Council tax hike will cause a quarter of homeowners to struggle financially

Research by Newcastle-based property developer, StripeHomes, has found that the vast majority of homeowners believe Government plans to increase council tax are unjustified, with 23% likely to struggle financially.

Research from StripeHomes shows that the average homeowner in England is due to see an annual increase in council tax of £78, pushing the cost to £1,895 per year or £158 a month.

An increase that 72% of homeowners believe to be unjustified.

The research from StripeHomes also shows that when considering the average monthly mortgage payment, the cost of food, home maintenance and bills, internet and other outgoings such as household insurance, an increase in council tax will push the average household spend to £1,734 per month.

The latest hikes mean that council tax will now account for 9.1% of monthly household outgoings, although when taking the much larger mortgage payments out of the equation council tax accounts for 23% of comparative outgoings.

Of course, there is also a regional disparity with this climbing to 14.3% in the North East, 11.9% in the North West, 11.7% in Yorkshire and the Humber and 10.9% and 10.4% in the East and West Midlands respectively.

This might seem marginal to some and the research from StripeHomes shows that 44% believe they should be able to get by, while 33% believe they will be able to get by despite the increase.

However, this further increases in the cost of living will cause 15% of homeowners to struggle financially with 8% stating they were already struggling to begin with.

Managing Director of StripeHomes, James Forrester, commented: “For many, an increase in council tax will come as an annoying inconvenience but one that will be absorbed. However, the assumption that this applies nationwide is simply wrong and for families across the nation, surviving financially is an obstacle they tackle on a month to month basis.

“This obstacle has been made all the larger due to the pandemic and the ability to overcome it is based on very fine margins indeed. Margins that the Government has chosen to chip away at once again with little thought for the average family.

“Not only is it ludicrous that a London millionaire can pay a comparable level of tax to a family struggling in the North East, but the figures show that those in Northern regions and even the Midlands are due to be hit hardest, as they’re the ones who will see the largest increase in council tax as a percentage of their outgoings.”

Survey of 1,087 homeowners carried out by StripeHomes via Find Out Now (16th March 2021).

F4B Network connects with OMS

One Mortgage System (OMS), the seamless single-input enquiry to completion processing platform for brokers, has been integrated across its proposition by the F4B Network.

The F4B network opted for OMS after an extensive review period and this integration will allow Appointed Representative (AR) firms access to OMS’ all-encompassing CRM system and full workflow solution.

The F4B Network was created on the back of demand from intermediary introducers who have previously utilised parent company F4B’s vast expertise across the specialist lending markets. The network continues to assemble a wide-ranging lending panel consisting of mainstream, buy-to-let, specialist and short-term finance lenders, plus an array of protection and GI providers.

In addition, the F4B Network also offers full compliance support and a tech package consisting of features such as remote file checking, research tools and a comprehensive PI insurance package.

OMS is the only end-to-end CRM system which covers product areas such as residential, buy-to-let, second charge, equity release, bridging, commercial plus general insurance and protection. It has already integrated with four market-leading platforms – Iress, Twenty7Tec, iPipeline and Knowledge Bank – to provide users with best in class for product sourcing, protection sourcing and criteria searching.

Steve Swyny, Commercial Director at F4B Network, commented: Technology plays a crucial role in any business and as a new entrant into the network arena it was important that we tested a variety of systems to ensure we are best placed to offer a comprehensive solution to our members. We opted for OMS because the platform is highly customisable and has been built with the advice process firmly in mind. This is evident not only in the tech journey but also from the experience and market knowledge of the support team which will provide a robust platform for advisers to streamline their front/back-office processes and generate more business.”

Neal Jannels, Managing Director of One Mortgage System (OMS), commented: “It’s always exciting to be involved in any new launch from an early stage and we have worked closely with the F4B Network team to create a solution which we hope will make a real difference to its members.

“We are entering a period where advisers are facing a number of choices when it comes to the direction of their business and the successful integration of technology will prove more important than ever in ensuring their present and future success.”

UK Consumers Increasingly Optimistic About Their Finances as Vaccination Programme Heralds an End to Lockdown

Recent research from global information and insights provider TransUnion has revealed a further increase in optimism around household finances in the UK. More than half (54%) of those surveyed now feel optimistic about their current financial situation, up from 42% at the end of 2020.

This more confident outlook coincides with the successful UK rollout of the COVID-19 vaccine and the research indicates an overall strengthening of consumer finances as almost 7 in 10 (69%) households report they are faring either as planned or better than planned financially.

Kelli Fielding, managing director of consumer interactive at TransUnion in the UK said: “We’ve been tracking the impact of the pandemic on consumer finances for the past 12 months and it’s really positive to see the heightened sense of optimism in this latest data. However, despite this, our research also suggests that COVID-19 will cast a long shadow, with a significant portion of consumers taking a cautious approach when it comes to credit.

“While nearly a third (32%) of households are planning to apply for new credit or refinance existing credit in the next 12 months, just over a quarter (28%) have considered it but ultimately decided not to apply, mainly due to fear of not being approved. One in four (27%) cite concerns about their credit history, so helping consumers understand more about their credit information is really important. Around a quarter (23%) are concerned about their income or the affordability of further debt. That’s not surprising given 64% of impacted households say they won’t be able to pay their current bills, down from 70% in March last year.”

The research also suggests that the financial divide that has been exacerbated by the pandemic may have significant long-term consequences. Whilst only four in 10 households (38%) are currently being negatively impacted financially, many have had to use their savings to manage day-to-day, something which TransUnion has seen at a relatively consistent level since its study began.

“A fifth of UK households have reportedly either cut back on retirement savings or have used them to get by during the pandemic. Higher earning households, however, have actually been able to save more, with the drop in discretionary spending on things like leisure and travel meaning a quarter (25%) have added more to their retirement pots and 42% have saved into an emergency fund,” said Brendan le Grange, director of research at TransUnion in the UK.

“Conversely, only 17% of lower earning households have been able to save for emergencies, with just 9% saving more for retirement, highlighting the longer-term view of the financial polarisation we’re seeing, which will serve to reinforce existing inequalities.”

As the UK looks toward the roadmap out of lockdown, with the reopening of non-essential retail and a cautious return to spending, finance providers need to be engaging with their customers in order to understand their specific needs, and using the latest tools and insights to help make informed decisions when it comes to lending.

Similarly, consumers need to have the knowledge and the tools to monitor and manage their credit information, and increasingly lenders are offering their customers direct access so that they can understand their credit score and the factors affecting it. This will be particularly important as protected payment holidays and other financial support measures come to an end.

Financial Wellness Group extends its partnership with Personal Group to launch new financial wellbeing products

Financial Wellness Group has extended its partnership with benefits and insurance provider, Personal Group, to give employees greater access to expert financial advice and support designed to help them ‘live more and stress less’.

The new services, available via Personal Group’s Hapi app, include:

Money A&E – which provides focused support for employees struggling with debt problems such as missed repayments or problems paying outstanding bills. Confidential one to one advice is provided by phone, live chat or email. Customers receive a detailed budget, a benefits check – to ensure that they are claiming what they can – and a recommendation document detailing how to get their finances back on track. For those for whom a debt solution is suitable, Financial Wellness Group is able to provide fee-free Debt Management Plans as well as the full range of other debt solutions.

Redundancy Support – for employers that are considering redundancies, this package enables them to provide to their employees additional support through what is a worrying time. The Redundancy Support package gives each employee access to a dedicated Financial Wellness Adviser, who will work with the employee to help them plan and manage their finances through the redundancy process. Putting a financial plan together can help ease some of the employee’s stress by helping them understand and take control of their financial situation.

Money Savvy – a programme of money management webinars and clinics, supported by an online financial education hub, including budgeting help, guides, money saving tips and a range of savings calculators and budget planners.

Deborah Ware, Chief Operating Officer at Financial Wellness Group, commented: “We are committed to giving employees the skills and confidence to take control of their finances and improve their financial wellness. For some that might be about learning to budget better, or starting to save. For others the focus might be on taking action early to ensure that their borrowing doesn’t spiral out of control, or supporting them through a large income shock as redundancy.

“Money worries have a real impact on employees’ attendance and work performance. So, not only is supporting financial wellness a valued benefit, but it makes sense for employers too. Our partnership with Personal Group enables us to deliver these benefits to many more employers via the Hapi platform.”

Deborah Frost, Chief Executive of Personal Group, commented: “Employee wellbeing isn’t just about mental and physical health – financial health has a big impact too. Financial wellbeing isn’t about how much money you have, it is about feeling in control of your financial situation and being able to plan for the future.”

People ‘still in the dark’ when it comes to credit reports

A lack of understanding around credit ratings has been exposed, with new consumer insights revealing low levels of engagement and knowledge about how credit reporting and scoring work.

Nearly half of the UK public (46%) have never checked their credit report, a figure which rises to 65% among 18 to 24-year-olds, while 69% don’t know what their credit score is.

The new research from Experian has been released for Credit Awareness Week (CAW), an industry initiative now in its fifth year, which aims to improve understanding about how credit reporting works so people can take control of their finances and achieve their financial goals.

The findings reveal that awareness is heading in a positive direction. When the survey was first conducted in 2017, 55% had never checked their report and 78% did not know their score. Credit experts have attributed this increase in awareness to people taking greater interest in their personal finances as a result of the COVID-19 pandemic.

However, there is still much to be done, with common myths about the credit industry persisting. Three quarters (75%, down from 80% in 2017) believe being put on a ‘credit blacklist’ will impact their ability to access affordable finance – despite there being no such thing.

Many people still wrongly believe credit reference agencies make decisions about whether a credit application will be accepted, when it is actually the lender who decides. Nearly a third (30%) incorrectly believe credit reference agencies decide the outcome of credit card applications, while 21% make the same incorrect assumption for loans.

Awareness about credit eligibility services remains low. Eligibility can help people find the most appropriate product for their circumstances by showing them which cards, mortgages, and loans they are likely to be accepted for without damaging their score.

Yet, the research claims 47% have never checked their eligibility, meaning they could potentially be putting their credit score at risk by often applying for products they are unlikely to qualify for. Awareness is particularly low among the younger generation, with just 7% of 25 to 34-year olds having ever checked their eligibility, compared with 15% in the 55+ age group.

However, younger people are also looking for industry assistance in building their credit scores. For example, a quarter (25%) of those aged 25- 34 believe subscription services such as Netflix and Spotify should be included in a credit report.

Recently launched Experian Boost, a free credit-score-improvement service, allows people to do this, taking into consideration everyday payments to subscription services, as well as regular payments to things like council tax and savings. This helps contribute to people’s overall financial image and could positively impact chances of securing credit in the future.

James Jones, Head of Consumer Affairs at Experian, said: “Our annual Credit Awareness Week survey gives us the opportunity to test public understanding of these important issues. This year’s findings, in the context of the COVID-19 pandemic, provide much food for thought.

“We’ve made positive strides compared to previous years, with recent progress a likely outcome of COVID-19 encouraging more people to pay greater attention to their personal finances. However, the clear message from the findings is that there is much more to do. As an industry, it’s important we empower people with the knowledge to take control of their finances and understand how they can make their credit information work for them.”

“The launch of Experian Boost is the latest example of how we’re finding new ways to help people take control of their finances through credit-score improvement. Other initiatives include an industry-led guide to credit scoring, which aims to build understanding about credit information, how and why it is used by lenders, and what rights consumers have over the information used and shared.”

“Particularly during these challenging times, understanding and monitoring your credit report and score is a key element of financial management and helps you to access the best products available. Experian, through the Credit Awareness Week campaign, ongoing educational work, and work with the financial services industry is committed to improving public awareness and understanding of the credit system.”

Money and Pensions Service to launch single consumer service driving financial wellbeing

People across the UK will be empowered to manage their financial wellbeing with greater confidence and clarity throughout their lifetimes, when a holistic new consumer brand is launched by the Money and Pensions Service (MaPS) this summer.

MoneyHelper will be a single destination providing money and pensions guidance over the phone, online and face to face.

Covid-19 has shone a light on the importance of financial wellbeing, and the new brand and the bringing together of legacy services will come at a time when many people need clear, accessible support. Even before the pandemic:

  • 9 million people were over-indebted, often borrowing to buy food or pay bills
  • 11.5 million had less than £100 in savings
  • 22 million said they don’t know enough to plan for retirement

And 60% of people say the Covid-19 pandemic has added to their financial concerns.

What is financial wellbeing?

Financial wellbeing is about feeling secure and in control. It is knowing that you can pay the bills today, can deal with the unexpected tomorrow and are on track for a healthy financial future. People should feel confident and empowered.

Legacy services

Since MaPS was formed in 2018, it has operated its consumer services under the three legacy brands of the Money Advice Service (MAS), The Pensions Advisory Service (TPAS) and Pension Wise.

MoneyHelper will bring these brands and services together in one place. Pension Wise, which provides guidance for people aged 50 and over about their pension options, will continue as a named service under the MoneyHelper umbrella.

Money and pensions guidance and free debt advice4 will continue to offer vital support to customers under the new MoneyHelper brand. Following a thorough review of all of the information, tools and content on the legacy services websites, the majority will move to a new home on the MoneyHelper website, making it easier for people to find the information they need.

Caroline Siarkiewicz, Chief Executive of MaPS said: “The arrival of MoneyHelper is an exciting next phase in our journey to improve the lives of people across the UK. MoneyHelper will be a single destination that allows people to more easily find and access free money and pensions support. Often money matters are complex; and we know that many people looking for help with money or pensions worries do not know where to start. MoneyHelper will be uniquely placed to empower people to inform themselves of their choices and improve their financial wellbeing across their lifetimes. It will also better link people with other free support services if that’s what is right for them.

“The new single brand will allow MaPS greater efficiencies so our efforts can be better focussed on delivering for people across the UK. It will also make it easier for our growing network of partners to refer people to our services, information and tools, and help to improve the UK’s financial and overall wellbeing.”

The journey to MoneyHelper

MoneyHelper was developed following extensive user testing amongst MaPS audiences of people who are struggling, squeezed and cushioned5. The brand identity for the combined services was the most positively received by customers as clear, personable and encouraging people to take action.

Getting ready for MoneyHelper

MaPS is working with stakeholders across the UK to ensure that they are ready to signpost to MoneyHelper services and content when the brand begins to be rolled out from early June 2021. A toolkit and guide for stakeholders will be produced to ensure they have the information and collateral they need to ensure the changeover to MoneyHelper is as easy as possible.

At this time, consumers will be automatically redirected from the legacy brands’ websites to MoneyHelper.

Covid-19 has created a more ‘money savvy’ generation – research reveals

Toluna’s ‘Understanding the 2021 Consumer’ Global Barometer Study is a bi-weekly index that taps into a community panel of 30+ million members providing accurate and timely information on the world’s current perceptions. The latest research surveyed 1,032 respondents in the UK.

KEY FINDINGS

Better financial health

The pandemic has made people think a lot more carefully about their money – how they’re spending it and how they’re saving it. It’s also enabled us to address our personal financial health, with more people determined to get their finances in better shape.

Out of those people surveyed:

  • 44 of people said Covid-19 has made them save more money to prepare for a rainy day
  • 36 of us vow to be better at budgeting
  • Nearly 3 in 10 (27%) of us have paid off or are planning to pay off debts since the pandemic started
  • Nearly a fifth of people surveyed plan to put money into longer term investments (19%)

Optimism around spending

Despite the current economic climate, 65% of people in the UK are confident about spending money.

When restrictions lift, many of us are looking forward to spending money on doing activities we haven’t enjoyed for a long time. When respondents were asked about what they’re planning to do first, in store shopping, dining out and personal care activities were high on the agenda:

  • 43% of people surveyed can’t wait to visit physical shops again and shop in store
  • 36% of people are looking forward to eating out
  • 35% plan of us to visit a hairdresser as soon as they’re able to

Michael Worledge, Head of Financial Services, Harris Interactive: “The pandemic was a completely unexpected situation that no one could have ever predicted or totally prepare for. Many people have been financially impacted by Covid-19 restrictions and repeated lockdowns demonstrating the importance of being money savvy and ensuring our financial health is as strong as it can be. Although the economic impact has been great, and we’re far from out of the woods yet, at least people have become more financially responsible as a result. People are trying to save more and wanting to get rid of debt which will help to create a more secure and financially resilient future.”

83% of tenants would pay more in rent for a property that better suited their needs

UK rental properties don’t meet the needs of modern-day tenants, with the vast majority (83%) stating they would pay more for a property that did.

That’s according to a study commissioned by build-to-rent specialists, Ascend Properties, which found 81% of tenants don’t think rental market stock is up to scratch in today’s world.

When asked as to why, 24% stated they didn’t provide enough outdoor or garden space, with a further 20% stating they were also too small inside.

A lack of parking was an issue for 19%, while privacy due to having to share and a lack of natural light also ranked high (10%).

However, when it comes to the deciding factor when choosing a rental property, quality of life still comes second to the price of a rental property, with 26% stating it as the main factor when choosing a place to live.

Location (23%), size (20%) and the availability of outside space (14%) also ranked high.

Despite price ranking as the deciding factor for many tenants, Ascend’s research also shows that 83% of tenants would pay more in rent for a property that better suited their needs.

One potential reason for the current level of tenant dissatisfaction could be due to the fact that just 41% were aware of the build-to-rent sector and the far superior offering it presents to residents.

Previous research by Ascend found that BTR stock has increased by 135% since 2017 alone highlighting the steep growth of the sector. However, as a fairly new offering, it still accounts for just 1% of rental market stock which might also explain why tenants are largely unaware of it.

Managing Director of Ascend Properties, Ged McPartlin, commented: “It’s hardly a surprise that so many tenants are still unaware of the build-to-rent sector although we’ve made some considerable headway in just a few short years. What’s also clear is that many renters feel that traditional rental stock simply doesn’t meet their needs and with more of us renting for longer, they want a property that is better suited to the modern-day world.

“This has been the driving force behind the build-to-rent sector and the provision of properties that residents want to live in, rather than make do with. The combination of privacy, community, modern-day living standards, amenities and space are the foundations of all build-to-rent developments and our research shows residents are also happy to pay more for a place they love to live within.”

Survey of 3,165 UK tenants carried out by Find Out Now (10th March 2021).

First ever digital financial advice and mortgage broker app launched by Multiply AI and Mojo

Multiply AI, the UK’s first fully-automated financial adviser app, today announced it has partnered with digital mortgage broker Mojo to provide the first end-to-end digital advice app free of charge for first-time home buyers.

Leveraging the power of deep learning AI, the app provides holistic financial advice for those who cannot afford to see a traditional face-to-face advisor.

The free-to-use online service helps people save up to buy their first home, providing tailored recommendations to help grow their wealth, and then offers the best mortgage deals in a fast and transparent way. The process is simple and easy to use, and customers get the investment support they need in a matter of minutes.

Multiply AI also provides an achievable pathway to get on the property ladder by launching access to a market-leading Lifetime ISA (LISA). This comes as many help-to-buy ISAs are closed to new applicants and most first-time buyers have been stalled due to lockdown measures.

Vivek Madlani, CEO of Multiply AI, said: “Our partnership with Mojo will help homebuyers from the point at which they decide to start saving their deposit, all the way to getting their keys.

“Mojo shares our ambition to democratise access to financial advice and remove key barriers to entry for first-time home buyers – namely financial knowledge to saving and getting the right mortgage. Together we are delivering a complete online experience that is easy to understand, cost-effective, fast and transparent.

“Multiply and Mojo will allow first-time buyers to go from deposit saving to homeownership without any of the frustrating paperwork, delays and fees that are usually associated with the traditional process of buying a home.”

Mojo’s award-winning free service has made great strides in bringing transparency and convenience to first-time buyers with innovations such as MortgageScore and real-time eligibility across thousands of mortgage deals from 90 lenders.

The smart, time-saving tech allows Mojo’s expert mortgage advisers to spend more time with first-time buyers, giving them real confidence in their mortgage decisions.

Even during the pandemic, many first-time buyers remain locked out of the housing market due to high demand, ongoing housing shortages and soaring property prices. Average first-time buyer house prices are up 10 percent from 2019, with the average UK property now worth £260,000. The average mortgage deposit required is also up – with most lenders requiring a minimum of 10 percent of the purchase price.

On top of this, most high loan to value (LTV) mortgages for small deposit borrowers have been pulled during the pandemic. These 95 percent loan-to-value mortgages offered a unique opportunity for first-time buyers to get their foot on the ladder.

Even with the demise of this lending option there are still other kinds of mortgages available but picking the right one can be confusing and time consuming without sound advice.

By joining forces, Multiply and Mojo are disrupting a process that has traditionally been difficult for first time home buyers to navigate. Customers can now get the quality advice and support they need to make the right decision about saving for a property and choosing a mortgage – with just a few taps on their smartphone.

Richard Hayes, CEO of Mojo, said: “We help thousands of people with mortgages and re-mortgages, but it’s always great when we can make things just that bit easier for first-time buyers, and this partnership with Multiply does that.

“Many first-time buyers have seen their plans disrupted over the past year, and most will want to make 2021 the year they get on the ladder – particularly if there is a softening of house prices after the SDLT holiday.

“This partnership gives them the quality advice and confidence they need to make better and more informed decisions about the biggest investment they will ever make in their life.”

The app can be downloaded from the App Store and will soon be available on Android phones.

MCI Club designs innovative package for brokers

The MCI Club has launched an innovative payment and processing package for all existing and new members of the mortgage club.

This package, which will be wrapped up in a single stable monthly fee, is designed to increase each member’s revenue potential through market leading rebates paid at the end of each month; and incorporates a choice of technology products to increase overall productivity. Proc fees will continue to be paid promptly but are dovetailed with reliable and consistent rebating, where applicable.

As part of the technology offering, MCI provides a free but optional CRM from eKeeper that includes integrated AML and Credit Reports from Experian along with a number of other integrations.

Those who are planning or looking to accelerate the digitalisation of their business have access to cutting-edge and discounted products including Burrow on-boarding. This is a pre-application client engagement and qualification tool where leads are posted directly into the adviser’s back-office system to process and retain.

All members have access to a flexible package, which can be tailored to the broker firms based on their aspirations.

MCI’s panel is continually growing and now has 60 lenders.

Melanie Spencer, Head of the MCI Mortgage Club, stated: “The last year has been tough. Brokers have been looking for value and stability, while having to endure the ebbs and flows of various lockdowns, changes in criteria and the stamp duty holiday.

“Our innovative payment and processing package is designed to lessen at least one burden on intermediary businesses, it’s there to increase the revenue generating potential of every adviser and still continue to deliver the same value and expertise we do today.

“We encourage every DA business and AR looking to go DA to consider what a mortgage club can do for them.”