Self-employed scheme warning: Extension called for as ‘efficient action is needed’

The Self-Employment Income Support Scheme (SEISS) was created by the government to provide financial assistance to those who work for themselves. The scheme provides similar levels of support provided by the furlough scheme for PAYE workers.


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While there has been no announcement yet, it is fairly probable that Rishi will extend SEISS if the context calls for it.

Recently, he extended the furlough scheme to October and when he originally launched the self-employment scheme it was highlighted that it will be extended if need be, as quoted from the chancellor of the exchequer: “The government will pay self-employed people, who have been adversely affected by the Coronavirus, a taxable grant worth 80 percent of their average monthly profits over the last three years, up to £2,500 a month.

“This scheme will be open for at least three months – and I will extend it for longer if necessary.”

Despite the likelihood of an extension, there may still be fear among the self-employed that the funding scheme will close as May comes to an end.

There have been plenty of reports and “murmurs” of a coming announcement and Ed Molyneux, the CEO of FreeAgent, has commented on how impactful this could be: “The clock is ticking but the government has yet to give any indication that it will extend the emergency scheme set up to help self-employed people by paying up to 80 percent of their earnings.

“As funding is due to expire at the end of the month, there could be a massive income drop ahead for small businesses and independent workers who rely on this scheme to keep them afloat.”

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While there are more employed workers in the UK, the impact of the self-employed cannot be understated.

In April, the ONS released figures which showed just how vital the self-employed are to the country’s economy:

  • At the end of 2019 there were more than five million self-employed workers in the UK
  • Self-employed people represent 15.3 percent of all employment in the UK, up from 12 percent in 2000
  • The self-employed support some of the UKs most vital industries, including construction, transportation, agricultural and related trades and media


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Worryingly, the same figures showed that 10 percent of the self-employed are aged 65 or over, compared with just three percent of employees.

This means that if the support scheme were to end, it could put some of the country’s most vulnerable people at risk (at least in terms of coronavirus risk).

Ed went on to comment on how important it is for people within this category to know where they stand: “Over 1.5 million people currently use this funding, so it is vitally important that they know what will happen in the weeks and months ahead.

“Small business owners are a catalyst for innovation in the UK, but in order to survive this period, they desperately need protection and support.

“While things are slowly heading towards a ‘new normality’, many small businesses are in no position to support themselves as they are either not operating fully, or cannot legally operate at all.

Because of the delicate situation, he concluded by calling on the government to not underestimate the consequences of inaction: “Efficient action is needed from the government at this time, and this must go hand in hand with clear communication.

“I urge the government to remember the delicate situation that many business owners are facing and not forsake a funding extension for any reason; the result could be catastrophic for our small business and freelance sector.”

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Child Benefit: Built up NI credits can be transferred under these conditions – check now

Child benefit claimants will get National Insurance credits while they’re receiving the benefit. This will continue until the youngest child in the family turns 12.


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The credits will be automatically added to a National Insurance account when Child Benefit is claimed.

Claimants will not need to take any action to get the ball rolling.

To claim Child Benefit, a CH2 claim form will need to be completed and sent to the Child Benefit office.

The government encourages parents to apply for Child Benefit even if they don’t need the payments due to these National Insurance boosts.

National Insurance contributions are needed to receive state pension, with 10 years as a minimum needed to get any amount.

The full amount will require at least 35 years of contributions.

So long as 35 years of contributions are collated and the person meets all eligibility criteria, they’ll get £175.20 per week from their state pension.

It can be difficult for some people to reach the 35 year limit but in some instances, a person claiming Child Benefit within the household may be able to help with this.

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Child Benefit claimants with excess National Insurance credits will be able to transfer them to a partner so long as they aren’t working, are on a low income and are not paying their own contributions.

Transfer claims of this nature can be made on a yearly basis after the end of each tax year.

There is a specific government form (CF411A) that will need to be completed to do this.

It is also possible to transfer National Insurance credits to someone else within the family.


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People may transfer National Insurance credits to a:

  • Sibling
  • Grandparent or
  • Other direct family member

Transfers of this nature can occur if the person being transferred to takes care of the child in question for at least 20 hours a week.

Child Benefit payments themselves can be quite generous, potentially providing thousands of pounds a year in some instances.

People claiming for a single child will receive £21.05 per week.

Additional children will bring in an additional £13.95.

Originally, Child Benefit could be claimed from as soon as the child’s birth was registered but this has changed in recent months due to coronavirus.

It can now be applied for even if the claimant has not registered the birth as coronavirus has forced all General Register Offices to close.

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State pension: Tens of thousands of women could be getting less than they’re entitled to

The paper from Sir Steve Webb, published today by pension consultants Lane Clark & Peacock, asks whether thousands of older women are missing out on some of their state pension entitlement. The issue appears to be particularly acute for older married women who may not realise that they had to put in a claim for a higher pension when their husband turned 65.


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However, it’s suggested that other married women may encounter problems, such as some widows and divorced women, and for the over 80s.

According to the research, in some cases, women affected could be owed backdated payments which run into thousands of pounds.

It’s estimated that the total amount owed could reach as much as £100million.

The issue affects a set of women covered by the “old” state pension system – meaning those who reached state pension age before April 6, 2016.

Under this system, married women could claim an enhanced rate of state pension when their husband reached the age of 65, in cases where they only had a small state pension entitlement in their own right.

The same rules applied to widows and divorced women.

At current rates, the pension that a married woman can claim based on her husband’s record of National Insurance contributions stands at £80.45 per week, although this is provided that their husband was receiving a full basic state pension.

This is 60 percent of the full basic state pension rate of £134.25.

Married women on low pensions should have been awarded this 60 percent rate automatically when their husband turned 65, since March 2008.

However, before that date, they needed to claim the uplift.

Data obtained in a Freedom of Information request submitted earlier this year by LCP partner Steve Webb to the Department for Work and Pensions (DWP) suggests that many tens of thousands of married women who would be eligible for this rate are not receiving it.

Sir Steve, a former Minister of State for Pensions, said that in the majority of cases it seems likely that this is because they have not actively claimed the uplift.

However, the pensions commentator said that in some cases it “will reflect the failure of DWP computers to automatically award the uplift”.

It’s understood that in situations where women needed to make a claim, should they do so belatedly, they can only backdate their claim for 12 months – meaning any uplift for the years prior to this is lost.


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In addition to gaps for married women, the paper identifies other groups who may be missing out. These include:

  • Thousands of widows who appear to be on very low state pensions, well short of the expected rate for a widow claiming on her late husband’s record;
  • Thousands of divorced women who should, in principle, be benefiting from the ability to ‘substitute’ the NI record of their ex-husband for the period up to the end of their marriage;
  • Thousands of women aged 80 or over who should in principle be entitled to an £80.45 pension on a non-contributory basis provided that they satisfy a simple residency test.

LCP says it’s difficult to put precise figures on the numbers missing out, but estimates that tens of thousands of women are being paid less in state pension than they’re entitled to.

To help married women identify if they may be entitled to an increase, LCP has launched an online calculator.

It allows women to enter details about their age and state pension receipt and that of their husband.

Sir Steve is now calling on the government to investigate this issue as a matter of urgency, and urging them to automatically uplift the pensions of those who are entitled.

The pensions commentator is also calling for a review of the 2008 rule change which means those who became entitled to a higher pension before that date can only now backdate a claim for 12 months.

The problem was initially highlighted following correspondence from readers of the website This is Money to its columnist Steve Webb.

Commenting, he said: “It is truly shocking that thousands of women are being short-changed on their state pensions.

“The system is highly complex and few will be aware of the special rules for married women, widows, divorced women and the over 80s.

“Yet each of these groups seems to be losing out in different ways.

“Whilst DWP is willing to put things right on a case-by-case basis when individuals get in touch, there is clearly a systematic problem here.

“It is time for the DWP to take this issue seriously and launch a full investigation into how so many women have been missing out for so long.”

A DWP spokesperson said: “We are aware of a number of cases where individuals have been underpaid state pension.

“We corrected our records and reimbursed those affected as soon as errors were identified.

“We are checking for further cases, and if any are found awards will also be reviewed and any arrears paid.”

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Does a Lifetime ISA affect benefits? Changes to account rules have come into effect

The Lifetime ISA is an account which offers eligible savers the opportunity to deposit up to £4,000 per tax year in it. The government pays 25 percent on the savings, up to £1,000 per tax year.


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It may be that savers opt for this type of account in order to get their foot on the housing ladder.

Meanwhile, others may opt to open a Lifetime ISA in preparation for retirement.

It’s possible to hold cash or stocks and shares in a Lifetime ISA, or to have a combination of both.

In a bid to recover the government bonus received on original savings, withdrawal charges apply if the saver withdraws cash or assets for any other reason than one of three exceptions.

For example, a person can withdraw money from the account without fee if they’re:

  • Buying their first home
  • Aged 60 or over
  • Terminally ill, with less than 12 months to live.

Otherwise, they would need to pay a withdrawal charge if they took any amount out for any other reason – something which is known as an “unauthorised withdrawal”.

This has previously stood at 25 percent, however temporary changes have been introduced recently during the coronavirus crisis.

Currently, the charge is 20 percent.

It will revert to 25 percent on April 6, 2021.

The new withdrawal charge of 20 percent was announced by HM Treasury on May 1, 2020.


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However, the rule change will be backdated to March 6, 2020.

This means that if a person has been charged at the former rate of 25 percent since then, the difference will be paid back into their Lifetime ISA.

“Contact your Lifetime ISA provider if this does not happen,” the website states.

So, does having savings in a Lifetime ISA affect benefits eligibility?

Having savings of a certain amount may affect whether a person is able to claim some benefits payments, and this includes those in a Lifetime ISA.

In the case of Universal Credit for example – a payment which is replacing six legacy benefits – a claimant and their partner must have £16,000 or less in savings between them in order to be eligible.

This means that some who have saved money in a Lifetime ISA or other savings accounts over the years may not be able to claim the payment.

It’s possible to use an independent benefits calculator in order to check what benefits a person could get, and some may choose to use this if they’re not eligible for Universal Credit.

There are a number of these signposted on the website, with these being calculators hosted by Policy in Practice, entitledto and Turn2us.

Users of these tools will need a number of pieces of information, and this includes details about savings, income, outgoings and existing benefits and pensions – as well as council tax bills.

Source: Read Full Article

Santander warns online banking users to never reveal this information – not even to staff

The coronavirus crisis has brought much of the UK to a standstill, with stringent lockdown measures remaining in place, although there has been some slight easing in the rules in England recently. With the population being urged to stay at home as much as possible, many have made a number of lifestyle changes, and for some, this means an increased usage of the internet.


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From socialising to shopping, according to Santander UK, more than half (54 percent) of over 55s are using more online services since the start of the pandemic.

However, the number of over 55s who continue to shy away from using digital banking has remained the same, with almost one in five (16 percent) of those choosing not to use their bank’s digital services to manage their money.

Furthermore, 64 percent of those who have never banked digitally have shared their concerns about security.

It’s a trend which is reinforced by Santander’s own data.

The bank has seen more than 250 million logins online and mobile banking since the pandemic began.

However, over 55s have initially been slower than other age groups in trying digital banking in the same period.

The figures show there has been a 40 percent difference in uptake of the digital services between 35 to 54 year olds and the over 55s in the first two weeks after the pandemic was declared.

Chris Ainsley, Head of Fraud Strategy, Santander UK said: “It’s great to see that over 55s are trying out new digital services to help them overcome some of the challenges created by coronavirus and their use of our online chat service is really welcome.

“For those who feel confident and comfortable after experimenting with other online services, then now is a perfect time to put digital banking to the test.

“It’s secure, saves time and is a convenient way to manage your day-to-day finances, particularly during the pandemic.

“For those who don’t have access to the internet or who simply aren’t comfortable managing their money online, then we’re always happy to help over our phone lines or once it’s safe to do so again, in person in branch.”

With nearly one third (64 percent) of over 55s who don’t bank online blaming security concerns, compared to 42 percent of under 34s, Mr Ainsley has shared some top tips for securely managing money via digital banking.


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Among the tips are warnings about some behaviours which online bankers are urged to never do – such as enter online banking details after clicking on an email or text message, as it may be that this is a phishing or smishing attempt.

Another thing customers should never do is reveal some personal information passwords – and this includes sharing the One Time Passcode (OTP) which they will be given.

No shortcuts

“Don’t be lulled into entering your online banking details after clicking a link in an email or text message,” he said.

“If you’re logging in to online banking, type the full address into your web browser.”

Keep it a secret

“Never share your One Time Passcode (OTP) with anyone, not even Santander staff,” Mr Ainsley said.

Sharing isn’t always caring

While remembering a plethora of passwords can be tricky, the Head of Fraud Strategy at Santander UK warned against doing this when it comes to digital banking.

“Keep your login details safe at all times,” he said. “Avoid writing them down and don’t share them with anyone.”

Leave them out in the cold

“Received a call you weren’t expecting? Never let a cold caller talk you into giving them access to your device or downloading software.”

No shortcuts

“Don’t be lulled into entering your online banking details after clicking a link in an email or text message.

“If you’re logging in to online banking, type the full address into your web browser.”

Stay on top of it all

“Install the latest security updates to your system software as they become available.”

Over and out

“Using public WiFi? Make sure you fully log out of online and sign out of the mobile app once you’re done.”

Source: Read Full Article

Pension: Advice for both retirees and those still working – withdrawal warning

Pension income is both crucial and fragile. They are designed to provide stable payments for a person’s later years but this doesn’t stop them being affected by short term problems. Coronavirus has created a dilemma for a whole host of financial assets but most will, understandably, be concerned about their retirement outlooks.


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There is plenty of advice on how to manage this period but the insight offered can often focus purely on one area, not taking into account different perspectives.

Thankfully Ian Gutteridge, a Director at Premier, provided plenty of advice for both individuals currently saving for retirement and those already retired.

His first set of advice is aimed towards people who are retired and may feel constrained by limited income and employment options.

The advice here mainly concerned withdrawing funds and the potential ramifications.

You are in retirement and looking to cash in funds to meet expenditure needs

Ian started off by warning against cashing in funds from already struggling assets: “Be careful about cashing in large amounts from investment funds that have suffered losses in recent weeks.

“Believe it or not, some individuals use the start of the tax year to withdraw funds from their pension to meet future income needs.

“Sadly, the timing in the current market is not great. If cash is required, can you:

  • “Take it from any cash funds that may exist within your Drawdown pension pot, rather than investment funds designed to achieve medium term capital growth?
  • “Take it from other forms of investment, such as personal savings?”

Some people may not even have the ability to make withdrawals and for people in this position, Ian calls for a certain degree of patience: “If there is no option but to withdraw funds from your investment funds within your Drawdown pension plan, look to make smaller withdrawals, perhaps to tide you over for a couple of months and then look to review the position in June 2020.”

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You are in retirement and want to change the shape and nature of income generated from your Drawdown pension plan

It’s a common trait in humans that when negativity strikes, we must react to counteract it.

In light of this, some retirees may want to alter how they manage their drawdown affairs but Ian highlights that extra income may not even be necessary in the current environment: “It might sound obvious to re-do a budget planner; but in the current climate, income needs may have reduced.

“With Covid-19 ‘lockdown’, we cannot do the things we previously took for granted. We travel less and we spend less on socialising. We may actually have lower income needs.”

While pension problems may be primarily an issue for the retired (or those approaching retirement) there are still many things that can concern those still working.

Ian’s following tips concern those who are pension savers who may be tempted to dip into their pensions early or alter their contributions.


  • Pension scam warning: How to protect your retirement fund

You are still working and saving into pensions, but you’re thinking of cashing-in part of your pension savings

Ian continued: “Employees who are still saving into a pension scheme, might be tempted to cash in an old pension or part of their current pension arrangement.

Under Pension Freedoms introduced in April 2015, there is an encashment option called an Uncrystallised Funds Pension Lump Sum (UFPLS), which allows a pension saver to cash-in their pension in return for a lump sum.

“25 percent of the fund is tax free and the balance is subject to income tax. A pension fund of £10,000 would provide a lump sum of £8,500 to a basic rate tax payer.

“However, encashing a pension under UFPLS rules immediately triggers the Money Purchase Annual Allowance (MPAA). This restricts all future pension savings (whether these come from an employer or from the individual) to just £4,000 a year.

“If future savings are greater than £4,000 it is likely the pension saver will pay income tax on the excess savings over this amount. As a result, savers have to be very careful when cashing-in pensions.”

His final tips concern a tragic predicament; savers and workers who wish to contribute to a scheme but under the circumstances simply can’t.

You are contributing into a scheme, but money is tight and you need to reduce costs

Ian touches on the country’s less than stellar record for saving for the long term: “UK plc still has a long term saving problem and we should always try to maintain an adequate level of pension savings. However, if personal cash flow is tight, modern day pension plans will usually allow contributions to be reduced or even stopped, without penalty.

“If you save into your employer’s Workplace Pension Scheme, check with your HR Department whether you can reduce contributions. You may already be paying the minimum amount and there may be special rules if you reduce contributions further.

“If you save into your own personal pension plan, check with the provider that contributions can be reduced or even stopped without penalty and that you can restart contribution into the existing plan without any additional costs.”

In a concluding remark, Ian warned that any decision made should be thoroughly considered before action is taken: “Don’t take the decision lightly though, as the benefits of long-term saving and compounding interest and growth should not be underestimated – and contributions should only be reduced if really needed.”

Source: Read Full Article

Mortgage: The first set of payment holidays will end next month – be aware of higher costs

Mortgage holidays essentially allow people to “pause” their monthly repayments for up to three months, although the payment freeze must be agreed with the lender. Rishi Sunak launched the scheme on March 17 in direct response to coronavirus issues.


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This scheme was followed up with other payment freezes concerning rent, credit cards and other debt obligations.

The scheme was welcomed by many who were worried about keeping a roof over their heads but those fears may come back soon.

As the scheme was announced and launched in March, some early claimants could see their mortgage holiday come to an end next month.

While it may be extended, current rules detail that mortgage holidays will have a standard length of three months.

The hope was that the economy and people’s finances would be back to relative normality following the break, however this may now be called into question as the country is still under strict lockdown rules.

If claimants are due to start covering their mortgage again from June, they will likely have an even costlier burden on their hands.

It has been revealed since the announcement that while the payments themselves would freeze, the interest generated would not.

This means following a mortgage holiday, claimants will have higher repayments with the added interest.

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Financial experts such as Martin Lewis have detailed that mortgage holidays should only be used as last resort because of this but they can still be applied for where needed.

Anthony Morrow, the CEO of OpenMoney, cautioned people currently considering a payment holiday: “I strongly recommend people approach any payment ‘holiday’ with an air of caution.

“While payment pauses should help ease immediate pressure, money will still be owed in the future – and in most cases with added interest.

“It’s important to remember that a mortgage holiday is a freeze and not an eradication. The money does need to be paid back and in the meantime economic conditions could continue to worsen for people.


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“Always read terms and conditions carefully and speak to your provider if there’s anything you’re unsure of.”

Thankfully, Anthony provided useful advice for those stuck with increased interest costs: “If you do find yourself having to cope with extra interest payments further down the line, you should do what you can to prioritise making those.

“If this applies to you, try your best to take a careful look at your finances and start to cut back on any unnecessary outgoings where you can.

This might mean cancelling some subscription services or cooking at home rather than ordering food in.

“Remember too that if you’ve got some cash savings, it could be a good idea to use these to help clear extra interest charges– as it’s likely the cost of this will be higher than the interest you’re making on your savings.”

As professionals and institutions started to analyse mortgage holidays, they also provided mortgage holiday “calculators”.

These tools can help people work out what they’ll owe in advance of taking the break and there are many of them freely available online.

Various public institutions have also updated their websites with information on mortgage holidays and impartial advice can be sought from the likes of the Money Advice Service, Citizens Advice and the Money and Pensions Service.

Source: Read Full Article

Mrs Hinch fan reveals £2 cleaning hack that will transform your dirty floor

Mrs Hinch is well known on social media for her cheap and easy cleaning hacks. Followers of the cleaning guru have set up Facebook pages to share their cleaning finds with each other. One fan has revealed how to transform a dirty and marked floor into looking good as new.


  • The best cleaning tips and tricks inspired by Mrs Hinch

The cleaning fan told Facebook group Mrs Hinch Made Me Do It that she tried mopping her floor every day but couldn’t seem to remove the dirty marks that had built up over the years.

She revealed how a £2 cleaning product had removed more dirt than she ever thought possible.

The woman posted before and after snaps of the floor which showed the dirty floor with stains all over it compared to her newly transformed stain free wood floor.

The woman wrote: “Oh my goodness, I’ve found my new favourite product!

“Can’t believe how much dirt this has brought up even though I mop everyday!”

Alongside her before and after photos, she revealed the cleaning product that she had been using.

She posted a photo of a spray bottle of Flash Traditional Multi-purpose with Bicarbonate of Soda.

Bicarbonate of soda contains many cleaning properties.


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It can be very effective for cleaning your entire home as it is extremely versatile and can be used as a mild abrasive, scouring agent and deodoriser to dissolve dirt, tackle odours and cut through grime.

This product can be picked up for as little as £2.

Despite the woman’s regular cleaning routine which involved mopping the floor every day, this product cleaned the wooden-effect linoleum floor which was now visibly several shades lighter.

She explained that she had purchased the spray from retail store B&M, but that Poundland all sells it for £2.


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The woman revealed that she sprayed the product on to the floor and worked it in with a brush.

Impressed followers of the group quickly commented on the post saying how impressed they were.

One woman wrote: “This is my absolute favourite product ever! Smells amazing and is amazing.”

Another said: “Love it! My new fave.”

Another eager cleaning fanatic posted on to the Facebook group Mrs Hinch Made Me Do It, another cleaning hack which also managed to remove years of dirt and stains.

The Mrs Hinch fan had used The Pink Stuff paste which costs as little as £1.

This is one of Mrs Hinch’s favourite products as she reveals she uses it on many household appliances.

The woman said: “It took me about an hour to clean, I just used a blue dish cloth and scooped the paste onto the floor and rubbed it in circular motions.

“Then rinsed the cloth where I needed to and continued.”

After she had finished scrubbing, the cleaning fan then mopped the floor with two capfuls of Zoflora and revealed her sparkling clean floor.

Zoflora is another one of Mrs Hinch’s favourite as it can be used as a disinfectant for many surfaces and items around the house.

Diluted 1:40 with water, fresh fragrances can fill your home lasting hours as well as disinfecting household appliances and items.

Source: Read Full Article

Martin Lewis: Warning issued as payment holidays may hurt mortgage application chances

New information uncovered by indicates taking a payment holiday on a mortgage or on other forms of credit may have an impact on future credit applications. It comes despite promises that credit scores won’t be affected.


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Mortgage payment holidays are something which many people will be contacting their lenders about, as Britons try to cope with the financial impact of the coronavirus (COVID-19) crisis in the UK.

Agreed mortgage payment holidays are not supposed to have a negative impact on a person’s credit file.

This is because the borrower is making the agreed payments – because during the time frame, the amount agreed is nothing.

However, the Financial Conduct Authority (FCA) has confirmed to Money Saving Expert that in practice, a lender could factor a payment holiday into an acceptance decision, as many new lenders use a new range of methods to assess people’s finances.

Rather than just credit scores, it may be other methods are used such as Open Banking.

Furthermore, Money Saving Expert reports that several major lenders also indicated that payment holidays could be factored in when assessing a future application for mortgage or credit.

Martin Lewis, founder of, said: “The FCA has confirmed, sadly, that while credit files shouldn’t be impacted by mortgage or other payment holidays, lenders are still allowed to take them into account when making their acceptance decisions.

“It’s impossible to say yet how widespread this will be or how substantial the impact will be – we’ll start to learn that over the next year.

“Each lender’s assessment process is different, it’s a dark art that’s hidden from the public and never published, so this is likely to be yet another factor applicants will need to navigate.

“Certainly many new challenger financial firms talk about their new, more sophisticated customer assessment models, that they believe are better than just relying on credit files.

“It’s that very fact that sparked me to look at this in the first place.

“And as they will be able to see that someone has temporarily not paid their mortgage, they can spot payment holidays.


  • Homeowner provides top tips for becoming mortgage free

“My hope is that as these holidays are specifically for the short-term financial hit of coronavirus – and as the practice is so widespread – it won’t be used by many firms, and where it is it won’t tarnish individuals’ credit reputation for too long.

“But there’s no real way to know.”

Despite this, Mr Lewis has urged those struggling to make ends meet to not be offput in seeking a mortgage holiday, if they need the money to get by during the coronavirus crisis.

“Most importantly, I don’t believe this should stop anyone who needs a mortgage holiday from getting one – if it’s crucial for cash flow, just do it,” he said.

However, it may be that the recent indications may cause some unsure about whether to get a mortgage holiday to take a closer look at whether they think it’s right for them.

This is something which the financial journalist addressed.

He said: “Yet for those on the border, who may find it temporarily useful but can cope without it, add this to the fact that interest racks up during the payment holiday and I’d err on the side of caution.”

Source: Read Full Article

UK Property: House prices on hold…but for how long? Market ‘grinding to a halt’

Data released yesterday by one of the UK’s largest lenders, Nationwide, indicates that house prices saw an annual increase of 3.7 percent in April. However, Robert Gardner, Nationwide’s Chief Economist, was also keen to clarify that, as the index is constructed using mortgage approval data, approximately 80 percent of cases in the April sample relate to mortgage applications which were made prior to the lock-down, and before the full extent of the impact of the pandemic became clear, and so admits it isn’t perhaps the most accurate reflection of the market over the last month.


  • House price slump not all good news for first-time buyers – expert

Robert continued: “There have been month-on-month gains for the last seven months in a row, after taking account of seasonal effects.

“In the opening months of 2020, before the pandemic struck the UK, the housing market had been steadily gathering momentum. Activity levels and price growth were edging up thanks to continued robust labour market conditions, low borrowing costs and a more stable political backdrop following the general election.” 

“But housing market activity is now grinding to a halt as a result of the measures implemented to control the spread of the virus, and where the government has recommended not entering into housing transactions during this period. 

“The medium-term outlook for the housing market is also highly uncertain, where much will depend on the performance of the wider economy. Economic activity is set to contract significantly in the near term as a direct result of the necessary measures adopted to suppress the spread of the virus.” 

Robert added: “But the raft of policies adopted to support the economy, including to protect businesses and jobs, to support peoples’ incomes and keep borrowing costs down, should set the stage for a rebound once the shock passes, and help limit long-term damage to the economy.”

“These same measures should also help ensure the impact on the housing market will ultimately be much less than would normally be associated with an economic shock of this magnitude.”

Former RICS residential chairman, Jeremy Leaf suggested: “Although these widely-respected and otherwise promising figures may be regarded as meaningless bearing in mind they reflect much of the beginning of the lockdown period, they could yet have more significance. If, as we are finding, most transactions have been put on hold rather than cancelled, then most could be reinstated if restrictions are eased soon and economic damage is relatively limited.”

Guy Gittins, Managing Director of London estate agent Chestertons agrees, and said: “The current lock-down has, obviously, significantly restricted people’s ability to view property and move forward with purchases, and has therefore effectively frozen the country’s property market at the moment. But it doesn’t necessarily mean that prices in London will be hugely affected, particularly in high value areas, such as Kensington, Knightsbridge and Notting Hill.”

Guy added: “As we near the end of lock-down, we are noticing more and more people contacting us every week, asking for details about properties and preparing to re-start their search.

“This would suggest that when the market thaws out, there will still be plenty of investors and owner-occupiers looking to purchase, so it’s possible that in some areas and price brackets, the market could almost pick up from where it left off in and around the Capital.”

Lea Karasavvas, Managing Director of Prolific Mortgage Finance is more circumspect, observing that: “Whilst at first glance it appears there is a surprising increase in the Halifax data, it is key to note that this is a ripple effect of the momentum that had been gathering over the last seven months.

“The true picture of the impact of COVID-19 will not really be seen until the May or June indices are available. The reality is that agents and valuers are still very much in the dark on how to give a true valuation on property prices at present, with varying commentary on its expected impact.”


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“With the new regime of desktop and automated valuations from lenders only really being introduced this month, it’s a herculean task for all mortgage valuers and agents to establish enough data to get an accurate measure of valuation figures.

“The impact of opinion versus fact will create a challenging market for agents when valuing properties and wrestling with sellers’ emotions through this crisis.”

The impact of consumer sentiment on property values – quite aside from the economic factors of employment and household incomes, both of which are likely to feel downwards pressure in the months to come – can’t be underestimated. Yet at the same time, is possibly the hardest element of all to forecast.

It’s entirely possible that, similar to the diverged and nuanced housing market prior to Brexit, some regions around the UK will see previous levels of demand for homes resume once lock-down is lifted.

It’s not a stretch to suggest that rural or coastal areas where there have been far fewer Covid- 19 infections could become more popular for those who find themselves in the position to continue with their moving plans. Likewise, homes with gardens could command a higher premium than they do currently, or at the very least suffer less as the result of any downwards pressure on prices.

If we are lucky enough to benefit from a ‘v’ shaped recession, which some economists predict, then while it could be a turbulent few months, at least the instability would be short-lived.

In a similar way to the significant regional differences in property prices and transaction numbers that quickly emerged following the 2016 referendum, the second half of 2020 could see dramatic differences in market performance around the country.

On the other hand, if consumer confidence plummets as a consequence of the double-whammy of health and economic fears, then equally it only makes sense that property values will also contract dramatically. This is the worst case ‘shallow tick’ recession that many professionals fear will actually transpire, taking years for the nations’ finances to recover from.

As with the race for a vaccine and a cure for the disease which has caused all of this, all we can do is watch and wait. And keep our fingers firmly crossed for the best outcome.

Follow Louisa on Twitter: @louisafletcher

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