Stamp Duty Holiday concept

The current Stamp Duty Holiday comes to an end in a little over two months. And there is a growing call from across the property industry for the Chancellor to extend it.

Removing the property tax from homes under £500,000 has been a shot in the arm for the market. While Covid-19 brought a sudden halt last March, the market was already slowing down ahead of it.

For many people, staying put before the holiday was the only option as the tax over-stretched their finances. Whilst they could afford the mortgage on their new home, and even covering the cost moving, finding the extra cash for Stamp Duty was a stretch too far.

Prior to the holiday, anyone buying a new home over £125,000 had to find funds to pay the treasury to cover the price of moving. The percentage increases at the next threshold of £250,000). Of course, there was a higher threshold for first-time buyers, but it still often put off next-time movers.

The average house price in the UK is £256,000 and these are not exactly vast mansions, but everyday homes for average-sized families. So, the Stamp Duty Holiday gave many of those who were outgrowing their home the chance to move. It is no surprise, therefore, that the market picked up the way it did at the end of 2020.

But with the deadline looming and delays due to Covid-19 and further lockdowns, it means many could miss out! Even if someone has had their mortgage approved and started the buying process in the past few weeks, there is a chance the deal will not meet the deadline.

Throw in the fact that anyone in the chain (including solicitors, surveyors, etc.) may have to self-isolate, it could lead to unexpected delays. As a result, a buyer will have to find extra cash to pay the tax through no fault of their own.

Stamp Duty ‘chaos’?

As TV property expert Phil Spencer said last week, the finite deadline could release ‘chaos’ and ‘mayhem’. With everyone working to the date, he believes it will create major issues if sales are not completed in time.

He said in a radio interview, “It’s great to keep people motivated towards that day. But actually, if they haven’t completed their deals on that date, the chances are that deals will be collapsing left right and centre. It will just be bedlam.”

The last thing anyone wants is to see deals collapse because the knock-on effect in the chain will be devastating. From the first-time buyers at the bottom of the chain to those downsizing at the top.

Sold STC

To help reduce the risk of the market being thrown into chaos, extending the Stamp Duty Holiday for those who have started the buying process would help.

Research by property magazine Property Reporter says there is an ‘overwhelming demand’ and mounting pressure on the government to do this. We would certainly agree!

So many buyers will spend money on legal advice, searches, surveys and arrangement fees over the next couple of months only to find they can’t complete in time. A house currently Sold Subject to Contact (STC) could then end up back on the market on 1 April! That will be emotionally devastating for both buyer and vendor; but the buyer will also end up with less money to spend in future as they have already paid fees.

Buyers are already beginning to retreat, and house builder Persimmon is reporting a slowdown in sales as the deadline gets nearer.

Extension call

A petition calling on the Government to extend the holiday has surpassed the 100,000 signatures. This means the issue will be considered for debate in Parliament.

We would add our support to the debate because we believe an extension is necessary to keep the market moving. Certainly, allowing those who have had offers accepted should qualify for the tax break at the very least.

Like Phil Spencer, we agree that a clear deadline and strict cut-off date is not the answer.

We recognise that this tax adds coffers to the public purse, but it is unfair on all those who are so close to completing having to rethink due to circumstances outside their control.

If you want to talk about your mortgage, contact the mortgage team today.

Man checks his savings


It’s generally good practice to think of your savings and investments within three distinct categories:

  • short-term – less than 5 years (emergencies, holidays and other short term goals less than 5 years away)
  • medium-term (school fees, university funding and other goals between 5 years and retirement)
  • long-term (retirement spending)

Why? Well, quite simply, anything in the short-term category should be kept safe in the best savings account you can find. For everything else you should be investing it.

To build your wealth in the past, most people headed to their bank or building society. They would look at the different types of savings accounts available and then choose the one they preferred. They could do this knowing that their pension was taken care of by their employer, usually a final salary scheme. This is a pension that pays you a guaranteed salary at a pre-determined age i.e. 60 or 65.

Bank savings accounts sound like a great idea. You put your money away and then access it when you need it. But bank accounts aren’t all they are cracked up to be when it comes to value for money. The amount of cash in the account is, in theory, meant to grow over time with compound interest. However interest rates are now at an all time low. In 1989 Bank of England base rate was as high as 14.8%. Today it is a mere 0.1% with talk of negative rates being a real possibility.

A savings account is fine if you have short term needs for your money and can’t risk stock market volatility. If you want your money to grow, however, then you will be disappointed.

Beware the ‘silent killer’

There is a ‘silent killer’ that slowly eradicates the value of the cash in your bank account and it’s called inflation. Inflation is effectively the rise in the price of goods and services in daily or common use.

If you’ve ever watch the news on TV or read a newspaper, they often talk about the ‘Consumer Prices Index’, or CPI for short. Each month the Bank of England collects around 180,000 separate prices of around 700 items. These cover everything from a pint of milk to the cost of a football ticket. It is this very large basket of goods which is our measure of inflation, or the cost of living to you and I.

Inflation tends to rise over time and can be vastly different depending on your age. For example, a 25 year old will more likely spend more of their money on goods which go down in price over time, such as televisions, computers and cars. An 85 year old however will more than likely spend a good chunk of their income on services which increase in price, such as heating and care costs.

Here are two examples of how prices of everyday goods and services have increased over time. You can find more at https://www.bankofengland.co.uk/knowledgebank/how-have-prices-changed-over-time:

How the price of goods has increased over time

Interest rates and savings

Another issue with using a bank to save your money is the rate of interest. Put in the simplest of terms, you earn interest on your savings, which is a payment from your bank for allowing them to use your money.

The original idea of banking is fairly simple: you give your money to the bank, they use it to loan to others and charge them fees and interest for using it. In return, you are paid interest.

The problem is, interest has been at incredibly low rate for a historically long time. That means you are not getting a lot, if anything, in interest. When you consider all of these factors, you’re effectively losing money due to the combination of low interest rates and inflation.

And that will only get worse if the Bank of England decides to cut interest to negative rates. It may help those who borrow, but it is very tough on those who are saving.

Savings versus investing

Interest rates in 1990 where around 10%, so putting money in the bank would have been a great idea. Your money would have been safe whilst the effects of compound interest would have gone to work ensuring your nest egg built up quite nicely. In fact, £10,000 saved over 28 years at these rates would give you a tidy £162,500 with next to no risk, an increase of 1,625%!

However, times have changed and using a current rate of 0.1% you would, over the same time period of 28 years, accumulate a rather disappointing £283 in interest. Now I know in reality you can get more if you shop around, but at the time of writing this I haven’t seen a no-strings savings account offering more than 0.9%. Such an account would still only generate interest of £2,864 after 28 years, an increase of just over 128%. If you remember from earlier, the cost of milk has gone up 176% over the same period.

In contrast, a FTSE All-Share tracker would have generated an average return of 4.54% turning your £10,000 investment into around £35,500. I’m not advocating that you go and put your money into a FTSE All-Share tracker by the way, as you should take advice from a professional adviser or at least have a more diversified approach to your investments, but you get the point.

Longer term gains

And be warned that in that time you will have seen years where you had less money than the year before. But this is for longer term money remember, so short-term dips is all part of how you make the longer term gains. This has worked for over 100 years and it’s not new; it’s just much more accessible.

Investing does have its ups and downs, but careful financial planning can mean medium and long-term investing makes complete sense for most people.

And keeping to a plan is essential, which is why we try to educate our clients so it’s easier to hold them accountable to their goals and keep them focused. Anyone can get cold feet when they see their hard-earned money going down in value (2001, 2008 and March 2020 anyone?), but it’s those who hold steady and keep their nerve that come out on top.

Of course, there is so much more to financial planning than the basic numbers. But I hope this has shown you that when it comes to money, saving and investing are very different. So, if you are putting money away in a bank account because you think it is ‘safe’, think again.

To talk to us about your savings and investments, contact us today.

Couple setting financial goals

A new year is a good time to assess your goals, whether that’s fitness, career or finances. When it comes to financial goals, consider the long-term as well as the next 12 months.

But if the start of a year is your catalyst to getting your financial house in order, our advice is get a plan in place today. Don’t leave it until tomorrow because tomorrow never comes, and you risk another year passing by without anything being done.

We know everyone has different goals and ambitions, so our tips are a useful starting point. Just remember that your financial plan is as individual as you!

Time to budget

Budgeting sounds like a very obvious place to start a financial plan. If you have no idea how much money is coming into and out of your bank account, you will find planning finances impossible.

Some people earn a good income but struggle with money because they have no budget in place. Managing your money properly gives you the ability to enjoy what you earn without over-spending and using credit excessively.

A monthly budget should include what money is coming in as well as what goes out. So write down what you are spending each month: food bills, mobile phone, utilities, mortgage, memberships, car costs etc.

There’s no point asking a financial planner to help you achieve your goals until you have an idea of your monthly budget. At a discovery meeting, a financial planner wants to know what you need to live each month, so now is the time to work it out!

Budget goals:
  • Set up a monthly budget and stick to it
  • Reduce unnecessary spending
  • Assess your budget regularly

Control your debt

When unexpected events happen, it is all too easy to grab your credit card. But debt has a nasty habit of increasing more quickly than you expect thanks to high interest rates.

Being debt free may sound like nothing more than a dream to you at the moment, but with proper financial planning it is possible. Start by setting up a repayment plan and make a commitment to stick to it; make sure you repay the most expensive debt first.

Reduce spending on treats to pay off your debt. Look at switching your credit card to one offering 0% on balance transfers. Some cards offer 0% on balance transfers for 2 years or more. This means you won’t be paying interest on top of what you owe.

Just make sure you pay more than the minimum and work out how long it will take you to repay the debt in full. In some cases, even taking a personal loan to consolidate debt can be a sensible idea, as your debt will be set to a structured repayment schedule. Just make sure you shop around for the best interest rates!

Debt goals:
  • Reduce discretionary spending where possible
  • Sell any unwanted items (such as old mobiles)
  • Have a plan in place to repay debt, starting with the most expensive debt first.

Save some money

There is one thing to learn from the past year, and that is unexpected events happen! Saving for a rainy day sounds like an old adage, but it is a very wise one.

No-one knows when they will need a few extra pounds to get them through a tricky time. Bank savings accounts are not the place to give you good, long-term returns, so don’t use them for a retirement nest egg. Having savings available for an emergency, however, is better than reaching for a credit card.

Sacrificing a few takeaways (or meals out when you eventually can) will really pay off when you need some extra cash.

Saving goals:
  • Reduce your grocery and takeaway bills
  • Find ways to save on utilities
  • Set a monthly savings goal
  • Start with short-term financial goals and work to long-term ones

Start investing

Investing allows your money to grow over time in a way that savings accounts cannot offer. Choosing to invest can be useful for long-term goals, as history shows that your money is likely to grow over time.

At Co-Navigate, we will look at your individual circumstances before suggesting if and what you should invest in. As well as the money you may wish to invest, we will consider your individual goals.

While you can invest on your own, it is always better to speak to a financial planner. They have not only studied the subject but have a wealth of experience.

Investment goals:
  • Speak to a financial planner
  • Set long-term goals

Setting goals is an important part of financial planning. Without them you are more likely to spend money you don’t have or waste it.

Our aim is to help clients relax about finances knowing they have a plan in place to ensure that they will achieve their goals. It also ensures that their family will be all right should the worst happen. Even during tough times, such as those we are facing now, knowing you have your finances in shape is one less thing to worry about.

Contact to us today to arrange a free online discovery meeting.