The Bank of Mum and Dad

The Bank of Mum and Dad apparently is now Britain’s ninth biggest “mortgage lender” putting it on a par with the Yorkshire Building Society. Parents are predicted to lend more than £6.5bn this year to help their children get on the property ladder.  This is a 30% increase on the £5bn loaned in 2016 according to recent research from Legal & General and economics consultancy Cebr.  This means that parents will be involved in more than 25% of UK property transactions as first time buyers continue to struggle to afford homes.

According to the report, the so called Bank of Mum and Dad will help fund property purchases worth about £75bn in 2017 including deposits for more than 298,000 mortgages. Parental assistance is expected to have risen from an average of £17,000 in 2016 to £21,600 this year. For those under the age of 35 the proportion seeking help from parents, friends and family for property purchases stands at 62%.

Nigel Wilson, the chief executive of L & G said “This is the second year of our bank of mum and dad research programme and the statistics show the problem is getting worse, not better.”

“The intergenerational inequality that creates the demand for (parental) funding continues to widen- younger children today don’t have the same opportunities that the baby boomers had, including affordable housing, defined benefit pensions and free university education.”

“Parents want to see their kids get on in life and the bank of mum and dad is a testament to their generosity, but it is also a symptom of our broken housing market.”

The surge in parental lending comes in spite of record low rates on mortgages, fuelled by intense competition between lenders for new business. But while mortgage repayments have never been more affordable, high prices in parts of the country mean first time buyers need large deposits to qualify for loans.

Government Urged To Remove VAT On Charitable Wills

Charity Consortium, Remember a Charity, has urged the UK Government to exempt VAT from the cost of writing a Will containing a charitable bequest.

The consortium predicts a VAT exemption on charitable wills would double the number of people leaving a gift to charity, generating a further £800m for the voluntary sector.

Rob Cope, Remember a Charity director, said “While this change would come at a relatively low cost to government, this could make a huge difference to charities, giving solicitors and will- writers cause to highlight the option and benefits of legacy giving with all clients.”

“We need to ensure that legacy giving is not just something reserved for the wealthiest in society; that it is something we are all given the opportunity to do.”

Legacy giving is a vital source of funds for charities and accounts for £2.5 billion of charitable income each year. Backing the recommendation is The Charity Finance Group, its head of policy and engagement, Andrew O’Brien said: “Legacies are a growing and important way that the public supports good causes. It is critical that we make giving as easy and effective as possible.”

Also supporting the move is the Institute of Fundraising, with its head of public affairs Mike Smith adding “This small change in the cost of writing a will could make a massive difference in the number of people who decide to leave a gift to charity.”

“The Government has been really supportive of efforts to increase legacy giving, and we are encouraging them to back this small reduction in tax to help raise millions for good causes.”

For expert advice on writing or updating a will then please contact Heather Warnock on hw@mitchells-roberton.co.uk or by phoning 0141 552 3422.

Gender Pay Gap

When you “make a bold statement”, you express an opinion in a brave way or it might be “bold” because the opinion is uncommon or controversial.

In the wake of International Women’s Day I am going to be bold.

  • There exists a gender pay gap (GPG) which the World Economic Forum predicts will not be closed until 2186. The gap currently stands at 18.1% being the difference between the average pay of men and of women. Although 2017 heralds the arrival of the GPG Reporting Regulations which require employers with 250 or more employees to publish information relating to the average pay of women and men thereby disclosing their GPG ,no sanctions for non-compliance have been imposed nor is there any requirement on employers to take positive steps to close the gap.
  • Last year the House of Commons Women and Equalities Committee requested urgent action to give pregnant women and new mothers more protection. The Committee reported that over the past decade the number of expectant and new mothers forced to leave their job has doubled to 54,000 a year. The representatives called for a law similar to the one in Germany which prevents pregnant employees being made redundant except in extremely rare cases. They also called for the three month employment tribunal time limit for pregnancy and maternity claims to be doubled to six months.
  • Recent research from the TUC found that more than half of women say they have experienced sexual harassment at work, including unwelcome jokes and comments of a sexual nature about their body or clothes. The accusations of mistreating women made against Donald Trump sparked outrage and served as a timely reminder that harassment and sexism in the work place should not be tolerated.

International  Women’s Day made an appeal for women to be bold- bold for change and bold enough to speak up.

New Residence Nil Rate Band

From April 2017 a new IHT- free allowance has being  introduced. It is to be known as the residence  nil rate band (RNRB) and will apply if you leave your residence to your  “direct descendants”.

The objective of the policy according to the Government is to “reduce the burden of IHT for most families by making it easier to pass on the family home to direct descendants without a tax charge.”

For some years now the nil rate band has been fixed at £325,000 and it looks like it will remain set at this amount for the next few years. At the moment IHT is charged at 40% on the value of a deceased person’s estate which exceeds the nil rate band. Where spouses or civil partners leave their estates to each other the nil rate band can be transferred giving a maximum of £650,000 IHT free.The RNRB when introduced can also be transferred between spouses and civil partners.

If you would like more information or to find out whether you should consider revising your Will to benefit from this new allowance, please contact me Heather Warnock  at heather@mitchells-roberton.co.uk or by telephoning 0141 552 3422.

A new Bill to tackle psychological domestic abuse has been published

The Domestic Abuse (Scotland) Bill aims to strengthen the law against people who psychologically abuse their partners using coercive and controlling behaviour.

For the first time, the Bill will create a statutory offence of domestic abuse by recognising the damage which non- physical abuse can cause. Such behaviour could include subordination, humiliation, isolating a partner from friends, relatives and sources of support and controlling or monitoring their day to day activity.

First Minister Nicola Sturgeon met survivors of abuse at the Glasgow Young Women’s Movement (YWCA) as the Bill was introduced to Parliament.

Ms Sturgeon said: “ I am proud that as a society, we’ve come a long way from believing that domestic abuse is only a physical act. The truth is that the psychological scars left by emotional abuse can have devastating effects on victims and this government will work hard to make sure perpetrators face the justice they deserve.”

“This Bill will help our police and prosecutors hold abusers to account- but importantly, it also shows those who have suffered abuse that we stand with them and will take the steps needed to help them.”

Kara Brown, Director of YWCA Scotland added “The Young Women’s Movement is proud to be part of a country breaking ground through new progressive legislation.”

“We welcome this legislation as a critical tool to reduce stigma, raise understanding and encourage survivors of mental, financial and physical abuse to come forward.”

Government Urged to Act on Retirement Housing

Two separate organisations representing the interests of older people have called for a “revolution” in the provision of housing to better meet the needs of those in retirement.

Saga has called on the Chancellor to introduce a Stamp Duty (in Scotland Land Building Transaction Tax)  exemption for those downsizing in retirement. Their recent research has provided compelling evidence that a third of over 60s want to downsize but are deterred by the cost. Abolishing Stamp Duty or in Scotland LBTT ,on age related housing developments would encourage downsizing, add to the housing stock, and help free up housing for younger people aspiring   to own their own home.

Saga’s call for a greater focus on the housing needs of retirees has been echoed by the International Longevity Centre-UK. (ILC-UK) This think tank’s study has revealed that:

  • Nearly 9 in 10 of the 65-79 age group live in under- occupied housing- over 50% live in homes with two or more excess bedrooms
  • According to calculations, there could be a retirement housing gap of 160,000 by 2030 and if the current trend continues by 2050 the gap could grow to 376,000.
  • Retirement housing is much more likely to contain adaptations for elderly living than other forms of housing. Therefore as well as freeing up a range of properties throughout  the housing market downsizing in later life  into retirement housing could help to ensure more people can stay in their homes for longer ,reducing pressure on the residential care sector.
  • When it comes to reasons why older people are currently choosing not to downsize, the ILC-UK’s findings are similar to Saga’s with Stamp Duty or LBTT and other financial costs posing a significant barrier.
  • It also found that lack of suitable housing on the market was a major deterrent.

“The Housing Minister is right to recognise that meeting the needs of last-time buyers and encouraging downsizing is crucial to addressing the housing crisis” commented Baroness Sally Greengross ,Chief Executive ICL-UK. “Downsizing can also ensure that older people live in properties that allow them to stay in their own homes for longer and can release equity that can be used to fund social care in later life.”

“Government should also consider what changes can be made to Stamp Duty (or LBTT) to remove the perceived financial barrier of downsizing” she said.

If you intend to buy or sell property in Scotland, then please contact me Marcus Downie by email marcus@mitchells-roberton.co.uk or by phoning 0141 552 3422 and I will be delighted to help.

We Need More Houses

A recently published White Paper on the housing market in England described it as “broken”. According to the White Paper the reason for this is simple- not enough houses are being built, now and in the past and supply significantly lags behind demand. It is estimated that 160,000 new homes have been built annually in England since the 1970s but the actual supply needed to keep up with an increase in population and a historic under-supply of housing is believed to be closer to 250,000.

And it is not the lack of land to build on which is the problem, with only 11% of English land currently built on. Instead the White Paper blames the chronic under-supply of housing on three main factors namely:

  • There are not enough local authorities planning for the homes they need
  • House building is too slow
  • The construction industry is too reliant on a small number of big players

The gap between demand and supply has of course an impact on house prices. Since 1998 the ratio of average house prices to average earnings has apparently more than doubled, making home ownership unaffordable for millions of people. The Coúncil of Mortgage Lenders predicts that by 2020 only a quarter of 30 year olds will own their own home.

Scotland faces similar problems. According to industry body Homes for Scotland the total number of new houses being built in Scotland each year is still down 40% on pre-recession levels, whilst the country’s population has grown to its highest ever level.

“As Sajid Javid said, the root cause of the housing shortage is the simple fact that not enough houses have been built, and that applies equally in Scotland”,commented Nicola Barclay, Chief Executive of Homes for Scotland.

“We need to move away from thinking of housing policy  in terms of election cycles and narrowly focusing on ‘affordable housing’  and instead look at the requirements for all tenures over the next 15-20 years” she added.

“We also need to be brave about the issues that are holding housing back, like the availability of land and the provision of infrastructure, or we will never have enough homes to meet the diverse needs and aspirations of those living in Scotland” she said.

If you intend to buy or sell property in Scotland, I can help. Please contact me Marcus Downie on 0141 552 3422 or by email on marcus@mitchells-roberton.co.uk