Monthly Archives: July 2013

Why saving in an ISA is better than a Pension.

ISAs are simple. Once the money is in there is no further tax to pay on it. There are no forms to fill or tax to reclaim. You can also withdraw your money whenever you like without paying any further tax.

Pensions just don’t come close. The real problem is uncertainty Any government can arbitrarily change the rules and move goalposts making many of the positives negative. Paying into a pension doesn’t avoid paying tax on your contributions, you just defer the day. When you take income from your pension, through either drawdown or an annuity you will be taxed on the income will be taxed on the income.  At present you can take a pension once you reach 55. There are no guarantees the age will not be raised again as it was from 50 to 55.

Currently you can take up to 25% of your pension pot as a tax-free lump sum – a great incentive, especially as you approach 55. But will this still be possible in 5 or 10 years? No one knows. Politicians are already giving consideration to limiting the amoun, perhaps capping it at £36,000.

Then there is the tax relief on contributions, again under review. Pension contribution tax relief deprives the treasury of around £35bn a year. It is suggesting that relief could be limited to 30% rather than the highest 40% as currently.

Finally, you are compelled to buy an annuity or drawdown. In most cases you would need to survive for 20 years just to get your pension pot repaid to you. Not surprisingly, annuity providers make huge profits on pension annuities. Standard Life for example has disclosed their profit margin is 18.6%. This is in addition to the fees charged over the years you build up your pension, taking a large slice of the growth in the form of their annual charges.

ISAs may not be 100% safe from a raid by the taxman. But as around 23 million people have one and will protest at any attempt to confiscate any of it, they are a lot safer than pension.

Ask anyone that saved into an Equitable Life pension!

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How to switch energy suppliers in your new-build home

Moving house can be a tricky business: there’s a lot to think about. When you’re moving into a brand new home, there can be other things to think about too. That’s why Debt Advisory Centre has put these tips together to help you set up your utility bills in your new-build home and make sure everything goes smoothly.

Before you leave your old home

The process of setting up your utilities in your new home actually starts in your old one. Here’s what you’ll need to do before you move out:


  • Let your utility suppliers know that you’re moving.
  • Make sure they have the address of your new place. If your supplier doesn’t recognise your new address or postcode, refer to the information below.
  • Take meter readings on the day you move out and send them to your suppliers. Keep a record of this.

In your new-build home

Setting up utility bills in a new-build home can be different than when you move into a second-hand home. Firstly, new homes are generally built to higher energy efficiency standards, which should mean you should spend less on your utilities. 

If your home is brand new, there is a chance that businesses like energy suppliers, insurers and retailers might not recognise your postcode – and this may make it difficult to switch your energy supply. If this is the case, you will need to contact the house builder’s sales advisor. You should ask Royal Mail for your new postcode to be put on their database (which most large companies use for reference). You may need to fill out the ‘Postcode Finder Address Enquiry Form’ on the Royal Mail’s website. It is best to check whether your new postcode is registered before you move in, so everything is set up for when you get there. 

Once your postcode is registered, you can look for the best deals on gas and electricity. It’s best to ask the house builder which company they use initially as this provider may have the best deals anyway. 

What to do if you’re struggling with your energy bills

Whether you’ve recently moved to a new home, you’re considering it, or you’re staying in your current home – it’s important to know what to do if you start struggling with your utility bills. 

Recent research from debt management provider Debt Advisory Centre shows that around four million adults in the UK are in arrears to their gas, electricity or water provider. And the research suggests that 13 million have ignored a utility bill because they couldn’t afford to pay it at the time. 

Here is what you should do if you’re falling behind on your utility bills:

  • Contact your provider. Tell them about your situation and what you can currently afford to pay towards your arrears. They should do their best to reach an arrangement that suits both of you. 
  • Carry on paying for your usage. If you don’t do this, your utility provider could take action like installing a prepayment meter – or your water company could take out a County Court Judgment against you.
  •  Consider a prepayment meter for gas or electricity. It can be more expensive than paying by Direct Debit, but contact from your provider will stop because you’ll be paying for all the energy you use ‘as you go’. Your arrears can be loaded onto the meter and you can pay these off more gradually too.  

If all else fails, get professional debt advice. This could help you to get on top of your utility arrears – as well as any other debts you may have, like credit cards and loans.

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Jeff Fairburn, Persimmon CEO e mail address is taken down

Jeff Fairburn 2sThe e mail address of Persimmon CEO Jeff Fairburn has been taken down. Previously you could write to him using now this is returned undeliverable. Let’s face it, if you are having ongoing problems with any new home the top man in charge needs to know. Otherwise how can company policy change and evolve? How can quality and service improve? As Persimmon Group CEO, Fairburn receives a salary of around £2million a year and should care about any problem his company’s customers have with the homes they build or the staff they employ.

If you get no joy from their regional office Managing Director, you should be able to escalate your complaint to the CEO. Now anyone wishing to do this is directed to his PA Alison Eastwood who customers can e mail using: But be warned, I have been told she will just refer you back to the regional office member of staff who you were having problems with in the first place!

This really does tell you everything you need to know, not only about the company, but also the man himself. Hiding behind his PA. His predecessor Mike Farley, was always accessible directly by e mail and even if he did nothing, buyers could at least tell him what they think about their new Persimmon home. Even the Persimmon’s own shareholders cannot e mail him now! 

Perhaps it all got too much that Fairburn’s Inbox was full each day with 1000’s of disgruntled purchasers telling him about their Persimmon new home woes!

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Call for a Windfall Tax on House Builders

Why we must levy a windfall tax on house builders

Along with many financial experts we are of the opinion that George Osborne’s “Help To Buy” scheme will fuel a house price bubble – in fact it already is!

It is nothing short of a subsidy for house builders who continue to make record profits, most of whom report profits up 50% or more last year even before help to buy kicked in. Help To Buy has enabled house builders to avoid reducing prices and provide lenders with less risk on loans. 

The treasury estimates that the £3.5billion scheme will help up to 74,000 new home buyers.  I am of the opinion that the house builders are the main beneficiaries.

Barratt Share Price 1

Those buying a new home will be buying just 80%, paying ever-increasing prices. The house builder’s shares are at record levels as the Help To Buy bonanza is enabling them to pig out on naive buyers who cannot really afford to own a home. Described by Albert Edwards of Societe Generale as “the indentured servitude of our young people”

The government must therefore levy a windfall tax on all house builders making in excess of a 10% profit whilst the scheme is in operation, to prevent house builders cashing in on the extra demand and raising their prices as financing a new home becomes easier.

When interest rates eventually do rise and there is a corresponding house price crash, it will be the taxpayer, left without a chair when the music stops! 

Quite frankly, Help To Buy is nothing short of a political measure to give the illusion of prosperity in time for the 2015 election. Provided the bubble doesn’t burst before the next election, the government doesn’t care!

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UK house prices rising at the fastest rate for 3 years

According to the Halifax, one of the UK’s biggest mortgage lenders, house prices are rising at their fastest annual rate for nearly three years. The lender said that house prices for the three months to the end of June were 3.7% higher than the same period in 2012 – the fastest rate of increase since August 2010. Halifax say the average UK home now costs £167,984. 

However the Nationwide survey last week reported a smaller 1.9% increase in prices over the same period. 

Halifax’s chief economist, Martin Ellis, believes the increase in prices is being caused by a shortage of available properties for sale and improved confidence in the housing market. 

A more likely cause is the low interest rate policy of the Bank of England and the supply of cheap money from the Government’s Funding for Lending initiative. History shows that in times when cheap loans are readily available house prices go up and when interest rates are high, house prices fall sometimes crash. A by-product of the current BoE policy of low interest, pro-inflation to reduce the national debt is the cost to savers, around £1bn a year in real terms, as the value of their savings is being eroded by low interest rates and inflation. 

Add in the foolish government house builder subsidy that is Help To Buy, giving house builders an opportunity to sell new homes with the tax-payer providing up to 20% of the sale price. In addition, the mortgage guarantee scheme where the government underwrites a portion of the home loan giving lenders will give buyers a greater access to mortgages, even those with a small deposit.  

Sound familiar?   Well it should.   This is exactly the scenario that caused the last financial crisis. Buyers being given cheap loans to buy homes they couldn’t really afford, as prices rose month after month. This time, it will be the British Government without a chair to sit on when the music stops.

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Bloor Homes – OTE Park, Burgess Hill

Over 20 years ago the Property Misdescriptions Act came into force. The aim was to stop properties being described in a more favourable light than the actual reality. The PMA has now been superceded by The Consumer Protection from Unfair Trading Regulations 2008 and the Business Protection from Misleading Marketing Regulations 2008.

Bloor Hamilton smallBloor describe their “Hamilton home as an “extremely spacious” (122 square metres – 1313 sqft) four bedroom home with “spacious lounge” (3.61m x 6.5m) with a master bedroom that “benefits from a fantastic en suite facilities and fitted wardrobes”.Wow! Bloor also state that there is “an additional storage cupboard on the landing” (probably the airing cupboard) and that “a garage and driveway are also included” Sign me up now!

The specification states “turfed front gardens”, but looking at the development plan, that is not a lot of turf! Nearly all the homes are virtually at the back of the footpath as is the case with most new homes built over the last 10 years.

As far as prices go a four bedroom “Hamilton” new home will set you back £399,950. Or as Bloor are keen to point out £319,960 with HelpToBuy, meaning you need to find just a £20,000 deposit and be able to afford payments on your £300,000 mortgage to own 80% of this home! A 25-year mortgage at 3% interest means you need to find a massive £1,436 a month, half of which is interest. So much for ‘Help to Buy’ Mr Osborne!

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