Over one in ten people across Britain own second homes, buy-to-let and overseas properties worth £941 billion, according to new research published by the Resolution Foundation. Game of Homes – a report funded by the Nuffield Foundation – looks at the growth of additional property wealth over the last two decades, who owns it, and what it means for wealth gaps across Britain.
The report shows that rising additional property wealth since 2001 has been the flipside of falling home ownership. The latest data (for 2014-16) shows that 5.5 million people reported additional property wealth, up 53 per cent since 2001. The value of additional property wealth has increased from around £610 billion in 2001 to £941 billion over the same period (both in 2018-19 prices). Game of Homes finds that, like most other forms of wealth, additional property wealth is accumulated over time, and is therefore most common among older generations.
Around one in six people born in the 1950s report additional property wealth, the highest of any cohort. The report notes that younger generations are failing to match the home ownership rates of previous generations, with 37% of people born in the 1980s having property wealth at age 29, compared to 50% of people born in the 1960s. However, it finds that younger generations are matching the additional property ownership rates of previous generations, with seven per cent of those born in the 1960s and 1980s having additional property wealth by the age of 29.
This suggests that millennial property wealth is being increasingly concentrated among rich households, says the Foundation. Looking at the kinds of additional property wealth that people own, the report shows that buy-to-let property is now by far the most common form, having grown by 58% since 2006-08. 1.9 million people have buy-to-let property wealth, compared to 970,000 people owning overseas property (which has not grown since 2008). The Resolution Foundation says that big income transfers in the buy-to-let market are currently taking place between generations. Younger private renters tend to transfer money to older landlords, with baby boomers receiving more than half of all rental income in the UK.

Regardless of the inevitable peaks and troughs, the value of property in the UK has increased significantly over the years and the long-term trend has largely been upwards. With continuing under-provision for retirement and property forming (for many) the greatest part of their wealth, raising cash by releasing equity from a home is becoming more and more popular. In addition to this, people are living longer and staying fitter. Consequently, for many who are over the age of 60 and are asset rich but cash poor using their home to provide a source of income is becoming popular.
Increased property prices have also contributed to interest in planning strategies that can help reduce inheritance tax (IHT) without diminishing security and with the owner continuing in rent free occupation of the property.
As for any financial strategy incorporating the assumption of debt, it is essential that a full and rigorous assessment of suitability is made before any form of recommendation for equity release is considered. The client needs to fully understand all the implications and the whole advice process needs to be fully recorded.

The DWP has published their finding on workplace pension savings in the document Workplace Pension Participation and trends of eligible employees 2008 – 2018. These official statistics provide breakdowns of two key measures for evaluating the progress of automatic enrolment implementation: increasing the number of savers, by monitoring trends in workplace pension participation and persistency of saving; and increasing the amount of savings, by monitoring trends in workplace pension saving.
The main findings were:
72% of eligible employees have saved into a workplace pension in at least three of the last four years, the DWP’s measure of persistency of saving;
The annual total amount saved by eligible savers stood at £90.4bn in 2018; and
87% of eligible employees were in a workplace pension in 2018.

A tribunal has thrown out an appeal by a property tax expert who claimed he did not need to pay stamp duty on a house purchase, as he paid the vendors through an annuity. The purchaser, David Hannah, runs a tax advice firm called Cornerstone Tax. He bought the property in 2011 with a deposit of £38,250, with the rest to be paid through an annuity. Under the original terms of the annuity, the sellers would be paid £383 a year, meaning it would take the best part of 2,000 years in order to pay off the full balance, according to the tribunal documents.
However, responsibility for paying the annuity was then transferred to a firm in the British Virgin Islands, which paid the full amount when it was called in by the vendor’s own lawyers. Hannah claimed the structure of the deal meant it fell within the zero per cent stamp duty threshold, but the taxman disagreed, leading to demands for the £30,600 in unpaid stamp duty, plus interest, as well as individual penalties against Hannah and his wife. The courts have found against his appeal, however. The tribunal judge stated that he “knowingly provided” HMRC with a document that contained an error “with the intention that HMRC should rely upon it as an accurate document”.

Identity fraud has risen in 2018 with over-60s and those aged 21 and under becoming prime targets. That’s according to the latest annual report from UK fraud prevention service Cifas, which revealed a dramatic 34% spike in identity fraud victims among the over-60s to over 33,000. This represents a significant jump compared to an overall 6% rise in cases recorded by Cifas.
As older people are perceived to be more likely to be approved for credit, they have found themselves increasingly targeted. Pensioners are not the only targets as the number of identity fraud victims aged 21 and under have soared by 26% over the same period. Commentators believe the continuing increase in the number of young victims of identity fraud is a clear signal that the need for education on the risks of fraud is pressing. According to the report, identity fraud cases hit a record high of 189,000 in 2018, with plastic cards in particular being targeted by fraudsters.
“Identity fraud to obtain a plastic card account, more than nine in 10 of which were personal credit cards, increased by 41% in 2018 to more than 82,000 reported cases,” comments Cifas. Misuse of facility fraud also rose significantly last year, increasing 10% and accounting for a quarter of all reported fraud cases. Cifas says this type of fraud happens when an account, policy or product is misused.

Both funds and trusts are collective, or pooled investments; that is, they pool the money of large numbers of individual investors to create a much larger amount of money which can then be invested. Also, they both use a fund manager to decide which companies to buy with the investors’ money. Funds are also known as open ended investment companies, or OEICs, and unit trusts in the UK. By definition they are open ended companies. That means when new investors come along with money to invest, new units in the fund are created and the fund grows.
Similarly, when investors want their money back, the fund shrinks as the units are cancelled. Investment trusts are different in that in principle there are a fixed number of shares in issue, so in order for an investor to buy shares another investor must be prepared to sell. This is the main difference.
So, what’s the impact of the closed- and open-ended structure for investors? Firstly, in extreme market conditions, investors often want to move into cash. Managers of funds sell assets to achieve this and if they need to sell at a loss, returns for investors are affected. Investment trusts, on the other hand, match sellers to buyers so the manager can avoid being forced to sell investments in a falling market. A trust can also borrow money or ‘gear’ to enhance returns in a rising market. Investment funds cannot don’t normally do this.
Gearing allows the manager to take advantage of opportunities he would otherwise be able to access, but he must ensure that the return he gets from that opportunity outweighs the cost of borrowing the money in the first place. Finally, investment trusts can retain up to 15% of the income they get as dividends from the companies in which they are invested whereas funds have to pay out all the income they receive. This means investment trusts can smooth out the paying of income by keeping back money to pay out in years when they don’t get so much money in.

The annual CGT exemption for individuals and personal representatives increased by £300 to £12,000 for 2019/20. The exempt amount for most trusts is £6,000.
There were no changes to any of the CGT rates. Taxable capital gains are added to the investor’s other taxable income to determine the rate of CGT they pay. To the extent they fall within their basic rate tax band they are taxed at 10%. To the extent they exceed it, they are taxed at 20%. Capital gains linked to residential property are, however, still taxed at 18% and 28% (as appropriate).

Bumper pension scheme transfer values have encouraged thousands of savers to trade in their valuable final salary pensions in recent years. But the city regulator has said it is ‘deeply concerning and disappointing’ that most savers who seek advice about transferring their final salary pensions are told to ditch them. More than two thirds of savers are told by advisers to transfer out of their final salary or defined benefit (DB) pension schemes, according to the Financial Conduct Authority (FCA), despite its stance that transfers are likely to be unsuitable for most clients.
Megan Butler, executive director of supervision, wholesale and specialists at the FCA said: “It is deeply concerning and disappointing to see that transfers are still being recommended at the levels we have seen. The FCA surveyed 3,015 financial advice firms and found that between April 2015 and September 2018, 2,426 firms had provided advice on transferring their DB pension.
Of the 234,951 scheme members who received advice on transferring, 162,047 were told to transfer out. The total value of DB pensions where transfer advice has been provided was £82.8bn, with an average value of £352,303. The FCA has already started visiting firms to assess their approach to DB advice. It will also be writing to all firms where the potential for harm has been identified.