News: housing and pension trends

We look at the new housing trends, from Stamp Duty Tax to the new Rent-to-Buy scheme. Who saves more, men or women? We’ve got it all covered

inheritance_tax

35% rise in stamp duty tax

During the 2013-2014 tax year, £12.4b was collected in stamp duty tax, a significant rise from the £9.1b reported the year before.  As it stands three-quarters of current taxes stems from the property market – through soaring property prices and increased property transactions.  Stamp Duty Tax collections have increased 35 per cent within this tax year.  Many housing organisations are using this opportunity to highlight the problem with Stamp Duty Tax, Paula Higgins, chief executive of HomeOwners Alliance, has argued “these latest figures show just how wrong stamp duty is”.

How is Stamp Duty charged?

The percentage of the tax depends on how much your home is valued when you purchased it.

  • 1per cent levy on properties worth more than £125,000
  • 3per cent levy for homes worth £250,001 and above (on entire amount) e.g. £7,500 for a home sold at this price
  • 4per cent levy for households worth £500,00
  • 5per cent levy if your property is worth £1-2million
  • 7per cent levy if the home is worth more than £2million

Although many are refuting and arguing the case of stamp duty tax, until revised, it will remain a staple part of the tax system.  Speak to an adviser to find out more about the tax and your allowances.

Read the full article and to find out more about stamp duty tax here.

Rent-to-buy

Last week the government announced their new ‘Rent-to-buy’ scheme, designed for first time buyers.  The scheme, which is going to be run from 2015-2018, will see 500-800 new build homes created across England.  Rent-to-buy customers will be offered to rent their properties for 20 per cent below the housing marketing rate for a fixed term.   During a ‘renters’ term they have the option to either buy the property in full, or purchase part of the property as part of the shared ownership scheme.  After the steady success of the Help-to-buy scheme, this new approach might allow more people on to the property ladder.

What are the requirements?

  • Your household must earn £60,000 a year or less (or £64,300 if you are looking at homes in London). A household can be one person, a couple (married or not) or even friends sharing a property
  • You are a first time buyer, or you used to own a home but can’t afford to buy one on the open market now
  • A good credit history

Speak to a Mortgage adviser to gain a better insight on housing property schemes.  Mortgage brokers can help you find the best value and advise you on affordability choices.

You can find more information on the rent-to-buy scheme here.

Gender clash on pension reforms

As part of their ‘Freedom to pensions’ series, the Association of Investment Companies (AIC) collaborated with market research group YouGov.  The focus of the collaboration was to determine gender attitudes toward the new pension reforms.  While concentrating on adults over 40 and earning £50,000+, there were clear subtle differences between both genders.

Different pages

When asked about feelings towards the new pension reforms, 47 per cent of men felt positive, while only 35 per cent of women agreed – the beginning of the gender clash, a trend throughout the survey. The results strongly suggest women may be less likely to use the new reforms which will be put into place from April 2015.  Currently, 54 per cent of men make voluntary contributions into a pension scheme, while only 46 per cent of women can say the same.  It is clear from the statistics women are more apprehensive when it comes to pension schemes – when looking at saving into ISAs/NISAs, percentages were recorded as level between both genders.

The new pension reforms are a way for the government to give consumers more control over their finances, but also to create a savings culture.  Having a sound retirement plan, includes having a great pension to fall back on.  Ian Sayers (Director General, Association of Investment Companies) highlights in the report, “many of us are not contributing enough to our pensions” – which correspond with reports that many new retirees are underestimating retirement costs, emphasizing how important creating a retirement plan is.

Search for a financial adviser here to talk retirements.

Read more on the AIC research here.