‘Advice gap’

A new study from the Financial Services Compensation Scheme (FSCS) ^I raises fears over a worrying financial ‘advice gap.’ Almost two-thirds of UK adults with savings, investments or a mortgage have not sought regulated financial advice in the last five years.

Not just for the wealthy

Additionally, more than half of all adults who hold a financial product believe professional advice is only for the wealthy. This is a common misconception the reality is that everyone can benefit from expert help, not just wealthy individuals with complicated assets.

Tailored plan

Taking the time to construct a clear and tailored plan that meets each client’s unique set of needs is the key to sound financial decisions. A strong and enduring relationship, developed through regular reviews, builds in the flexibility for plans to be adapted when life events inevitably dictate change.

Think about it

We’re always here to help bring clarity to your financial decision making. Get in touch today!

As with all insurance policies, conditions and exclusions will apply. Your home may be repossessed if you do not keep up repayments on your mortgage.

^I FSCS, 2023

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A risky game to play

It’s wise to investigate any areas you could cut back on during the current costof-living crisis, but this statistic reveals a worrying picture for young people planning to abandon their contents cover.

Protecting your contents avoids the worst-case scenario of having to replace costly contents, maybe all at once.

Cost effective

With policies starting from just over El a week, it’s a low expense in proportion to peace of mind. Indeed, the average price paid for home insurance has fallen to its lowest levels in a decade, according to the Association of British Insurers (ABI)2.

As with all insurance policies, conditions and exclusions will apply

^I G0Compare, 2023, ²AB1, 2023

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#paidAd

In 2022, the Financial Conduct Authority (FCA) warned investment firms about how they use influencers to promote their products on social media. With an abundance of adverts offering financial advice (sometimes without revealing it is a paid ad), it is more important than ever to be vigilant.

Your protection

Professional advice will consider your personal circumstances, offer a range of options and give you the necessary time and support to make the best decision for your unique long-term needs.

In contrast, online adverts generally rely on the popularity and personality of the influencer. The result is consumers not being offered the most suitable product and lacking support throughout the whole process.

Here for you

Your finances are one of the most personal parts of your life. When seeking advice, listen to financial advice professionals – not social media experts. We are here to help you choose based on your unique situation – get in touch today.

As with all insurance policies, conditions and exclusions will apply. Your home may be repossessed if you do not keep up repayments on your mortgage.

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How would you cope if you became ill? Would you have to rely on your partner, or struggle on trying to work? Almost one in five (19%) working adults say they would have to rely on their partner’s income or savings if they were unable to work.

It makes sense to review your situation carefully if you’re self-employed too. Only 6% of self-employed workers have an income protection policy and millions of self-employed people consider they would have to carry on working if they suffered an illness or injury. Some 11% would resort to taking on debt such as a loan, overdraft, or credit cards ⁷ .

As with all insurance policies, conditions and exclusions will apply

² LV=, 2023

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So, what’s changing?

The Renters’ Reform Bill, which is set to be voted on before May 2023, includes many significant changes. If passed in full, the act will:

• Scrap section 21 ‘no fault’ evictions
• Create a register of landlords
• Introduce a private rented ombudsman to help enforce renters’ rights  Make it illegal for landlords and agents to refuse to rent properties to people who receive benefits
• Give local authorities more power to enforce and protect renters’ rights.

From ‘E’ to ‘C’

Another significant change that is fast approaching is an update to the rules on Minimum Energy Efficiency Standard (MEES) for privately rented homes in England and Wales.

Currently, the MEES is an Energy Performance Certificate (EPC) rating of ‘E’. From 2025, though, the bar is due to be raised to a minimum of a ‘C’, with new tenancies affected immediately and the rules applying to all tenancies from 2028.

Landlord licensing

Before now, landlord licensing has mostly only applied to Houses in Multiple Occupation (HMOs). More recently, some local authorities have been broadening their rules to include standard, single-tenancy buy-to-lets. It could be a good time to check whether you need a licence now or may do in the future.

What do landlords think?

Despite the impact it could have on their portfolios, more than two in five BTL landlords are not aware of the proposed Renters’ Reform Bill, a new study ⁱ has claimed.

The survey also found that close to half of landlords are ‘Strongly Concerned’ or ‘Concerned’ about not being able to refuse to rent properties to people who receive benefits. Similarly, landlords are worried about changes to section 21 evictions (45.45%), property registration (42.65%) and the right to request a pet in their house (41.45%).

Capital Gains Tax

Increased requirements to remain compliant will add to the pressures placed on landlords and could lead to some selling up, the study suggests. For those seeking to escape the new legislation, Capital Gains Tax (CGT) is something else to think about.

Generally, you need to pay CGT if you sell a rental property for more than you paid for it. From April 2023, the annual CGT allowance is E6,OOO and is set to fall to É3,ooo from April 2024.

Talk to us

With so much happening (and scheduled to happen) in the BTL sector, it can be difficult to know the best course of action to take. Whatever your plans, we’re here to help you make sense of it all and ensure your BTL portfolio is well prepared for everything that is to come.

^I Finbri, 2023

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Commenting on the figures, Robert Gardner, Nationwide’s Chief Economist said, “There are some encouraging signs that mortgage rates are normalising, but it is too early to tell whether activity in the housing market has started to recover. It will be hard for the market to regain much momentum in the near term as economic headwinds are set to remain strong, with real earnings likely to fall further and the labour market widely projected to weaken as the economy shrinks.”

Your home may be repossessed if you do not keep up repayments on your mortgage

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Monthly rise

The Bank of England (BoE)’s Monetary Policy Committee (MPC) increased Bank Rate again in February. Now at its highest level since the 2008 financial crisis, Bank Rate is pushing repayments higher for many mortgage holders.

On average, homeowners with tracker deals are facing mortgage repayments £382 higher than they were in December 2021. For mortgage borrowers on SVRs, the equivalent increase will amount to £240 a month.

To fix or not to fix?

In the context of rising rates, the certainty offered by fixed-rate deals can seem more appealing. Having a fixed-rate deal offers a guaranteed interest rate, which means monthly payments will be the same from the start to the end of your term.

The ability to plan your budget is a benefit of fixed-rate deals, though your monthly payments won’t fall if interest rates do. With financial conditions posing a challenge to many, fewer people are taking out mortgages. Indeed, approvals dropped to 753,946 in 2022, an annual decline of -20.2%².

Your home may be repossessed if you do not keep up repayments on your mortgage

¹UK Finance, 2023, ²Octane Capital, 2023

https://www.msn.com/en-gb/money/other/misery-for-millions-as-mortgage-payments-rise-588-a-year/ar-AA170STE?ocid=FinanceShimLayerhttps://www.propertyreporter.co.uk/property-market-turbulence-sees-mortgage-approvals-slide-by-20.html

For more information get in touch with the Full Circle Mortgages team here.

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In total, homeowners used equity release to borrow £6.2bn in 2022, a 29% yearly rise and a doubling in the amount borrowed since 2017. It’s not only higher amounts being borrowed; there are now more individual equity release plans too. In 2022, 93,421 people chose to release wealth from their property, up 23% from a year earlier.

Cost-of-living pressures continue to be the main prompt for people choosing to release equity.

A lifetime mortgage is a long-term commitment which could accumulate interest and is secured against your home. Equity release is not right for everyone and may reduce the value of your estate

¹Equity Release Council, 2023

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The proposed legislation, which is set to be voted on before May 2023, includes many significant elements. If passed in full, the act will:

• Scrap section 21 ‘no fault’ evictions
• Create a register of landlords
• Introduce a private rented ombudsman to help enforce renters’ rights
• Make it illegal for landlords and agents to refuse to rent properties to people who receive benefits
• Give local authorities more power to enforce and protect renters’ rights.

According to the survey, 47.55% of landlords are ‘strongly concerned’ or ‘concerned’ about not being able to refuse to rent properties to people who receive benefits. 

¹Finbri, 2023

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Here or there?

The results of the survey showed just how many renters and homeowners are unhappy with their current location. The key reasons for wanting or needing to move elsewhere included job opportunities (37%), proximity to friends and family (35%), a better lifestyle (29%) and to live somewhere more upmarket (21%).

Additionally, 73% of respondents admitted that they were ‘greatly concerned’ about the current property market and 38% have the mindset that they will ‘never’ be able to afford their own home.

Rental surge

Demand for rental properties remains at record levels², even while the average rent remains close to record highs. This rental demand is partly the result of worsening affordability for buyers.

Although house prices have steadied so far in 2023³, the average asking price for a UK home is £362,452, which remains out of reach of many aspiring buyers. Indeed, 75.92% of renters don’t think they’ll be able to own a property in 2023⁴.

Wherever you want to go

We’re here to help you get onto or move up the housing ladder – wherever you want to go. Get in touch today to see how we can help.

¹kindroom, 2023, ²Foxtons, 2023, ³Rightmove, 2023, ⁴Finbri, 2023

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