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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Have you though of challenging your council tax band (England and Scotland)

Most of us will have received our council tax bills for the year 2021/2022 and seen the almost universal 5% increase and wondered how it could be justified given the difficult year we have all endured.

There is not much we can do to challenge an increase, but we can see if our property was placed in the right tax band and perhaps obtain a lower bill if it was proved.

In 1991, Council Tax was due to be introduced and to make it happen on time (1993), every property had to be valued and assigned to a tax band. The process was rushed in order to make the deadline and therefore there is a possibility that your property and that of your neighbours were not properly assessed at the time. Property in Wales was all reassessed in 2003, so this only applies to property in England and Scotland as Northern Ireland has its own Rates system.

Steps to take.

1. Talk to neighbours in the same postcode with similar properties and see if you are in the same tax bracket.
2. If you bought your house after 1991, you can use its price and date of sale to find the value at that time. It’s also worth doing this with similar neighbouring properties to check there are no anomalies and make use of house price websites to note down the price and date of similar properties to yours in your street.
3. Now check whether your property was placed in the right tax band – see below

Council tax bands at 1991 property values

At this point, if the indications are pointing towards a case for appeal, then you can apply for a reassessment. However, be aware that the council review could find that you were actually in too lower a tax band and you and your neighbours would find yourselves paying more.

4.If you are still sure that you are in the wrong band with a prospect of paying less council tax, including backdated payment for the difference between the old and new rates from the time you bought the property, you can formally apply for a reassessment.

Go to this site https://www.gov.uk/council-tax-appeals which will show you the steps needed to start the process.
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How to avoid scams online – staying one step ahead of the fraudsters

All of us are relatively positive that we can avoid scams online or over the telephone and yet, the Office of National Statistics (ONS) latest ‘Crime Survey for England and Wales’ reveals just how effective the scammers are.

There were an estimated 4.4 million fraud offences of all types and yet the figures from the police and other bodies such as the National Fraud Intelligence Bureau (NFIB) showed just 730,765 offences, a rise of about 2,000 from 2019 suggesting that just 16.6% of frauds are being reported, you need to avoid scams online.

Turning to cybercrime, the ONS‘ Telephone operated Crime Survey for England and Wales

(TCSEW) estimated 1.7 million offences to the end of September.

One of the most ‘popular’ scams at the moment preys on the rise in internet ordering linked to home delivery. The Royal Mail scam relies on people expecting a delivery, who receive a text claiming that a parcel is awaiting delivery by Royal Mail. The text claims that a notional sum needs to be paid before delivery can be made. If the link is pressed it goes to a Royal Mail lookalike site, which then asks for personal and payment details. The result – another stolen identity, try to avoid scams online.

It is not just Royal Mail but also any of the well known courier firms which are servicing the growth of online shopping whose sites are being mocked up. The key to a successful scam is how plausible it seems, as in this case.

Police and anti-fraud offices’ advice centres on a few key areas where we as individuals can protect ourselves. 

1. Be more vigilant. Taking more responsibility to ensure that we think carefully before blindly connecting to sites (as above) and responding to texts and emails from individuals or businesses with which we have had no connection.
2. Only download apps from official app stores, such as:
   • Apple iTunes
   • Android Marketplace
   • Google
   • Play Store
   • BlackBerry World
3. Don’t download anything from unofficial or unknown sources, as your computer or phone could be infected by malware or a virus.
4. Keep your computer and phone’s operating systems updated with the latest security patches and upgrades. Your operating system provider normally sends these.
5. Never give your mobile banking security details, including your passcode, to anyone else and don’t store them on your phone.
6. For added security set up a password or PIN to lock your mobile.
7. Just like on your computer, you can get antivirus tools for your mobile; use a reputable brand. Some banks offer free antivirus software for their customers’ phones. Check your bank’s website for more information.
8. Be wary of clicking on links in a text message or email. Don’t respond to unsolicited messages or voicemails on your phone. Your bank will never email or text to ask for your PIN or full password.
9. Protect family members. Every youngster has a smartphone and increasingly elderly relatives are switching to smartphones as the pandemic has forced businesses and services to move to online representation. They need to be made aware of the above.

Lastly, let’s all use our common sense to avoid scams online. If in any doubt as to the authenticity of a website purporting to be from a service provider, particularly ones supposedly from our banks, make a phone call or check the web address you have been asked to connect to and compare it with the one on their main website. 

We will be doing other features on How to avoid scams and combatting fraudulent scams and helping you to stay safe.

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Benefits of the recently extended Stamp Duty holiday

On Wednesday 3rd March the Chancellor announced an extension of the Stamp Duty holiday to the 30th of June.

How will this extension benefit you?

Benefit from substantial savings – In England and Northern Ireland, if you are considering moving home and complete by June 30th, you can benefit from the biggest cuts in property purchase tax on properties up to the price of £500,000. In Scotland, the holiday comes to an end at the end of this month but those in Wales will benefit from the tax cut on properties up to the price of £250,000.

Zoopla data indicates that at least 740,000 buyers will have benefited from the Stamp Duty holiday by the time it ends across the UK.

Getting the purchase completed – For those in Scotland there is little time left to take advantage of the scheme, but for the rest of those moving home, the extension to the tax holiday will allow more time for property purchases to reach completion. Without the extension, thousands of deals may have fallen through because buyers may have been forced to find extra savings to meet an increased tax bill.

Buyers have benefited by making substantial tax savings. The biggest cuts are on offer to those in England and Northern Ireland. Spending £500,000 or more on a new home or buy to let investment, you could save up to the maximum in tax of £15,000.

Whilst the Stamp Duty holiday has resulted in greater demand it has also led to higher house prices. Figures from the Land Registry show an 8.5% year-on-year rise in December, defying predictions earlier, in the year that the pandemic would create a reduction in the cost of a home.

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