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Govt pledges more help for those at risk of losing their home

Housing minister Grant Shapps has unveiled a new cross-government initiative to try and prevent people from losing their homes. The financial crisis has heightened debt worries for many people, and Mr Shapps believes that there is more ministers can do to assist people who are drifting towards homelessness.

Homeowners with money worries always have the opportunity to turn to a quick house sale to address their financial concerns, but many people do not seek advice regarding their options until it is too late. The Making Every Contact Count report looks to address this by putting in place a series of safeguards, giving charities and councils a blueprint to work together.

Commenting on the report, Mr Shapps said that Britain already has some of the strongest protections in the world to prevent people losing their home, but more can always be done.

“No single voluntary service, government agency, council or government department can prevent homelessness alone – but working together we can make a big impact,” he added.

Govt to let property buyers access parents’ pension funds

First-time buyers struggling to find the deposit their mortgage lender requires will be able to tap into the pension pots of their parents and grandparents, under plans outlined by deputy prime minister Nick Clegg.

The so-called ‘pensions-for-property scheme’ will effectively allow pension pots to act as a form of guarantee for first-time property buyers, providing banks with more confidence to lend them larger sums of money.

Speaking on BBC One’s Andrew Marr Show, Mr Clegg said the number of aspiring buyers asking their parents for assistance in property buying has doubled, but the pension industry is concerned about what impact this new scheme may have on retirement planning.

Joanne Segars, chief executive of the National Association of Pension Funds, said: “The government has already looked at letting people have early access to their pensions and decided it against it. People need to keep their pension for their retirement, especially with rising longevity and the costs of long-term care.”

Barclays cuts mortgage rates again

Barclays has announced it is to cut rates on many of its most popular mortgage rates by up to 0.3 percentage points, while it is also introducing a new five-year fixed-rate deal.

The Future Fix mortgage for property buyers with a 30 per cent deposit benefits from the cut, meaning the tracker rate has been reduced to 2.49 per cent plus the Bank of England base rate. In addition, the two-year fixed-rate deal for borrowers with a 40 per cent deposit has fallen from 3.09 per cent to 2.89 per cent.

The new five-year fixed-rate deal, meanwhile, is offered with interest of 4.89 per cent but is available to those with a deposit of just 15 per cent.

Andy Gray, head of mortgages at Barclays, says the high level of competition in the mortgage market is what has prompted this second rate cut in a matter of weeks. “This is great news for borrowers who are getting access to some really low rates,” he said.

“We would encourage people to act now and review their mortgage to see if they stand to save money by remortgaging.”

House prices rise 2.3% in 12 months

House prices rose 2.3 per cent in the 12 months to June, according to the latest official data from the Office for National Statistics (ONS). The rate of increase remains unchanged from the year to May, showing that values for property buyers and those looking to make a quick home sale remain fairly stable.

Despite the overall UK growth, England was the only country to see prices increase in the 12 months to June. Scotland and Northern Ireland saw prices decline by one per cent and 12.9 per cent respectively, while they remained unchanged in Wales.

Further analysis of the ONS data shows that London, where prices increased 6.5 per cent, was the primary force behind the rise. The south-west and the south-east also saw property values rise 2.3 per cent and 2.3 per cent respectively.

However, there was bad news for first-time property buyers, who typically had to pay 3.1 per cent more for their homes than they would have had to in June 2011, and the price of new dwellings rose 5.9 per cent.

Affordability looking promising for first-time property buyers

The number of UK towns and cities considered affordable for first-time property buyers has risen to its highest level for a decade. The latest Halifax First-Time Buyer (FTB) Review reveals that the average price paid by FTBs was affordable for someone on average earnings in 54 per cent of local authority districts (LADs).

This represents a 12 per cent rise in the last year, and an eight-fold increase on the level of affordability at the peak of the housing market in 2007. Back then, just seven per cent of LADs were affordable.

Martin Ellis, housing economist at Halifax, says the data is very encouraging, considering the vital role FTBs play in the housing market. However, he does concede that lending restrictions remain a problem. “The continued uncertainty over the outlook for the UK economy and the difficulties faced by many in raising the necessary deposit remain significant hurdles for those wishing to buy their first home,” he explained.

House prices drop 1.7% in July

House prices have fallen by 1.7 per cent in July in what has now clearly become a buyer’s market, the latest data reveals. Rightmove suggests that the £4,138 average price fall has come about because those looking for a quick home sale outnumber property buyers by two to one.

While Rightmove notes that house prices are 2.3 per cent higher than they were this time last year, the 1.7 per cent drop is the biggest monthly decline since December, and the largest July fall for four years.

In terms of regional breakdown, house prices in England and Wales fell across the board – the one exception being the West Midlands, where a two per cent rise was witnessed.

Rightmove director Miles Shipside also commented that the number of unsold houses per estate agent branch is “stubbornly high”. He added: “Those keen to sell this summer have the challenging confluence of miserable viewing weather, the continuing credit crunch plus a sporting distraction of Olympic proportions.”

Finances stretched for ‘sandwich generation’

One in seven UK adults have found themselves having to provide financial support to both their parents and their children. According to research from the Co-operative, this “sandwich generation” spends an average of more than £3,500 a year helping out their family members.

Even parents with children who have left home are still paying around £2,543 a year to fund their children and parents, it was found. In addition, three in five of this group said the financial assistance given to family is compromising their quality of life.

The Co-operative also predicts this problem may worsen, with inheritance from a quick property sale of their parent’s home likely to be reduced by the recouping of nursing home costs under proposed government legislation.

Robin Taylor, the Co-operative’s head of banking, said: “The report shows how the changing nature of modern families and cost pressures of living in the current economic climate, are placing real financial pressures on the shoulders of today’s middle generation.”

Debt levels down, but concern remains

More than a third of Brits have reduced their debt levels over the last year, but worries remain in many households.

Research from MoneySupermarket.com has revealed that average UK personal debt (not including mortgage owings) now stands at £6,926, down from the £8,431 recorded this time last year.

In total, 35 per cent of Brits have reduced their debt levels in the last 12 months, However, 27 per cent have actually increased their non-mortgage borrowing, while 38 per cent remain concerned about the debts they hold.

Tim Moss, head of loans and debt at MoneySupermarket.com, says that the reduction in personal debt levels overall is very pleasing, but with economic growth uncertain, concerns are likely to remain for some time to come.

“Balancing the household budget is hard enough without being saddled with the additional pressure of debt repayments. However, there is no need to suffer in silence and there are many options to make steps to reduce personal debt, before it escalates out of control,” he said.

Those burdened by heavy debts may find that a quick home sale could ease the financial pressure.

Brits may claim back up to £90m IHT on property

Up to £90 million of inheritance tax (IHT) paid in the last four years may be reclaimable due to the fall in house prices. According to NFU Mutual, the dip in the housing market means thousands of Britons may have paid more than they need to.

IHT is calculated based on the value of the deceased’s property at probate, and is often paid promptly after a quick home sale. However, HM Revenue and Customs rules allow for the amount to be recalculated if the property sells for less than the valuation within four years. The average UK house price has dropped 11 per cent since 2008.

Sean McCann, personal finance specialist at NFU Mutual, says many people are unaware that claims can be made in such circumstances. “And with house prices generally falling across over the last four years, thousands of people could still be able to claim back any such overpayment,” he added.

Property a key source of retirement income

Almost three-quarters of Brits will consider using their property to fund their retirement plans, a new survey shows. The Equity Release Council (ERC) polled nearly 2,000 UK adults from all age groups and found that 61 per cent consider their property to be a top-three source of income.

By 2017, the ERC expects that more than a quarter of a million British adults will be considering downsizing, perhaps through a quick home sale, while nearly 60,000 will be looking into equity release. While the dependence on property for income decreases in older age groups, it still plays an important role for today’s over-50s.

ERC chairman Nigel Waterson explained: “This research clearly shows that more and more people are considering using their property as part of their retirement finances. This might mean choosing to downsize, rent a room out or use equity release – or any combination of the above.”