Report reveals rise in multiple property ownership

downloadA report published by the Resolution Foundation has found that the number of individuals who own a second home rose by 30% between 2002 and 2014.

The think tank’s research revealed that 5.2 million people now own a second home. In contrast, four in ten adults own no property at all.

It also suggested that ‘baby boomers’ aged between 52 and 71 are the most likely to own a second home.

Since April 2016, buyers of second homes in England, Wales and Northern Ireland have been required to pay higher rates of Stamp Duty Land Tax (SDLT). Buyers of second homes in Scotland are required to pay higher rates of Land and Buildings Transaction Tax (LBTT).

In addition, starting from April 2017, new rules restrict relief for finance costs on residential properties. For 2017/18, the deduction from property income is restricted to 75% of finance costs, with the remaining 25% being available as a basic rate tax reduction.

Over the subsequent three years the direct deduction of finance costs will reduce by 25% each year until 6 April 2020, when all finance costs incurred by a landlord will be given as a basic rate tax deduction.

Commenting on the findings, Laura Gardiner, Senior Policy Analyst at the Resolution Foundation, said: ‘Contrary to the popular narrative, these second home owners are rarely your typical middle-income worker shoring up savings, or ordinary retirees boosting pension income.

‘They tend to be baby boomers who are very wealthy indeed relative to their peers, living in the South and East of England.

‘Policymakers should consider what more can be done to ensure that home ownership doesn’t become the preserve of the wealthy for generations to come.’

We can provide advice on all aspects of tax and property – please contact us for help with planning ahead.

Figures reveal significant rise in number of card payments made by consumers

contactless cardData published by UK Finance has revealed that card spending totalled £57.1 billion in June – representing a 7% rise when compared to a year earlier.

1.4 billion card payments were made in June, which constitutes a 12% rise when compared to the same time last year.

Contactless payments accounted for 34% of all card transactions, the data found. Online payments constituted 13% of all transactions.

Spending in the retail sector rose by £19 million during June, to total £26.1 billion. Spending on food and drink increased to £10 billion in June.

Meanwhile, services sector spending rose by £138 million to reach £31 billion.

Richard Koch, Head of Cards at UK Finance, said: ‘Contactless payments accounted for a third of transactions in June, with consumers continuing to use their cards for lower value purchases.

‘While spending recorded a relatively modest monthly growth, the number of transactions rose at a faster rate with some 46 million card purchases made every day.’

credit cardData published by UK Finance has revealed that card spending totalled £57.1 billion in June – representing a 7% rise when compared to a year earlier.

1.4 billion card payments were made in June, which constitutes a 12% rise when compared to the same time last year.

Contactless payments accounted for 34% of all card transactions, the data found. Online payments constituted 13% of all transactions.

Spending in the retail sector rose by £19 million during June, to total £26.1 billion. Spending on food and drink increased to £10 billion in June.

Meanwhile, services sector spending rose by £138 million to reach £31 billion.

Richard Koch, Head of Cards at UK Finance, said: ‘Contactless payments accounted for a third of transactions in June, with consumers continuing to use their cards for lower value purchases.

‘While spending recorded a relatively modest monthly growth, the number of transactions rose at a faster rate with some 46 million card purchases made every day.’

Rise in retail sales despite Brexit fears

Fears of an immediate post-Brexit vote slump in the UK retail sector proved unfounded, as new figures reveal that retail sales increased in July.

A survey by the Britbrexitish Retail Consortium (BRC) and a leading accountancy firm found that total sales rose by 1.9% compared to the same month last year, while a separate report by Barclaycard found that spending in restaurants, pubs and cinemas also grew strongly in the month following the referendum.

The chief executive of the BRC, Helen Dickinson, described the rise as unsurprising, given that ‘little has materially changed’ for most UK households since the EU referendum.

The increase in sales in July has been partly attributed to warm weather, as has the rise in spending in restaurants and pubs. Barclaycard’s monthly report showed a 12.2% increase in spending by cardholders in pubs and a similar 12.8% rise in restaurant spending.

Paul Lockstone, managing director of corporate affairs at Barclaycard, said: ‘These are the first full month’s figures since the EU referendum, so it’s too early to say if this is the start of a long-term trend, but it seems likely consumers will be watching the external environment carefully ahead of any major spending decisions.’

Meanwhile, a consumer research survey carried out by Barclaycard found that people were more cautious about their future spending than they were previously, with nearly 50% ‘not confident’ in their ability to spend more on non-essential items.

Interest rates remain at record low

07 Aug 2015

The Bank of England’s Monetary Policy Committee (MPC) has once again decided to hold UK interest rates at the record low level of 0.5%.

However, for the first time in many months the decision was not unanimous, with one of the nine members, Ian McCafferty, voting for an increase.

There has been speculation for a while that the interest rate, which has now been held at 0.5% for more than six years, could be due for a rise. Some commenters expected two or three MPC members to vote for an increase, as Bank of England Governor Mark Carney has dropped hints that a rise was ‘drawing closer’.

But in its latest Inflation Report, the Bank described the outlook for inflation as ‘muted’ – which has led some experts to suggest that any rise could be delayed.

John Longworth, Director General of the British Chambers of Commerce, said: ‘It would have been imprudent to push through a rate rise at this moment when our economic recovery remains in need of care and encouragement. Rates will eventually have to rise and when they do, it should be done slowly and steadily. Until that moment, the Bank of England is right to keep interest rates at current levels.’

Following the announcement sterling fell against other currencies. The pound fell by a cent against the dollar before recovering slightly to stand at $1.5511, and was down nearly one euro cent against the euro at €1.4218.

Bank lending to business forecast to rise for time since financial crash

Bank lending to businesses is expected to rise this year for the first time since the financial crash, new figures suggest.

According to the EY Item Club, businesses borrowed £103.4bn from banks in the first half of 2015, up from £88.6bn in the same period last year.

While experts say this year’s rise is likely to equate to a modest 0.25%, they predict that by 2019 business lending could be 25% higher than last year.

Bank lending peaked at £575bn in 2008 and has fallen steadily since.

‘With the economy growing at a steady pace and business investment set to rise at an annual average of 6.5% over the next three years, the forecast suggests that the days of lending contraction are in the past,’ said the group.

Mortgage lending is also predicted to rise this year as the housing market continues to strengthen.

Lending to home buyers is expected to climb at an average of 3.8% a year until 2019, while the total amount of outstanding mortgage loans is forecast to reach £1.3 trillion.

Andrew Goodwin, senior economic advisor to the EY Item Club, said: ‘With homeowners set for the sixth year running of historically low borrowing costs, the demand for mortgages should continue to grow healthily, albeit at a far from spectacular pace.

‘But while a low interest rate environment is good news for consumers, the prospect of a further year of squeezed interest margins is not what the banks were hoping for’.

Stamp and postage costs set to rise this month

04 Mar 2015

Stamp costs are set to rise from the end of this month, Royal Mail has announced.

From 30 March the cost of first class and second class stamps will both rise by 1p, to 63p and 54p respectively.

A variety of other postage costs will also change. Sending a large letter will increase by 2p to 95p for first class and by 1p to 74p for second class.

However, a price cut for second-class small parcels that was introduced at Christmas as a temporary promotion will remain in place, and the cost of sending a second class medium parcel will actually drop. From 30 March, second class medium parcels weighing up to 2kg will be priced at £4.89, which Royal Mail said ‘represented a saving of up to £3.11’.

Royal Mail claims that it had thought “carefully” about the change and its impact on customers, and insisted that stamp prices in the UK were among the best value in Europe.