The end of BTL?
Buy-to-let landlords are switching from residential to commercial property, says the Telegraph. Auctioneers say the imminent start of the new tax regime for residential BTL, which will severely cut net of tax returns, has prompted many landlords to look at shops, offices and industrial units. The rental yield is often higher and tenants pay many of the costs residential landlords have to fork out for, including insurance, repairs and rates. But capital growth is much less likely than in the residential market.
Grandparents lose credit
Thousands of grandparents are missing out on valuable National Insurance credits, says the Telegraph. The “specified adult childcare credit” is designed to protect the pensions of grandparents who retire early to care for grandchildren so that their parents can go back to work. If you miss a whole year of NI contributions, this results in a cut of £231 a year in the state pension, and the credit can avoid this. But since the credit was introduced in 2011, just 5,000 people have claimed it, though over 100,000 could be eligible.
Is care at home better?
With the care crisis, closures of care homes and huge residential care home fees, is organising care at home a better solution for some elderly people? The Telegraph says that not only can costs be lower, but you stay in control, and may qualify for some local authority financial support. This is because if you stay in your own home but have assets of under £23,250 you qualify for financial support, whereas if a widow or widower goes into a care home the value of their house is used to pay for all or part of their care costs. Most people use a specialist agency to employ carers, who are usually paid well above the minimum wage that is usually paid to care home staff.
Boom in first time buyers
The number of first time property buyers in 2016 was the highest since 2007, says the Mail, with over 335,750 people getting onto the first rung of the property ladder. Halifax says those purchasing their first property paid an average of £205,170, some 7 per cent above 2015’s level. But since 2007 first-timers’ average deposit has more than doubled to £32,321 while in London it is now over £100,000. And mortgage terms are also getting longer, with 60 per cent of 2016 mortgages having a term of over 25 years.
Look to smaller banks for bonds
If you have a maturing fixed-rate bond, look to smaller banks for better rates, says the Mail. Typical rates from the big banks are 0.5 per cent for one year and 0.55 per cent for two years, while smaller banks pay up to 1.4 per cent for one year and 1.6 per cent for two years. Like bigger banks they are all covered by the UK deposit protection scheme up to £75,000 per person per account. And NS&I will launch a new three-year bond in March paying 2.2 per cent, though the maximum investment is limited to £3,000.
Cover your dog
Only one in four British dog owners has insured their pet, says the Times, yet vets’ bills can run into thousands if a dog suffers an accident or serious illness. The most expensive type of policy (maximum benefit) comes in at an average premium of £247 a year for a pedigree animal, whereas accident-only policies cost just £52 on average. But premiums are also partly based on the breed of dog, with smaller and non-pedigree animals costing less to insure.
Watch out for tax traps
An analysis in the Financial Times identifies over 90 ‘tax traps’ where an additional slice of income bears a marginal tax rate much higher than the normal rate. For example, parents earning between £50,000 and £60,000 can suffer a marginal tax rate of 100 per cent since they lose as much child benefit as they get in salary. And because Scotland has the power to change tax thresholds but not National Insurance, someone living in Scotland (with an S on their tax code) will pay tax at 52 per cent on the slice of income between £43,430 and £45,000.
Inflation rising
Inflation as measured by the Consumer Price Index rose to 1.6 per cent in December, up from 1.2 per cent the previous month and higher than most forecasts. Rising food and fuel prices were the main factors. The Retail Prices Index rose at 2.5 per cent compared with 2.2 per cent the previous month. Analysts said the decline in the sterling exchange rate was starting to feed through into prices.
UK house prices up 6.7 per cent
UK house prices rose in November for the first time since the Brexit vote, the Financial Times reported using data from the Office of National Statistics. The 1.1 per cent gain in the month resulted in an increase of 6.7 per cent over the twelve months to November, taking the average to £217,928 (£482,000 in London). Residential rents remained unchanged for the fifth successive month but mortgage approvals picked up from their August low.
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