Home insurance claims?

Home insurance offers protection against the most likely things that can go wrong in your home. While we often think of outside threats like theft or fire, a new study1 has shown that more claims result from clumsiness than malice. 

Accidents happen 

Accidental damage and escape of water are the most common reasons people claim on their home insurance, the study found. 

Of 76,518 claims made last year, accidental loss or damage at home accounted for more than a quarter, with escape of water making up another quarter of claims. 

Accidental damage is defined as sudden and unexpected damage to a property or contents by an outside force. This label is wide reaching, spanning everything from staining a carpet to drilling through a pipe. 

What else? 

Other reasons for claims included storm damage (13%), theft (7%) and accidental loss or damage away from home (7%). The least common reasons to claim included leakage of oil (108), property owners’ third-party liability (10) and arson, which recorded just seven incidents. 

Come what may… 

However careful you are, it is a fact of life that accidents happen. When damage occurs, having the right home insurance in place to cover it provides crucial peace of mind. We can help you find the best protection for your circumstances. 

1GoCompare, 2023 

The complexities of succession planning 

Succession, the hugely popular TV show, highlights the complexities of wealth transfer. There’s a lot to think about when passing on your wealth – as well as the risk of family disputes, tax implications need to be taken into consideration. 

Preserving, planning and communication 

As families accumulate wealth and assets it becomes important to preserve these and to plan the transfer across generations. Without a solid succession plan, a family’s hard-earned wealth could be at risk of erosion or loss, leading to potential disputes down the line. 

Open communication through proactive discussions with all family members is important. 

Take care with property 

If you’re planning to gift property during your lifetime, you need to be aware of complicated Inheritance Tax (IHT) rules around this. For example, if you gift a house to a family member but continue to benefit from it in some way, it will remain part of your estate when you die and HMRC could tax your loved ones at 40% on anything over the tax-free threshold. 

Reclaiming overpaid IHT 

Even when the estate has paid any IHT that’s due, that’s not the end of the story. 

Following several years of significant house price growth during the pandemic, property prices are now falling. This means that properties that were valued for IHT at the height of the pandemic are now likely to sell for less. Over the years, stock market volatility due to political and economic uncertainty has also led to investment losses for many. So, the IHT bill may have been overpaid and the estate will need to put in an overpayment claim. 

There’s plenty to consider. For support with your succession plans, get in touch. 

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

“We are beginning to win the battle against inflation”

Some positive economic news was delivered last week in the form of better-than-expected inflation data for October. The latest official release from the Office for National Statistics (ONS) revealed that in the 12 months to October, the Consumer Prices Index (CPI) rose by 4.6%, down from 6.7% in September. A Reuters poll of economists had predicted an October reading of 4.8%.

Falling from a peak of 11.1% in October last year, the annual rate has eased as household energy prices reduced year-on-year. Not all prices are falling, but many are rising less quickly.

Commenting on the largest one month fall in the annual CPI rate since April 1992, Chancellor Jeremy Hunt said, “Now we are beginning to win the battle against inflation we can move to the next part of our economic plan, which is the long-term growth of the British economy.”

Rishi Sunak has therefore met his target to halve inflation, a promise he made at the beginning of the year when the rate averaged 10.7% in the final quarter of 2022. Last week the Prime Minister said, “In January I made halving inflation this year my top priority … today, we have delivered on that pledge.”

The reading is likely to reduce concerns of a further increase in interest rates again this year, despite it being more than twice its 2% target. The final Monetary Policy Committee meeting of the year will conclude on 14 December.

UK retail sales 

ONS retail sales data for October has revealed that volumes fell unexpectedly, declining by 0.3% in the month, following a fall of 1.1% the previous month. With the cost of living and bad weather during October weighing on volumes, shoppers purchased less food and fuel during the month.

ONS Deputy Director for Survey and Economic Indicators commented on the data, “It was another poor month for household goods and clothes stores with these retailers reporting that cost of living pressures, reduced footfall and poor weather hit them hard.”

US – China relations

The President of the People’s Republic of China Xi Jinping travelled to the US last week, his first trip to the States in six years, where he met with President Joe Biden to discuss bilateral cooperation between the two nations. Among the key topics of conversation were the restoration of military communication, artificial intelligence, and agreements on curbing fentanyl production. After the meeting, the Chinese leader professed, “The China-US relationship has never been smooth sailing over the past 50 years and more… yet it has kept moving forward amidst twists and turns. For two large countries like China and the United States, turning their back on each other is not an option.”

Autumn Statement speculation

With Jeremy Hunt set to deliver his Autumn Statement on 22 November, speculation has been rife about possible inclusions. It appears less likely that rumoured changes to Inheritance Tax will be introduced until the Spring Budget, with Mr Hunt insisting that economic growth remains his current priority.  However, he has not ruled out cutting other taxes such as Income Tax or National Insurance. The Prime Minister added to this speculation on Monday, saying “We can now move on to the next phase of our economic plan and turn our attention to cutting taxes. We will do so seriously, we will do so responsibly, but that time is now here.”

There is also expected to be a focus on business taxes, as cutting them is seen as key to helping the economy to grow. On support for businesses, the Prime Minister said he wanted to help companies “invest, innovate and grow through lower taxes and simpler regulation.“

There has been speculation about benefit values which are normally uprated each April with the inflation rate of the previous September. The government may consider using the October rate of 4.6% rather than September’s 6.7%. According to The Institute for Fiscal Studies (IFS), this would cut working-age benefits spending by about £3bn in 2024/25. 

The Chancellor will also unveil the latest economic update and forecasts produced by the Office for Budget Responsibility (OBR).

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 (22 November 2023)

Residential Property Review – November 2023 

Residential supply and demand less downbeat 

According to the Royal Institution of Chartered Surveyors (RICS) October UK Residential Market Survey, demand is still falling faster than supply. 

New buyer enquiries posted a net balance of -28% during October, marking eighteen successive months in which this indicator has been in negative territory. Nevertheless, the latest reading is less downcast compared to a figure of -37% seen in the September survey and represents the least negative return since May 2023.  

For agreed sales, the latest net balance of -25% is consistent with generally weak activity levels over October. However, the reading is again less negative than figures of -45% and -35% recorded in August and September respectively. 

New residential listings coming to market continue to slow, evidenced by a net balance reading of 

-7% for October. Respondents to the survey report that the number of market appraisals undertaken over the month is below that seen in the equivalent period of last year, with a net balance of -51%. 

Fixer uppers are most in demand 

When looking at more than 600,000 property listings to see which features led to the highest number of enquiries to estate agents, Rightmove has found that fixer-upper homes, or those that are described as needing refurbishment, are at the top of the list for buyers. 

Two groups of buyers compete for this type of home: first-time buyers looking for a cheaper property to get on the ladder which they can refurbish over time and investors looking to grab a  bargain and do it up to sell or rent out. 

Conversely, house hunters looking for a refurbished home can expect to pay an extra £70,000 on average for the privilege (19% more than the average national house price). 

Rightmove’s Tim Bannister commented, “This really shows the different priorities that home-movers have – some are in a more fortunate position to be able to consider buying a newly refurbished home, while others want to put their own stamp on a home and do it up from scratch, or they may realise that if they buy now they can spend time doing up the house a room at a time.” 

New Housing Minister  

As part of the government reshuffle, Lee Rowley has replaced Rachel Maclean as Housing Minister.  

Rowley is the sixteenth Housing Minister since the Conservatives came into power in 2010 and he held the same position during the short-lived premiership of Liz Truss. He will oversee the Renters’ Reform Bill, which is now at Committee stage, with findings scheduled to be reported back to the House of Commons by 5 December 2023. 

The new Housing Minister will also address the Leasehold and Freehold Bill, confirmed in the recent King’s Speech. This Bill aims to eliminate punitive service charges and facilitate easier acquisition of freeholds by leaseholders. 

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 – November 2023

ESG credentials come to the fore in the industrial and logistics sector  

November’s UK Commercial Market in Minutes from Savills has highlighted the continued robustness in the industrial and logistics sector, despite a reduction in take-up during the year due to economic uncertainty.  

The weaker demand has given warehouse space occupiers the opportunity to be more selective about their requirements, which has created a ‘significant gap when it comes to prime and secondary rents as businesses look to prioritise ESG credentials,’ according to the report. As occupiers focus more than ever on the quality of space, ESG requirements have become a key consideration for all third-party logistics providers to succeed in gaining customer contracts.  

The financial benefits to firms from efficiencies derived from acquiring Grade A space, mean it’s now near the top of the wish list when it comes to tenants selecting a new warehouse unit. Occupiers are also appreciating the benefits in attracting and retaining staff that a contemporary, well-specified building can provide.  

From a rental perspective, although supply is rising, prime unit rents are still rising, recording a 5.8% increase, versus 0.3% for secondary space. With take-up of second hand stock lagging and achieving rental levels lower than prime units, landlords and developers need to be mindful of the requirement for redevelopment or refurbishment of stock to satisfy potential occupiers’ ESG requirements. 

Retail recovery ‘yet to begin in earnest’ 

The latest Royal Institution of Chartered Surveyors (RICS) market update indicates the resilience of retail transaction volumes in Q3, reaching a five-year high of £1.9bn.  

Although retail volumes have experienced a more positive period, yield data from CBRE indicates ‘a turnaround in the retail sector has yet to begin in earnest.’ At a headline level, retails yields average 7.2% at present, versus 6.5% at the start of 2023. 

Scottish commercial property investment likely to ‘pick-up’ in 2024 

Colliers recent Property Snapshot of the Scottish Commercial Market shows that during Q3, investment volumes slowed from £500m in Q2, to £330m. This figure is approximately 33% below the 5-year quarterly average.  

In the year to the end of Q3, total investment volumes registered £1.1bn, this is a 47% reduction on the 2022 Q1-Q3 figure recorded. Year-to-date (end Q3) from a sector perspective, 32% of investment activity can be apportioned to the retail sector, followed by 26% for offices and 15% for industrial. 

During the third quarter, a total of 32 deals were transacted, the average lot size of which was £10m, a reduction from an average of £13m the previous quarter. According to the report, transaction volumes have been hindered by a ‘scarcity of accessible financing options,’ with a recovery heavily dependent on a combination of lower debt costs and bond yields, plus a recovery in asset process. 

Looking ahead, Colliers believe that investment activity is ‘likely to remain subdued’ during the fourth quarter, but into 2024 they’re expecting ‘a pick-up… when investor sentiment improves, and interest rates and inflation continues to fall.’ 

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

“The UK economy has stagnated again in recent months”

Last Friday, UK growth figures from the Office for National Statistics (ONS) showed that the economy is estimated to have shown no growth in the third quarter of the year, following an increase of 0.2% in Q2. UK gross domestic product (GDP) is estimated to have increased by 0.6% in Q3 2023 compared with the same quarter last year.

Although the economy registered no growth in the July to September period, it does compare favourably with expectations of a 0.1% fall as predicted by a Reuters poll of economists. Hopes are that, although slight, this quarterly growth will aid the UK economy from slipping into recession this year, defined as two consecutive quarters of contraction.

From a month-on-month perspective, ONS data also released on Friday, shows GDP is estimated to have grown by 0.2% in September, following a gain of 0.1% in August. Services output was the main positive contributor in September, rising by 0.2% in the month, ‘driven by growth in professional, scientific and technical activities, and human health and social work activities,’ according to ONS. The construction sector also registered growth (0.4% in September) to provide support.

Addressing the flat growth in Q3, Research Director at the Resolution Foundation James Smith, commented, “The UK economy has stagnated again in recent months, driven in part by the rapid rise in interest rates since late 2021… Britain is a stagnation nation that has struggled to secure sustained economic growth since the financial crisis. Addressing this is the central task we face as a country and must be at the heart of the Chancellor’s Autumn Statement in 10 days’ time.”

Meanwhile, Jeremy Hunt responded to the data, “Naturally interest rates do have an impact and the judgement of the Treasury is that the main reason growth has slowed is because of that.”

Powell “not confident” inflation reducing action enough

Speaking at an International Monetary (IMF) event in Washington last week, Federal Reserve Chairman Jerome Powell said that although he and his colleagues were encouraged by the slowing rate of inflation, further action may be necessary in order to maintain momentum. Addressing the commitment to bring inflation down to 2% he signalled, “we are not confident that we have achieved such a stance,” but added, “we will keep at this until we succeed.”

Surprise cabinet reshuffle

Former Prime Minister David Cameron replaced James Cleverly as Foreign Secretary in a surprise cabinet reshuffle sparked by Suella Braverman’s sacking on Monday. Cleverly becomes Braverman’s replacement at the Home Office. Steve Barclay has replaced Therese Coffey as Environment Secretary, with Treasury Minister Victoria Atkins promoted to replace him as Health Secretary. Meanwhile, former Transport Minister Richard Holden has been appointed Tory party Chairman, and Pensions Minister Laura Trott has been promoted to Chief Secretary to the Treasury, replacing John Glen. Jo Churchill MP has been appointed as Minister of State in the Department for Work and Pensions.

Other senior cabinet members remained in post, including Chancellor Jeremy Hunt, Defence Secretary Grant Shapps and Education Secretary Gillian Keegan.

Pay growth overtakes inflation

Regular pay (excluding bonuses) rose at an annual rate of 7.7% between July and September, latest official ONS figures show. This indicates a rise of 1% after taking inflation into account and represents the largest increase for two years. Other ONS figures show that the number of job vacancies continues to fall – between August and October, the estimated number of vacancies in the UK fell by 58,000 to 957,000. However, vacancies remain well above pre-pandemic levels.

Darren Morgan, ONS Director of Economic Statistics, said that the figures “show a largely unchanged picture, with the proportions of people who are employed, unemployed or who are neither working nor looking for a job all little changed on the previous quarter.”

Responding to the latest labour market figures, Chancellor Jeremy Hunt said, “It’s heartening to see inflation falling and real wages growing, keeping more money in people’s pockets. Building on the labour market reforms in spring, the Autumn Statement will set out my plans to get people back into work and deliver growth for the UK.”

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 (15 November 2023)

Home Finance – In the news

Most landlords not selling yet 

Two in three buy-to-let landlords have no plans to sell any of their properties in the upcoming year, new research1 has revealed. While the new Renters Reform Bill had led some to predict a selling spree, it seems most are holding onto their investments – for now. Those with a single property (75%) and those with two or three (69%) are most likely to hold onto all their properties. In a turbulent market, rising interest rates are the main motivation for six in 10 landlords who intend to sell, a 15% jump on the previous survey. Nearly half claim that the rent they charge no longer covers their mortgage costs. 

Majority experiencing transaction delays 

More than half of people selling a property in the last year experienced delays, a survey2 has shown, with one in five seeing their transaction collapse. For more than six in 10 sellers, moving home within their timeline was an important factor when entering the market. Almost four in 10, meanwhile, believed that the requirement to provide information on their property at various points during the process contributed to the delay. 

1Landbay, 2023 

2Moverly, 2023 

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

Wealth – In the news

More pension savers want to exclude oil 

New analysis1 has revealed an increase in the number of pension savers who would like to see the oil sector completely excluded from their pension investments, up from 15% in 2022 to 21% in 2023. Of the remaining 79%, almost half said they would only continue to invest in this sector if companies show a concrete commitment to cutting greenhouse gas emissions and improving their environmental impact. Alongside oil, investors were also concerned about companies contributing to deforestation and habitat destruction, predatory lending, and investments in alcohol and gambling. 

With COP28 kicking off in the United Arab Emirates on 30 November it will be interesting to hear further views on this from the pension and investment industry and groups such as the Net-Zero Asset Owner Alliance, plus the intentions of the oil sector in committing to net zero. 

Artificial Intelligence (AI) to be regulated 

AI is having an impact on almost all areas of life, including financial services. With the government calling on the UK to be the global hub of AI regulation, the Financial Conduct Authority (FCA) has announced its intention to regulate critical third parties, including AI services, for the UK financial sector. Commenting on the FCA’s role, Nikhil Rathi, FCA Chief Executive said, “While the FCA does not regulate technology, we do regulate the effect on — and use of — tech in financial services.” 

He added, “As the Prime Minister has set out, adoption of AI could be key to the UK’s future competitiveness – nowhere more so than in financial services.” 

1PensionBee, 2023 

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. 

Money – In the news

Cost of raising a child soars 

Recent research1 has found that the cost of raising a child has increased by 10% over the last year, with the average UK family spending £223,256 in their offspring’s first 18 years. This works out at over £12,000 a year per child. The research looked at the different costs associated with bringing up children, ranging from essential through to leisure activities. 

End to rising wealth 

The Resolution Foundation has found that the cost-of-living crisis, coupled with the monetary policy response, has put an end to the trend of rising wealth in the UK. The independent think-tank estimates that the wealth-to-GDP ratio fell to around 650% by early 2023. This is by far the biggest fall on record as a proportion of GDP, wiping out £2.1trn of household net worth in cash terms. 

Gender pensions gap 

There is still a wide gender pensions gap – recently published government data (for 2018–20) shows a gap between median male and female private pension wealth of 35% overall. The size of the gap varies according to age, with women aged between 45 and 49 seeing a 47% chasm relative to men in the same age group. 

1Moneyfarm, 2023 

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. 

‘Megatrends defining the future’

The emergence of new trends and advancements such as the advent of AI, electric vehicles and other ‘big picture’ global innovations are set to shape our future, presenting opportunities to investors interested in capturing these themes in their portfolios. 

The United Nations Economist Network has identified five megatrends impacting social, economic and environmental outcomes, these are – climate change, demographic shifts, urbanisation, digital and disruptive technologies and inequality. The World Economic Forum have noted that ‘megatrends are defining the future… short-term investors can be opportunistic, but long-term investors have to be more strategic, particularly in the face of these megatrends.’ 

An ever-changing world creates opportunities and challenges  

Developing a strategy and adding thematic investments to a portfolio can enable investors to align their personal objectives and interests, as well as identifying and hopefully capitalising on changes believed to be disrupting established markets and industries. By combining thematic elements with a well-diversified and well-managed core portfolio, investors could achieve balance between opportunity, risk and performance. Advice to identify these potential opportunities is essential. 

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.