Negative interest rates are when the Bank of England charges banks for holding their deposits. The idea is that these charges will filter through into the banks’ customer-facing products and ultimately encourage spending rather than saving. Negative interest rates have never been used in the UK, but then they haven’t been ruled out either. Here is what you need to know. COVID19 is getting expensive The brutal reality of COVID19 is that there is a human cost and a financial cost. What's more, the financial cost also has a human cost. There are really only two ways for the government to cover its spending on COVID19. One is to cut back on services and the other is to raise taxes. Realistically, it is likely to use a combination of both approaches. This could, however, be a lot more complicated in practice than it sounds in theory. There is a limit to how far the government can cut back on services without generating serious negative consequences. For example, when schools were physically closed, many parents struggled to juggle childcare and work. That leaves raising taxes, but this too has its complications. A lot of tax revenue depends on behaviours which are partly or wholly voluntary. For example, VAT only applies if people make purchases. If the government raises taxes too high, there is a very strong chance that people will simply adjust their behaviour to compensate. Negative interest rates discourage saving The direct impact of negative interest rates is to discourage regular banks from keeping deposits with the Bank of England. The indirect impact of negative interest rates is to make conditions (even more) unfavourable for savers. Currently, there is little room to lower interest rates on cash deposits. This suggests that charges may be the order of the day. If UK banks and building societies follow the precedent set in other countries, savers with small deposits will continue to be able to hold them for free. The charges will be reserved for savers with larger deposits. It remains, of course, to be seen what qualifies as a larger deposit. It also remains to be seen whether the charges will be a flat fee, a flat percentage or a rising percentage. The prospect of negative interest rates also raises questions about the use of speciality ISAs like the Lifetime ISA. This benefits from a government bonus scheme. The government cannot just ring-fence Lifetime ISAs (or indeed any ISAs) from the consequences of negative interest rates because the government cannot directly control them. Negative interest rates might not help borrowers If borrowers are on fixed-rate deals, then the fixed rate applies regardless of what happened with the base rate. If borrowers are on floating-rate deals, then the specific terms of the deal will determine the extent, if any, to which they benefit. The lender’s contract may state that there is a minimum interest rate which applies no matter what. In principle, lenders could be tempted into offering new products with lower interest rates. In practice, lenders might be more concerned about avoiding a rerun of 2008. If the consensus in the sector was to avoid risk and shore up balance sheets, borrowers would have very little choice but to accept the matter. Negative interest rates might stimulate the economy The general idea behind negative interest rates is that motivates people to get cash out of deposit accounts and into work. This does not necessarily mean high-street spending. It may mean the stock market or property. In theory, however, getting money (back) into circulation should help to stimulate the economy in some way. Opinions are divided as to whether or not this theory actually works in practice. There’s really no way of addressing this since you can’t run a crisis twice over changing one variable. The UK may, however, be about to try the experiment. Your property may be repossessed if you do not keep up repayments on your mortgage.

Mortgage application documents tend to be long, detailed and, frankly, very tedious to complete.  It is, however, very advisable to take the time to complete them properly.  This will allow the potential lender to go through the checking process in the shortest possible time.  When completing the application, remember that there are five key questions the lender needs to have answered. Who are you? You’ve probably heard of identity theft. Hopefully, you’ve taken steps to reduce your likelihood of falling victim to it. If not, now would be a good time to research and implement preventative measures. Lenders also need to take preventative measures to make sure that they do not end up giving money to fraudsters. In short, therefore, be prepared to prove your identity. Can you afford the mortgage? This is an obvious question but these days it generally requires a very detailed answer.  That answer typically starts with your credit score, but it doesn’t end there.  It’s strongly recommended to keep an eye on your credit score even if you’re not thinking about applying for credit.  You should certainly do everything you can to maximise it when you’re applying for a mortgage. Firstly, make sure that your credit record is free of errors. Secondly, make sure that you’re on the electoral roll at the address you're using for your application. Thirdly, see if there are any obvious “quick hits” which could improve your score. For example, do you have credit cards you never use but which are still open? If so, close them. After all this, expect to have to show details of your current outgoings. Then expect to be quizzed over how they might change during the lifetime of the mortgage. If you do have any compelling reason to think that your financial circumstances might improve significantly then make sure to mention them, just remember to back up any claims you make. What is the source of your deposit and income? If your deposit has been built purely out of your personal savings, then proof of income will normally be sufficient. If, however, it includes gifts, an inheritance, the results of capital gains or anything non-standard (e.g. a gambling win), then you will need to be prepared to show the source of the money. If you are in regular employment, then proof of income should be fairly easy. If you are in self-employment, then you can expect to need to show tax returns. You may, however, need to answer further questions. This would typically be the case if your income was noticeably higher than would be expected for someone in your line of employment. If this is the case, then you will probably be aware of it yourself. It would therefore be sensible to explain it on the application and, of course, provide any supporting evidence. Could anyone else have a claim on your assets? The defining feature of a mortgage is that it is a loan secured against property. This means that the lender automatically has a certain level of protection against defaults. If someone else could have a claim on that property, the level of protection is reduced. You may still be able to get a mortgage, but the lender may lower the amount they are prepared to offer. Can you be trusted? In addition to checking your credit score, you might also want to have a look at your record with National Hunter & Cifas. These are two fraud-tracking databases. Hopefully, it will be completely blank. As with credit records, however, errors do happen, although they are extremely rare. If you do find yourself erroneously listed on one of these databases, then it’s vital to take action immediately as it can have major repercussions. Your property may be repossessed if you do not keep up repayments on your mortgage.

In a normal year, the housing market slows down significantly over the winter months. This year, however, is definitely not a normal year. This year, buyers will be racing to beat the clock as it ticks down on the Stamp Duty holiday. Sellers, therefore, have an excellent chance of making a sale, if they take the right approach. Here are some tips. Organise your paperwork If 2020 has one bright spot for home-sellers, it’s that this is likely to be a year when buyers are super-motivated to complete quickly. In fact, you may even see more buyers prepared to buy a new property before they’ve sold their old one. This would ensure that they get at least some benefit from the Stamp Duty holiday. They will therefore be very keen to have reassurance that you really are a motivated seller. Letting them know, or better still see, that you have all documentation ready and waiting will be a very positive sign for them. Be sensible about pricing Remember that the Stamp Duty holiday was introduced as part of the government’s Plan for Jobs. The general idea was to make home-buying more affordable and hence easier. It was not for sellers to put up their prices to what they would have been with Stamp Duty so that they could pocket the difference. You don’t have to drive your price down into “bargain-basement” territory. You do, however, need to be realistic about the fact that a lot of buyers are likely to be wanting to spend as little as possible. In other words, if you’re looking for a quick sale, price on the lower end of sensible. Basically, make sure buyers feel like they’re getting a bargain. Offer an online video tour It’s long been standard practice for online home listings to contain floorplans and photos as well as a detailed text description of the property and its key features. If you’re working with a real-world estate agent, they’ll probably arrange this for you. If you’re working with an online estate agent, they’ll probably offer this as an extra service. If so, it’s well worth considering. Now that COVID19 is here, video tours have ceased to be reserved for multi-million-pound properties. In fact, they’re becoming increasingly popular. The good news is that you don’t need any special skills or equipment to record a basic video tour of your property. Your phone will do just fine and you can upload the results to YouTube and put the link in your listing. You do, however, need to keep safety in mind at all times. Make sure that any personally-identifiable information stays off-camera and keep all valuables out of sight. Remember that this includes Christmas presents under the tree and, these days, sadly pets. Keep health and safety in mind Obviously, you’ll need to be COVID19 aware, but remember that general health and safety still applies too. In particular, keep in mind that days are short in winter. This means that there’s a strong chance that people coming to view your house will be coming in the dark. Make sure that you have plenty of outdoor lighting for them to find their way to your door. Present your home (and garden) appropriately All the usual home (and garden) presentation rules still apply. This means that you might want to give some thought to your choice of Christmas decorations. It’s fine to have the house decorated. Just make sure that your choice of decor is neutral, or, at the very least, unlikely to cause offence. For example, if you’re into “naughty Santas”, keep them for another year.

The UK has long been a famously home-loving nation. Under the current circumstances, that’s probably just as well. One of the many and varied consequences of COVID19 is that it has led to people reassessing their homes. In many cases, they have taken, or intend to take, steps to improve them. Unsurprisingly, budget-friendly changes seem to be the most popular. Major home improvements have slowed Defining “major home improvements” as “home improvements which need planning permission” creates an effective measure for judging the impact of the lockdown. Bridging loans broker Octagon Capital analysed data from gov.uk. This analysis showed that applications for planning permission in April, May and June 2020 were over a fifth lower than the same periods the previous year. The good news is that the level of approvals remained fairly constant. This indicates that planners are both willing and able to work with home-owners. In other words, planning departments are still operating fairly normally despite the pandemic. Home-offices are the new must-haves Home-working has been a growing trend for some time now. Up until the pandemic, however, most of that growth was through freelancers and start-ups. Now, even the most traditional companies have been forced to invest in home-working infrastructure and, bluntly, to make it work for them. Many are now openly enthusiastic about its long-term potential. It’s therefore hardly a surprise that multiple surveys are highlighting the need for a proper home office as a new must-have. In fact, it’s probably a fairly safe bet that a lock of the lockdown planning applications have come from people investing in “garden offices”. Those without a garden are looking at ways to create a dedicated office space indoors. Of course, you can only carve out a dedicated office space if you have actual space to carve. This has obvious implications for the inner-city property market. Up until 2020, many people, especially young adults, were happy to trade space for the joys of city life. Now, however, this is being rapidly reassessed. In fact, survey data is pointing to a clear “flight from the city”. Home gyms and gardens are highly desirable Like home-working, home-exercise has been a growing trend for some time. In general, however, it has been a supplement to gyms rather than a replacement for them. Currently, however, people are being forced to look at other options. It will be interesting to see whether this change sparks a long-term development or whether it fades away with COVID19. Gardens have long been desirable features in family homes. Since the lockdown, however, survey data indicates that they’ve become increasingly desirable to young adults too. Given the UK’s high population-density, this could be a sign that planners and developers will need to start looking at alternative options such as communal gardens, roof gardens and even balconies. Cosmetic updates are the order of the day Statistics from homeware retailers such as B&Q show that the initial lockdown was quickly followed by massive demand for DIY materials. Unsurprisingly, paint and wallpaper led the way. Anyone who knows anything about DIY knows that these are generally the quickest and most affordable options for giving your home a refresh. Anyone who refreshed their home during lockdown would have had an advantage if they subsequently put it on the market. Rightly or wrongly, first impressions do matter a lot in sales, especially property sales. It may be, however, that people were simply updating their homes on the expectation that they were going to be seeing a lot of them over the coming months. If that was the case, then their expectations have been justified by the second lockdown. It will be interesting to see if this triggers a further wave of home-improvements.

With the UK now, finally, moving out of lockdown, a lot of questions will inevitably be asked about it. Some will be largely academic while others will be purely practical. Arguably one of the most pressing questions of all is the question of how we cover the bill for the last few months. Could the Coronavirus result in higher taxes? It is hard to rule that out for the future, for the time being, however, the focus is on tax cuts, including a cut to stamp duty. The new rules in brief Technically, Stamp Duty has not been cut, the threshold to pay it has been raised from £125K (or £300K for first-time buyers) to 500K. This threshold applies to all buyers, but those buying a second or subsequent home will still have to pay the 3% Stamp Duty surcharge. The Stamp Duty holiday came into effect on the 8th of July and is scheduled to last until 21st March 2021. For completeness, Stamp Duty only applies in England and NI. Scotland has Land and Buildings Transaction Tax and Wales has Land Transaction Tax. These both work along similar lines but they follow rules set down by the respective regional parliaments. The “winners” In principle, the “winners” are anyone who completes on a property during the period of the Stamp Duty holiday. In practice, while they might all be winners, some people will win more than others. For example, the discount for first-time buyers has now been absorbed into the general Stamp Duty holiday. This means that first-time buyers will be facing the same transaction costs as people who have already owned property and who have had a chance to build up equity in it, which they can put towards the purchase of a subsequent home. It’s also worth noting that even with the 3% surcharge, the Stamp Duty holiday is good news for buy-to-let investors looking to expand their portfolios. This could make life more challenging for first-time buyers. That said, it could be good news for renters, only time will tell. The Stamp Duty holiday might also benefit industries related to property. In addition to estate agents (and mortgage lenders), tradespeople might also see an upturn in business. Sellers might want their homes at least touched up before they put them on the market and buyers might want their new homes customized to their liking. Similarly, retailers which sell homewares might see improved sales as buyers, especially first-time buyers, furnish and decorate their properties. The “losers” You could argue that the only loser is the government, but the counterargument to this is that essential government spending has to be financed from somewhere. This means that the revenue lost through the Stamp Duty holiday (at least potentially) has to come from somewhere else. In theory, it could come from the taxes paid by the various industry sectors which benefit from the move. In practice, it very much remains to be seen how much (if any) extra tax it will generate. If it doesn’t generate enough, then presumably there will have to be tax increases in other areas. People who completed before the holiday may see themselves as losers. You could argue that they’re not, they’re just not winners, but that probably won’t be a great comfort to them. Similarly, people who can’t complete during the holiday period are also likely to see themselves as losers, especially if home prices increase. In fact, if this Stamp Duty holiday results in home prices increasing sharply, then the group of losers could extend beyond those who are priced out of the market and come to include those people who see their council tax bills increase based on higher home values. Your property may be repossessed if you do not keep up repayments on your mortgage.

It’s four years until the UK is next due to have a general election, but it seems like campaigning is starting early. Speaking at the annual Conservative conference, Boris Johnson announced the introduction of 5% deposits for first-time buyers. He did not, however, given any details of how this would work. A new name for an old scheme? One of the interesting points about the Prime Minister’s announcement is that there already is a scheme to help first-time buyers get on the property ladder with just a 5% deposit. The Help to Buy Equity Loan scheme does exactly that. It was initially made available to all buyers. As of April 2021, however, it is due to be restricted to first-time buyers. One very possible explanation is that the government is going to revamp the existing Help to Buy Equity Loan scheme. At present, this is only available on new-build homes and is due to close at the end of March 2023. If it were to be made available on existing property and extended indefinitely, then it could be presented as a new scheme. Making the Help to Buy Equity Loan scheme available to people buying existing properties could have other political advantages. Firstly it would deal with the criticism that the scheme is effectively a backhanded subsidy for home-builders. Secondly, it could stimulate the market for private home-sellers and thus help them to move on. Greater emphasis on shared ownership? Another possibility is that the Prime Minister is looking to extend the use of shared-ownership schemes. Potentially a first-time buyer could put down a 5% deposit on an agreed purchase price and then pay a combination of mortgage and rent to buy their home over time. This already works in practice. At present, however, it only works on a fairly small scale. Ramping it up to work over a larger one could be fraught with all kinds of complications and pitfalls. The obvious one is working out a way for first-time buyers to exit the property easily if they have only bought part of it. It’s also hard to see how such a scheme could be applied to private sales of existing property. Restricting it to new builds, however, could substantially limit the choice available to first-time buyers. It could also open up the scheme to the same criticisms as the existing Help to Buy Equity Loan scheme. Moral hazard and taxpayer risk However you look at it, at the end of the day, a 5% deposit means a 95% mortgage. At least it does if you want to buy the entirety of a property. The only question, therefore, is how this mortgage is structured. In other words, how much risk is going to fall on the first-time buyer/regular lender and how much is going to fall on the government/taxpayer? In the existing Help to Buy Equity Loan scheme a buyer essentially runs a 75% mortgage for 5 years. They then add on the 20% equity loan owned by the government. The problem is that it is highly unlikely that they will have paid off 20% of their loan principal in those 5 years. Their home may have increased in value, but this is irrelevant if their income does not stretch to higher payments. This means that first-time buyers could end up being forced to sell their homes so they can pay off the regular mortgage and the equity loan. Leaving aside the disruption this could cause, it could also leave them at a financial loss. If they end up in negative equity and need to default, then the consequences will be shared (possibly unequally) between them and the taxpayer.

It takes a lot to bring the UK’s housing market to a halt, but COVID19 managed it. With lockdown in place, mortgage approvals slowed to a trickle. May was the worst-hit month with just over 9,000 approvals. Fortunately, the housing market has been picking up since then with just under 40,000 approvals in June and 66,300 in July, but can it continue? July saw the Chancellor dish up a Stamp Duty holiday July could have been a tough time for the housing market. The furlough scheme was reaching its final stages. There was continued uncertainty in the job market and Brexit was heading ever closer. It would have been entirely understandable if people had decided to sit tight where they were unless they were actually forced to move. It would also have been catastrophic. Fortunately, the chancellor understood how much of the UK’s economy depended on a functional housing market. He, therefore, decided to do whatever was necessary to get it moving, even though it meant a short-term sacrifice of much-needed tax revenue. The mortgage-approvals figures suggest that his gamble is working, for now. They do, however, raise the question of what happens next. Eight months to find a “new normal” in the housing market The Stamp Duty holiday came into effect in July and is scheduled to last until 31st March 2021. This gives the housing market eight months to find a new normal and reach a point where it can function without state support. This may sound like a long time, but the property market is not the stock market. It often moves at a notoriously slow pace. That said, some of the changes brought in during the pandemic may help to speed it up. Virtual viewings, virtual valuations and, possibly above all, the legalization of the use of esignatures, could all help to simplify and hence streamline housing transactions. This could prove very useful, if not vital, to the process of getting the housing market back on its feet. Estate agents can now tempt hesitant sellers with the prospect of an easy sale, potentially at a better price than they would have achieved if buyers had to think about paying Stamp Duty as well. The more sellers enter the market, the more sellers are encouraged to enter the market. This may seem counterintuitive, but the key point to note is that most sellers need somewhere else to live. Barring forced sales, they will only put their current property on the market if they are confident that they can find another property which will suit their needs. Getting more properties on the market helps to engage buyer interest and hence promotes a virtuous circle rather than a vicious one. What does 2021 have in store for the housing market? Some people might argue that Brexit notwithstanding, 2021 has to be a better year than 2020. Hopefully, they are right. Early signs are at least moderately encouraging. For all the concerns about the approach of cold and flu season, the UK has managed to avoid another national lockdown. Local lockdowns have been imposed, but are not as severe as the initial lockdown. Most business sectors have either adapted to the pandemic environment or are in the process of doing so. In many cases, this has meant an increased emphasis on using the internet effectively. This could stand them in good stead post-Brexit. Admittedly, some sectors could face brutal restructuring and may even need some form of state support, travel, for example, is an obvious candidate here. These should, however, be the exceptions rather than the rule. A stable economy, even if it’s not thriving, should be enough to underpin the UK’s famously robust housing market. Your property may be repossessed if you do not keep up repayments on your mortgage.

One of the benefits of being a homeowner is that you have complete control over your home. You can put this to good use to save yourself some money. In some cases, you may need to spend to save, but overall it will be worth it. Here are some ideas. Max out your insulation The arrival of autumn is a great time to make sure that your home’s insulation is as good as it can possibly be. You may have already dealt with the “big ticket” items like double-glazing, jackets for water tanks and loft insulation. It may, however, be very much worth your while to deal with small issues like your letterbox, gaps under internal doors, especially near exterior doors, and loose glass in windows. This may only make a small difference to your energy bills each month, but over time, that small difference will add up. Try to heat small areas instead of big ones How practical this will be will depend on your lifestyle, but it’s worth considering, especially if you’re working from home over the winter. Using central heating is practical and convenient either when the whole house is in use or when the whole house needs to be warmed up, for example, first thing in the morning. It is, however, neither economical nor environmentally-friendly to heat a whole house when only a small part of it is being used. You can deal with this by switching off radiators when rooms are empty (and keeping doors closed). This can, however, be a bit of a pain. Another option is to leave the central heating off and use localised sources of heating. These can be anything from plug-in heaters to blankets to extra clothes. The key point is to get the heat exactly where you need it and only where you need it. Check your radiators are working at their best First of all, check if your radiators are heating consistently from top to bottom and side to side. If they’re not, try bleeding them. If that doesn’t work, then you may want to get a professional to investigate. Assuming your radiators are working, make sure that you’re benefiting from all the heat they produce. Consider putting reflective material behind your radiator to try to encourage the heat into the room rather than into the wall. Also, make sure that the heat can travel upwards and outwards freely. Avoid blocking your radiator, for example with curtains or furniture. Use sensor-activated outdoor lighting Sensor-activated outdoor lighting scores for both convenience and cost-effectiveness. If you use solar-powered and/or battery-powered lighting, you can avoid the dreaded cable clutter and still have lighting whenever you need it. Having lighting which is activated “on-demand” and which automatically goes off after a certain time means that you only pay for what you use. Switch to LED bulbs This is definitely an example of “spend to save”, but you don’t have to make the change all at once. Think about which lights in your home get the most use and then replace those bulbs with LEDs as the original bulbs wear out. Use natural light as much as you can Days may get shorter in winter, but you can and should still do what you can to use free sunlight instead of paid electric light, even if you have LEDs. If you don’t like the glare and/or want extra privacy, then consider using privacy film and/or a net curtain. Only boil as much hot water as you need for hot drinks You might want to consider buying a travel kettle so you’re effectively forced to use smaller quantities of water. If not, at least remember to fill your kettle with the minimum amount of water you need for your hot drink.

If you’re a manager in the Bank of Mum and Dad, then you may have some serious thinking to do if one (or more) of your children wants to buy a property and needs your help. Harsh as it may sound, it may be in everyone’s best interests for you to consider the situation in much the same way as a commercial lender. Loan or gift? That said, the first question is one which is unlikely to be considered by any commercial lender. Are you making a loan or are you giving a gift? If you give your children a gift and live for another seven years, then (under current rules) it will be discounted from the value of your estate when IHT is calculated. On the other hand, if you give your children a gift of money now, you will not be able to use that money yourself if you need it later. You should therefore only give a gift if you are sure you can afford it. You should only give a loan if you are sure you can afford to do without the money for the relevant length of time and you are confident your child can pay back the money. Family credit checks If you’re considering making a loan to a family member, then you need to be very clear about one of the realities of lending. You only get repaid if the borrower has money to repay you. In principle, if the borrower owns an asset, like a house, you may be able to secure the loan against it. In practice, there are complications with this. First of all, asset prices can go down as well as up. This means that, at any given point in time, the borrower’s home might not be worth enough to pay back the amount borrowed against it. Secondly, if the homeowner is a family member, are you really going to take any action which might cause them to lose their home? Are prepared to risk ending up on seriously bad terms with them? Could there be repercussions with other people to whom you are close? What are you going to do if the borrower’s circumstances change through no fault of their own? The obvious example here is redundancy, but even younger people can get ill and/or have accidents. In short, before you even consider making a loan to a family member (or anyone else), think long and hard about the practicalities of repayments. Using your own home equity to help your children Be very careful about either using equity release or increasing your own mortgage to help your children with a property purchase. Either of these approaches could lead to complications with your own retirement. Similarly, be careful with downsizing. If you’re downsizing purely to release equity in your home without taking on debt, then you may come to regret the decision. If you’re downsizing because you want a smaller property anyway, then be careful not to overestimate how much you will save by doing so. The safest approach would be to downsize yourself first, see what profit you made and then decide what to do with it. That way, you’re dealing with a known situation. If this is not possible, then it’s highly advisable to err on the side of caution when creating your estimates. Keep in mind that overestimating how much you will make on your current property and/or underestimating the cost of a new home could leave you financially stretched even without financing your children. You also need to consider the transaction and moving costs. In particular, think about what will happen if you buy after the current Stamp Duty freeze has come to an end. Your property may be repossessed if you do not keep up repayments on your mortgage.

It probably comes as a surprise to nobody that taxes are under review. While the Coronavirus-relief measures were often welcomed, it was clear, even at the time, that they were almost certainly going to work out to be very expensive. Now, the physical effects of the virus are, broadly, under control. That means it’s time to deal with the economic ones. The only question is how to go about it. Cut spending or raise taxes When governments want (or need) to pay down debt, they only have two options. They can cut public spending and/or they can raise taxes. Currently, however, cutting public spending could be very problematic for several reasons. Firstly, the Conservatives’ “austerity programme” is still a very recent, and very controversial, memory. Admittedly, the pandemic is a very different set of circumstances. It is, however, impossible to overlook that the government’s decision to impose an extended lockdown triggered massive profits for some, very large, companies (like Amazon) while being catastrophic for many smaller ones. Secondly, with Brexit on the way, the government is going to need to hire certain public-sector workers to deal with the change. Probably the most obvious example of this is the need for customs officials. Thirdly, the government has reiterated its commitment to certain public-spending plans, notably HS2. Only time will tell whether or not this is a wise move, but it is clearly on the cards. Choosing the taxes to raise Realistically, it should probably be taken as red that tax rises are going to happen. The real questions are “which taxes are going to be raised?” and, of course, “by how much?”. The answers to these questions will probably be determined by a combination of financial necessity and political expediency. Financial necessity means that the government is going to have to find the money at least to pay its bills, including servicing its debt. Ideally, it needs to take steps to reduce the debt, otherwise, it will, literally never go away. Political expediency means that it needs to think about how tax rises will be viewed by the electorate in general. Making even small increases in broad-based taxes such as National Insurance, Income Tax and Value Added Tax could, potentially, raise a lot of money. It could, however, also upset a lot of people. “Sin” taxes can be presented as being taxes on unhealthy behaviours. They do, however, present two problems. Firstly, they can be controversial (think of the reaction to the sugar tax). Secondly, they can be avoided by giving up the unhealthy behaviour. This might be good news over the long term but it won’t help the public finances in the short term. This leaves rises in “wealth” taxes, especially those related to savings and investment such as taxes on interest, dividends and capital gains. These would impact a much smaller number of people and hence might not raise that much money. They would, however, send out a signal that the government was expecting the better-off to pay their “fair share”. What does this mean for savers and investors? Currently, interest rates are so low that Savings Interest is likely to be a minor issue for most people. Dividend Tax may be more of a concern, but right now it remains to be seen how many companies will be in a position to pay dividends. That leaves Capital Gains Tax. Assuming the government sticks to the current rules, Capital Gains Tax is only payable when an asset is sold. This means that investors could be well advised to think about what assets they are holding and whether or not they want to hold them over the long term. If they do, they may then want to think about how they hold them, e.g. directly or via a limited company or trust. The FCA does not regulate some forms of tax planning and we act as introducers for it

If you’re a (potential) first-time buyer, you might be feeling rather confused about your place in the housing market right now. Here is a quick rundown of the key housing-market news for first-time buyers and what it might mean. The Stamp Duty holiday Whether or not the Stamp Duty holiday is good news for first-time buyers probably depends on what sort of property you were looking to buy (and where). If you were looking at properties priced up to £300K then you may not be particularly thrilled at finding yourself (back) on a level playing field with people moving up the property ladder and only slightly ahead of investment buyers. On the other hand, if you’re looking at properties priced between £300K and £500K, you might be very happy about the change. The return of the 90% mortgage Officially, the 90% mortgage is back and available to first-time buyers. Unofficially, it very much remains to be seen how many first-time buyers will actually qualify for one. Nationwide, for example, has a rule in place that a buyer can only be gifted 25% of the deposit, the rest must have been raised through savings. It’s not clear what other rules are in place at Nationwide or what rules exist at other lenders. It also has to be said that there is a difference between available deals and attractive deals. The simple fact of the matter is that mortgage lenders, like all other businesses, are going to offer the best deals to the best customers. When it comes to mortgage lending, the best customers are typically going to be the ones with the largest deposits (and the most stable incomes). The Help to Buy Equity Loan scheme is extended Currently, the Help to Buy Equity Loan scheme is open to all buyers. From April 2021, it will only be open to first-time buyers. Although the existing scheme runs to March 2021, it was supposed to be used to purchase homes which were finished on or before 31st December 2020. It is this deadline which has now been extended to 28th February 2021 to give builders some breathing space after construction sites were forced to close for COVID19. The official final date for purchases to be completed is still March 31st 2021 but the government has indicated that there could be some scope for flexibility here on a case-by-case basis. This news about the extension may be good for any first-time buyers who are using the current scheme, at worst it will be indifferent. The change to make the scheme open only to first-time buyers doesn’t really qualify as news any more but is likely still to be welcomed. Some first-time buyers may regret the fact that the change to the Help to Buy Equity Loan Scheme only happens after the Stamp Duty holiday is scheduled to end. This may, however, be a positive. In short, come April 2021 first-time buyers will have two advantages over those moving up on the property ladder. Remember the Lifetime ISA The Lifetime ISA hit the headlines at the start of the pandemic when the government announced that people would be able to withdraw funds from it without a penalty even if they didn’t use them to buy a property or pay for their retirement. Other than that, it’s essentially been business as usual for Lifetime ISAs and their holders. Obviously, the question of whether or not the Lifetime ISA is a good product for you will depend on your own situation. It is, however, worth noting as another possibility for helping first-time buyers get on the housing ladder. Your property may be repossessed if you do not keep up repayments on your mortgage.

Regular home insurance may not cover you for DIY disasters. You probably need specific accidental damage cover and even if you have it, you should do your best to avoid claiming it since this can push up your premiums. In the case of DIY, it can also require a visit to A&E. With that in mind, here are some tips on how to DIY safely. Call in a pro The best way to do DIY safely is to call in a pro. Make sure you pick a reputable tradesperson and you’ll get your job done by someone who has the right skills, experience and tools as well as the right insurance. You’ll also get paperwork to show that the job was done by a professional and that can be very valuable when you come to sell your home. In fact, it may be very valuable if you need to claim your home insurance for another reason. Do your preparation as though you were a pro If you employ a professional tradesperson, then they’re going to want to know the exact scope of the job and the exact environment in which they’ll be doing the work. In fact, they may well need to see the site in person and make their own assessment of it. Remember that most DIY jobs are going to have at least some potential to damage the infrastructure of your home. This is particularly likely if you need to lift up floorboards or drill into the floor (or do so by accident). That could bring you into contact with live electrical cabling, gas pipes and water pipes. Damaging walls or ceilings could have implications for the structural integrity of your home. Damaging a window could leave you exposed to weather damage (and cold) and security threats until it is fixed. Doing any of the above could work out very expensive, more expensive (and inconvenient) than it would have been just to call out a pro in the first place. You can treat your job scope and site assessment as a way to get a real feel for whether or not the job really is within your capabilities. If it is, then you will have benefitted from the time you spent doing your preparatory work. If it isn’t, then you will be a (large) step ahead when it comes to hiring a pro. Follow pro-standard health-and-safety protocols Assuming you’ve worked out how to do the job without demolishing your home, it’s time to think about how to do the job without demolishing yourself. You will never see a pro take on even an apparently minor job without appropriate safety gear and there is a very good reason for this. Small hazards can do major damage, especially if they get into a delicate part of your body, like your eye. In this sort of situation, the best you can hope for is a trip to A&E. The worst possible outcome is a life-changing injury (or even a fatality). Keep other people out of your work area unless they really are helping Young children and pets should never be allowed anywhere near a DIY project. This is unlikely to stop them from trying (and both can be very determined) so you may need to enlist a helper to keep them out. Older children and adults should also be kept out of the work zone unless they are genuinely helping. If they are genuinely helping then they need appropriate safety gear too. They also need to know exactly what is expected of them to avoid mistakes which could be expensive and/or painful.