News
Why is Buy-to-Let Booming?
Just last week in a conversation with a letting agent, I was told they only had three properties to let. “That’s great news”, I said, but as they explained, they desperately need more properties on their books because the demand is outstripping the supply.
In Norwich, the situation has been exaggerated by increasing student numbers. The universities are building over any spare land they have to take advantage of this new revenue stream, and still, we lack space.
The good or bad news, depending on your view, is that the shortage is likely to get worse. With changes in housing benefit rules, many claimants who are in houses will be moved to smaller units, likely to be rooms in HMO (Houses of Multiple Occupation) properties.
Landlords are bound to take advantage of this demand, “we are seeing a real increase in the demand for Buy-to-Let mortgages”, says Stephen Robinson, Financial Advisor at Oracle Financial Services. Stephen adds, “we are really busy, working with landlords who are trying to increase the size and performance of their portfolios”.
With growing confidence in the sector, mortgage lenders appear to be doing their bit to help, although this can be patchy. Kensington, who were allowing buy to let borrowing at 85% loan to value recently announced that their funds for that product had already run out.
In the short-term, landlords are demanding more innovative products from lenders, whether they can keep up is another question.
James Ewles wrote this article on the 9th November 2011. The points raised in this article are the opinion of James Ewles.
James is the Managing Director of Oracle Financial Services.
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Buy, Sell, Buy, Sell
Silly season used to be the reserve of the political press trying to keep themselves busy, and us readers amused, whilst our politicians sun themselves on sundrenched beeches on the French Riviera. That is a long as some pre pubescent kids don’t decide to run riot on our streets, with the Police looking on, as shops, livelihoods and communities are torn apart and spoil the holidays of our political elite who cancel their holidays to recall parliament.
Whatever happened to judgement? Why do our Police not know how and when to react? Surely they understand that on one hand, you can not tear into the mob and batter them to death, and at the other end of the scale, surely they must understand that they can not stand idly by as our streets are destroyed. Where was the judgement?
Humans are able to make judgement. It allows us to act according to the circumstances. Being able to judge is using the brain to evaluate the evidence in the making of a decision.
When and why did we stop using this gift?
The financial markets have seen their fair share of turmoil over the holidays, the markets were panicked, we were told, meaning, some traders have some concerns over euro and American debt, and if it will or if it can ever be repaid. Of course, much of this debt is now owned by China, and do you really think the US or our European friends will not repay their debt; it is very unlikely, even given the current enormous level of money owed.
For most of us, making a decision to buy or sell financial products based on this information is madness, of course if you believe stock is undervalued and you think you can profit from this, then sure buy if you are sure of the risks.
My view on this and other silly season madness is, don’t get the jitters, and join the madness. Use your considered judgement, get professional advice if you want it, but what ever you do, just calmly, carry on, its what we do, it is the British way.
James Ewles wrote this article on the 2nd September 2011. James is the Managing Director at Oracle Financial Services. The views are that of James Ewles.
Workers Discover They Cannot Afford to Retire
Even large companies are now facing the reality that the pension schemes they run are just going to be far too costly in the future. It’s not just the private sector, as we are all too aware the public sector are having to work longer, pay more into their pension and end up with less.
So, what went wrong?
Lee Johnson, financial advisor at Oracle Financial Services says, “it’s simply that we are all living far longer than expected, and although that’s great news, it has a massive impact on pensions”.
“As a Nation we seem to be in denial and just don’t consider our retirement until it’s too late. The best time to start is simply as soon as possible, and I mean as early as birth! Children can have pensions, I know it’s not a glamorous gift, but they will thank you”.
It’s not all doom and gloom, there are very attractive incentives from the government to having a pension. Depending on your employment and tax status the benefits vary, but as an example, an employee on the national average salary of £25948* can get tax relief at their basic rate of tax on any contributions they make. This means you pay income tax on your earnings before any pension contribution, but the pension provider claims tax back from the government at the basic rate of 20%.
In practice, this means that for every £80 you pay in, you end up with £100 in your pension pot. If you pay tax at the higher rate or are an additional rate taxpayer, you can claim the difference through your tax return. Either way this is a great incentive.
You can also put money into someone else's personal pension, for example your husband, wife, civil partner, child, or grandchild's. They'll get tax relief added to it at the basic rate, but this won't affect your own tax bill. If they've got no income, you can pay in up to £2,880 a year - which becomes £3,600 with tax relief**. Whatever you decide to do, make sure you make some sort of provision. The debate on a pension time bomb is a real one so don’t get caught out.
* Source: Office for National Statistics. (Results from the 2010 Annual Survey of Hours and Earnings).
** Source: Her Majesty’s Revenue & Customs.
James Ewles wrote this article on the 13th August 2011. The points raised in this article are the opinion of James Ewles.
James is the Managing Director of Oracle Financial Services.
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Life is what happens when you are busy making other plans…
What are we here for, what am I trying to achieve, how will I be remembered, will I leave the world a better place for my existence?
Financial planning is about the plans for your life, your dreams, and your aspirations. It might be helping the kids through school and university, buying your home, caring for parents, your own retirement, replacing the car, building the extension, you get the idea! What it’s not about is pensions, investments, stock markets, and life insurance, these are only products that allow us to fulfil our plans.
When was the last time you asked yourself what you really wanted, what you needed to achieve? My guess is that it was some time ago and even then did you create a plan? Even if you did, when did you last review that plan? Does it really matter? Well that’s up to you to decide, for many of us, it certainly does matter that we have our financial lives in check.
You can either be very disciplined and use books, the internet and other sources to create and manage your plan but you will also need to have the discipline and knowledge to complete regular reviews to check your progress. The alternative is to seek help from a local financial planner, but make sure it’s one who understands you and what you want rather than those who just try and sell you products.
An important first step is to find a fee only financial planner, meet with them and see if they understand you and what you are trying to achieve, take with you your plans or ideas, broken down into short, medium and long term and see how you get on.
Not all financial planners are the same, a good financial planner should be willing to listen, listen some more, and then ask you questions to qualify exactly what you want. A great financial planner can help you achieve your dreams, help you create a realistic financial plan and meet regularly with you to review progress and make amendments. How does that sound?
*The title is taken from the lyrics of "Beautiful Boy (Darling Boy)" which contain the famous Lennon quote "Life is what happens to you while you're busy making other plans”.
James Ewles wrote this article on the 13th August 2011. The points raised in this article are the opinion of James Ewles.
James is the Managing Director of Oracle Financial Services. www.oracleonline.co.uk
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Is Pension Charging Fair?
Christine Farnish, the chair of Consumer Focus, said the regulator needed to "get a grip" of these problems, which makes it "impossible for consumers to judge price, and shop around for a good deal as they would in other markets."
"Too many consumers are being persuaded to switch their pension into different pension products which may well leave them worse off," Ms Farnish said.
She added, "others are signing up to paying trail commission to their advisor for the life of the product - which may be decades - without receiving any tangible benefit."
It seems the Financial Services Authority (FSA) agree with the findings and have stated that from 2013, product providers will not be allowed to pay commission to financial advisers for selling certain financial products. This is part of a package of changes, known as the ‘Retail Distribution Review’ (RDR) which covers many issues including adviser qualifications and fee charging.
From 2013, product providers will not be allowed to pay commission to financial advisers on pensions and some other financial products; if the customer wants advice they will have to pay for it at the market rate. This is great news for the client as there will be no product bias and complete transparency, it’s also been welcomed by advisory firms who are already focused on fee based advice.
James Cushing, Financial Adviser at Oracle Financial Services in Norwich, says “we have been fee based for some time now and the benefit to the customer is clear, the customer pays for the advice which is charged separately. If the customer requires ongoing advice and servicing, this will also be paid for at a set price”.
“The issue is not the charge, it’s the fact that some advisers have been charging for a service which they are not providing. It appears there are still some advisors taking fees and not providing an ongoing service, for one I will be happy to see an end to this practice”.
“There is a real value in reviewing your pension, it’s a long term plan, and as with any plan it needs re-visiting from time to time. Depending on the clients age, fund size and where they are invested, reviews can be as often as quarterly or as far apart as every other year”.
Many fee-based advisers are seeing an influx of clients, in particular those who have left their banks. Banks are leaving the independent advice market in their droves as they have realised they’re unable to deliver the service, and are likely to operate a restricted advice model for many of their customers.
James Ewles wrote this article on the 20th July 2011. The points raised in this article are the opinion of James Ewles.
James is the Managing Director of Oracle Financial Services.
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Sources:
BBC
Consumer Focus
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