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Eight things that will (probably) happen in 2018

1. Prices will continue to rise more than your pay for most of 2018

The cost of living is increasing at a near six-year high of 3.1%, having more than doubled during 2017, largely as a result of the fall in the value of the pound following the EU referendum in June 2016. Meanwhile, average wage growth is running at 2.3% (or 2.5% if you include bonuses) which means that real earnings are falling.

Household energy costs, petrol and car insurance have been among the worst culprits for price rises. Most of the big energy companies hiked tariffs during the year, with British Gas adding 12% to electricity bills in August. This time last year the average price of petrol on Britain’s supermarket forecourts was 111.9p a litre, but now it’s 116.5p. There’s not much we can do about that, unfortunately, although most experts are expecting a flat or mildly falling oil market in 2018 as US shale production continues to rise, offsetting attempts by the Organisation of the Petroleum Exporting Countries (Opec) to increase prices.

Car insurance has rocketed by an average of £200 over the past five years, according to Comparethemarket.com. Between September and November 2012, the average motor insurance premium stood at £559, but today premiums for the same three months have reached an average of £758 – a rise of £199. After years of increases in insurance premium tax, 2018 is unlikely to see further hikes so the inflation rate in car insurance may finally begin to slow.

Most economists expect the general price squeeze to continue through 2018, although there is some light at the end of the tunnel; the Bank of England is forecasting inflation to slip back to 2.4% by the end of 2018. Meanwhile, wage growth is expected to at least maintain its current rate, or moderately accelerate to above 2.5%, so Christmas 2018 could see the first recovery in real earnings for years.

2. Train fares will jump on Tuesday

The bad news is that the first big price rise of 2018 is just days away: on Tuesday UK rail fares will rise by 3.4% – the largest increase for five years. The rise covers “regulated” fares such as season tickets and long-distance journeys. But other fares can be raised or dropped at the train operators’ discretion. The price of an off-peak trip from Preston to Manchester goes up 6.6% to £16 from £15, while a London to Slough off-peak ticket is increasing by 9% from £9.60 to £10.50.

3. Letting agency fees will (eventually) be abolished

Tenants in England typically pay £404 every time they move, according to campaign group Generation Rent – and more than £800 in some parts of London. There can also be additional charges for tenants on low incomes and needing rent guarantors (at an average cost of £152), or simply needing to move in on a Saturday (an extra £62). But at some point in 2018 (the government has not given a precise date yet) England will follow Scotland and ban letting fees to tenants. Landlords threaten to retaliate with rent increases, but with a weak economy and lower pressure from migration, few experts reckon rents will rise by anything more than 0-1% in 2018.

4. Pensions will be the big money story of 2018

Many people could be in for a shock when they check their pay packet in April 2018. That’s because of a big change that will affect millions of people, who will see a bigger slice of their pay automatically diverted to a savings pot for their pension.

Automatic enrolment went live in 2012 and but the total minimum amount paid in is currently just 2% of qualifying earnings – made up of 0.8% from the worker, 1% from the employer and 0.2% in tax relief. However, on 6 April this will rise to 5% – typically 2.4% from the worker, 2% from their employer and 0.6% in tax relief. In April 2019 the total increases again, to 8%. So, if you are an affected employee, how much might you – and your employer – have to pay into your pension?

For someone on £20,000 a year, it means they will lose an extra £33 a month when they see their pay packet at the end of April 2018. Currently, they are contributing the minimum 1% of salary, which works out at £16.67 a month, including tax relief worth £3.33. From April, this will rise to £50 a month (with £10 of tax relief), then in April 2019 it will rise to £83.33 a month. Employers will also have to put in lots more. Expect the opt-out rate to rise in 2018 – and for employers to use their increased pension payments as an excuse not to give wage rises.

5. The state pension will rise, tax allowances improve, but council tax will go up

From 6 April, pensioners entitled to the full new state pension (with a full 35-year record of NI contributions) will see their payments increase by £4.80 from £159.55 per week to £164.35 a week, which means there will be nearly £250 a year better off. The old basic state pension will rise from £123.30 a week to £125.95.

On the same day the new personal tax rates will come into force, with the chief change an increase in the personal allowance – that part of your pay not liable for income tax. It will go up to £11,850, a £350 increase from the current level. In practice, it turns into a £70 saving for a basic rate taxpayer, as it means that £350 more of their income is not liable to 20% income tax.

But much if not all of this will be taken up by potentially large increases in council tax. In a move slipped out just before Christmas, the government allowed local authorities to raise council tax by up to 5.99% next year. All councils will be able to raise council tax by up to 2.99% next year to fund local services, which is 1% more than this year. On top of this, 152 councils, which includes all London boroughs, unitary and metropolitan authorities and county councils, will be able to increase it by an additional “precept” 3% to fund social care services.

6. House price rises will slow to a dribble

Most people, particularly first-time buyers, will welcome a pause in house price growth, with most of the experts predicting just 0-2% rises in property prices in 2018 – and falls in the capital. For the first time since the financial crisis, earnings are likely to rise faster than property prices.

7. Interest rates will rise, and the stock market will wobble

Another 0.25% increase is expected in late spring, taking the Bank of England base rate to 0.75%. But unless the economy displays some unexpected perkiness, that should be the last rate rise of the year, so mortgage rates will stay low.

In 2017 the FTSE 100 enjoyed a rise of nearly 500 points, or more than 6%. In Frankfurt, the Dax index surged 13%, while on Wall Street the gains were even higher, with the S&P 500 advancing 18%. But after such a strong run – and with more interest rate hikes expected in the US – few believe 2018 will be anywhere near as good as 2017, with some predicting a major wobble in the market some time during the year.

8. The taxman will soon come knocking

Maybe you were one of the 2,590 people who used Christmas Day to fill in their tax return. But for the others who didn’t, the 31 January deadline looms.

If you are filing your 2016-17 return online for the first time, you will need to create a government gateway account if you haven’t already done so. Go to gov.uk/topic/personal-tax/self-assessment.

Angela MacDonald, head of customer services at HMRC, says filling in your tax return can be done anywhere and at any time, using your phone, tablet or computer. There are online webchats, live webinars, YouTube videos and social media support that can be accessed at any time, she adds.

Source: The Guardian

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How to make 2018 your richest year yet

January is probably the tightest year of the month for many of us as we recover from the financial hit of the festive season.

But if you’ve overdone it on spending, there are some tricks you can use that will not only go some way to repairing the damage, but will also help to set you up for a more financially successful year ahead.

Financial experts have shared their top tips and predictions for the year ahead with Femail to ensure you use upcoming changes in legislation and interest rates to your advantage and boost your bank balance.

From investing in gold to purchasing second-hand jewellery with a renowned brand name such as Tiffany, these are the hacks that will ensure 2018 is your most abundant year yet.

‘The bank of England Base rate is likely to increase over the next couple of years to around per cent according to the Governor, Mark Carney,’ said Mark Homer, co-founder of Progressive Property.

‘As long term fixed rate mortgages are still cheap a 10 year fix may be preferable. Barclays has a 10 year fix at 2.69 per cent which just has to be a good deal.’

Some of the cheapest fixed rate deals have been removed by banks because of the interest rate rise, so if you’re looking to remortgage in 2018, you could well end up on a higher rate.

But Tashema Jackson, money expert at uSwitch.com points out that rates have only gone back to 0.5 per cent, where they sat for almost nearly nine years – so there’s no need to panic about them shooting up just yet. 

‘However, don’t be seduced into thinking that a lower interest rate is automatically cheaper,’ she said. ‘Take some time to calculate if the lower rate and higher fee is actually cheaper. It could save you a fair bit of money in the long run.’

She added that it’s crucial not to rely solely on information from your broker.

‘Many mortgage brokers will have exclusive deals from particular banks,’ she explained.

‘That’s why searching and comparing what is on offer from different providers can really help give you a better understanding about what is currently on offer from the mortgage market,’ she explained.

Don’t assume this means you know best, but being informed is always worthwhile. You may be able to give yourself a leg up before committing on a particular one.’

‘When the initial term of a mortgage ends, lenders transfer customers onto their Standard Variable Rate (SVR). This typically has a much higher rate of interest,’ said Ishaan Malhi, CEO and founder of online mortgage broker Trussle.

‘Nationwide is offering a two-year fixed rate of 1.99 per cent while their SVR sits at 3.99 per cent, for example.

Set a reminder to look into your options with a broker three months before your initial term ends to avoid paying over the odds. Just one month on your lender’s SVR can cost you hundreds of pounds in extra interest.

‘Interest rates may have crept up recently but they’re still historically low,’ Ishaan added. ‘If you’re in a position where you can afford to overpay on your mortgage, this is a good idea as it can reduce your overall debt. This will be harder to do when interest rates rise further, which they may do in the coming years.

‘Check with your lender about how much you can overpay by each month since there’s usually a limit before a penalty applies. For most fixed-rate deals this is usually up to 10 per cent of the remaining mortgage balance per year.’

Mark Homer More points out that permitted development rights for homeowners are likely to come in the New Year from the government.

This will likely allow people to extend their properties and make other alterations without the need for planning permission.

‘Rather than Moving house this could be a great option for those looking for more space who also would like to create equity in their home,’ he added.

Experts at Hitachi Personal Finance agree that you should look to improve rather than move.

‘Typical property prices jumped around £85,000 in the first half of 2017,’ they said.

‘So spending on property renovations instead – such as creating an extra room out of wasted loft space, new kitchens or bathrooms – could potentially add significantly more space, and serious value too. The average a loft conversion could add to the value of your home is 12 per cent, so it’s well worth considering all options.’

Mark Homer recommends Paragon Bank, who is offering a 120 day notice savings account at 1.45 per cent which trumps savings products offered elsewhere.

‘Should you be happy locking your money away for four months this would appear to be a good option to help reduce the effect of inflation on your capital,’ he said.

Julian Hynd, Chief Deposits Officer at Ford Money says that a number of factors could push up interest rates in the coming year.

‘The Bank of England is expected to increase the base rate further, while the Funding for Lending Scheme (FLS) to boost bank lending to households and companies comes to an end in January,’ he said.

‘Our research shows that almost three in five UK savers do not know what interest rate their account pays while nearly half only review their accounts once a year or less.

‘Finding a savings account that pays a fair and consistent rate over time could mean one less thing for savers to be worried about with any interest rate changes and ensure savers get the most out of their money.’

Jamie Smith-Thompson at pension advice specialists, Portafina, explained: ‘You don’t have to be Nostradamus to predict that Brexit will continue to create economic uncertainty in 2018. And this could leave people facing sudden changes in circumstances that put a strain on personal finances. One of the best ways to counter this uncertainty is to keep six months’ worth of outgoings as an emergency fund. It can soften the blow of any nasty surprises and give you the time and space needed to make the best decisions.’

Jamie Smith – Financial Adviser at Foster Denovo comments predicts a change to pension tax relief in the next 12 months.

‘This is most likely to be in the form of a reduction to the annual allowance, which is the amount that can be saved into a pension scheme and still benefit from tax relief within a given tax year,’ he said.

‘Although a reduction would not affect the vast majority of people, those who can afford to maximise pension funding should consider doing so before any new restrictions are introduced.’

Jamie warns of growing instability in the UK due to uncertainty around Brexit and recent downgrading of growth forecasts.

‘Anyone within a few years of accessing any stock-market linked savings should be reviewing their portfolios and the underlying risks,’ he said.

‘For example, if you are planning to retire over the next few years you may want to consider de-risking your pension funds and moving these into less volatile asset classes.

‘Some pension providers will do this automatically, which is known as ‘lifestyling’, but certainly many pension plans will not have this function.

‘Those who have a longer term investment horizon of at least five to ten years before they plan to access and spend their savings may not need to be as concerned but it is still a good idea to review their portfolios.’

Adrian Ash, Director of Research at BullionVault – the world’s largest online trading platform for precious metals insists gold will act as a way to protect wealth as well as to increase it in 2018. 

‘Those who forget history are doomed to repeat it, and investors seem to have forgotten both the global financial crisis and the DotCom Crash where gold investing could have helped preserve investors’ wealth,’ he said.

‘Demand for gold sank in 2017 as stock markets surged, yet gold has risen for UK investors in every year that the stock market has fallen by 10 per cent or more.’

Dr. Johnny Hon, Chairman – The Global Group says 2018 provides ‘fantastic opportunity’ for investing in media and entertainment ‘as the global middle class grows and technology develops’.

He added: ‘Virtual Reality (VR) and Augmented Reality (AR), made famous by Pokémon GO, open up new ways of watching and shopping while viewing TV and movie content. Significant returns are to be made here.

‘Property continues to be a good investment and one that again features many innovations. One that will appeal to many younger people in particular, is the new concept of co-living, which, by using shared spaces and facilities, creates a more fulfilling lifestyle, that not only offers concierge and cleaning services, but also creates a genuine sense of community through shared spaces and facilities. With building land at a premium, this has a great future.

Stuart Law, CEO and founder of Assetz Capital says that more people are turning to Peer-to-peer (P2P) as an alternative to saving.

‘P2P platforms directly match people wanting to invest money with those requiring a loan, cutting out the middle-man and giving investors a choice in where their money is lent,’ he explained.

‘The rates of return can be attractive in the current climate of low interest rates, although it’s important to be aware that – as with most investments – capital is at risk and the amount invested is not covered by the Financial Services Compensation Scheme (FSCS) as it would be if held in a bank account.

‘Most P2P lenders are now fully authorised by the Financial Conduct Authority (FCA), but anyone thinking about investing money in this way should still ensure they’re using an approved firm.’

It’s something you might ignore until you’re considering applying for a loan, but it provides a useful snapshot of all your bills from mobile phone, to gas and electricity bills, as well as credit cards, loans and mortgages, according to Tashema Jackson, money expert at uSwitch.com.

‘You’ll also be able to check that all the information it contains is correct,’ she added. If you notice any errors you can contact the relevant lender and ask for them for a correction, but bear in mind that you will be expected to provide proof that a mistake has been made.

‘Doing a bit of research will also let you know if any lenders have a particular offer on, such as cashback on mortgage payments, or preferential interest rates to existing customers.’

Source: Brinkwire

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Mixed messages cloud the picture on housing market for year ahead

The housing market has been sending out some mixed messages recently. On the one hand there’s talk of consumers being reluctant to make big decisions amid wider economic uncertainty and a squeeze on living costs, but on the other hand, house prices have continued to climb in many areas, with reports of a lack of properties to choose from in popular locations.

So what will happen to house prices in 2018? In general, predictions have ranged from prices being flat across the UK to edging up by a few percentage points by this time next year. Economists believe the squeeze on incomes from inflation will limit what buyers are willing to pay.

Robert Gardner, chief economist at Nationwide Building Society, says: “How the housing market performs in 2018 will be determined in large part by developments in the wider economy. Brexit developments will remain important, but hard to foresee.”

This year has seen big differences between areas of the UK in how the housing market has performed. The Royal Institution of Chartered Surveyors has said pricing in Scotland, Wales, Northern Ireland and north-west England has been resilient compared with some other places.

While London has seen a cool-down, some other major cities, where housing affordability is less stretched, have been putting in a relatively strong performance.

Richard Donnell, insight director at property analysts Hometrack, says: “The likes of Manchester, Birmingham and Glasgow have seen market activity increase and this has delivered above-average price growth of 6 per cent to 8 per cent for the last 12 months.”

When it comes to sealing a deal, more house sales are going through at less than the original price sellers had wanted, according to estate agents. For some buyers, they may find there’s more room for negotiation, depending on what the local housing market is like at the time.

But the supply of properties on the market is still tight in many places, so sellers in these areas may feel more confident in holding firm on price.

Across the UK, 85 per cent of properties sold for less than the asking price in November, according to the National Association of Estate Agents – the highest proportion since its records started in 2013. One in eight (12 per cent) properties sold for the asking price and 3 per cent sold above the asking price.

As regards mortgages, despite the Bank of England hiking the base rate from 0.25 per cent to 0.5 per cent in November, the rates on offer are still “extremely low”, says David Hollingworth from broker London & Country Mortgages.

He says some mortgage borrowers will be receiving their annual statements in January, which can help them to take stock of whether they should make switching mortgage their New Year’s resolution or whether they are already on a good deal.

In some good news for first-time buyers, Hometrack predicts this sector will make up the largest group of buyers in 2018.

Donnell says: “We expect first-time buyers to be the largest group of buyers in 2018 accounting for over one in every three sales and overtaking existing home owners as new purchases by investors fall in the wake of tax changes.”

Source: Scotsman

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Tougher landlord stress tests split lending market

Tougher stress tests and underwriting standards polarised the buy-to-let market in 2017, according to Coventry Building Society.

Kevin Purvey, director of intermediaries at Coventry, said the more stringent regulatory standards from the Prudential Regulation Authority (PRA) had split the market into lenders that will lend to limited companies and those that will not.

The PRA brought in the tougher affordability guidelines on 1 January, which led most lenders to raise their interest coverage ratio – the amount of monthly income required to cover borrowers’ repayments – from 125 per cent to 145 per cent of the mortgage interest.

Then, on 30 September, the PRA told lenders to take into account the viability of borrowers’ entire portfolios when they apply for a new mortgage.

Landlords have also been hit by the government’s decision to phase out tax relief on mortgage interest by 2020.

Many amateur landlords have since stopped adding to their portfolios, while borrowing via a limited company has surged in popularity for those looking to avoid the scrapping of tax relief.

Mr Purvey predicted the tougher underwriting standards would have an impact on the market for years to come.

He said: “Lenders’ approaches to higher stress rates and new rules for lending to portfolio landlords have made the market more complicated for landlords and brokers.

“These changes have seen the market become increasingly polarised between those who will lend to landlords registered as a limited company and those who don’t.”

But while borrowing via a limited company allows landlords to claim tax relief, concerns have been raised that higher interest rates on some products could ultimately lead to them paying more than they would as an individual.

This could have implications for brokers if clients who have borrowed via a limited company complain about the advice they received.

Source: FT Adviser

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UK mortgage approvals hit 15-month low in November

LONDON (Reuters) – British banks approved the fewest mortgages in 15 months in November, when the Bank of England raised interest rates for the first time in more than a decade, industry figures showed on Thursday.

Banks approved 39,507 mortgages for house purchase last month, down from 40,417 in October and 5 percent fewer than in November 2016, trade association UK Finance said.

At the start of the month, the Bank of England raised interest rates from a record low 0.25 percent to 0.5 percent.

“Housing market activity remains under pressure from squeezed consumer finances and fragile confidence, and it may well have taken a further dent in November from the Bank of England lifting interest rates,” Howard Archer, chief economic adviser to the EY ITEM Club consultancy, said.

A Reuters poll of economists last week suggested British house prices will rise little more than 1 percent next year, with those in London set to fall for the first in eight years.

Last month, finance minister Philip Hammond sought to offer voters some relief with spending plans that focused on housing, including scrapping a property purchase tax for most first-time home-buyers.

“Even if successful, (Hammond‘s) measures to boost house building in November’s budget will take time to have a significant effect so are unlikely to markedly influence house prices in the near term at least,” Archer said.

More comprehensive lending figures from the Bank of England are due next Thursday.

Source: UK Reuters

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New £2.9m bridge will create link between Notts town and village

Funding for a multi-million pound bridge that will support the development of hundreds of new homes has been approved.

The new pedestrian and cycle access overpass will be installed over the A46, connecting the former RAF Newton site – where 550 new homes are proposed – with a plot of land also proposed for new housing in Bingham.

A total of 317 homes could be built on the plot of land, just west of Chapel Lane, by developer Barratt Homes.

The planning application was submitted to Rushcliffe Borough Council in September, and is due to be discussed by its planning committee at a meeting in the new year.

The council has been awarded £2,910,000 by Highways England – the government-owned company with responsibility for the operation, maintenance and improvement of the motorways and trunk roads in England – to build the bridge.

The bid to secure the funds began two years ago, and it was confirmed on December 28 that it had been awarded from Highways England’s Growth and Housing fund.

Bingham Town Councillor Sue Hull welcomed the news of the bridge being built, and said it would “connect” both Newton and Bingham together.

She said: “The borough council applied for the funding of the bridge over two years ago now.

“It is needed for the area. The residents on the RAF Newton site feel isolated, as the nearest shops for them are in East Bridgford.

“This new bridge will connect the two sides together. People will be within walking distant of supermarkets, and the post office.

“It will be a quick and direct link to Bingham’s town centre, and will have a huge positive impact on the people from the Newton side.”

It is not known when work on the bridge will start.

The developments are part of the first phase of Rushcliffe Borough Council’s plan to build up to 1,050 new homes as well as shops, a community centre, primary school and allotments and parks in Bingham

Leader of Rushcliffe Borough Council Councillor Simon Robinson said: “Rushcliffe is delighted to be awarded this funding from Highways England Growth and Housing Fund.

“The link bridge directly supports the development of 550 new dwellings proposed at RAF Newton.

“It will provide direct pedestrian and cycle access across the recently dualled A46 between the RAF Newton and Bingham development sites.

“This will mean the current and future residents of the RAF Newton settlement will have sustainable access to a wide range of retail and commercial amenities on offer in Bingham, and better access to employment opportunities in both the town itself and the greater Nottingham area through improved access to public transport links.

“RAF Newton is a key site on the A46 and the funding for the bridge brings us a step closer to realising our targets and ambitions for this key growth corridor.”

Source: Nottingham Post

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Mortgage sales showed growth in UK in November, particularly buy to let sector

Mortgage sales in the UK rose by 4.1% or £637.4 million and up by 3% or £470 million year on year, the latest intermediary marketplace data shows.

Buy to let mortgage sales in November increased by 10.8% or £334.1 million compared to October while residential figures were also up, increasing 2.5% or £303.3 million on the previous month.

The data from Equifax Touchstone shows that the majority of regions across the UK witnessed positive mortgage sales growth in November. Wales led the way with a rise of 9.9%, followed by the South East at 8% and the Midlands at 7.5%. The North West and London were the only regions to see a drop in sales, down by 2.3% and 2.6% respectively.

‘Mortgage sales in the UK have once again remained strong. Buy to let figures in particular have continued to gain momentum, enjoying positive growth for a fourth consecutive month,’ said John Driscoll, director at Equifax Touchstone.

He pointed out that the outlook for the market remains unclear but the firm is expecting that mortgage sales will continue given the current increasing difficulty in getting on the housing ladder and the subsequent increase in demand for rental properties.

‘The full impact of the recent rate hike on sales is yet to be fully felt and even the abolition of stamp duty for first time buyers announced in November’s budget was not received as wholly positive; some within the industry believe house prices may actually rise as a result, which could negatively affect mortgage sales,’ he pointed out.

The data, which covers the majority of the intermediated lending market, also shows that the average value of a residential mortgage in November was £191,425 compared to £190,627 in 2016 and in the buy to let sector it was £144,537 compared to £163,115 in 2016.

Source: Property Wire

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Government to tell rogue landlords: ‘shape up or ship out’

A package of measures to crack down on rogue landlords, including a tougher licensing regime for house shares and a minimum size for bedrooms, has been announced by the government.

Alok Sharma, the housing minister, said “far too many” tenants were being exploited by unscrupulous landlords, who would now have to “shape up or ship out”.

The measures come after the government was accused of undermining efforts to protect private sector tenants by curtailing the powers of local authorities to introduce landlord licensing schemes. Figures published two months ago under the Freedom of Information Act revealed that most councils had failed to secure a single landlord prosecution.

Meanwhile, in an interview with the Independent, the Labour leader, Jeremy Corbyn, said at the next election his party would scrap laws that allowed landlords to evict tenants under so-called no-fault evictions.

Ministers are to seek approval from parliament to widen the criteria for landlords in England, who need to secure a licence when renting out a “house in multiple occupation” (HMO). There are about 500,000 HMOs in England, and national mandatory licensing applies only to properties that are three or more storeys high.

This is to be changed so that many flats and one- and two-storey properties would be subject to licensing, provided they are occupied by at least five people from two or more households. The move will affect about 160,000 houses.

Rules have also been proposed that would set minimum size requirements for bedrooms in HMOs to prevent overcrowding. Rooms used for sleeping by one adult would have to be no smaller than 6.51 sq metres (70 sq ft), and those slept in by two adults would have to be no smaller than 10.22 sq metres. Rooms slept in by children aged 10 or younger would have to be at least 4.64 sq metres in size.

As part of the licensing requirements, councils will be able to make sure only rooms meeting the standard are used for sleeping.

The Department for Communities and Local Government said there would also be new rules to help people “fed up” with living near shoddily maintained properties without proper bins and rubbish dumped everywhere. Ministers intend to introduce a mandatory condition in HMO licences requiring landlords to comply with local council rules on refuse and recycling.

The government has set out details of criminal offences, which would automatically ban someone from being a landlord. From April, an individual convicted of offences including burglary and stalking can be added to the database of rogue landlords and barred from renting out properties.

Sharma said: “Through a raft of new powers, we are giving councils the further tools they need to crack down on these rogue landlords and kick them out of the business for good.”

This month, however, Newham council in London – which has arguably led the way in tackling bad landlords, with 331 prosecuted as of last October – accused the government of standing in the way of councils that were trying to protect their tenants.

In 2013, Newham became the first council in the country to introduce borough-wide licensing, requiring all landlords to licence all properties offered for private rent. However, in 2015 the government introduced legislation requiring ministerial permission to introduce such schemes, while the Newham scheme renewal a few weeks ago had conditions placed upon it – one part of the borough was excluded – and was also delayed unnecessarily, resulting in a gap of two to three months between the end of the old scheme and the start of the new one, according to the council.

Sir Robin Wales, mayor of Newham, has called on the government to “remove this bureaucratic and anti-democratic piece of legislation, and let councils get on and introduce the right schemes to protect their private sector tenants from rogue landlords”.

Source: The Guardian

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Why British residential property remains a good bet in 2018

British residential property has long been viewed as a very strong asset class for investment. While there have been ups and downs along the way, such as the price crash in the early 90s, it has generally offered excellent long-term returns.

The market’s reputation has taken something of a knock recently, however, which has been driven by Brexit-related uncertainty and a slight cooling in price growth. This is a temporary blip and is unlikely to dampen the market in the long-run. Rather than be deterred, I firmly believe that investors should embrace some of the excellent opportunities this market presents.

The Brexit vote in June 2016 is the starting point for this slight faltering of faith in the residential market. In the run up to the referendum vote, both house prices and foreign investment in the UK were at record highs. However, a somewhat surprise result  signified a break with the status quo and ushered in economic uncertainty, and this soon led to concerns about whether price growth could be sustained.

–UK inflation: where’s it heading in the long term?

However, these anticipated shockwaves failed to materialize. House prices have continued to rise ever since the referendum, illustrating that demand for residential property remains high and providing investors with strong capital returns. Rental yields across much of the country have also continued to perform well, with ever greater numbers of tenants looking to the private rented sector to meet their needs.

For some investors, the vote has actually opened up new opportunities. The devaluation of Sterling against currencies like the Euro, Dollar, and Renminbi has meant that UK assets offer better value than they did before the vote. This provides overseas investors with excellent value for money, and has also kept important capital flowing into the country’s property market – ensuring that developers can successfully finance the projects that increase the UK’s housing stock.  Similarly, a sustained low Bank Rate has also kept investors’ mortgage costs down.

While Brexit might not have been the doomsday event for the property that some expected, there are also concerns in several quarters that the market has run out of steam. There has been some evidence that the London market has cooled off slightly in recent months – particularly at the upper-end, which has been heavily affected by the changes to stamp duty on second homes. However, other parts of the country also offer world class property investment opportunities. Manchester, Liverpool and Leeds continue to provide strong returns, and our recent Global Real Estate Outlook found that Birmingham is set to become a global property investment hotspot. This is due to a combination of low prices, high yields, and a rapidly growing local economy. The UK residential property market therefore continues to offer investors with a variety of different portfolio sizes, risk appetites and capital availabilities a diverse range of different propositions.

–Which way will property prices go in 2018?

While the additional stamp duty levy on second properties and recent changes to landlords’ tax relief remain in place, the political environment towards property investment is less highly-charged than it was pre-Brexit. The recent Autumn Statement, for example, was notable for the absence of significant policies directed at landlords. While punitive pre-Brexit policies remain in place, policymakers’ attentions now appear to be more focused on improving first-time buyers’ prospects and increasing housebuilding than cracking down on investment portfolios.

Looking forward, there are a few risks facing the UK’s residential sector, but many of these look increasingly unlikely to come to fruition. While economic turbulence resulting from the UK and EU failing to agree upon a divorce bill could have derailed the economy, it now appears that a reasonable deal that works for both parties in in sight. This will encourage stability in the market. Furthermore, the imbalance between supply and demand in the property market will support both a baseline of rental yields and house prices. With the UK’s population continuing to grow, this trend is unlikely to be reversed anytime soon.

Although the economic outlook often changes in the short-term, the reality is that the UK will continue to be a great long-term destination for residential property investment for some time.

Source: Money Observer

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British Pound Advances On Dollar, Slips Against the Euro in Thin Holiday Trade

Pound Sterling on front foot in final week of 2017. Economic and political news flow is thin but there’s scope for low volumes to exaggerate moves in FX.

Sterling overcame resistance from a weak US Dollar Wednesday, although a more robust performance against the greenback by the Euro helped push the Pound-to-Euro rate down by a fraction – reversing an earlier gain for the pair.

Price action comes amid a light flow of economic data and low volumes in foreign exchange markets as London, the main centre for currency trading, operates with a skeleton crew throughout much of the current week.

“The UK has returned from the long holiday weekend, though with another one coming up and the Pound in the middle of a bigger range, there doesn’t appear to be much incentive for the market to be wanting to make any big pushes,” says Joel Kruger, an FX strategist at LMAX Exchange.

The Pound was quoted 0.16% higher at 1.3394 against the US Dollar by the London close while the Pound-to-Euro rate was marked 0.20% lower at 1.1255. The Euro-to-Dollar rate was quoted 0.35% higher at 1.1899.

“The market has been consolidating but ultimately looks poised for a continuation of the 2017 uptrend, with a higher low waiting to be confirmed at 1.3027 on a break of the 2017 high at 1.3658, Kruger adds, referring to the Pound-to-Dollar rate.

“This will then open the door for a measured move upside extension back above 1.4000 and towards 1.4200 into 2018,” Kruger adds, referring to the Pound-to-Dollar rate.”

Above: Pound-to-Euro rate shown at hourly intervals.

2018 Agenda: UK Economy and Brexit

The ebb and flow of economic growth and the stop-start march of Brexit negotiations have been front and centre for the Pound in much of 2017.

Similar will be true for the currency in 2018, with traders looking to see talks on future trade and transition opened once into the New Year, while hoping for another interest rate rise from the Bank of England.

“For the next week and possibly two, we do not expect new Brexit developments as the U.K. Parliament isn’t expected to debate on the issue until mid January,” says Kathy Lien, a managing director of foreign exchange strategy at BK Asset Management.

“There are no major U.K. economic reports scheduled for release until next week at which point the pace of growth and more specifically the PMI reports will be in focus.”

Next week sees January and the New Year get underway with the monthly surveys of purchasing managers across the manufacturing, construction and services industries, which will be among the final inputs to expectations for economic growth in the final quarter and 2017 as a whole.

Talks around a possible “transition deal” will begin in January, with markets hoping to see a quick agreement struck in the first quarter, before discussions move onto future trade ties after the next European Council meeting.

Simultaneously, markets will be positioning for the next round of Bank of England growth and inflation forecasts, due for release in February. These will be key for the market’s evolving expectation of future interest rate decisions.

The Sterling Overnight Index Average (SONIA) rate most recently implied an expectation by the market that the Bank of England will wait until February 2019 before raising UK interest rates again.

However, the UK economy is recovering its lost momentum, wage growth is picking up and inflation of 3.1% is still more than 100 basis points above its target, which could mean there may be scope for the BoE to signal an earlier move is possible once into the New Year.

This would be positive for the Pound, particularly when considering that markets are already braced for three Federal Reserve hikes in 2018 and that the European Central Bank is yet to announce a full exit from its quantitative easing program.

Source: Pound Sterling Live