No time like the present to teach children money management skills

These are unprecedented times in which to bring up children and one of the vital lessons we can pass on to them is to teach them how to understand and manage money. Without a real appreciation of how to handle finance, without children money management skills, so many adults end up in debt – often because no one ever taught them how to manage money when they were young. 

We are all bombarded with slick advertising for ‘must have’ products or experiences that are backed up by ever increasing access to easy credit or ‘buy now, pay later’ schemes, tempting us into instant gratification. It is therefore vital to give our children a grounding in personal finance to help them appreciate how money can work for them, rather than against them.

Show them by example – when you take them shopping, show them how much you spend on food and that money is a tool and enables you to purchase items. Explain that having £10 in your hand does not mean you can buy something worth £10.01.

Do they know where money comes from? – explaining the concept of working for pay should be emphasised from an early age.

A piggybank – start the savings habit early. Cash might be going out of fashion, but making the connection to value is helped immeasurably by understanding coins and notes and what they represent.

Pocket money – in exchange for chores done around the house, pocket money is a good practical demonstration of the connection between work and reward.

Saving – insist that a percentage of their pocket money goes into savings; perhaps a piggybank for the very young or helping older children to open a savings account either online or via an app or passbook, in which they can see their money grow.

If children want to buy a specific item or service, or set a savings goal, this can help them learn how to budget and to understand that saving, rather than just instant acquisition via the Bank of Mum and Dad, fosters independence and recognition that saving leads to better outcomes.

As children move into their teen years there is now a range of debit cards linked to apps

which can also help them to see what they are buying, how much they spend and how much they have left. Spending limits can be applied by parents, but spending limits are not a substitute for parental guidance from an early age.

The world is becoming an increasingly difficult place to navigate, especially for the young. So, a basic grounding in managing money can be one of the best gifts you give to youngsters.

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Planning permission for Garden rooms – what you need to know

Many of us have sheds in our gardens. Some were probably inherited when we moved house and are versatile enough to be a gardener’s store, a hobby sanctuary or just a place to keep bicycles and other items that won’t fit anywhere else. But do you need Planning permission for Garden rooms

However, there has been a rise in the number of structures for our outdoor spaces, which provide for less utilitarian purposes. Garden rooms provide an extra space which, when kitted out properly, can become a home office or a second room for relaxation.

After the initial enthusiasm to adopt a garden room and extend the versatility and usefulness of your property, there are several things to consider.

Most garden rooms don’t require planning permission. Being classed as outbuildings, you are permitted to build one as long as you comply with certain rules.

Permitted development rights
Most properties have this automatically. However, if the property is in a National Park, a World Heritage Site or a conservation area, it could be in a designated area where development of a property or the erection of outbuildings are not permitted, or require separate permission. It is a good idea to check with your local planning office. Maisonettes and flats don’t have permitted development rights because of the communal aspect. The rules are the same whether you live in England, Northern Ireland, Scotland or Wales.

Planning rules
Under permitted development, there are rules to follow:-

• The garden room must not be at the front of the house
• The total area of all external structures including sheds, extensions and outbuildings must not exceed 50% of the outside area surrounding the house
• The room or cabin must be single storey and less than three metres in height. The eaves must be no more than 2.5 metres above ground level.
• The room must not be for self-contained living accommodation
• The room must not have a balcony, veranda or raised platform.

Garden rooms as offices
Using a garden room as an office also presents no issues, provided it is for incidental use for working alone at a computer, for example.

However, being mindful of changing the character of a neighbourhood, councils will not approve garden offices where business meetings or appointments will be hosted.

Retrospective planning permission can be applied for, but councils can order the removal of a garden office if the rules are not met.

In summary, garden rooms rarely require planning permission, provided the basic rules on size and usage are observed. However, if in doubt, check with your local authority.

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Abolition of ground rents on new properties moves a step closer but only on new property

Currently a Leasehold Reform Bill is being debated in parliament that will abolish ground rents on new properties charged.

Not to be confused with standard monthly rent paid to the owner of the property, ground rent is a rental charge attached to the ground on which the property sits. It is paid annually or half yearly, and failure to pay can result in the freeholder seeking to obtain possession.

The Leasehold Reform (Ground Rent) Bill will put an end to ground rents for new, qualifying, long residential leasehold properties in England and Wales. This is part of the most significant changes to property law in a generation.

It will be the first of two part legislation to reform the leasehold system. This Bill will mean that if any ground rent on new properties is demanded as part of a new residential long lease, it cannot be for more than one peppercorn per year (notional value) meaning that future leaseholders will not be faced with financial demands for ground rent. The Bill also bans freeholders from charging administration fees for collecting a peppercorn rent. Fines of up to £5,000 will be levied on freeholders that charge ground rent in contravention of the Bill. 

Some leaseholders have experienced ground rents doubling every ten years on top of their mortgage and any service charges, with no prospect of ever selling the property on. Their only way out has been to buy the freehold, only to discover this is yet another area targeted by the profiteers.

Developers, including some household names, have been selling newly built flats (and houses) as leasehold, creating high annual ground rents and including provisions in leases for the rent to be increased – sometimes doubled – after a certain period of time.  A number of buyers of this type of property have, quite often, been told by the builder that they would be given the opportunity to buy the freehold at a later time before the builder developing the site, only to find that, when they try to buy the freehold, the builder has already sold it to an investment company. Critics of the bill are rightly complaining that it does not go far enough, because existing leaseholders are not included in the new Bill as it is currently structured.
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Be fully aware of your options and the consequences of accessing or moving your pension pot

When the rules were relaxed on pension holders having access to their pension pots, an event such as the COVID pandemic and its consequences were not considered. In 2020 figures from the ABI (Association of British Insurers) showed that the number of people moving your pension pot as a form of flexible income grew by 56% between April and September of that year.

This example, though caused by an extreme event, illustrates two things. Firstly, how useful it is to be able to access funds when needed, something which would not have been possible before the rule changes, but secondly, that the ease with which the pension pot can be accessed for immediate use or to move to another savings provider is a cause for concern if pension holders are unaware of all the pros and cons.

The government is therefore rightly concerned that whilst accessing pensions pots should be simple and easy to do, it wants pension holders to be more aware of their options so that they are fully informed before moving or accessing their money.

Currently, pension providers are only obliged to tell their customers that free and impartial advice is available from Pension Wise, the service promoted by the government to help individuals aged 50 and over with a defined contribution pension, understand the options available to them.

In new rules which have just been set out, the Department for Work & Pensions (DWP) is proposing that pension scheme managers and trustees make sure the individual has either received or opted out of receiving Pension Wise guidance, before allowing their application to proceed.

Pension schemes would also be required to offer to book a Pension Wise appointment on the individual’s behalf. If the appointment is declined, the DWP is proposing that pension holders will have to formally opt out, before they can proceed to the next step.

The DWP is right to make individuals pause and give them the option to be better informed before taking the plunge. However, when the consultation is complete, it is to be hoped that the final rules will not be too draconian in respect of Pension Wise appointments and end up increasing extra administration costs for pension providers and inhibiting access to funds for transfer or for immediate use.
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New web apps to simplify planning applications to build extensions

For some time, the rules on planning have been difficult to interpret, particularly for homeowners putting in Planning applications to build extensions for extra accommodation or new kitchens. It has led to confusion and, in some cases, added cost for homeowners as many home improvements, such as kitchen extensions and loft conversions, do not need full planning permission. Lack of clear information has seen invalid applications submitted for what are called ‘permitted developments’ rejected with the subsequent wasting of time and money.

In response, the Ministry of Housing, Communities & Local Government has developed two new apps, which are currently being tested in three areas. The first one is designed to help guide homeowners, while the second will also help developers and architects by speeding up and simplifying the application process. In addition, it will help council planning officials manage permitted development applications – tracking progress and putting the information they need to make decisions in a user-friendly format. It puts the focus on data rather than documents, helping planners make decisions much more quickly and efficiently.

The new app for homeowners uses simple language and diagrams to help navigate the system. It asks a series of questions and determines whether the plans meet local and national requirements. Users can then apply within the app for the certificate they need to show their plans are permitted development, allowing building to go ahead.

According to the Ministry, it is a first step towards replacing the current, outdated, paper based system with a fully digital process, which does away with 100 page PDFs and having to find information manually.

Assuming the trials are successful, apps will (presumably) then be made available for all smartphone operating systems.

For the many people who have been put off by the complexities of form filling as well of those who have lost money in fruitless attempts to apply, these new apps could hold the key to a simpler, stress free method of planning application.

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Japanese Knotweed – be afraid, be very afraid (if you are a homeowner)

We tend to think of threats to our property such as beetle infestation, rising damp or flooding. However, it is becoming clear that one of the most potent threats is an innocuous looking plant called Japanese Knotweed.

Japanese knotweed is an aggressive and invasive species of plant that costs landowners, local authorities and building developers thousands of pounds each year in removal fees and project delays.

Since its introduction to the UK in the 19^th century from the Far East due to the beauty of its flowers, Japanese knotweed has had a negative impact on the UK’s ecosystems, causing damage to buildings, walls, hard standing, drainage systems and flood defences. The risk of structural damage caused by Japanese knotweed to property has led mortgage lenders to refuse to lend on properties affected, which in turn can see properties down valued. Unless the infestation is eliminated, prices of properties can be adversely affected.

When buying a property, it always advisable to instruct a RICS qualified surveyor to undertake a Homebuyer’s Report or the more comprehensive full structural survey, in order to have a clear picture of the state of the property. Surveyors are trained to spot plant infestations and Japanese knotweed in particular. It is also worth knowing that it is a criminal offence for sellers not to reveal Japanese knotweed infestations, which emphasises the level of importance that the authorities place on trying to identify and eradicate this menace.

A study by scientists found the plant is impossible to manage with standard measures and homeowners are unable to control the spread of the plant themselves. Its destructive ability means it can be a nightmare for homeowners, as it not only poses a structural risk but it’s very presence can reduce a property’s value by as much as ten per cent. For anyone wishing to eradicate the infestation, only recognised knotweed eradication companies are qualified to eradicate it once it takes root. Costs can start from £5000.

It is estimated it would now cost £1.5 billion to clear the UK of knotweed.
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The Stamp Duty holiday officially ended on 30^th June

The stamp duty holiday (SDLT), introduced in July 2020, was designed to stimulate the housing market by cancelling or reducing stamp duty payments on house purchases during the holiday period when the nil band for residential properties was increased from £125,000 to £500,000.

(The figures given are for England & N. Ireland only. In Scotland and Wales, the figures may vary)

The holiday was extended from its original end date of 31^st March and officially ended on 30^th June. Rather then reimpose the full tariff straight away from July 1^st, the Treasury has reduced the impact of an immediate return to the standard tariff by reducing the nil band from £500,000 to £250,000 and then from 1st October, reducing it further back to its pre- holiday level of £125,000.

From 1 July, stamp duty will only be applicable above £250,000 at the following rates:

• £0-£250,000 = 0%
• £250,001-£925,000 = 5%
• £925,001-£1,500,000 = 10%
• £1,500,000+ = 12%

From 1 October 2021, rates are due to return to normal. That means the point you to start paying stamp duty will revert back to £125,001:

• £0-£125,000 = 0%
• £125,001-£250,000 = 2%
• £250,001-£925,000 = 5%
• £925,000-£1,500,000 = 10%
• £1,500,000+ = 12%

The stamp duty holiday has certainly been a huge incentive for buyers. For some it meant saving as much as £15000. It also proved to be attractive for BTL landlords even though they were still having to pay the usual 3% surcharge which also applies to all second home buyers.

The main driver for the jump in house buying, apart from the stamp duty holiday, has been the pent up demand caused by lockdowns and the desire of urban dwellers to seek more space after experiencing the day to day claustrophobia of being cooped up in confined spaces with little or no access to open air spaces.

One side effect of the rush to buy has been to accelerate the rise in house prices as the supply of property could not keep up with the demand. Subsequently, UK house prices rose on an average by 13.4% in the year to June, according to the Nationwide Building Society. In popular areas such as Cornwall, the average increase was up by 15.5 per cent between March 2020 and 2021.

Since the wind down of the stamp duty holiday started on the 1st July, indications suggest that demand will begin to fall and prices start to stabilise.
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Proposed bonfire of building planning regulations – for good or bad

The government is proposing to relax rules on building planning regulations so the number of new homes being built can be accelerated in the biggest shake-up of the system for 70 years.

The Prime Minister has opted to put home ownership at the centre of promises made at the election to even up the perceived imbalances between the North & South of the country. To do that a new planning bill is due before Parliament during this session, which will make it easier for developers to seek and have planning permission granted to build new homes.

The planning bill, which was included in this year’s Queen’s Speech, will aim to improve the chances of property ownership across the country and in particular in areas where the Conservative government won seats from Labour at the General Election.

The plans are controversial and include proposals to scrap Section 106 agreements, which are agreements between developers and local planning authorities about measures that developers must take to reduce the impact of their developments on the community. These are considered as making it too easy for residents and local authorities to block developments.

Other measures outlined include forcing councils to zone swathes of land on three criteria – growth, protection or renewal. The land zoned for growth would benefit from automatic outline planning permission, with councils unable to turn down applications that accord with local rules.

The government has confirmed its determination to push ahead with the full package of reforms, despite the understandable backlash from environmental groups who feel that local residents’ misgivings and local councils will be powerless to stop or amend unsuitable developments.

However, the quality of much current new build property has been called into question, which, if allowed to continue, could derail the goal of providing the volume of homes required and built to the right standards. Over 97% of new home buyers reported snagging problems or defects to their builders last year, according to a recent national new home customer satisfaction survey. It is clear that work needs to be done to hold builders to stricter rules of quality control in order to meet the expectations of buyers and also help the government meet its green target of better insulated and energy efficient homes.
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Buyer demand for property continues to outstrip available supply

No one can have failed to notice the rise in house prices and the Buyer demand for property, particularly since the lockdown eased. Reports from the Royal Institution of Chartered Surveyors (RICS) tell us that the number of properties being put up for sale is not keeping up with the increased demand.

According to RICS the predominant requirement from prospective buyers is for property with more internal and external space, an understandable reaction to the lockdowns which have seen urban dwellers, especially, suffering from the effects of being cooped up for long periods of time.

The recognition by most of us of how badly we need to have access to space for our own mental health and that of our families has been brought into focus during this pandemic and, for those of us with the means, looking for alternative accommodation promising a better lifestyle has been a major factor in the surge in demand.

The other main reason has been the suspension of stamp duty land tax (SDLT) on property valued at £500,000 or less, which has proved to be a massive incentive by cutting the costs on a £500,000 property by £15,000. If you purchase a residential property in England between 1^st July 2021 and 30^th September 2021, inclusive, you will start to pay Stamp Duty Land Tax on the amount that you pay for the property above £250,000.

On the 1^st October, the SDLT rates revert to their original pre-covid levels.

The demand for properties has also given rise to other issues for estate agents and sellers. While properties are selling almost before the property details are put up on agents’ websites, the numbers of prospective buyers are overwhelming agents’ abilities to cope with organising viewings. It has been reported that some agencies are asking for written proof of a potential buyer’s ability to purchase before they will allow a property to be viewed.

While it is understandable to try and weed out the ‘sightseers’ who only want to look and have no intention of buying, the ways that estate agents can use to do this need to be scrutinised. Unconfirmed reports of one agent charging £5 upfront in cash to view a property looks very suspect. Other accounts of an upfront fee being levied by agents which is non-refundable if the prospective buyer does not show up, illustrate just how overheated the market has become. We would urge caution if any kind of fee is requested by an agent as a condition of seeing a property. In addition, be extremely careful in providing any personal financial details to agents before seeing a property. Without a clear demonstration of how your data is used and securely held, it might be better to look elsewhere.
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Help is at hand for property leasehold owners

Are you aware of the differences between owning the freehold of your home and property leasehold?

Someone who owns a property outright, including the land it is built on, is a freeholder.

With a leasehold, the person owns a lease, which gives them the right to use the property for a set period via an agreement with the person or company which owns the freehold.

While it is common to buy a flat on a leasehold basis, the practice of selling houses in this way has mushroomed in the last few years, as developers and builders realised that, in addition to achieving the sale price on a property, they could charge an annual rental payment (ground rent) with the potential to double the cost of this ground rent every 10 to 15 years. Developers can also sell freeholds to outside investors, who can (and do) ramp up ground rents. Attempting to buy your own freehold from a developer after the sale has gone through on a leasehold basis is allowed, but the developer or investor can demand whatever price they wish.

In addition, the leaseholder buying a new property will normally be offered a lease over a fixed period of between 99 and 125 years. Although there is a right to extend leases, it can be expensive and under current rules leaseholders of houses can extend their lease only once, for 50 years, with a ground rent.

However, help is now at hand. The Competition and Markets Authority has ruled that doubling ground rent every 10 or 15 years is unfair because, apart from the increasing cost for no extra benefit, it makes it more difficult to sell the property.

Campaigners calling for leaseholds to be banned on new builds now have backing from the government with the Housing Minister, Robert Jenrick, saying that unfair practices like those described “have no place in our housing market”.

As the government has announced the biggest changes to property law in 40 years, this means that homeowners caught in this trap will gain greater control of their properties and free themselves from ground rents which have been costing them so much.

When the legislation is passed, leaseholders will be able to extend their leases to 999 years with no ground rent. Whilst the cost of extending a lease, which has been known to go into tens of thousands of pounds, will also come down under the plans. The reforms mean both house and flat leaseholders will now be able to extend their leases to 999 years with a ground rent set at zero.

Even when the legislation is passed, it is important that when it comes to buying a new property, you have a clear understanding of your rights and obligations as a freeholder or leaseholder. Our advice is always to make sure that your solicitor or conveyancer gives you full explanations and takes you through the terms and conditions.
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