Pension tax relief changes could come as soon as next month’s emergency budget and could possible affect the UK’s top earners. Wealth managers are advising they should act soon. As part of their election manifesto the Tories pledged to reduce tax relief on pension contributions for those earning over £150,000.
Currently, individuals can contribute up to £40,000 to their pension while claiming full tax relief – but the Conservatives said they’d gradually reduce this figure down to as little as £10,000 for high earners.
Additional rate taxpayers could lose as much as £13,500 this year if they don’t act quickly to take advantage of the existing pension rules while they are still available. A viable strategy and sensible approach for some additional rate taxpayers would be to contribute the maximum amount into a pension before the budget. This would allow and contributions to achieve the full tax relief.
While the timing of any change is not known – there is a possibility they could be introduced as early as the Budget or delayed until April 2016. Time to rethink your pension strategy?
As investors we are always on the look out for the next property hotspot. But would you have guessed on Bristol being the number one UK property hotspot? In fact, the number of homes sold in the Bristol postcode surrounding Avonmouth nearly doubled in 2014 from the previous year. Are Britain’s latest property hotspots developing into regional house-price bubbles? Well it is looking that way. Avonmouth, next to the Royal Edward Docks (a vibrant area that has benefited from extensive regeneration) was the district with the biggest increase in transactions last year, as sales jumped 94.5pc in 2014, according to new analysis from property agents Hamptons International.
The number of sales rocketed 128 to 249 over the year and house prices grew 21.1pc, double the rate of the national average. In the Hamptons 2014 index of British postcodes by transaction volumes, neighbouring Redcliffe in Bristol city centre came second with sales up 93.2pc last year. It’s all about Bristol!
There has been a huge growing demand to live in and around Bristol. So what are the reasons for this desire to live in Bristol? Maybe because it’s one of the UK’s leading tech scenes. Possibly the relatively large number of new-build developments and high use of the Government’s Help to Buy scheme. For investors, Bristol could be the place for capital growth.
Other UK property hotspots measured by the rise in the number of property sales, included Langdon Hills in Basildon, Essex, which came third in the ranking. Parts of Leicestershire, Cambridgeshire and North Dorset also recorded huge increases in transaction levels. Cardiff also featured in the top ten UK property hotspots, which only studied postcode districts in which there were more than 100 sales in 2013.
Focusing on areas in and around London, Greenwich, Croydon and Dartford all reported an increase in sales too, landing in the top 20 areas by increase in home sales in 2014.
With the extortionate high prices of central London property, these boroughs on the outskirts of London have benefited from those moving out from the centre. High prices for zones one to three for London transport could also be a major factor for first-time buyers buying in Croydon rather than Clapham.
With the general election nearing, party leaders are coming out in force with their mandates. David Cameron is proposing a move towards tapping into the young first time buyer market which has struggled to get onto the property ladder. “More than 50,000 people have signed up to a scheme which gives first-time buyers a 20 per cent discount on new homes” David Cameron has announced.
The Prime Minister said that providing young people with cheaper properties is the “ultimate symbol” of a country “where if you work hard, you can get on”.
The Conservative – Lib Dem Coalition last year stated that 100,000 of the new homes would be offered to youngsters but the Conservative manifesto will contain a promise to double that number by the end of the next Parliament. “Conservatives want more people to own their own home,” Mr Cameron said. “Home ownership goes to the heart of our political beliefs. It’s simple: we believe having a home of their own gives people and families independence; it helps people stand on their own two feet; and it’s one of the ultimate symbols of a country where if you work hard, you can get on.”
Under the scheme, houses will be built on brownfield land and reserved for sale only to young people under the age of 40 buying their first homes. The discount will be offered on homes up to £250,000 outside London and £450,000 inside London. On a £200,000 the discount would be £40,000 which would go a long way to helping first time buyers. The scheme started in March and have had 52,225 people have sign up.
The Prime Minister further added: “It boils down to backing aspiration, and that’s why helping everyone who works hard own a home of their own is a key part of our long-term economic plan.” It’s important to note that The Labour Party opposes the scheme. Could this backfire against Labour? It remains to be seen.
The commitment is designed to appeal to young voters and is an extension of the party’s flagship Help to Buy scheme, which aims to get people on the housing ladder. Dozens of house builders including Barratt and Taylor Wimpey have already indicated their support for the plans as have a number of local authorities. Mr Cameron has previously said that the homes will not be “rabbit hutches or shoe boxes”, pledging that they will be “places to start and raise a family”.
The Prime Minister added: “We’re going to build 200,000 new homes, twenty per cent cheaper than normal. But the really exciting part is this – they will be reserved just for first-time buyers under the age of 40. Homes built for you, homes made for you – from the Conservative Party, the party of home ownership in our country.” Could this have an effect on the property market as buyers wait until the results of the General election? The race to 10 Downing Street is on with property a hot topic!
Buy to let property Investors on the increase! After the last property market crash it seems that the property investor is on the rise again. The number of buy to let property investors in the UK has reached 1.6 million in 2014 according to Her Majesty’s Revenue and Customs (HMRC). This represents an increase of 120,000 from the previous year.
After looking into various sectors of property investment, research found that student property was considered the best and most popular investment opportunity. Approximately 1 in 8 claimed that should they choose to invest, their preference of choice would be in student accommodation. 10 per cent would choose to invest in retirement property, whilst 9 per cent preferred holiday homes. However, this research did not take into account alternative investment or fixed rate investments where the investor did not own the asset. Having raised millions in fixed rate property investments over the years, we can see that there is an increase in property investments as a whole not just in the buy to let sector. Confidence is increasing over time.
However, despite the growing numbers reported by HMRC, certain concerns have been identified, with 36 per cent of UK adults stating that it is too risky to be a buy to let property landlord. Confidence in property investment was also shown to vary across the UK. The highest percentage of investors believing the market will boom was from London at 39 per cent. The next highest was West Midlands with 38 per cent. However, optimism was much lower from those surveyed from the North East and the East Midlands. They showed only 21 and 26 per cent respectively believing that the market will continue to grow. The proportion of optimism seemed to be lowering the further you travel up the country.
At Barrington Howe we continue to look for high quality asset backed investment opportunities to complement our existing portfolio of products. Through continued feedback from our clients, we try to understand what the market is looking for and currently it is low risk asset backed investments offering sensible and achievable returns. One such product that we have now taken on is ILS buy2 let car finance.
This is an innovative investment opportunity allowing investors to tap into a huge market to finance cars to buyers seeking HP finance for cars. There is a massive demand for car buyers wanting finance so there is no shortage of buyers. In addition, investors gain the benefit of an asset in both the car and the HP loan book. But here’s the clever bit. If the car owner defaults on the payment, there is technology in the car that will allow for the car to be switched off preventing it being driven.
The feedback from many investors is that they don’t understand how a film investment works. They are not keen on a Brazilian property investment in a country they never visit. What they do know is a car. They understand vehicles. They understand the concept of buy to let. It’s not a difficult concept to understand and let’s face it, people fear what they don’t know. It’s a natural reaction. Generally if you don’t understand something, it does not fill you with confidence to invest into it.
Most of the population drive and it’s easy to understand that you can make a fixed income from financing a car whilst retaining the underline security. At the highest investment option, investors can make 20% per annum over 3 years. That’s a 60% return on investment from a car! As such, ILS Buy 2 Let Car Finance has been a welcome addition to the Barrington Howe list of investment opportunities. A fixed rate investment giving high yields with added benefit of security. Barrington Howe now have opportunities to invest in property, cars and hotels now giving cash or pension investors’ greater choice and flexibility to diversify their investment portfolio.
Over the last 2 and a half years, Barrington Howe has been extremely successful as a master agency with the Dolphin Capital investment. In fact, the Dolphin Capital property investment has gone from strength to strength building on a strong and assured business model giving investors more comfort when investing into an asset backed investment.
As of November 2014, German-based listed building developers Dolphin Capital and their associated international partners rebranded to Dolphin Trust. With continuing international expansion and global success, trademark protection of the company’s name is needed for a defined brand identity and to allow further growth within the group. An important part of the rebrand is a new public image for the company including a new corporate design as the foundation for all communication including a brand new global website.
Part of the rebranding is no doubt due to wanting to disassociate itself from other companies with the same or similar name. We at Barrington Howe have ourselves been made aware of this confusion through our own experience. We found that on occasions, potential clients carrying out their own due diligence confused Dolphin Capital with other companies that had, let’s put it politely a bad reputation. Even a small error like that can have big implications in giving a potential investor the wrong impression of what is a reliable and proven investment, even though it is a completely different company. The rebranding to Dolphin Trust is a smart move.
“The significance of the new name is in part a reflection on our customers and partners, who have made our success possible in only seven years”, says Charles Smethurst, founder and CEO of Dolphin Trust. “But even more it represents our claim to breathe life into words such as sustainability, transparency, honesty and trust.” Smethurst stresses further.
Dolphin Capital was originally launched in 2008, uniting a group of companies that had worked together for over 25 years, and since then has developed a reputation as a leader in the market for development of historic listed buildings in Germany. Today, Dolphin Trust will continue these long traditions and diversify into new fields such as residential construction and land development.
At 12% pa, is this one of the best fixed rate bonds on the market? The returns on some of the best fixed rate bonds can offer an attractive alternative to those on low-return cash savings accounts, but you need to understand the risks as well as the benefits.
What is a bond?
A bond is an alternative method for a company to borrow money directly from investors instead of a bank. It is effectively a loan for a fixed period of time (or “term”) with an agreed rate of interest (or “coupon”). Typically, these loans are three to five year agreements. A coupon or interest is paid either quarterly, bi annually or annually. When the bond reaches “maturity” the company gives you your original investment capital back plus any interest due.
The key benefits
The biggest benefit is the return which is 12% pa but with the added benefit of having security on your investment. This ensures there is a tangible asset that can be liquidated in the event of a worst case scenario. In this case, the fixed rate bond is based on property which provides the security. An independent FCA regulated trustee overseas the running of the investment too. The other key benefit is that there are no hidden or additional fees which can often cut into the return on interest (ROI). Barrington Howe is an authorised investment agent for the bond and is based in London. We specialise in asset backed secure investment opportunities.
3 Year fixed term Bond
Fixed Exit Date
12% pa fixed return paid every 6 months
FCA regulated Security Trustee
Strong track record, all investors paid out over the last three years
Understanding the risk
Unlike traditional bonds, unregulated bonds cannot be freely traded. That means other than in exceptional circumstances your money is tied in for the full term. For investors who may need the cash during the term, it is a disadvantage. However, it may be a benefit as the bond’s value is not subject to the sometimes volatile fluctuations of the markets during the agreement term, just the viability of the company issuing the bond; as long as the bond issuer meets its obligations, you know exactly how much you are going to get in interest and at the end of the term. In this case, 12% a year for three years. A total of 36% interest. If the bond is asset backed with a form of security, this gives greater strength to the investment model.
Aside from the lock-in, the biggest disadvantage of unregulated bonds is that they are not covered by the Financial Services Compensation Scheme. If the company goes bust you may lose some or all of your money. You have to be confident the issuer has the financial strength and ability to meet its obligations. With a secured bond, there is always a tangible asset as a failsafe.
The Colonial Capital Bond
The Colonial Capital Bond is issued by Colonial Capital plc through its authorised agent Barrington Howe. This fixed rate bond offers 12% pa for three years. It specialises in buying below market value properties in Chicago and refurbishing them to a high standard before renting them through a US Government Social Housing program to families. The properties have their market values raised through the refurbishment and an exit strategy for guaranteed rents through the US Government. The fixed rate bond issuer is a UK PLC with an FCA regulated security trustee.
The Colonial Capital Bond has been designed to try and mitigate many of the risks associated with fixed rate bonds. Investors have two distinctive levels of security. Firstly, an FCA-authorised investment manager has been appointed to act as security trustee with the power to intervene and seize the assets of Colonial Capital plc if it fails to fulfil any of its obligations to its investors. Secondly, Colonial Capital Bond plc is a wholly owned subsidiary of Colonial Capital Ltd, which is standing as guarantor – so the parent is effectively underwriting the obligations to the company’s bond holders.
This bond also gives you the choice of compounded interest by rolling up your interest over the 3 years. With a compounded interest of 14% per annum, is this one of the best fixed rate bonds?
This year, radical new UK pension rules were announced to allow pension holders the chance to take their entire pension at retirement rather than take out an annuity, an income for life option. Has this turned the world of annuity upside down? Before the budget announcement, the only draw down was a 25 per cent tax free lump sum at 55. Now with the new pension rules, it has opened the door for pension holders to take a much larger lump sum when desired.
Let’s look at the changes. As of April 2015, anyone from the age over 55 will be able to take 100 per cent of their pension as cash. This will apply to both workplace and personal pensions. It will not however apply to final-salary pension schemes. The ability to take a 25 per cent of your pension free from income tax still remains. The remaining draw downs will be subject to income tax.
But won’t this open the door to increased consumer spending or using the money for the wrong reasons? Research from Friends Life has shown that only 7% of us will take all our funds out in one lump sum. The temptation is to spend it rather than invest it wisely. The key is not to spend but invest wisely. Pensioners do not have the time or energy to make up losses so it’s vital that good choices are made. Low risk secure investments ensure the preservation of capital which a pensioners profile matches.
Peter Evans of Barrington Howe says “We have spoken to a number of potential clients over options available to them once the new pension rules change next year. With our products and solutions, pensioners could actually make a significant gain financially and benefit from the new pension rules. With sensible pension planning, pensioners could not only access 100 per cent of their pension but can also receive a greater interest compared to the average pension. Our products are already showing incredible returns of 100 per cent under six years!”
How does this effect an annuity? Peter went on to answer “We have already seen annuities drop from the institutional pension companies such as Standard Life. We would expect to see it drop further across a number of pension companies”
Barrington Howe offers alternative investment opportunities to investors seeking and in recent months we have noticed a high number of prospective clients are looking to more secure investments. Whilst many people have suffered losses to bad alternative investments in recent years, the preferred choice of investment is for a more secure one, sometimes referred to as asset backed. The feeling is that investors want a hands free approach but only if they feel comfortable with the product. The preference is for fixed rates of returns but the main criterion is security. How do I know my funds are secure? How can I be sure that there is a legitimate route for my funds and interest to be paid back? These questions have been consistently asked by clients.
Property investment will always be a popular choice of investment type. It’s tangible and has a great track record for both capital gain and yield if done correctly. As a company we have been dealing with Dolphin Capital for 2 years and our clients are overly satisfied by the proposition. It gives them the level of security they require. In addition it gives a clear level of transparency to understand the investment model. People in the over aged 50 category cannot afford to lose their funds as they cannot work long enough to make it back. So selecting a low risk property investment is crucial in their decision making. After presenting the Dolphin Capital opportunity, we have found that investor clients have been hugely impressed by its model for security, not to mention the impressive returns.
Banks are only offering 0.5 per cent interest per annum. Cash ISAs are offering no more than 3 per cent per annum. These are both low interest rates but the dilemma is where to invest? Some investment offer returns of 10 per cent but without any form of security. People are unclear of where to invest their hard earned money to ensure that there capital is preserved, protected. Dolphin Capital seems to fit the low risk profile for cautious investors. Barrington Howe is now entering its third year as an authorised agent and has seen success via both cash investor and pension investors (SIPP and SSAS). “We look forward to more successful years with Dolphin Capital and our valued clients”.
Wouldn’t you like to Be the bank? For years banks have been reaping the rewards and making substantial profits regardless of the economy. This has been the same for centuries. Billions and billions made regardless of the market conditions. Wouldn’t you like to know of profitable ways on investing money.
But if you had an opportunity to do what the banks do would you take it? If you could replicate what the banks do to make profits by investing money, would you do it?
Considering how they have structured themselves with contracts, investing and loaning funds historically, they have been very successful. A simple formula that has worked for years and years. What am I referring to? In terms of the ability to buy property, offering mortgages is the central hub of property buying on a global scale. But what if you could offer a mortgage with the same benefits?
When a property is bought and you use a mortgage, the bank lends the money and takes a first legal charge on the property. This first legal charge is the security. They don’t own the property but they have the first legal charge ensures that they get paid back their money first before anyone!
What if you could replicate exactly what the banks do and make a substantial profit for yourself?
The banks only lend money in this way if their tight criteria are met and have security against their money. This way they ensure that they will get their money back FIRST before anyone as well as making a healthy profit. But what if you could do this? Let’s face it, the interest rates the banks give is virtually nothing.
What if you could Be the Bank and offer a mortgage? What if you could lend funds in the most secure method on property with full security for your own money. Investing money by being the bank. The ability to protect your funds with security and make a fixed income, just like the banks. Wouldn’t that be great? Why not? Why can’t you have a legal agreement drafted by the same solicitors that advise global banks without having to pay for it?
Be The Bank – It’s All About Security, Security, Security
Well you can now. Regardless of whether you are inexperienced in finance or a professional or sophisticated investor, you can benefit from being the bank. It doesn’t matter what country you are located in. You can receive all the financial benefits of what a bank does without the need for being one.
Now you can Be the Bank by investing money but with an additional security feature. You can have additional security not only against the property but also with the added privilege of your capital and interest held by a solicitor in an Escrow account for additional protection! Now you can Be the Bank and more!
If you would like to Be the Bank, simply email email@example.com with your name and number and one of our staff will call you and share the Be the Bank Opportunity. If you have a minimum of £10,000 or a SIPP, you can Be the bank, Beat the Bank rather than finance the bank.
High yield commercial Investments, pensions and tax planning
Barrington Howe are not licenced investment advisors or regulated by the Financial Conduct Authority to provide financial investment or financial advice. The information and services provided by Barrington Howe do not constitute to financial or investment advice and should not be taken as such.