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.

Person receives financial planning advice

From time to time, we get asked why people should be pay fees for financial planning advice. To be honest, it baffles me why people should expect a financial adviser to offer free services.

I believe that this is due to many misconceptions, and here just a few:

  • We are paid a commission by the companies that we advise you to invest in
  • Banks offer free ‘advice’ so why shouldn’t everyone?
  • There’s so much information online, freely available knowledge doesn’t require paying for

All of these assumptions are myths, and as the saying goes, ‘there’s nothing more expensive than free advice’.

Financial advice and fees

Independent financial advisers and planners charge fees and are only allowed to receive commission from insurance and mortgage providers.

As you’d expect we must have professional qualifications. In addition, we must continuously evidence ongoing study in the form of continuing professional development (CPD) to our professional body. This all makes sense, as you certainly wouldn’t trust your retirement to someone who doesn’t have any relevant qualifications!

All financial advisers must also have a Statement of Professional Standing (SPS). This is applied for each year to allow us to be able to give regulated financial advice. To apply we must evidence a minimum of 35 hours CPD for that year.

Financial planners start as trainees and work alongside experienced advisers for a set period. During that time, they must study outside working hours to pass examinations and coursework. Once trained, we undergo annual testing to ensure that our knowledge is continuously up to date.

Our knowledge and understanding of finance are why you pay fees. In in that respect we are no different than a solicitor or an accountant; you are paying for experienced advice.

Be held accountable

Our clients are also paying us to hold them accountable to their financial plans. We help stop them making rash decisions which could scupper their plan. We also keep them calm in times of trouble.

It is by doing this that we are confident our clients will be better off financially in the long term. As a consequence be able to make better and more informed lifestyle decisions.

We love working with our clients, and seeing them achieve their goals is priceless. But for us to delve into your finances and get to know you and what you want to achieve takes time. It also requires effort and hard work from our whole team.

Independent financial planning

When choosing a financial planner, find out what service they offer first. Is it full holistic financial planning or simply product advice? Ask them what their services will do for you. It is also important to ask them if they can offer independent advice or restricted advice. Restricted advisers are nearly always tied to a single provider such as a bank.

In my experience, this generally means they are less concerned about your ongoing costs and more concerned with selling you something.

Co-Navigate’s financial planners are exactly that, planners. We will only recommend a regulated financial product if it is necessary to be able to carry out your financial plan. We are also independent, meaning when we do make a product recommendation, we are doing so having researched the entire marketplace on your behalf.

After our initial discovery meeting which we provide at our own expense, and assuming we both agree to work together, we spend hours building a picture of your finances and linking them with your goals. And once in place, we regularly meet our clients to review their financial plan and adapt it where necessary.

Banks and ‘advice’

I believe part of the confusion is due to people historically visiting a bank or building society for ‘advice’. A phone call from the bank manager asking to see you used to be quite a daunting thing. Invariably, most people accepted the invitation. Having been ‘on the other side’, I now know that this has been a good sales tactic by the banks. As a result, they were able to get in front of their customers and sell them more products.

They may listen to you, but they will not provide a financial plan that helps you achieve your goals. Instead, they will give you the information about their products and then it’s up to you to assess which product meets your needs. But none of this has anything to do with financial planning and everything to do with buying a financial product.

Online financial planning ‘advice’

If you Google ‘best pensions’ or ‘best investments’ you will get a lot of information. This may be useful for signposting, but is so generic that it can never be called ‘advice’.

Everyone’s situation is different, particularly when it comes to finances. Your financial goals will be as individual as you are, so general information is not always helpful and can sometimes even be harmful, costing you much more in the long run.

Most people looking for help with their finances recognise that they must pay their adviser for their time and expertise, and that financial planning is much more than simply choosing a pension. I hope that this brief overview shows you why it’s money well spent.

To speak to us about our financial planning advice services, contact us today. You can also contact our Newcastle office on 0191 228 6130.

Woman happy thanks to having financial well-being

Life in the past few months has been a real struggle, with the Institute of Fiscal Studies claiming that the Covid-19 pandemic will affect people’s mental health.

Struggles in the wake of lockdown and isolation is likely to have a long-term effect, which will need addressing.

One area that has hit people hard is their financial well-being, due to worries about current and future employment and any debt they have. Thousands of job losses are announced daily across many sectors. And it is likely that more will follow in the future, sadly.

While the coronavirus pandemic was unexpected, those without a financial plan will be hardest hit, no matter what sector they work in. That doesn’t just mean those with lower salaries, as even seemingly affluent people admit worrying about money – especially if they have no plan in place.

At Co-Navigate, our role is to provide clients with a realistic financial plan to help them achieve their goals. After our first meeting, we use software that includes ‘what-if’ scenarios so we can plan for the worst. As a result, if or when, the worst happens, they have peace of mind. They know there is a plan in place, even if it is plan B or plan C.

Money and happiness

Money doesn’t buy happiness, the saying goes, but a number of studies show that’s not necessarily the case. Researchers from Purdue University revealed that there is an optimal point to how much money makes us happy.

Andrew T. Jebb, the lead author and doctoral student in the Department of Psychological Sciences, says, “It’s been debated at what point does money no longer change your level of well-being. We found that the ideal income point is $95,000 (£77,000) for life evaluation and $60,000 (£47,000) to $75,000 (£60,000) for emotional well-being.”

Having a healthy income not only gives us a chance to buy the things we need, it offers a chance to enjoy luxuries, such as new cars and holidays. It also means we can save and invest to increase our wealth, which provides security.

It is in times such as those we are living in that financial security trumps our desire to buy the latest technology! A newly released smartphone can wait as our understanding of money changes during recessions and downturns.

Increase financial well-being

Last year, leaders within the finance profession launched The Financial Wellbeing Conference. Set up to help financial planners, its aim was to show that someone’s well-being is just as important as wealth. During the conference, financial well-being was broken into five elements:

  • A clear path to achieve objectives
  • Control of daily finances
  • The ability to cope with financial shock
  • Financial options in life
  • Security for those we leave behind

What it means to us

The five elements mentioned are among those that form the bedrock at Co-Navigate. We love to hear about our clients’ goals, but nothing makes us happier than watching them achieve those objectives and take control of finances.

When it was discussed at the first conference 12 months ago, no-one would have guessed just how important the ability to cope with a financial shock would become.

So, how is your financial well-being? If you want to improve it and take control, then contact us today and talk to one of our team.