Tag Archives: family
Row breaks out over issue of retirees downsizing in the UK
Older home owners in the UK should not be forced to downsize just to let the younger generation onto the housing ladder. Saga, a services and advice provider for people aged over 50, has hit out at remarks attributed the Financial Conduct Authority, the UK’s financial watchdog, that retired people should not continue living in properties that are too big for them. Lynda Blackwell, head of mortgages at the FCA, is reported to have told Ministers that they need to address the situation in the UK where retired people continue living in the family home once their children have left. She explained that the current housing shortage could be addressed by these so called ‘last time buyer’ moving to smaller properties to free up homes for people lower down the housing ladder. But Saga believes it is a form of bullying. ‘If people have saved and paid for their house over their working lives, it's down to them if they want to fill it with family or live on their own,’ said Saga’s director of communications, Paul Green. ‘But setting the generations against each other or talking about tackling older home owners is not just unhelpful it's insulting,’ he added. He explained that recent research carried out by Saga in association with Wadswick Green retirement village clearly showed that two thirds of older home owners would like to consider moving home ready for retirement but are prevented from taking that step either because there aren't sufficient appropriate properties to move to, or the costs to move far outweigh any benefit from doing so. ‘One of the solutions Saga has researched is allowing one stamp duty free move for those rightsizing for retirement which, according to independent economists CEBR, would release 111,000 family homes onto the market,’ said Green. ‘This is a win for older home owners who want to downsize, but also for younger families that want to move up the ladder and also for the exchequer. The research shows that by giving this tax free move it would be counterbalanced by an estimated £461 million of stamp duty that would be generated by the house sales that might otherwise not have taken place,’ he explained. ‘If we want to tackle the housing crisis we need to do so holistically. First time buyer schemes for the young are a good start, but we need to consider incentives to help encourage those that would like to move, to take that step. The FCA are right, we definitely need to do more and do it better, but using divisive language will only alienate the very people we need to help and encourage,’ he added. Continue reading
Home valuation rush expected for inheritance tax change in England and Wales
There is set to be a rush of home valuations in England and Wales after the Chancellor George Osborne signalled that properties worth up to £1 million will be scrapped from inheritance tax. Currently the tax is levied on homes from £650,000 but in the government’s mini Budget later this week he will raise the threshold. It means that owners of homes worth up to £1 million can pass them on to their children tax free. An analysis of Land Registry data suggests that owners in Gloucestershire, Yorkshire, Somerset, Dorset and Cheshire may be leading the charge to get their homes re-valued. It could also leave looming insurance problems for up to a third of families living in high value or listed homes which are more expensive to repair or rebuild, according to the study by NFU Mutual, a leading rural insurer and financial advice firm. ‘If you don’t know how much your home is worth, then there’s a real danger that you and your family could lose out. Around three in every 10 homes are undervalued by their owners, leaving families at risk of underinsurance and an unexpected tax bill,’ said Nicki Whittaker, high value home specialist at NFU Mutual. Around 80% of million pound homes sold in England and Wales in the last 15 years are in London and the South East but there are concentrations of expensive homes across the rest of the country, including Gloucestershire, Cheshire and Dorset. ‘We expect there will be a rush to re-value these properties as parents and grandparents look to hand down as much as they can to their families. But many of these bespoke and listed properties need more thorough assessment to establish their true worth,’ explained Whittaker. ‘Figures from our valuation partners show many expensive country homes are dramatically undervalued because owners are often unaware that the cost of rebuilding listed and unique properties is so much greater,’ he pointed out. ‘It’s clear from these results that thousands more people need to take action if they want to make sure their biggest financial asset remains in the family. A valuation and some simple tax planning would help to make sure people are fully protecting what is rightfully theirs,’ he added. The Conservative Party outlined plans for a new transferrable main residence allowance in its election manifesto earlier this year. The move, to be announced by Osborne in his Budget speech on Wednesday 08 July 8, would increase the effective inheritance tax threshold for married couples and civil partners to £1 million. Continue reading
UK mortgage industry urged to do more for older buyers
The mortgage industry in the UK must better respond to the challenges of an ageing society and fit in with the increasing number of retirees taking out loans for homes, it is suggested. Speaking at a conference organised by the Council of Mortgage Lenders, David Sinclair, director of the International Longevity Centre-UK (ILC-UK), urged the industry to ensure they do not discriminate on basis of age alone. Sinclair also urged older people to think very carefully before looking to buy to let and an investment option to give them a return on their pension savings. He welcomed the work being done by the CML on this topic and urged the industry body to continue to work with providers to ensure they are better equipped to respond to the challenges of demographic change. Since 2010, both the number and percentage of mortgages extending into retirement has increased and ILC-UK research in 2014 revealed that the average housing wealth of retirees is £122,000 or £1.4 trillion in total. While lending criteria has been tightened across the board as a consequence of first the credit crunch and then the MMR, ILC-UK says that this may not fully explain the rising numbers of people who appear to be excluded from the mortgage market purely on the basis of age. Sinclair said that broader demographic trends, financial insecurity and public policy change is resulting in increasing numbers of people needing to take a mortgage into retirement but property investments can be risky and they do not guarantee returns. ‘The industry and the regulatory environment have been seemingly struggling to respond to ageing and demographic change. We are, however, very pleased to see that the industry have begun to respond to these challenges through the important work being led by the CML,’ Sinclair told the conference. ‘We are living longer, our family structures are changing, we are marrying later and we are working longer. At the same time, financial insecurity will result in more people needing to borrow more and later in life. We should be particularly worried about those retirees with interest only mortgages but no linked investment,’ he pointed out. He explained that whilst the introduction of pension freedoms could be a boon to the buy to let sector, older people should make sure they take advice before making the jump and with older people holding almost £1.4 trillion in wealth in their homes, equity release is going to be an attractive way of supplementing a pension for many. ‘The industry needs to ensure that the income poor asset rich pensioners are well served by this market. That said, the recent growth in the number of people aged 55 to 64 taking equity release is potentially very worrying,’ he added. Sinclair also called on the industry and government to work to address the fear of borrowing faced by many income poor, asset rich customers and to work together to ensure that individuals have access to advice. He added… Continue reading
