Parents hold onto their cash
The Mail reports a survey about inheritance in which 30 per cent of parents said worries about their children’s relationships meant they didn’t want to give them money. Some 14 per cent said they were bypassing their children and giving to grandchildren, about the same percentage as those who expressed doubt that a child’s marriage would last. According to Google, searches on the question ‘Should I get divorced?’ peaked the week after Christmas. The older generation prefer to make small gifts, and more of them are setting up discretionary trusts to retain control of their capital.
Rich inheritors
The older generation have seen their total wealth increase by 45 per cent over the past ten years. That means their children will inherit more than previous generations – but also more unequally, says the BBC. Research by the Institute for Fiscal Studies showed that about half of UK households own about 90 per cent of wealth, which means that those who inherit from the rich will be very well off – even though most of those who inherit already have higher than average incomes and assets. The IFS says biggest cause of the discrepancy is housing wealth, and the difficulty young people have in buying a first home is making the problem more acute.
House price forecasts for 2017
The Mail rounded up house prices forecasts for 2017 from several sources, all of whom predicted slower growth than in 2016, ranging from ‘flat’ (Savills) to 3 per cent (RICS). The big lenders – Nationwide and Halifax – expect average price rises of no more than 2 per cent. Almost a third of the Mail’s own readers surprisingly said they would like prices to fall in 2017 – presumably because they are struggling to make their first purchase.
Portability denied
Most modern mortgages are portable – you should be able to transfer them when you sell your home and buy another. But the Telegraph claims that most lenders are denying borrowers’ ability to port their mortgages by forcing them to go through stringent ‘affordability’ tests, despite the fact that the regulator has explicitly said this should not be necessary unless the borrower wants to increase the loan or extend the term. If the borrower does not fit the new affordability criteria, then they no longer qualify for the cheap tracker deal they currently have and will have to take out a loan at a higher interest rate.
HMRC deploys snooper computer
HMRC has spent over £100 million over several years developing a ‘snooper computer’ that identifies people whom may be under-declaring their income, and the system is being deployed just as the January deadline for filing 2015-16 tax returns approaches. The Connect system collects data not just from other government departments but from sources such as Airbnb, the Land Registry and eBay. It can also get information from banks in 60 countries. It flags likely targets for further investigation.
How to boost your credit score
One recent survey showed that 79 per cent of adults had no idea what their credit score was or how it affected them, says the Times. Yet a poor credit score can not just make it harder and much more expensive to gain any sort of credit but also make it harder to get deals for mobile phones, rental agreements or utilities. Experts recommend checking your current score with one of the big three agencies – Experian, Equifax and and Callcredit. Those with poor scores should consider taking out a credit card with a low limit and paying the balance off every month. For young people, getting on the electoral register is another way of improving your rating.
Generation rent
The proportion of 25-year-olds who own their own home has fallen from 46 per cent to 25 per cent in the past 20 years, says the Telegraph, citing research by estate agency Savills. But it is not just the young – the overall proportion of home owners has fallen from 72.9 per cent from its peak in 2004 to 64.1 per cent today. Rents are now much higher than mortgage payments, partly the result of an 88 per cent fall in the amount of social housing being built today compared with 20 years ago.
Inflation ahead
Three-quarters of the economists responding to the Financial Times’ annual survey said UK inflation was likely to top 2 per cent in 2017, while a third of them expected inflation to exceed 3 per cent during the year. The 15 per cent decline in the exchange value of the £ is cited as the main cause, though there is still much disagreement on how quickly that will feed through to retail prices. Most economists still agree with the Bank of England that the rise in inflation will be temporary, since there is as yet no sign of an upturn in average earnings.
BTL landlords expect double hit
A survey of Buy to Let owners reveals that over 60 per cent of them expect to be hit not just by restrictions on the tax relief on mortgage interest (which will be cut from 40 per cent to 20 per cent by 2020) but by new affordability rules on BTL lending set by the Bank of England. These rules seem likely to penalise landlords with more than four properties, says the Financial Times.
Courier wins gig economy case
A courier for a London bicycle delivery firm has won her employment tribunal case to be regarded as an employee rather than a self employed contractor. Ominously for business owners, the judge described the company’s depiction of its couriers as self employed as ‘window dressing.’ Several similar cases are due to be heard shortly by the same judge. Lawyers interviewed by the Financial Times said thousands more couriers were likely to pursue similar cases.
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