Finance Matters

• 28Nov

  Will we pay capital gains on house sale?

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  From This is Money:

  If there has been a rise in the value of the house, will we be liable to pay capital gains tax? P.M.H., Bexley, Kent
  From the information you have provided I think that there may be a CGT liability though this does depend on the increase in the property’s value.

  The rules state that you will normally have a chargeable gain if your property is worth more than you paid for it when you sell or dispose of it.

  It’s worth bearing in mind that when working out the chargeable gain you can deduct some of the costs of buying, selling and improving the property. There is a single rate of capital gains tax of 18% for individuals on taxable gains….

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• 28Nov

  Residential property fund for Sipp savers

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  From This is Money:

  Savers can also benefit from up to 15% of any rise in the value of properties invested in, but risk a maximum fall of 30% if the portfolio’s value drops.

  The fund receives two years’ rent from the landlord upfront, which translates into a 13.5% interest payment for investors over that period. They will receive this as soon as the opportunity to invest in the fund closes, which is expected to be at the end of 2009.

  The properties will be sold or refinanced after two years with the fund sharing in 15% of any profit. The maximum exposure to falling property values is 30%, dubbed a ‘downside protection.

  Derek Uittenbroek of Smith & Williamson, which is marketing the fund, says: ‘Investors get their income upfront, rather than having to worry about rent collection or occupancy rates.
  ‘Meanwhile, the downside safeguard shields them from fluctuations in the market, while still allowing them to enjoy a share of any potential gain.’

  While Sipp savers investors can also re…

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• 28Nov

  Fixed-rate mortgages back below 5%

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  From This is Money:

  People who want to fix their mortgage rate for two years are now typically paying 4.99%, according to financial information group Moneyfacts.co.uk.

  The cost of the deals rose sharply during July to peak at 5.21% as lenders responded to rising swap rates, upon which the mortgages are partially based.

  The average margin charged on a two-year fixed-rate mortgage is now 3.21%, up from 2.72% in June.

  Michelle Slade, spokeswoman for Moneyfacts.co.uk, said: ‘Borrowers are finally starting to see more positive news coming out of the mortgage market.

  ‘Lenders have become accustomed to the post banking collapse world and appear to finally be relaxing their credit criteria while remaining within a regulated frame work.’…

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• 28Nov

  Lenders stay tough on loan to value deals

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  From This is Money:

  But the cost of mortgages is still high for those without a large deposit.
  Saffron Building Society last week launched a two-year fixed rate at 5.89% that is available to borrowers with at least a 10% deposit.
  Cheltenham & Gloucester, part of Lloyds TSB Group, also introduced a two-year tracker loan and a two-year fix for borrowers with a 10% deposit or more.
  But the rates are high at 6.99% to fix and a starting pay rate of 5.99% on the tracker.
  The deals are not available for those who want to remortgage their homes.
  There are other new deals that are aimed at borrowers with little equity in their homes who need to remortgage.
  Abbey, owned by Spanish bank Santander, has said it will offer lower rates to Abbey and Alliance & Leicester current account customers who have held an account for more than six months.
  The deals go up to 90% loan to value (LTV) for those taking fixed rates. Nationwide, which last week reported a sharp plunge in half-year profits, has als…

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• 28Nov

  Home-buy scheme is £115m flop

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  From This is Money:

  Around £115m has gone on Rent to Homebuy since it was launched in July last year. It pays part of people’s rent for up to five years while they save for a deposit.
  But nobody who signed up has actually managed to buy their own home yet.
  The Tories, who published the official figures, attacked the scheme as ‘incompetent’ and ‘a complete and utter failure’.

  What is Homebuy Direct?

  HomeBuy Direct is a shared equity scheme that the Government said would help first-time buyers and house builders.
  It operates on specific new build properties from developers. Buyers borrow at least 70% of the properties value on a mortgage with a further equity loan of up to 30% of the purchase price, split between the Government and developer.
  There is no charge on the equity loan for the first five years, after which the developer charges a 1.75% annual fee on its portion of the loan.
  Buyers can buy out the extra equity in instalments. If they do not buy the rest of their equity and sell…

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• 28Nov

  Skipton raises SVR to 5% for new borrowers

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  From This is Money:

  Some new borrowers with Britain’s fourth-biggest society will be charged a minimum of 5% if they move to SVR. Others will be charged a minimum of 4.5%.
  But existing customers will still be allowed to pay its actual SVR of 3.5% – one of the lowest on the market.
  This confusing mix of charges is to help the society fund new home loans.
  By imposing floors on the SVR it prevents new customers from moving on to a deal that is unaffordable for the building society.
  But the difference in repayments for customers can be huge. For a typical £150,000 loan those on 3.5% would pay £751 per month, those on 4.5% will pay £834 and those on 5% £877.
  David Hollingworth from brokers London & Country says: ‘You will need to check the small print of your deal very carefully to see which rate you qualify for.’
  Meanwhile, borrowers with Accord, part of Yorkshire BS, will see a hike in their repayments after the lender hiked its standard variable rate.
  Around 14,0…

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• 28Nov

  Check the fees before switching mortgage

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  From This is Money:

  Bank and building society standard variable rates have plunged to historically low levels.
  New fixed, tracker and discount deals have recently been slashed as banks and building societies seek to compete with Northern Rock, which itself is desperate to lend to homeowners.
  However, borrowers should look beyond the headline interest rate and add in all the fees before deciding whether to switch.
  Start by checking what you are being charged. Lloyds TSB and Nationwide have the lowest SVRs at 2.5%.
  Mortgage repayments on a typical £150,000 would be £673 a month – total £16,128 over the next two years if rates remain unchanged.
  Bristol & West charges 2.99%; Halifax/Bank of Scotland 3.5%; HSBC 3.94%, and Abbey 4.24%.
  Most building societies charge more with Chesham BS the highest at 6.45%. This puts monthly payments at £1,008 on a £150,000 loan; £24,192 over two years.
  Weigh up the total cost of the deals. For example, First Direct’s tw…

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• 28Nov

  House prices 4.6% higher close to good schools

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  From This is Money:

  The building society looked at the impact on house prices of the local primary school having 10% more 11-year-olds who achieved a level four or above in their key stage 2 Standard Assessment Tests than surrounding schools.

  House prices in all regions of England were higher if they were in the catchment area for a good school, with properties in Yorkshire and Humberside seeing the biggest increase in percentage terms of 4.6%, while those in the South-West saw the smallest rise at 2.6%.

  The group said in the vast majority of primary schools in England, at least 70% of pupils achieved at least a level four in their SATs, while 30% of schools had an average attainment rate of between 90% and 100%.

  Nationwide chief economist Martin Gahbauer said: ‘Following recent revelations around the lengths that some parents are prepared to go to get their child a place at a good school, we have revisited our research examining how property prices are influenced by the performance of local sch…

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• 28Nov

  House prices – ‘five years to recover’

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  From This is Money:

  The average estimate suggests it will take five years for the market to recover. One group, Capital Economics, claimed it could take until 2019, while others said it would be any time between 2012 and 2016.

  ‘Prices need to fall a further 20% to 25% to get back their long-term trend.

  Others including Fitch and Savills are predicting a fall of between six and 8%.
  But the Bloomberg survey also showed the Centre for Economics and Business Research forecasting a 4% rise, while Citigroup say it could be anything from five to 10%.

  The UK’s third biggest mortgage lender said the value of new loans agreed for the six months to the end of September was down 47% to £70.5bn….

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• 28Nov

  BBA: Mortgage lending double 2008 levels

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  From This is Money:

  Net lending, which strips out redemptions and repayments, also held firm at £3.1bn, slightly higher than the £2.8bn figure recorded in August.

  Both spending and repayments on credit cards were unchanged from the previous month at £5.7bn and £6bn respectively.

  David Dooks, BBA statistics director, said: ‘The longer it takes to emerge from recession, the longer we will see households and businesses continue to borrow with caution.

  Remortgaging levels also remained subdued during the month, as low interest rates mean many people are better off staying on their lender’s standard variable rate when their existing deal comes to an end.

  The low levels of remortgaging meant total mortgage advances also remained depressed during October at £9bn, slightly ahead of the previous month’s figure but still 20% lower than a year ago….

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