The real value of a survey

Nobody wants to pay too much for their home. During the home buying process, there are many causes of stress. Making sure you don’t overpay doesn’t need to be one. That’s because getting the right survey can give you peace of mind that you are paying a fair price. 

What is a survey? 

A survey is a detailed report which helps make potential buyers aware of any present issues or problems which may occur in the future. 

This can help with budgeting for any works required and help you renegotiate if there are any major concerns. Remember: a survey is not a valuation; it is a tool to help homebuyers make informed decisions. 

Surveys crucial in turbulent times 

House prices have been unpredictable in the last year. In times of economic uncertainty, surveys become even more important. When house prices have fallen, a survey can help clarify what represents real value. 

Value means something different to different people. For example, over two fifths would pay more for a property with a high EPC rating, research reveals1. This shows that getting the price right is 

personal. A survey is designed to help you do just that. 

More than simply one more cost  

Buying a home can feel like an accumulation of costs – a survey can feel like one more among many. That’s why it is important to factor in the survey as early in the buying process as possible. 

1Uswitch, 2023 

As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments

Residential Property Review – June 2024 

Housing market update 

The UK housing market continues to show modest signs of recovery, according to the latest data from Savills.  

Despite some house price growth, a significant upturn is considered unlikely until mortgage affordability improves.  

Buyer activity continues to improve, as the number of sales agreed in May was 10% higher than the 2017-2019 average, according to TwentyCI.  

The rental market remains relatively consistent. Data from Zoopla shows that, in April, annual UK rental growth was 6.6% – slightly lower than the 6.7% recorded in the previous month. The region with the strongest annual growth was the North East (9.5%), followed by Scotland (9.3%). Rental growth is accelerating in locations close to large cities, such as North Tyneside and Midlothian – more evidence that the pandemic’s ‘race for space’ appears to be in reverse.   

New homes in the capital – demand outstrips supply 

Demand for new builds in the capital is increasing, but supply is limited, attributable to high development costs.  

Knight Frank data indicates that confidence is picking up amongst London buyers, as the number of offers placed on new homes in April increased by 9% year-on-year, while viewings rose by 17%. Similarly, the number of prospective buyers who registered interest in purchasing a new build was 15 to 20% higher than the previous year for mid-to-upper markets.  

Despite this growing demand, the cost of building in the capital has put off some developers. As a result, new starts fell by 20% over a 12-month period and there are currently about 35,000 new homes being delivered per year – over 30% lower than the Mayor of London’s target of 52,500.  

How will the General Election affect the housing market?  

Ahead of the 2024 General Election, new homes are the unanimous focus of the manifestos when it comes to housing.  

If the Conservatives remain in government, Rishi Sunak aims to build 1.6 million new homes over the next five years – slightly more than the Labour Party’s target of 1.5 million and less than the Liberal Democrat’s promise of 380,000 new builds per year. Ed Davey stated that 150,000 of these will be social housing; Keir Starmer would also prioritise building new social rented homes. 

The Labour, Liberal Democrat and the Conservative manifestos all pledge to fully abolish Section 21 ‘no fault’ evictions. Davey also pledged to create a national register of licensed landlords and make three-year tenancies the default.  

If the Labour Party comes to power, they propose to increase the rate of Stamp Duty for non-UK residents. Meanwhile, the Conservatives would abolish Stamp Duty for first-time buyers (FTBs) on homes up to £425,000. To further support FTBs, Sunak promised a new and improved Help-to-Buy scheme. Similarly, the Labour manifesto pledged a permanent mortgage guarantee scheme. 

All details are correct at the time of writing (19 June 2024) 

It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. No part of this document may be reproduced in any manner without prior permission. 

Commercial Property Review – June 2024 

Commercial trends of 2024 

Flexibility, sustainability and diversification are key trends in the commercial property market so far this year, according to PropertyWire. 

Flexible workspaces are increasingly in demand, reflecting the shift to hybrid working since the pandemic. Co-working spaces, quality buildings and adaptable offices are more popular, as are those in prime locations.  

Sustainability continues to be a priority, prompting landlords and developers to adopt eco-friendly practices. Eden, a new sustainable office space in Salford, is one of the developments leading the way; the 12-storey, 115,000 sq. ft building was designed to meet net zero targets. Features include air source heat pumps, a rainwater harvesting system and energy efficient lifts.  

Logistics and distribution centres are in demand due to the upturn in e-commerce. As the online retail market grows, high street units are having to diversify their offering to become more than just shops; some are now incorporating experiences, entertainment and restaurants.  

London lacking big deals  

April was another quiet month for the City investment market, according to Savills.  

At the end of April, the year-to-date turnover was £474.3m across 25 deals – 77% down on the previous year and 79% lower than the five-year average. Interestingly, the number of deals was only 18% less than the five-year average, indicating that fewer larger deals are bringing down the turnover volumes. In fact, the City has not had a deal above £100m so far this year.  

With a muted market, Savills believes investors could use this opportunity to take advantage of reduced competition, commenting, ‘It seems the time is ripe for investors to act on big ticket deals in London. By making the most of the market dynamics, unlocking undervalued assets, and harnessing historical insights, investors can position themselves to take advantage of this ever-evolving market landscape.’ 

Industrial and retail outperforming the office sector 

CBRE’s Monthly Index for April highlights that there is a positive outlook for the retail and industrial sector, while the office market experiences some challenges. 

The report found that, in April, retail capital values increased by 0.1%; standard shops were a key driver of this, recording 0.2% capital growth. Also, retail warehouse capital values rose by 0.1% and, for the first time since April 2023, shopping centre values did not decrease. 

As for the industrial sector, capital values were up 0.3% in April, with the South East region performing particularly well compared to the rest of the UK. 

The office sector did not fare so well, with total returns at -0.1%. Capital values of Outer London/M25 offices fell by 1.2%, causing a monthly decrease of 0.6% overall. However, office rental values did increase by 0.1%.  

Jennet Siebrits, Head of UK Research at CBRE, reflected, “Industrial and retail performance is a source of optimism for UK real estate investors. Both sectors exhibit steady rental growth, particularly industrial and have reported positive total returns in every month so far in 2024.” 

All details are correct at the time of writing (19 June 2024) 

It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. No part of this document may be reproduced in any manner without prior permission. 

News in Review

“While there was no growth in April, it’s important to focus on the broader trend” 

The UK economy did not grow in April, official data released last Wednesday by the Office for National Statistics (ONS) revealed. The headline figure followed a month of wet weather, with ONS suggesting that the rain might have affected consumer spending.  

More positively, the services sector belied the trend and grew by 0.2%, a fourth consecutive monthly increase. Furthermore, real gross domestic product (GDP) rose by 0.7% in the three months to April, compared with the previous quarter. 

Growth in the first three months of 2024 had helped the UK economy exit recession. David Bharier, Head of Research at the British Chambers of Commerce (BCC), commented, “While there was no growth in April, it’s important to focus on the broader trend, rather than volatile monthly movements. Growth of 0.7% in the three months to April is positive news. 

He continued, “While the broader trend is ticking up, downside risks remain. Many businesses we speak to are still held back by skills shortages, high borrowing costs and trade barriers with the EU. Sectoral performance remains very imbalanced, with retail and hospitality sectors consistently reporting weaker growth.” 

  

Mortgage arrears rise for UK borrowers 

The UK’s total value of outstanding mortgage balances with arrears rose again in Q1 to reach its highest level since 2014, according to Bank of England (BoE) data released last week. 

The value of outstanding mortgage balances with arrears rose by 4.2% in Q1 2024. On an annual basis, this put total arrears 44.5% higher than a year earlier. 

The BoE’s Mortgage Lenders and Administrators Statistics revealed that the total value of outstanding mortgage balances with arrears is now £21.3bn. Many analysts maintain a positive tone, pointing to expected upcoming cuts to Bank Rate, which could ease the pressure on borrowers. 

More UK adults are ‘economically inactive’ 

ONS data showed the number of working-age adults considered economically inactive reached a nine-year high of 2.8 million, with 22% of adults aged 16 to 64 not actively looking for work. Since surging during the pandemic, the UK’s inactivity rate among adults has remained persistently high in the past two years. 

Meanwhile, the official unemployment rate confounded analysts by unexpectedly rising to 4.4% in the three months to April, its highest level for two and a half years. Conversely, as unemployment rose, the number of job vacancies fell by 9,000 to 904,000. 

And on the campaign trail… 

The major parties published their manifestos last week, outlining their intentions for the UK should they be elected on 4 July.  

Sir Ed Davey launched the Liberal Democrat manifesto entitled, ‘For a Fair Deal,’ with the NHS a key focal point. Pledges included giving unpaid carers the right to paid carers’ leave from work and providing 8,000 more GPs in England. Economic pledges from the party included reforming Capital Gains Tax (CGT), reversing banking sector tax cuts and raising the tax-free Personal Allowance. 

Rishi Sunak set out his ‘Clear plan, bold action, secure future’ manifesto pledging £17bn worth of tax cuts, to be funded by clamping down on tax avoidance and tempering welfare spending. Headline announcements included abolishing National Insurance (NI) contributions for the self-employed, along with a further two percentage point cut in employee NI contributions by 2027, plans to abolish Stamp Duty for first-time buyers on homes up to the value of £425,000 and the construction of 1.6 million new homes. The manifesto also confirmed proposals already announced during the campaign, including National Service, the State Pension triple lock and plans to halve immigration. 

The Labour Party’s manifesto placed wealth creation as their “number one priority,” according to Sir Keir Starmer, who announced intentions to recruit 6,500 new teachers, launch a new ‘Border Security Command’ to tackle immigration and plans to build 1.5 million new homes. Their manifesto promised no changes to personal tax rates, explaining its plans would be funded by charging VAT on private school fees, abolishing the non-dom tax status, increasing Stamp Duty for foreign buyers and clamping down on those who are underpaying tax by closing ‘loopholes’ in the windfall tax on oil and gas firms.  

Here to help 

Financial advice is key, so please do not hesitate to get in contact with any questions or concerns you may have. 

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. 

All details are correct at time of writing (19 June 2024) 

Investing – adopting an Olympic mindset

The countdown is well and truly underway to this summer’s Olympic and Paralympic Games in Paris when we are all sure to be watching in awe as the world’s leading elite athletes showcase their talents. And investors could boost their chances of success by emulating an Olympian’s mindset and thereby improving their financial wellbeing. 

Attributes of an Olympian 

Many of the attributes associated with successful Olympic or Paralympic athletes are the same as those required to be a successful investor. A growth mindset, for instance, is important, as is managing nerves, being confident and resilient, having a well-thought-out strategy, blocking out ‘noise’ or distractions, setting clear objectives and realistic attainable goals, displaying discipline, and making small alterations or rebalancing. 

The coach’s role 

There are also similarities in terms of the relationship between an athlete and their coach, and a financial adviser’s role with clients. Both relationships, for example, are based on trust and honesty, and rely on a coach or adviser imparting knowledge and experience. Indeed, the provision of quality financial advice, just like a good coaching relationship, should be empowering. 

Taking advice 

Just like elite athletes, clients who receive professional advice are typically better prepared, more focused, more likely to maintain a positive mindset and avoid behavioural mistakes that can derail any investor’s plans. So, make Olympic year the time you fully utilise the ongoing guidance and mentoring we can provide in order to ensure your investment plans stay firmly on track and give you the best chance of attaining your life goals. 

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. 

No plans to downsize for the majority of over 55s

Only one in seven non-retired homeowners over 55 plan to downsize after they stop working, a new study1 suggests. 

In a poll of 2,000 adults over the age of 55, half said they plan on staying in their current home after they retire. For those aged 71 to 75, the figure is 68%. 

No hassle, please 

The main barriers to downsizing include not wanting the hassle (37%), wariness about potential costs, including Stamp Duty (35%) and a perceived lack of suitable housing (26%). Meanwhile, three in ten said there were no barriers in place, suggesting they simply do not want to move. 

Of course, it’s your choice where you live. But downsizing can bring many benefits, such as freeing up some cash and saving you money on your bills in the long term. It may also be beneficial living in a property better suited to your lifestyle. 

Knock-on effects 

Low levels of downsizing can have an impact on supply levels across the property market. Analysts suggest it may prevent some growing families from finding suitably sized homes to move into. Some have also warned of a ‘ripple effect’ that could impact buyers further down the property ladder. 

Here to help 

If the ‘hassle’ of a house move is stopping you from downsizing, we can help with your mortgage and support you in the process. 

1Pegasus, 2024 

As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments 

News in Review

“As consumers gear up to spend more… there’s a brighter outlook for the coming months” 

Last Tuesday, figures from the latest Barclays Consumer Spend Report revealed that consumer card spending fell to a three-year low in May. As households continue to feel the squeeze, overall spending grew by just 1.0% for the month, its lowest rise since February 2021. 

Analysts lay the blame for lower discretionary purchases not only on cost-of-living concerns but also unseasonable levels of rainfall, which may have kept some shoppers off the high street. Sectors that performed especially poorly include takeaways and fast food, which experienced its first fall in the past four years. Meanwhile, supermarket spending growth also sank to its lowest point in two years. 

On a brighter note, the report revealed that, as consumers feel more optimistic about the latest inflation figures, three in 10 now plan to spend more once the weather improves. Karen Johnson, Head of Retail at Barclays, struck a cheerful tone when commenting on the figures. She said, “As consumers gear up to spend more with better weather, and with the Euros, Wimbledon, and Taylor Swift’s ‘Eras Tour’ on the horizon, there’s a brighter outlook for the coming months.” 

BCC says there is ‘life in the UK economy’ 

The UK economy is now forecast to grow faster than expected this year and next, according to upgraded figures from the British Chambers of Commerce (BCC) released last week. The BCC expects the economy to expand by 0.8% in 2024, above the 0.5% previously forecast. In 2025, the BCC estimates growth of 1.0%, raised from an earlier projection of 0.7%. 

Despite the small upwards revisions for 2024 and 2025, longer-term prospects are not much improved, the BCC noted. Indeed, the forecast for 2026 remains unchanged at 1.0%, with the BCC pointing to ‘global headwinds remaining, interest rates falling slowly and only a gradual expansion in consumer spending’ as the main reasons. 

Following a turbulent few years, acceleration in growth forecasts – however minor – is welcome. The revised figures follow better than expected economic performance at the start of 2024; having briefly fallen into a technical recession at the end of 2023, the UK economy is now on course for a slight recovery, analysts suggest. 

Another strong month for UK services sector 

More positive news came from the S&P Global UK Services PMI, which revealed last Wednesday that the UK services sector continued to perform solidly in May. Although some momentum had faded from the previous month, the index only slipped slightly from April’s 11-month high to settle at 52.9. This also represented the seventh consecutive month above the 50.0 neutral mark.  

The release revealed service companies feeling ‘strongly optimistic’ about the outlook for 2024. Notably, input cost inflation fell to its lowest level since February 2021, prompting some analysts to wonder whether the Bank of England (BoE) might cut interest rates in the near term.  

Commenting on the figures, Joe Hayes, Principal Economist at S&P Global Market Intelligence, said, “That’s now three months on the trot that selling price inflation in the services sector has eased. This will be very encouraging to the BoE’s Monetary Policy Committee and suggests the trajectory of services prices is moving in the right direction.” 

Eurozone rate cut 

Last week the European Central Bank (ECB) cut its main interest rate from 4% to 3.75%, following progress in successfully tackling inflation. Following Canada’s decision to reduce its official lending rate last week, ECB President Christine Lagarde said the inflation outlook had improved “markedly,” but cautioned inflation was likely to stay around the target level of 2% into 2025. She said, “We are not pre-committing to a particular rate path” but will keep interest rate policy “sufficiently restrictive” as required to bring inflation down. 

UK election 

On Friday night, a seven-party leaders’ debate took place, with Leader of the House of Commons, Conservative candidate Penny Mordaunt and Labour Deputy Leader Angela Rayner taking part on behalf of the Prime Minister and Sir Keir Starmer, respectively. Key issues debated included defence, immigration and tax. Earlier in the day the Prime Minister apologised for leaving D-Day 80th anniversary events early. The Liberal Democrats and Conservatives have released their manifestos, with Labour’s due on Thursday.  

Here to help 

Financial advice is key, so please do not hesitate to get in contact with any questions or concerns you may have. 

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. 

All details are correct at time of writing (12 June 2024) 

AI & scams

Although there is much excitement surrounding the advent and development of artificial intelligence (AI), there are some serious risks involved – namely, the prevalence of scams that are becoming increasingly sophisticated.  

Types of scams  

There are a few main scams to be aware of: 

  • Deepfakes are essentially fake media content that is very believable. For example, a video clip of financial expert and broadcaster Martin Lewis was recently fabricated, aiming to convince viewers to part with their money. This AI software can also clone voices and use them to make fraudulent phone calls. In a recent survey1, 77% of those respondents who had been victims said they had lost money because of this kind of scam. 
  • Images and videos can be created of people to pass through security and verification checks, thus gaining access to bank accounts  
  • ChatGPT enables phishing scams to seem more convincing by making the tone more human and filtering out any spelling or grammatical errors.  

Who is at threat? 

Everyone risks falling victim to these scams, regardless of age. In fact, research2 has found that 48% of adults between the ages of 25 and 34 have experienced financial fraud, while only 28% of over 55s said the same. 

What can we do? 

Andrew Bailey, Governor of the Bank of England, commented, “The time to act to safeguard our society from AI-enabled fraud is now, and all organisations need to think carefully about how AI may create fraud risks for their business and their customers. This will require ongoing vigilance, including monitoring and the sharing of insight and best practice between firms and across sectors.” 

We understand that the threat of scams can feel overwhelming, especially when the capability of AI is constantly changing and developing. That’s why it’s important to question everything, equip yourself with knowledge so you’re not vulnerable and, if in doubt, get in touch for guidance. 

1McAfee, 2024 

2GFT UK 

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. 

Focusing on self-actualisation in retirement

To enjoy a financially secure retirement, it’s important to spend time doing some in-depth thinking well in advance to determine your goals and requirements in order to achieve the lifestyle you dream of. You need a robust financial plan. 

When thinking about the income you’ll need in retirement, many people find it helpful to think in terms of Maslow’s renowned Hierarchy of Needs. His pyramid has various levels of need that human motivations move through, starting with the physical requirements for human survival, and ending with mankind’s highest aspirations, reaching ‘self-actualisation’ at the apex of the pyramid. Adapting this approach to personal finance was pioneered in the US. Using this hierarchical approach in a personal finance context can be a useful tool in deciding how to plan your income in retirement. 

Survival income – This is the base of the pyramid and consists of the income you need to pay all your basic household expenses, your regular bills and running costs. 

Safety income – The next layer up, this is the amount you might need to meet life’s unexpected events, such as health and later-life care costs, loss of income and any emergency financial help you might want to give your family. 

Freedom income – This layer is all about assessing the likely cost of doing all those things that you never had time to do before you retired, including travel expenses, major purchases or indulging yourself in other ways. 

Self-actualisation 

Many people add a gift layer representing money they want to pass on to children and grandchildren during their lifetime, and some add a dream layer, their ultimate ‘bucket list,’ to the very top. The apex of ‘self-actualisation’ represents the ultimate in reaching your full potential, being self-fulfilled and enjoying peak experiences. Maslow described this level as the desire to accomplish everything that one can, and “to become everything one is capable of becoming.” 

By viewing your retirement finances in this way, you can gain a clear picture of how much money you’ll need to help you enjoy the retirement you’ve always wanted. We can build a clear and comprehensive strategy. 

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. The Financial Conduct Authority (FCA) does not regulate Will writing, tax and trust advice and certain forms of estate planning. 

News in Review

“The market appears to be showing signs of resilience” 

The UK experienced a modest rebound in house price growth in May, according to the latest Nationwide House Price Index, released on Friday. Prices rose by 0.4% month-on-month to reach an average house price of £264,249. The annual growth rate picked up to 1.3%, from 0.6% in April. 

The figures point to resilience in the housing market, with May’s gain reversing a 0.4% drop in the previous month. Wage growth and lower inflation contributed to renewed buyer confidence, analysts suggested. 

Commenting on the figures, Robert Gardner, Nationwide’s Chief Economist, said, “UK house prices increased by 0.4% in May, after taking account of seasonal effects. This resulted in a slight pickup in the annual rate of house price growth to 1.3% in April, from 0.6% the previous month.” He added, “The market appears to be showing signs of resilience in the face of ongoing affordability pressures following the rise in longer term interest rates in recent months. Consumer confidence has improved noticeably over the last few months, supported by solid wage gains and lower inflation.”   

There has also been positive news on homeownership rates for young adults, according to new research from the Institute for Fiscal Studies (IFS). After falling continuously from 2000 through to 2015, homeownership for those aged 25 to 34 has recovered to the level of 14 years ago, despite rising prices and interest rates. The figure for this age group rose by 6 percentage points to 39% in 2022/23, which is back to the level in 2010. However, the IFS warned the figure remains 20 percentage points lower than in 2000, adding, ‘The recovery has been concentrated among those on middle incomes.’ 

UK car production falls 

Figures released last Thursday by the Society of Motor Manufacturers and Traders (SMMT) showed that car production in the UK has fallen for a second consecutive month. 

Some 61,820 cars rolled off the production line in April, the SMMT revealed, down by 7% on the same month last year. Of these, around 14,000 were built for the UK, an increase of almost 20%. In contrast, cars built for export declined, with shipments to the European Union, China and Australia experiencing double-digit drops. 

Analysts attributed falling production to the winding down of existing models, as well as some plants transitioning to electric vehicle (EV) production. 

Mike Hawes, SMMT Chief Executive, commented, “With a General Election in a matter of weeks, the next government must ensure the conditions are right not just for the competitiveness of UK manufacturing, but for the investment required to transition the sector to a net-zero future.”  

US economy growth slower than expected  

The US economy grew slower than expected at the start of 2024, after an initial estimate of a 1.6% annualised growth rate was revised down to 1.3%. According to the US Bureau of Economic Analysis, the world’s largest economy, which has outperformed its peers over the past year, suffered from a widening trade deficit and a drop in consumption in the first three months of the year. The 1.3% growth rate compares to 3.4% annualised expansion recorded at the end of 2023 and was lower than the 2.4% that had been forecast by economists. Household consumption was reduced from an initial estimate of 2.5% to 2% in the revised figures and accounted for about half of the overall growth downgrade. 

Calls for financial engagement 

UK Finance has called on the next government to produce polices that will promote financial engagement, including financial education delivered via the school curriculum and a cross-government task force to tackle financial abuse. According to UK Finance, 80% of voters support better financial education at school. The lobby group is also calling for improved policies around frauds and scams. 

King Charles banknotes enter circulation 

The Bank of England will issue banknotes bearing the likeness of King Charles for the first time today. To minimise the environmental and financial impact of the change, new notes will only be printed to replace worn ones featuring her late Majesty, Queen Elizabeth. So, the public will begin to see the new King Charles notes very gradually. 

Here to help 

Financial advice is key, so please do not hesitate to get in contact with any questions or concerns you may have. 

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. 

All details are correct at time of writing (5 June 2024)