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Research reveals high number of sellers who end up paying inheritance tax
One in four properties sold in England and Wales in 2015 were above the inheritance tax limit and the number sold for more than £325,000 have doubled since 2009, new research shows. Proportions were even higher in some locations, for example, 94% of properties sold in East Central London were over the inheritance tax nil-rate band, says the research from Saga Investment Services. The research also found that just one in 10 individuals can correctly identify the IHT threshold for a single person, and a mere 4% for married couples and civil partners. Just 10% correctly said £325,000, some 21% thought it was higher and 19% said it was lower, while 50% didn’t know. The report points out that new ‘main residence’ allowance to be introduced in April 2017 will benefit home owners. Overall the number of properties sold at prices above the £325,000 starting point has doubled over the past six years from 13% of properties in 2009 to 24% in 2015, according to the study which analysed six years’ worth of property sales data published by the Land Registry. Despite the number of property sales in 2015 decreasing by 3.7% compared to 2014, sales exceeding £325,000 have soared by 11.4% over the same period. A breakdown of the figures show that after East Central London the next location with the highest number of property sales over the IHT threshold is West London with 90%, then South West London at 88%, the West End of London at 86% and North West London at 83%. But outside of central London, the proportion of properties sold above £325,000 has also been rising sharply. Some 28% of postcode areas have seen the number of property sales exceeding the IHT threshold double in the past six years, including Brighton, Bromley, Bristol, Cambridge, Colchester, Croydon, Durham, Northampton, Norwich, Portsmouth, Stevenage, Tweed, Uxbridge and Watford. For married couples and civil partners, any unused IHT allowance can be passed on to the surviving partner, meaning the total that can currently be handed over without a potential tax bill could be £650,000. Across England and Wales, the number of properties sold above this level has doubled since 2009, from 2.4% to 5.5%. There are 17 postcode areas in which one in every 10 properties sold in 2015 exceeded £650,000, compared to seven in 2009. In 2015 some 60% of all properties sold in the EC postcode area exceeded £650,000, up from 14% in 2009, while 56% of property sales in West End, 53% in West London and 44% of sales in South West London. The research also shows that just 4% of over 50s living in London correctly identified the IHT threshold for married couples and civil partners and 17% believed there was currently no maximum, while 20% thought the threshold was lower. On 06 April 2017 a new IHT allowance will be introduced for people passing on their main home to a direct descendant. This will rise each… Continue reading
First time buyers in the UK are failing to count the cost of home ownership
First time buyers in the UK are failing to count the true cost of purchasing a home with legal fees and insurance catching them off guard, new research suggests. Some 40.6% of new home owners don’t take unexpected fees into account and bank transfers, searches and mortgage set up costs were among the biggest shocks for one on four buyers. The research from Pegasus Personal Finance also found that 24.3% weren’t aware of land registry fees, 16.7% unaware of stamp duty and 14.7% not knowledgeable on solicitors’ fees while one in 10 admitted a lack of knowledge on interest rates. Some 13.5% of home owners, assumed to be those with variable rate mortgages, admitted they haven’t prepared for an increase in interest rates should they unexpectedly climb from a seven year low of 0.5%. The firm points out that excluding stamp duty, unforeseen fees could amount to a sizeable £1,850 according to recent data from the Money Advice Service. On top of this one in five did not account for an increase in utility bills as a result of moving to a larger property, while the same number were surprised to see their car insurance costs increase. And 24.6% underestimated removal charges while 13.9% viewed furniture and decor as a surprise expense. ‘The results of this study showed some real eye opening insights and surprisingly displayed a lack of thorough understanding when it comes to the cost of buying a property,’ said Jonathan Le Roux, director of Pegasus Personal Finance. ‘When buyers are working out their budget for a future home move, forgetting the significant costs associated with stamp duty, solicitors fees or similar can really put a spanner in the works at the last minute,’ he explained. ‘Our advice is to do your research and carefully list all the associated costs so you go into home ownership with your eyes wide open. It may be tedious but completing this homework is essential to everything going smoothly,’ he added. Continue reading
First UK house price estimates published ahead of new national index in June
The first estimates for the new single official UK House Price Index which will be first published in its entirety in June 2016, have been published. The new improved index has been developed jointly with other official producers of house price statistics following a review by the National Statistician, uses data from, amongst others, the Land Registry and Council of Mortgage Lenders. By using these comprehensive datasets together, as well as by employing the best internationally agreed methods, the new UK HPI aims to give the best and most detailed picture of the UK housing market. For the most recent period, December 2011, the new UK HPI shows an average price level of £185,000 for England and Wales. This is lower than the price recorded by the current Office of National Statistics index for England at £222,000 for the same period. But it is above the equivalent price levels recorded by the Land Registry for England and Wales at £157,000, the Halifax for the UK at £157,000 and Nationwide for the UK at £163,000. The main reason for the decrease in price levels from the ONS index to the new UK index is the use of the geometric mean, which reduces the impact of very high value properties on the headline data. Over the period from 2003 to 2011, which is the longest comparable period available, the average annual growth is 5.2% for the ONS index for England, 4.6% for the Land Registry index for England and Wales, 4.7% for the Halifax for the UK, 5.3% for Nationwide for the UK and 6.1% for the new UK index for England and Wales. The inclusion of cash sales and improved weights are both contributing to the increased growth seen in the new UK index, according to ONS statistician Chris Jenkins. ‘By combing different data sets and using the best internationally agreed methods, the new UK HPI will give the best possible picture of the changing UK property market,’ he explained. ‘For the first time, consistent high quality data will be available for both national and local areas, helping policy makers to make better decisions,’ he added. Continue reading
