incomes and needing rent guarantors (at an average cost of £152), or simply needing to move in on a Saturday (an extra £62). But at some point in 2018 (the government has not given a precise date yet) England will follow Scotland and ban letting fees to tenants. Landlords threaten to retaliate with rent increases, but with a weak economy and lower pressure from migration, few experts reckon rents will rise by anything more than 0-1% in 2018.

4. Pensions will be the big money story of 2018

Many people could be in for a shock when they check their pay packet in April 2018. That’s because of a big change that will affect millions of people, who will see a bigger slice of their pay automatically diverted to a savings pot for their pension.

Automatic enrolment went live in 2012 and but the total minimum amount paid in is currently just 2% of qualifying earnings – made up of 0.8% from the worker, 1% from the employer and 0.2% in tax relief. However, on 6 April this will rise to 5% – typically 2.4% from the worker, 2% from their employer and 0.6% in tax relief. In April 2019 the total increases again, to 8%. So, if you are an affected employee, how much might you – and your employer – have to pay into your pension?

For someone on £20,000 a year, it means they will lose an extra £33 a month when they see their pay packet at the end of April 2018. Currently, they are contributing the minimum 1% of salary, which works out at £16.67 a month, including tax relief worth £3.33. From April, this will rise to £50 a month (with £10 of tax relief), then in April 2019 it will rise to £83.33 a month. Employers will also have to put in lots more. Expect the opt-out rate to rise in 2018 – and for employers to use their increased pension payments as an excuse not to give wage rises.

5. The state pension will rise, tax allowances improve, but council tax will go up

From 6 April, pensioners entitled to the full new state pension (with a full 35-year record of NI contributions) will see their payments increase by £4.80 from £159.55 per week to £164.35 a week, which means there will be nearly £250 a year better off. The old basic state pension will rise from £123.30 a week to £125.95.

On the same day the new personal tax rates will come into force, with the chief change an increase in the personal allowance – that part of your pay not liable for income tax. It will go up to £11,850, a £350 increase from the current level. In practice, it turns into a £70 saving for a basic rate taxpayer, as it means that £350 more of their income is not liable to 20% income tax.

But much if not all of this will be taken up by potentially large increases in council tax. In a move slipped out just before Christmas, the government allowed local authorities to raise council tax by up to 5.99% next year. All councils will be able to raise council tax by up to 2.99% next year to fund local services, which is 1% more than this year. On top of this, 152 councils, which includes all London boroughs, unitary and metropolitan authorities and county councils, will be able to increase it by an additional “precept” 3% to fund social care services.

6. House price rises will slow to a dribble

Most people, particularly first-time buyers, will welcome a pause in house price growth, with most of the experts predicting just 0-2% rises in property prices in 2018 – and falls in the capital. For the first time since the financial crisis, earnings are likely to rise faster than property prices.

7. Interest rates will rise, and the stock market will wobble

Another 0.25% increase is expected in late spring, taking the Bank of England base rate to 0.75%. But unless the economy displays some unexpected perkiness, that should be the last rate rise of the year, so mortgage rates will stay low.

In 2017 the FTSE 100 enjoyed a rise of nearly 500 points, or more than 6%. In Frankfurt, the Dax index surged 13%, while on Wall Street the gains were even higher, with the S&P 500 advancing 18%. But after such a strong run – and with more interest rate hikes expected in the US – few believe 2018 will be anywhere near as good as 2017, with some predicting a major wobble in the market some time during the year.

8. The taxman will soon come knocking

Maybe you were one of the 2,590 people who used Christmas Day to fill in their tax return. But for the others who didn’t, the 31 January deadline looms.

If you are filing your 2016-17 return online for the first time, you will need to create a government gateway account if you haven’t already done so. Go to gov.uk/topic/personal-tax/self-assessment.

Angela MacDonald, head of customer services at HMRC, says filling in your tax return can be done anywhere and at any time, using your phone, tablet or computer. There are online webchats, live webinars, YouTube videos and social media support that can be accessed at any time, she adds.

Source: The Guardian

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How to make 2018 your richest year yet

January is probably the tightest year of the month for many of us as we recover from the financial hit of the festive season.

But if you’ve overdone it on spending, there are some tricks you can use that will not only go some way to repairing the damage, but will also help to set you up for a more financially successful year ahead.

Financial experts have shared their top tips and predictions for the year ahead with Femail to ensure you use upcoming changes in legislation and interest rates to your advantage and boost your bank balance.

From investing in gold to purchasing second-hand jewellery with a renowned brand name such as Tiffany, these are the hacks that will ensure 2018 is your most abundant year yet.

‘The bank of England Base rate is likely to increase over the next couple of years to around per cent according to the Governor, Mark Carney,’ said Mark Homer, co-founder of Progressive Property.

‘As long term fixed rate mortgages are still cheap a 10 year fix may be preferable. Barclays has a 10 year fix at 2.69 per cent which just has to be a good deal.’

Some of the cheapest fixed rate deals have been removed by banks because of the interest rate rise, so if you’re looking to remortgage in 2018, you could well end up on a higher rate.

But Tashema Jackson, money expert at uSwitch.com points out that rates have only gone back to 0.5 per cent, where they sat for almost nearly nine years – so there’s no need to panic about them shooting up just yet. 

‘However, don’t be seduced into thinking that a lower interest rate is automatically cheaper,’ she said. ‘Take some time to calculate if the lower rate and higher fee is actually cheaper. It could save you a fair bit of money in the long run.’

She added that it’s crucial not to rely solely on information from your broker.

‘Many mortgage brokers will have exclusive deals from particular banks,’ she explained.

‘That’s why searching and comparing what is on offer from different providers can really help give you a better understanding about what is currently on offer from the mortgage market,’ she explained.

Don’t assume this means you know best, but being informed is always worthwhile. You may be able to give yourself a leg up before committing on a particular one.’

‘When the initial term of a mortgage ends, lenders transfer customers onto their Standard Variable Rate (SVR). This typically has a much higher rate of interest,’ said Ishaan Malhi, CEO and founder of online mortgage broker Trussle.

‘Nationwide is offering a two-year fixed rate of 1.99 per cent while their SVR sits at 3.99 per cent, for example.

Set a reminder to look into your options with a broker three months before your initial term ends to avoid paying over the odds. Just one month on your lender’s SVR can cost you hundreds of pounds in extra interest.

‘Interest rates may have crept up recently but they’re still historically low,’ Ishaan added. ‘If you’re in a position where you can afford to overpay on your mortgage, this is a good idea as it can reduce your overall debt. This will be harder to do when interest rates rise further, which they may do in the coming years.

‘Check with your lender about how much you can overpay by each month since there’s usually a limit before a penalty applies. For most fixed-rate deals this is usually up to 10 per cent of the remaining mortgage balance per year.’

Mark Homer More points out that permitted development rights for homeowners are likely to come in the New Year from the government.

This will likely allow people to extend their properties and make other alterations without the need for planning permission.

‘Rather than Moving house this could be a great option for those looking for more space who also would like to create equity in their home,’ he added.

Experts at Hitachi Personal Finance agree that you should look to improve rather than move.

‘Typical property prices jumped around £85,000 in the first half of 2017,’ they said.

‘So spending on property renovations instead – such as creating an extra room out of wasted loft space, new kitchens or bathrooms – could potentially add significantly more space, and serious value too. The average a loft conversion could add to the value of your home is 12 per cent, so it’s well worth considering all options.’

Mark Homer recommends Paragon Bank, who is offering a 120 day notice savings account at 1.45 per cent which trumps savings products offered elsewhere.

‘Should you be happy locking your money away for four months this would appear to be a good option to help reduce the effect of inflation on your capital,’ he said.

Julian Hynd, Chief Deposits Officer at Ford Money says that a number of factors could push up interest rates in the coming year.

‘The Bank of England is expected to increase the base rate further, while the Funding for Lending Scheme (FLS) to boost bank lending to households and companies comes to an end in January,’ he said.

‘Our research shows that almost three in five UK savers do not know what interest rate their account pays while nearly half only review their accounts once a year or less.

‘Finding a savings account that pays a fair and consistent rate over time could mean one less thing for savers to be worried about with any interest rate changes and ensure savers get the most out of their money.’

Jamie Smith-Thompson at pension advice specialists, Portafina, explained: ‘You don’t have to be Nostradamus to predict that Brexit will continue to create economic uncertainty in 2018. And this could leave people facing sudden changes in circumstances that put a strain on personal finances. One of the best ways to counter this uncertainty is to keep six months’ worth of outgoings as an emergency fund. It can soften the blow of any nasty surprises and give you the time and space needed to make the best decisions.’

Jamie Smith – Financial Adviser at Foster Denovo comments predicts a change to pension tax relief in the next 12 months.

‘This is most likely to be in the form of a reduction to the annual allowance, which is the amount that can be saved into a pension scheme and still benefit from tax relief within a given tax year,’ he said.

‘Although a reduction would not affect the vast majority of people, those who can afford to maximise pension funding should consider doing so before any new restrictions are introduced.’

Jamie warns of growing instability in the UK due to uncertainty around Brexit and recent downgrading of growth forecasts.

‘Anyone within a few years of accessing any stock-market linked savings should be reviewing their portfolios and the underlying risks,’ he said.

‘For example, if you are planning to retire over the next few years you may want to consider de-risking your pension funds and moving these into less volatile asset classes.

‘Some pension providers will do this automatically, which is known as ‘lifestyling’, but certainly many pension plans will not have this function.

‘Those who have a longer term investment horizon of at least five to ten years before they plan to access and spend their savings may not need to be as concerned but it is still a good idea to review their portfolios.’

Adrian Ash, Director of Research at BullionVault – the world’s largest online trading platform for precious metals insists gold will act as a way to protect wealth as well as to increase it in 2018. 

‘Those who forget history are doomed to repeat it, and investors seem to have forgotten both the global financial crisis and the DotCom Crash where gold investing could have helped preserve investors’ wealth,’ he said.

‘Demand for gold sank in 2017 as stock markets surged, yet gold has risen for UK investors in every year that the stock market has fallen by 10 per cent or more.’

Dr. Johnny Hon, Chairman – The Global Group says 2018 provides ‘fantastic opportunity’ for investing in media and entertainment ‘as the global middle class grows and technology develops’.

He added: ‘Virtual Reality (VR) and Augmented Reality (AR), made famous by Pokémon GO, open up new ways of watching and shopping while viewing TV and movie content. Significant returns are to be made here.

‘Property continues to be a good investment and one that again features many innovations. One that will appeal to many younger people in particular, is the new concept of co-living, which, by using shared spaces and facilities, creates a more fulfilling lifestyle, that not only offers concierge and cleaning services, but also creates a genuine sense of community through shared spaces and facilities. With building land at a premium, this has a great future.

Stuart Law, CEO and founder of Assetz Capital says that more people are turning to Peer-to-peer (P2P) as an alternative to saving.

‘P2P platforms directly match people wanting to invest money with those requiring a loan, cutting out the middle-man and giving investors a choice in where their money is lent,’ he explained.

‘The rates of return can be attractive in the current climate of low interest rates, although it’s important to be aware that – as with most investments – capital is at risk and the amount invested is not covered by the Financial Services Compensation Scheme (FSCS) as it would be if held in a bank account.

‘Most P2P lenders are now fully authorised by the Financial Conduct Authority (FCA), but anyone thinking about investing money in this way should still ensure they’re using an approved firm.’

It’s something you might ignore until you’re considering applying for a loan, but it provides a useful snapshot of all your bills from mobile phone, to gas and electricity bills, as well as credit cards, loans and mortgages, according to Tashema Jackson, money expert at uSwitch.com.

‘You’ll also be able to check that all the information it contains is correct,’ she added. If you notice any errors you can contact the relevant lender and ask for them for a correction, but bear in mind that you will be expected to provide proof that a mistake has been made.

‘Doing a bit of research will also let you know if any lenders have a particular offer on, such as cashback on mortgage payments, or preferential interest rates to existing customers.’

Source: Brinkwire