Where are our home-grown tech giants?

When it comes to technology, it seems the most recognisable companies are more often than not American. Most investors can name the industries dominated by Facebook, Google, Apple, and Microsoft in an instant. In fact, emerging names like Tesla and Airbnb are also American.

Tech names from other parts of the world are quickly gaining ground. In recent years, Alibaba, Softbank, and Spotify have all managed to establish their brands as global household names. However, investors would be hard-pressed to name a British tech giant on the same scale.

Until 2016, the UK’s biggest technology company was Cambridge-based ARM Holdings. Most smartphone and tablet users still have no idea that the the technology developed by this group of engineers powers more than 85% of all mobile devices (Richard Beddard, Money Observer, February 23, 2016). Unfortunately, Softbank’s acquisition of the company in 2016 took it off the London Stock Exchange, forever depriving retail investors of the chance to bet on the growing market for Internet-of-Things (IoT) devices and robotics.

The technology stocks that remain listed on the LSE are either so niche that most investors haven’t heard of them or so small that they stand little chance against their Chinese or American rivals. However, there are some companies that have the potential to dominate their niche. The fact that British technology remains overlooked and undervalued presents an opportunity for investors willing to take a closer look.

Accesso (AIM: ACSO) is a great example of this. Currently worth half a billion pounds, this AIM-listed stock is far from a global technology giant, but its software tools power the guest experience at some of the most recognizable tourists attractions in the world, including Alton Towers and Legoland (Steven Frazer, Shares Magazine, 19 Feb 2015).  

Other interesting tech stocks include gene therapy research firm Oxford Biomedica (LSE:OXB), ID verification services provider GB Group (LSE:GBG), and robotic process automation solutions provider Blue Prism (AIM:PRSM). Just Eat, the online platform that revolutionised takeaway food delivery, just entered the FTSE 100 for the first time last year. Valued at under £4 billion, JustEat (LSE:JE) is arguably Britain’s most well known tech success story (Josie Cox,Independant, 18 December 2017).

Meanwhile the UK is home to 22 out of a total of 50 European unicorns (startups worth over $1 billion) (Jonathan O’Callaghan, Alphr, 30 Apr 2018).  Many of these startups are focused on emerging technologies like biotech artificial intelligence (BenevolentAI), virtual simulations (Improbable), and online food ordering (Deliveroo).

Investors trying to bet on home-grown technology could either take a closer look at underrated tech stocks or wait for these exciting unicorns to open with investors in the near future.

The value of investments and income from them may go down as well as up and you may not get back the original amount invested.

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Is My Money Manager Being Fair?

Wide-ranging pension reforms in 2015 have put Britons in charge of their retirement savings for the first time ever. Millions of savers are now expected to enter the stock, bonds, exchange traded funds, and real estate markets directly. Many of these investors will eventually reach out to a professional money manager or investment advisor to help them shepard their capital.

But how does an investor know their money manager has their best interests at heart? After all, conflicts of interest and bad actors are far from uncommon in the wealth management industry (William Robins, Citywire, 28 June 2017).

Across the pond, American and Canadian regulators are gradually pushing towards a framework for financial advice based on ‘the fiduciary standard’. According to the American Investment Advisors Act of 1940 (Office of the Legislative Counsel of the U.S. House of Representatives., 2018), a fiduciary is an advisor who commits to putting his or her own interest below that of the client. In other words, the advisor has a duty of care and loyalty to the client which supersedes self-interest.  

Although the UK advice market has largely professionalised over the past few years, British advisors are not bound by any such fiduciary rule. Instead, advisors follow the Financial Conduct Authority’s conduct of business rules.

Nevertheless, some advisors have adopted business policies akin to the fiduciary standard in an effort to set themselves apart from the competition. Investors and savers can identify these advisors based on their level of transparency. Straightforward disclosures about the structure of fees, performance reporting and volatility monitoring could be considered a bare minimum. Preferably, advisors should go the extra mile by disclosing potential conflicts of interest, partnership arrangements, and frameworks for unbiased asset allocation.

Savers have the right to ask if their money manager and professional advisor is acting in good faith. By reassuring clients that their interests come first, advisors can set themselves apart from their peers and cement the working relationship.

The value of investments and income from them may go down as well as up and you may not get back the original amount invested.

A pension is a long-term investment. The fund value may fluctuate and can go down. Your eventual income may depend upon the size of the fund at retirement, future interest rates and tax legislation.

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Should the Inheritance Tax be Scrapped?

It’s one of the most unpopular forms of tax in the country. Inheritance tax or IHT, is considered “unfit for purpose” by policymakers and taxpayers on both sides of the aisle. Considering the latest statistics from the government and the rising level of wealth inequality in Britain, the calls for a thorough overhaul of the system seem justified to some experts (Heather Stewart, the Guardian, 2 May 2018).

The tax is structured as a flat 40 per cent levy on assets worth over £325,000 left as inheritance. That threshold is much higher than the median household wealth across the UK. This means only 4% of estates pay the inheritance tax. In 2017/2018, collections rose to  £5.3 billion for the first time, accounting for 77p in every £100 pounds collected in taxes throughout the fiscal year (Lucy Warwick-Ching, Financial Times, April 27, 2018)

According to the Resolution Foundation, there are numerous reasons this tax is considered unfair and unfit by regular taxpayers. Some view it as double taxation of assets from which HM Treasury has already taken its fair share. Others say there are simply too many loopholes in the current system that allow people to get away with paying less. Coupled with all the exemptions under the current system, an individual can inherit up to £900,000 without paying IHT (Delphine Strauss, Financial Times, MAY 2, 2018).

Instead, the Resolution Foundation (Press release, 2 May 2018) argues for a tax on gifts and bequests given out over a lifetime. According to the foundation’s research, this ‘Lifetime Receipts Tax’ could make the tax system fairer for everyone and raise the government’s tax revenue. A hypothetical 20% tax on gifts worth between £125,000 to £500,000 and 30% on gifts beyond that could help the government raise £11 billion by 2020-21, nearly double the amount under the current system.

Replacing the tax on inheritance to one on gifts given out over a lifetime could move the British system closer to the one implemented in France and Ireland. Whether or not the IHT should be reformed is still under review by the independent Office of Tax Simplification. Their report is due by the end of the year which means taxpayers can expect an overhaul relatively soon.

Information is based on our current understanding of taxation legislation and regulations which is subject to change.

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Women Deserve Better Wealth Managers

According to the latest data, the UK is home to over 50,000 high-net worth (HNW) women (GlobalData Plc., Wealth in the UK: HNW Investors 2018). Women represent 14.6% of the total HNW population in the country, proportionatly higher than any other country in Europe. A confluence of social, demographic, economic, and technological trends have empowered women across the region.

Yet it seems the traditional wealth management industry is failing next-gen female business leaders and successful female entrepreneurs. 73% of women who employed the services of a wealth manager in the UK said they felt misunderstood ( “Harnessing the Power of the Purse: Female Investors and Global Opportunities for Growth,” Center for Talent Innovation, 1 December 2016). They used the words “unwelcoming,” “patronizing,” “male-dominated” and “full of jargon” to describe the industry as a whole.

Accenture Consulting (2017) finds that most women have a different investment style and a different set of needs from the advisors they work with. Women demand a higher degree of communication and a broader approach to setting long-term financial goals. They are also more likely than men to be conservative investors.

Women are likely to keep generating wealth at an accelerated pace for the foreseeable future. Their growing financial strength represents an opportunity for the wealth management industry. Increasing diversity at the firm could be one way to better serve this expanding pool of potential clients.

According to the latest industry statistics (James Connington, The Telegrapgh, 9 AUGUST 2017), women manage less than 6% of the total money in funds. In the UK, there are 10 male advisors for every single female financial advisor (Money Marketing, 28th June 2016). Hiring and training more female wealth advisors could prove to be a competitive advantage. Meanwhile, reinventing the organisation’s culture to be less male-dominated and more client-centric is a winning strategy regardless of the industry.

The value of investments and income from them may go down as well as up and you may not get back the original amount invested.

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Making An Impact

The impact investing wave hasn’t hit Britain - yet.

The nature of capitalism is gradually changing across the world. In recent years, wealthy investors have tried to look beyond the basic fundamentals of their investments to uncover the true social impact of their decisions. Making a conscious effort to divest from certain companies and invest in others based on personal beliefs and values has become a multi-billion dollar global trend known as ‘impact investing’.

According to the Global Impact Investing Network (GIIN) annual survey (May 17th 2017), investors have deployed $228 billion in assets to social impact ventures. These ventures include alternative energy projects, affordable housing loans, water treatment solutions, waste management services, wildlife conservation, and early education. With 32% annual growth, Southeast Asia is the fastest growing market for such investments. However, the UK domestic market remains largely untapped.

An industry review (Advisory Group appointed by HM Government, GROWING A CULTURE OF SOCIAL IMPACT INVESTING IN THE UK, 2016) revealed that 56% of survey respondents have considered making social impact investments, but only 9% have actually done it. The report says industry leaders need to do more to improve accessibility to social investment vehicles. It recommends increasing the number of products offered in this sector. The overall UK market is estimated to be worth £150bn and is primarily comprised of green energy bonds, renewable energy infrastructure, social housing, and social impact businesses.

Investors seem to have recently recognized the fact that these investments are not money-losing bets or misguided attempts to signal virtues. Instead, many of them offer attractive returns and significant cash flows. With the rise of exchange traded funds (ETFs) backed by environmental or social goals (ESGs), making such an impact investment is easier than ever. 2018 was a record year for these ETFs, with eight new ones being launched in May alone. There are now a total of 31 ‘ethical ETFs’ with little over £3.9bn in assets under management (Kate Beioley, Financial Times, MAY 24, 2018).   

Industry insiders believe the government needs to step up and support these initiatives to encourage more investments (Sarah Gordon, business, Financial Times, NOVEMBER 14, 2017). By co-investing alongside private investors, offering tax incentives, and relaxing certain regulations, the British government can accelerate growth in social impact investing across the country.

The government has already tried to make a similar move in the past. In 2012, it set up Big Society Capital, an independent investment institution, to invest money from dormant bank accounts into social ventures. The government has also expanded the reach of the social investment tax relief (SITR) to encourage big ticket investments in social impact ventures.

With better products, growing awareness, and government support, ordinary investors can finally participate in an asset class that can deliver not just an enormous social benefit but also a justified return on investment.

The value of investments and income from them may go down as well as up and you may not get back the original amount invested.

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Good governance is the unsung hero of investment returns

Management strategy, successful products, economic growth, and low interest rates are often the core drivers of investment returns. Sometimes, experts will go as far as to commend the corporate culture or CEO’s vision to explain the abnormal returns from a stock. However, investors tend to overlook the importance of good corporate governance.

Robust corporate governance is the antidote to an issue academics like to call ‘the agency problem’ (Sunit Shah, CFA Institute Research Foundation, 1 March, 2014). The agency problem is an inherent conflict of interest between those who run the company (management) and those who own it (shareholders).

The owner-manager relationship is fraught with misaligned incentives and asymmetric information. The responsibility of closing this gap and resolving the conflict lies with the shareholder-appointed board of directors. A healthy dose of oversight from an independent board could check the management’s tendencies to waste resources, cut corners, overpay themselves, or dilute the stock.

The board promises to uphold the rights of shareholders and safeguard their interests. It seems intuitive that stronger oversight and shareholder rights should lead to better performance. Indeed, recent studies have managed to establish this link.

A study of shareholder rights at 1500 large firms during the 1990s found that companies with a better score on the ‘Governance Index’ made fewer corporate acquisitions, had higher profits, lower capital expenditures, and better sales growth (Gompers et al., Quarterly Journal of Economics, February 2003). In other words, the value of the firm was noticeably enhanced by better governance.

Fortunately, measuring corporate governance at publicly-listed companies has become easier with the Institute of Director’s annual publication of the Good Governance Index (GGI). The GGI measures corporations based on 47 different governance indicators ranging from the percentage of CEO pay in stock to the frequency of board meetings every year.  In the latest report, Diageo Plc. came out on top with a score of 837. GlaxoSmithKline Plc. scored the least - 627 (IoD, Good Governance Report, 2017).

The GGI provides a window into the boardroom for retail investors. Leveraging these tools could help investors monitor their company managers more closely, mitigate the risks and moral hazards of owning a piece of a large company, and perhaps enhance their investment performance.

The value of investments and income from them may go down as well as up and you may not get back the original amount invested.

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Measuring Dividend Quality

With fixed income yields at record lows across the developed world, income-seeking investors have had a tough decade. Ever since the financial crisis of 2008, the yield on government 10 year treasury bonds has tumbled from around 5% to 1.68% (investing.com). The hunt for income over the past decade has led investors to either buy-to-let properties or dividend stocks.

A number of FTSE 100 companies pay dividends many times greater than the income from fixed income securities. Most of these are household names. Vodafone, for example, pays out nearly 9% of its current stock price in dividends. Similarly, National Grid, Marks & Spencers, and the Royal Mail PLC offer dividend yields of 7.58%, 8.18%, and 9.51% respectively. The overall FTSE 100 pays just over 4% in dividends (David Brenchley, Morningstar, 23 April, 2018).

Such handsome dividends coupled with the opportunity for price appreciation make dividend stocks an ideal asset class for income seekers. However, investors need to take a closer look to ensure the dividends are sustainable. A sudden plunge in the stock price or an unexpected cut in the annual dividend payout could negatively impact the total return from these stocks.  

It is essential to establish a connection between a company’s dividends and its underlying economics. Companies need to have adequate annual earnings to cover their expected dividends. A dividend coverage ratio (net income divided by dividend) of greater than 1 is absolutely essential. Firms also need to have adequate cash, low debt, and healthy growth prospects to sustain the dividend long term.

Another important factor dividend investors must consider is the management’s philosophy. A number of cash-rich and stable businesses do not offer a dividend because the management believes it can generate a higher return for shareholders by reinvesting the free cash flow back into the enterprise. The most prominent example of this is Warren Buffett’s Berkshire Hathaway, which has never paid a dividend in its 54-year history (Aristofanis Papadatos, Seeking Alpha, Feb. 28, 2018). That’s despite the fact that the company’s cash hoard recently reached $116 billion. With this in mind, income-oriented investors need to pay close attention to a change in management or its dividend policy.

A well-diversified, high-yield dividend portfolio can help investors who rely on their investments for income. However, the cash flow from dividends is often unpredictable over a longer time horizon. Investors need to periodically check the financial health of the business to ensure their quarterly payments are sustainable.

The value of investments and income from them may go down as well as up and you may not get back the original amount invested.

The value of investments and income from them may go down as well as up and you may not get back the original amount invested.

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The Impact Of British FinTech Innovations

It’s easy to underestimate the power of Britain’s tech industry. While startups from Silicon Valley and China suck up all the room from media press briefings, British startups have been developing and innovating very much under the radar. The UK is now home to over 4,799 startups, many of which are in the financial technology (FinTech) sector (Startup Rankings).

In the latest Global Financial Centres Index, London came out on top, beating New York (Z/Yen, March 2018). A combination of financial talent, government support, and a reputation as a financial center built over centuries helped London cement its position. Now, billions are pouring into to ensure the financial hub evolves and stays on the bleeding edge. From 2016 to 2017, the amount of money invested in London-based FinTech startups doubled to nearly £800 million (Tim Focas, Financial Times, November 21, 2017).

Startups like Transferwise (recently moved to Estonia), Yielders, Lending Club, and Monzo have had a tangible impact on the country’s economy and the lives of millions of people. Later this year, peer-to-peer SME lender Lending Club plans to launch an IPO that could value the firm over £2 billion (Mike Knight, Fathom London, April 23, 2018). Yielders has single-handedly catapulted London to the top of Islamic FinTech with its Shariah-compliant property investment crowdfunding platform. Transferwise, London’s most well-known fintech giant, has already claimed over 10% of Britain’s overseas money transfer market. The company became profitable last year (Neil Ainger, CNBC, May 17, 2018).

At the center of the revolution was London’s Silicon Roundabout. Since the term was coined in 2008, thousands of startups have flourished in the area, with some of the biggest names in tech - Softbank, Google, and Facebook - investing there. According to some estimates, the area is still likely to create more than half a million jobs over the next few years, attract billions in investment, and offer tech workers salaries that are more than double the median individual income (The Telegraph, 2018).   

The services and platforms sprouting up in London’s tech hub are streamlining an industry ripe for disruption. Slashing bank fees, increasing access to SME loans, helping entrepreneurs crowdfund their projects, and bringing low-cost digital banking to millions has had a tangible impact. Going forward, there’s little doubt London’s reputation as a FinTech hub will help it retain its position as the global financial linchpin.

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London’s Potential Role As A Blockchain Tech Hub

For centuries, London has served as the most vital artery of the global flow of financial assets.The city’s financial industry is so critical that it accounts for 12% of Britain’s GDP, employs 1.1 million people, underlies the value of a vast swathe of commercial and residential real estate, and contributes more to the government treasury through taxes than any other industry (Andrew MacAskill, Insurance Journal, March 28 2018)

Which is why it’s important that the city recognises and embraces the upcoming paradigm shift in the world’s capital markets. According to David Treat, managing director of Accenture Capital Markets (Accenture Perspectives), blockchain technology has the potential to “fundamentally re-architect processes” in the global financial services industry. Smart contracts, distributed ledgers, and digital assets could change the way financial institutions settle contracts, onboard clients, and manage collateral. Some estimates suggest that the technology could add business value worth $176 billion by 2025 and over $3.1 trillion by 2030 (John-David Lovelock, Gartner, March 02, 2017).

Considering the magnitude of this technological shift, it seems reckless for Britain’s financial capital to ignore it. The favourable regulatory environment and thriving startup scene have already encouraged entrepreneurs and investors in the space. The Bank of England (Mark Carney speech, BoE, March 02, 2018) acknowledges the potential of this technology to make transactions cheaper and more secure, while the Financial Conduct Authority's Project Innovate is helping entrepreneurs navigate the regulatory hurdles in this nascent industry. Earlier this year, the UK government also launched the world’s first Cryptoasset Taskforce to encourage innovation in the space (HM Treasury, Gov.UK, May 21, 2018).

London, meanwhile, continues to cement its position as a prime destination for blockchain events and conferences, with at least 11 major blockchain events in 2018 (Josh Levine, Bizzabo, Feb 27, 2018). Networking events like these attract thousands of attendees from across the globe. Amongst the visitors could be talented developers and passionate entrepreneurs who may pick the city as a base for their next venture.

London’s position as the leader in financial services is about to hit a transition point. With Brexit looming, fintech gaining steam, and digital assets proliferating, it seems the city needs to innovate to stay ahead. Fortunately, combining technology with raw talent and an entrepreneurial spirit has been done here before. For now, the city has barely tapped into its true potential as a critical hub for blockchain innovation.

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Does a Post Brexit Investment Boom Beckon?

Loose monetary policy and high profit margins for UK investment should translate into significant business investment. Pension auto-enrolment and the National Living Wage have driven the cost of labour up and companies are close to capacity after a 9 year positive run for the economy.

A fear of Brexit uncertainty has caused firms to hoard cash in response, lowering business investment.

Business investment has been 3 to 4 percent lower than it otherwise would have been according to the Bank of England.

According to Pantheon Macroeconomics:

"Business surveys clearly indicate that Brexit is to blame for the decoupling between investment and current economic fundamentals."

A record £57 billion in currencies & deposits was amassed in the first year after the referendum, with the accumulation continuing ever since. 37% of GDP is now held in deposits, an increase of 5% since the referendum.

A decline in investment is not the only reason for the lack of investment, as the cash is also being earmarked for financing.

Once Brexit occurs, the massive backlog of cash could be injected in to the economy.

A soft Brexit is far from certain however, as the latest proposal from the British government is likely to be rejected by the EU. This proposal is also viewed negatively by some of the hard line elements in the Conservative Party.

Pantheon Macroeconomics predicts that investment will increase to 3% in 2019, up from 0.8% this year with GDP growth set to rise to 1.7%.

Your financial adviser can help to make sure you are sufficiently diversified and in the right investments that will help you to achieve your long term goals.

The value of investments and income from them may go down as well as up and you may not get back the original amount invested.

Information is based on our current understanding of taxation legislation and regulations which is subject to change.

Past performance is not a reliable indicator of future performance.

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Is It Too Late to Invest in Biotech?

It's increasingly difficult to invest in the biotech sector as there was a decent selection of low risk, relatively large companies around.

A higher level of competition means that the amount of time that smaller firms that dominate the space have in order to generate profit has become more limited, complicating things for investors.

A decade ago, large firms were creating drugs with massive potential, which was then followed by a second wave. Now, however, these companies have matured and have become the new establishment and begun to stagnate.

Keeping in mind the fact that it's mainly smaller companies that will provide interesting growth for investors, finding the companies that have new revolutions in the pipeline is a challenge for investors. In addition, the successful company may have as little as a year to enjoy the low competition environment that they had created.

One example of this is Vertex, that launched a Hepatitis C treatment that launched strongly but fell away sharply as Gilead launched a competing drug that improved upon it.

Patients have benefited from the breakneck pace of innovation in the sector driven by the ease of development of new products, however, investors have found it much more difficult to navigate the new environment.

Prioritisation of certain disease areas is one way that investors can keep on top of the sector as it's not possible to talk to every company in the sector. Diabetes for example, is one area of high competition that would produce short profit time frames for the companies involved. Therefore it's best to look at areas with low competition.

A focus on a particular tumour or disease stage will often insulate a company from excessive competition due to barriers to entry caused by the approval process.

Biotech should continue to grow well in the long term, however the sector is more complicated than ever for investors.

Your financial adviser can help to make sure you are sufficiently diversified and in the right investments that will help you to achieve your long term goals.

The value of investments and income from them may go down as well as up and you may not get back the original amount invested.

Information is based on our current understanding of taxation legislation and regulations which is subject to change.

Past performance is not a reliable indicator of future performance.

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Don't Let Fear Hold You Back From Investing, Your Adviser can Help!

New research from Scottish Friendly indicates that more than half of savers are so concerned about investing that they are seeing their savings eroded by inflation instead.

49% of those surveyed indicated that the fear of potential losses was their main concern. 53% responded that they wouldn't be willing to invest in stocks and shares at all.

By doing this however, inflation eroding savings becomes a real concern, as it's currently running at 2.4%, while the savings rate is only 1.33%.

According to Calum Bennie of Scottish Friendly:

" Every pound you save becomes less valuable when it’s held in an account that pays less than the rate of inflation. Brits are being driven by a nagging fear of losing money, which may be clouding their personal judgment when it comes to important financial decisions."

A gain of only £162 in 2016/2017 would have been earned by investing in a cash ISA in the 1999-2000 tax year, a very small return by any standard.

The exact same investment in the FTSE All Share would have increased by £841 in the same period.

Since 1999, cash accounts have increased by less than stocks and shares ISAs two thirds of the time.

Some of the reasons that are holding investors back are the idea that they can't afford it, the perceived complicated nature of financial products and the lack of comfort with non cash holdings.

Callum Bennie says:

"Investing is not without risk, of course, and ultimately you shouldn’t feel uncomfortable about where you’ve put your money. But interest rates on cash accounts have been rock-bottom for a very long time now, and inflation is consistently eating away at the value of that money."

Your financial adviser can help to make sure you are sufficiently diversified and in the right investments that will help you to achieve your long term goals.

The value of investments and income from them may go down as well as up and you may not get back the original amount invested.

Information is based on our current understanding of taxation legislation and regulations which is subject to change.

Past performance is not a reliable indicator of future performance.

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The London Exodus Continues!

House prices are one of the factors that have caused the amount of people leaving London to increase by 55% over the last 5 years.

Estate Agent Knight Frank have found that the only age group that is moving in to London on a net basis was those who are in their 20s.

Record numbers moving out of London

Frank Knight have revealed that 336,000 people left London to live elsewhere in the UK over the course of the year to June 2017, which was a 15% increase when compared with the previous year.

The current level of outward migration from London is at it's highest level since 2011. The 30s age group is the group leaving in the highest numbers.

Most popular places to move to from London

Scotland was the most popular destination, with Birmingham, Brighton and Bristol the next most popular.

Are London house prices too high?

The average house price in London was £484,584 as of April 2018, significantly higher than the average UK price of £226,906. Houses in Croydon, one of the more affordable areas in London cost £273,526 on average, which would require a deposit of £27,000 and income of £55,000 in order to make a 90% mortgage affordable.

Cheaper alternatives to London

Brighton, Bristol, Thurrock and Birmingham with the average cost per property in Birmingham being less than half that of London.

Are London prices cooling down?

The recent slowdown in London has meant that in March 2018, the average house price was lower than the previous year for the first time in five years. Growth improved in April, however it was far lower than the 20% increase recorded in August 2014.

Help for buyers in London

London Help to Buy, shared ownership and Affordable Housing schemes are some of the ways buyers in London can enter the market.

Are you thinking of making a move? Your Mortgage adviser can help you to secure the home or investment you are looking for.

Information is based on our current understanding of taxation legislation and regulations which is subject to change.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Our charges are usually between £395 and £995 depending on the type and amount of borrowing required and individual circumstances.


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How Will the Market Slowdown Affect Housing Prices?

A new report outlines the fact that house prices will need to be cut or the home will need to be heavily promoted in order to be sold.

A gulf has opened between the expectations of sellers and buyers, caused by an increase in homes coming to market in combination with the regular summer lull that has pushed asking prices down according to Rightmove.

Rightmove reports that a fall of 0.1% was recorded in the time spanning June and July, down from growth of 0.4% in the month before.

However, prices are at their highest in five years, with prices up on an annual basis by 1.4%, though this was a fall from the figure of 1.7% in the previous month.

A third of properties currently for sale have been reduced at least once, pointing to the disparity in expectations between sellers and buyers.

The highest proportion of homes for sale since 2015 has resulted from an 8.6% jump in properties for sale combined with a lack of new buyers.

According to Miles Shipside of Rightmove:

"At this time of year many potential sellers are more focused on erecting sun umbrellas as opposed to 'For Sale' signs, and would-be buyers are equally distracted by their summer holidays,

Prospective buyers will need tempting with a summer special price or a beautifully finished and presented must-have home, and sellers whose homes tick these boxes then need an estate agent with good marketing skills to promote it effectively,"

The level of sales transactions is improving over the course of the year as sales in the year to date were down by 3.9% and improvement from the 5.4% decline at the same time last year.

The results differ geographically also as London and the South saw the largest fall in transaction, with the north not declining as much.

When compared to the same time last year London and the South East saw falls of 11% and 8% respectively in the three months prior.

Brian Murphy of the Mortgage Advice Bureau, says: "This month's report suggests that asking prices have flattened in many parts of the UK, partly as a result of the distractions of sunshine and major sporting events, but also as the disparity grows between what vendors believe their property is worth at first listing, and what the market will actually stand.

...As it stands, consumer confidence currently appears to be holding steady, despite ongoing Brexit headlines, which stands us in good stead for the next couple of month across the height of the summer holidays."

Are you thinking of making a move? Your Mortgage adviser can help you to secure the home or investment you are looking for.

Information is based on our current understanding of taxation legislation and regulations which is subject to change.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Our charges are usually between £395 and £995 depending on the type and amount of borrowing required and individual circumstances.

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Are You Paying Too Much for Money Transfers?

Transferring money abroad is increasingly becoming a common occurrence with emigration, presents to family members or holidays just some of the reasons a transfer could be needed.

£107,400 is the average amount transferred when moving overseas according to TransferWise, the money transfer service.

The most likely reasons for sending cash overseas are property & living expenses, closely followed by shopping and family events according to FairFX.

Banks are using the lack of knowledge of alternatives in order to collect high fees on transfers, with a £250 transfer to Germany costing £17.50 at Lloyds Bank and £20.80 at Santander according to Consumer Intelligence. Specialist providers such as Western Union would charge £1.09 for the same transaction, with app TransferWise second at £1.70.

Jenifer Swallow of TransferWise asserts that banks are taking advantage of consumer's lack of knowledge in the sector:

“It’s unfair that banks are not transparent about what they’re really charging customers for this service," she said. “Banks charge anything from 3pc to 7pc of the transaction amount for an international payment. These transactions are regularly advertised as costing ‘just £5 or £10 upfront’ or even ‘fee free’ – but sending £250 to the eurozone with a Santander current account costs a hefty £22 in fees. Much of the charge is hidden within a poor exchange rate.”

Ian Strafford-Taylor of FairFX says that the banks use less efficient methods of transfer, adding to the cost to the consumer:

"Banks are notorious for slapping consumers with big fees when it comes to international money transfers.

"Additionally, rates advertised on companies’ websites and the indicated rate given over the phone can vary by as much as 1pc, with the majority of firms offering better rates on their website than on the phone."

Santander is one provider that says it was investigating ways of lowering costs.

Speak to your financial adviser to put a long term financial plan in place.

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Are You a Renter Seeking to Climb the Property Ladder?

A high proportion of renters in the UK still wish to become home owners at some point despite the fact that many do not have any savings.

The results over the past decade have not changed, when asked, three out of five renters have indicated that they aspire to home ownership in the future.

64% of households did not have savings in the 2016-2017 tax year according to the data released by the English Housing Survey.

This rose from 54% in the 2014-2015 edition of the survey.

30.4% of respondents had more than £16,000 saved, while a third of those surveyed had less then £5,000 saved.

The results indicate a disparity between the amount most would realistically need in order to pay a deposit on a home and the level of savings that they possess as the average cost of a home in England is £240,000. A 10% deposit would mean that most of those surveyed would be unable to afford it.

An increase in the age of those surveyed does not necessarily mean an increase in savings as 69% of renters in the 45-64 age bracket have no savings, compared with those in the 16-24 bracket at 61%.

While the desire to buy still remains, the lack of resources has resulted in a more long term approach, with three quarters of those surveyed expecting their planned purchase to be over two years away, which is up from 65.8% recorded 10 years ago.

The Bank of Mum and Dad could figure in the plans of some prospective home-buyers, as according to Legal & General, friends and family gifted £6.5 billion towards property purchases in 2017 and 62% of home owners bought homes in this fashion.

Are you thinking of making a move? Your Mortgage adviser can help you to secure the home or investment you are looking for.

Information is based on our current understanding of taxation legislation and regulations which is subject to change.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Our charges are usually between £395 and £995 depending on the type and amount of borrowing required and individual circumstances.

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Is Buy-to-let Still Viable?

Buy-to-let landlords are being courted by lenders in order to help them borrow over the past 6 months. The tough new lending rules have prompted lenders such as Virgin Money and West One to allow borrowers to use their property's rental income and their own income when applying.

Barclays, BM Solutions, Precise Mortgages, Vida Homeloans, Kent Reliance, Aldermore and Metro Bank offer this, known as 'top slicing'.

If the interest rate paid was 5.5%, the property's rental income was required to be 145% (up from 125% previously) of the mortgage payment under new rules introduced in January 2017.

The new rules significantly reduced landlord profits.

Some providers go even further in terms of the income that can be included, as West One for example offers other income to be included if the rental income is over 100% of the mortgage payment.

Jeni Browne of Mortgages for Business says:

"Top slicing is not new. The likes of Metro Bank and Barclays have been using it for a long time and now, as regulatory guidelines are forcing lenders to apply more onerous rental calculations, we are seeing more lenders moving into this space.

This works really well for those who are medium to high income earners, have minimal borrowing and three or fewer buy-to-let mortgages. Top slicing has enabled many borrowers to reach their desired objectives, particularly when a more tick-box approach has failed them."

Be aware that utilising this arrangement could impact upon you in the future:

"For those with four or more mortgaged buy-to-lets, lenders are required to assess the landlord’s entire portfolio and ensure that they are comfortable that the existing arrangements can withstand rental voids, interest rate rises and the tax changes.

To this end, the properties already in the portfolio are also subject to a rental calculation and so having a mortgage which relies on top slicing in the background could mean that you fall outside of the lender’s parameters."

Are you thinking of making a move? Your mortgage adviser can help you to secure the home or investment you are looking for.

Information is based on our current understanding of taxation legislation and regulations which is subject to change.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Our charges are usually between £395 and £995 depending on the type and amount of borrowing required and individual circumstances.

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How Much Should You Save for Retirement?

In order to have a reasonable lifestyle in retirement, workers need to save at least 12% of their salary in to their pension, and employers should be made to contribute half of that according to a new report.

Only three percent of savers in modern pension schemes will be able to afford a comfortable retirement.

An increased focus on real life targets such as holidays and cars should be implemented in order to make the future benefits of saving more tangible.

The minimum savings rate has risen to 5% and will increase to 8% in April 2019, with half paid by the employee, with the remainder paid by the employer and tax relief.

Many people think that the minimum level of contributions will guarantee them a comfortable lifestyle which is not the case according to the report:

"The vast majority of savers do not understand retirement savings, do not know what sort of income they should aim for in retirement, and do not know how to achieve it.

Future generations of retirees are ...much less likely to have sufficient assets to generate an adequate retirement income."

At the new rate of 8% of salary, 94% of people will reach a common measure of basic living requirements (£9,998 in 2017) by the time they need to retire.

A comfortable retirement, measured as two thirds of their pre-retirement income, would only be reached by 3% of those who hold new style defined contribution pensions.

The lower levels of home ownership combined with lower pension levels and higher social care and housing costs point to a struggle for many pensioners in the future.

It's important to keep your investments and pensions under regular review in order to ensure they are being invested in line with your goals.

Your Financial Adviser can construct a financial plan for you that will enable you to meet your financial goals.

The value of investments and income from them may go down as well as up and you may not get back the original amount invested.

A pension is a long-term investment. The fund value may fluctuate and can go down. Your eventual income may depend upon the size of the fund at retirement, future interest rates and tax legislation.

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Have You Been Over-taxed by HMRC?

The emergency tax will continue to be levied on those that wish to withdraw income from their pensions by HM Revenue & Customs (HMRC) despite criticism from the pensions industry.

HMRC assumes that any withdrawal from a pension under the new pensions freedoms rules will be repeated on a monthly basis over the course of the year and charges accordingly.

This means that a single withdrawal will only have 1/12th of the usual annual allowance applied to it. A lack of understanding of the new rules has been highlighted by the Office for Tax Simplification, with the resulting over taxation of retirees to the tune of hundreds of millions of pounds having resulted already.

According to HMRC, they have already reviewed the current system and have concluded that any changes at the current time would not significantly improve the tax position for the majority". The current method is designed to reduce the risk of tax underpayment.

Tom Selby of AJ Bell says: "This is a disappointing stance from HMRC when you consider that people withdrawing their pension have been overtaxed by hundreds of millions of pounds over the past few years."

Those who have overpaid and not applied for a refund will have been left out of pocket, with £300 million in overpaid tax having been collected due to the new policy.

Mr Selby continues: "By continuing to overtax people, HMRC risks pushing savers into financial difficulty and forcing them to withdraw more than they need, which could result in them paying even more tax.

‘HMRC’s belligerent refusal to countenance any public debate on this issue is deeply frustrating".

If you think that you may have overpaid, see HMRC's site for further information.

Your Financial Adviser can construct a financial plan for you that will enable you to meet your financial goals.

The value of investments and income from them may go down as well as up and you may not get back the original amount invested.

A pension is a long-term investment. The fund value may fluctuate and can go down. Your eventual income may depend upon the size of the fund at retirement, future interest rates and tax legislation.

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Are You Overly Exposed to China? Your Adviser Knows!

Have the recent falls in the Chinese stock market and currency been caused by the US tariffs of $34 billion and the potential trade war? The stock market and currency falls may look as though they are correlated but there may not be a direct link.

Shaken retail investors have caused the Shanghai Shenzhen composite to fall in to bear territory. Slowing economic activity had already dampened the expectations of investors before the prospect of the trade war had been raised,

A clampdown on speculative loans by Chinese authorities has put the brakes on the economy, with the dispute with the US acting as a 'double whammy' for the Chinese market.

The reverse is now happening as the Chinese authorities are raising the personal income tax threshold to RMB60,000 from RMB42,000 generating RMB125 billion in potential consumption, boosting GDP by 15 basis points and benefiting over 80% or 340 million people. An increase in infrastructure spending has also been mooted.

The currency however, is more sensitive to trade concerns. The renminbi would be negatively affected by the lower exports caused by a trade war. It has been suggested that the lower value of the RMB could be intentional on the part of China, however, this could lead to capital outflows that could exacerbate the problem rather than being advantageous for China.

Policy will likely continue to cushion the domestic economy of China in anticipation of further headwinds courtesy of the US.

Your financial adviser can help to make sure you are sufficiently diversified and in the right investments that will help you to achieve your long term goals.

The value of investments and income from them may go down as well as up and you may not get back the original amount invested.

Information is based on our current understanding of taxation legislation and regulations which is subject to change.

Past performance is not a reliable indicator of future performance.

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