August 2023

Finally, Some Positive News for Home Buyers?

As you know, recent times have been filled with headlines about rising mortgage rates, making it challenging for many to balance their monthly mortgage repayments against the rising cost of living or moving home to fit their current life circumstances, for example.

However, there are further glimpses of positive news as in recent weeks, a number of major UK lenders have started to reduce their rates, representing a refreshing change to the gloomier news seen earlier this year.1

Alongside this, Halifax have stated that on average, UK housing is more affordable now than 12 months ago. According to their data, the typical home in the UK currently costs 6.7 times the average earnings of a full-time worker, which is down from 7.3 times, a year ago.2

Some of the key rate changes at a glance

  • Nationwide and TSB have reduced rates by up to 0.4% on selected mortgage products.3
  • Santander and HSBC have reduced selected rates by 0.20%.4
  • Skipton Building Society have reduced their 100% loan-to-value mortgage to 6.29%, along with rate cuts to other mortgage products.5
  • Halifax, part of Lloyds Banking Group, have also stated that a range of price cuts are taking place on their products, including selected five-year rates.6

These reductions will bolster hopes that we have seen the peak of mortgage rates, even though borrowers still face near-record costs1, with the average cost of a two-year fixed mortgage still at 6.76%, compared to the low rate of 2.34% witnessed back in December 20217  for example.

Why are these mortgage rates being reduced?

Recent data showed that UK inflation fell to a 15-month low in June, reversing a sharp increase earlier in the year.1 Furthermore, the need for lenders to compete in a challenging economic environment has also contributed to the rate cuts.

Looking ahead

Despite these promising signs, major reductions in mortgage costs are unlikely in the short term, with inflation still high and the Bank of England expecting rates to remain higher for longer.1 However, this recent positive development should not be overlooked, as it provides a glimmer of hope for those either looking to remortgage in the coming months, buy a first home or upsize on their existing property.

What this means for you

These lower rates could open more opportunities to find a mortgage that fits your current needs, whether it’s to help you secure a remortgage, find that dream new property, or help someone in your family to get onto the property ladder for the first time – please do get in touch with us to see how we can possibly help.

We’ll be able to navigate the complex world of mortgages and listen to your exact situation before searching across a wide range of products and strive to help you find one that matches your circumstances, lifestyle and financial goals.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Sources

  1. The Guardian (2023) NatWest and Virgin Money cut rates as mortgage ‘price war’ spreads. Available at https://www.theguardian.com/money/2023/aug/10/natwest-and-virgin-money-cut-rates-as-mortgage-price-war-spreads (Accessed 21st August 2023)

Bills Warning for Heat Pumps in Rural Homes

If your house is in the countryside you could see your heating bills increase by more than two thirds if you decide to install a heat pump, according to figures from industry trade body Energy and Utilities Alliance (EUA).1

They calculated that the cost of running a heat pump for rural homes is more than 70 per cent higher per year than a conventional oil boiler. The Government wants to install 600,000 heat pumps a year by 2028 and ban all new oil boilers by 2026, as well as put eight million electric vehicles (EVs) on UK roads by 2030 as part of the push to meet ‘net zero’ targets.2 

The proposals have prompted fears in rural communities, where millions of people are not connected to the gas grid and so rely on oil heating, that antiquated local infrastructure will not be able to cope with the sudden demand on electricity. [1][2] 

The costs associated with upgrading are also significantly higher than staying with conventional boilers. While a replacement oil boiler typically costs £2,500, heat pumps retail in the region of £13,000, according to the EUA.

In an attempt to soften the blow of switching to alternative heating, the Government offers grants of between £5,000 and £6,000 for households to purchase and install a heat pump and advocates argue that this price will reduce as the industry grows.

However, fewer than 10,000 heat pumps were installed during the first year of the roll-out programme, falling far short of the target of 30,000. Some £90 million of unspent subsidies are set to be handed back to the Treasury due to the lacklustre uptake.1

Mike Foster, chief executive of the EUA, said: “The government has promised that from 2026 people living in homes off the gas grid – that is typically in rural areas of Britain – would not be able to replace a broken boiler with a new one. By law they would be forced to have a heat pump.”

“That is not something that most rational people would do as a choice, and if they are forced to do it then the political backlash would be immense.”

If you live in a rural home, or are considering purchasing a property in a rural area then this will become a key topic to bear in mind in the coming years regarding the plans around the use of heat pumps.

Sources

  1. Sharetalk (2023) Industry group indicates a 70% increase in bills for rural households transitioning to heat pumps. Available at: https://www.share-talk.com/industry-group-indicates-a-70-increase-in-bills-for-rural-households-transitioning-to-heat-pumps/ (Accessed 23rd August 2023)

Five Tell-tale Signs of Social Media Fraud

With the vast majority of us plugged into social platforms, the risk of encountering digital swindlers is only a tap away.

However, these fraudsters adopt smarter tactics to mask their intentions, often leveraging familiar logos, counterfeit terms of service, and mimicked website URLs to entrap you.

Often, these schemes involve tempting you to click links where you input your details. Yet, doing so might hand over your personal data to unknown entities or unintentionally spread the fraudulent post among your contacts. Your contacts may then fall prey to the scam, interpreting the shared message as an authentic endorsement.

Below are five techniques which can help in recognising these digital traps:

Sounds Too Good to be True

Deceptive individuals exploit financial anxieties, luring victims with promises of instant relief. They typically dangle irresistible bargains, such as drastically slashed prices or investments promising unrealistically high returns. Your first move? Conduct an online search of the offer. If a business or brand promotes a deal on social media, it’s highly probable they’re also featuring it on their official website.

Suspicious Links Arrive in Your Inbox

Always be cautious of unrecognised links. Before you take the plunge, scrutinise them carefully. Malicious links might contain software that compromises your Facebook login and personal data. In extreme cases, you could find yourself locked out, with fraudsters seizing control of your account and targeting your contacts.

If an unfamiliar email alerts you about a suspicious login attempt, never use its links. Instead, directly access the app to review security measures. Fraudulent emails may lead you to counterfeit login pages, capturing your credentials in the process. This gives them access to all linked personal data, facilitating identity theft. More worryingly, if your account is linked to financial details, there’s a risk of monetary loss.

Avoid clicking dubious links in messages. Fake sites may sport domain names mimicking established brands to appear trustworthy. Also, while a padlock symbol next to a URL suggests encryption, it’s not fool proof – as they can be faked or purchased.

Questionable Brand Representation

Digital imposters often masquerade as reputable brands. Analyse the post for any branding discrepancies. Pay attention to logos and the overall quality of presentation.

For unfamiliar brands, inspect their profile. Does it exude professionalism or seem haphazard? Delving into reviews can provide added reassurance.

Persistent Posts

Repeatedly spotting the same post shared on multiple mediums? It might be cause for concern. They might be unwittingly disseminating a scam. Always trust your gut. Sometimes, it’s preferable to forego an enticing offer rather than compromise your data. For online purchases, consider the seller’s legitimacy and opt for face-to-face transactions when feasible.

Demands for Bank Transfers Should an online transaction ask for direct bank transfer payments, proceed with caution, especially if you don’t personally know the seller. Purchasing a counterfeit or non-existent item via credit or debit card offers some avenue for recourse. However, bank transfers provide minimal protection, leaving you vulnerable to losses.

Guidance for Landlords on Increasing Capital Gains Tax Payments

One knock-on effect of the rise in mortgage rates has been a noticeable increase in the amount of buy-to-let properties being sold, as landlords find their mortgages more expensive to afford and representing a less-worthwhile return on investment. Latest available data for April & May this year shows that as many as 25,000 rental properties were sold, compared to 22,000 for the months preceding.1

As property is sold, landlords may be liable to pay Capital Gains Tax (CGT) if the sale of the property means that the profits exceed the UK Government limits on what an individual can earn before taxation is due.

Recent figures from HMRC highlight a notable 20% increase in CGT payers during the 2021-22 fiscal year. Around 394,000 individuals encountered this tax, predominantly due to sales that yielded financial gains, such as those from a second property or investment assets.2

According to these statistics, the tax authority amassed a staggering £16.7 billion in CGT, representing a 15% growth from the previous record.

Over the last decade, there has been a significant increase in taxpayers liable for CGT. With tax-free allowances on the decline, this pattern is set to continue.2

While CGT covers profits from assets such as shares, secondary residences, and various other belongings, it isn’t solely the domain of the immensely wealthy. A striking 45% of the total CGT derived from gains exceeding £5 million. However, a substantial 214,000 individuals paid it on gains of less than £25,000.3

Demystifying Capital Gains Tax

CGT is levied on profits made when selling an asset, determined by subtracting the purchase price from the sale price.

Various reliefs are accessible depending on the asset type, and there’s an annual CGT exemption for individuals. This was previously set at £12,300 but reduced to £6,000 in 2023, with a further anticipated reduction to £3,000 by 2024.4

For those in the higher and additional tax brackets, the CGT rates stand at 28% for property gains and 20% for other assets. For basic rate taxpayers, CGT rates vary between 10% and 18%, contingent upon their total taxable income and the asset nature.

Repercussions for Buy-to-Let Landlords

Landlords must brace themselves for CGT on profits when divesting from any property other than their primary residence. This includes both second homes and let properties.

According to recent data, 139,000 taxpayers declared 151,000 residential property sales in the 2022/23 tax year. This led to a combined tax liability of £1.8 billion, markedly higher than the figures from 2020/21.1

This uptick suggests an increasing number of landlords are leaving the property market, perhaps because of more restrictive tax measures that make buy-to-let investments less enticing.3

Several CGT reliefs are available to landlords, though they are increasingly limited. One relief is extended to landlords who have let out a property they previously occupied. Here, CGT is levied only on the appreciation during their non-occupancy period. The ‘lettings relief’, however, has seen curtailments, thus diminishing its utility for numerous landlords.5

Seek specialist advice

The world of Capital Gains Tax can be complex, however we would recommend seeking expert advice from a qualified financial adviser before making any decisions on the subject, whether you are considering selling a second home or buy-to-let property, or are interested in making an investment in property at this time.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Sources

  1. The Guardian (2023) Number of landlords selling up in UK grows as mortgage rates surge. Available at: https://www.theguardian.com/business/2023/aug/14/number-of-landlords-selling-up-in-uk-grows-mortgage-rates-surge-buy-to-let (Accessed 22nd August 2023)

All the information in this article is correct as of the publish date 31st August 2023. The opinions expressed in this publication are those of the authors. The information provided in this article, including text, graphics and images does not, and is not intended to, substitute advice; instead, all information, content and materials available in this article are for general informational purposes only. Information in this article may not constitute the most up-to-date legal or other information.

Five Tell-tale Signs of Social Media Fraud

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