Archive for the ‘General’ Category
Friday, April 12th, 2013
One of the main talking points in the recent budget was Chancellor George Osborne’s announcement of a government backed guarantee for parts of mortgages.
The idea is that lenders will be encouraged to lend up to 95% of a house value, with a proportion of that loan being guaranteed by the government. This would leave the buyer only needing to contribute a deposit of 5% of the value of the property. If a flat was being bought at £100,000 and that was its valuation the buyer would need to find a deposit of only £5000. Part of the £95,000 loan (say £25,000) would be guaranteed by the government – leaving the lender at risk only for £75,000 should the borrower default.
One of the real difficulties the house market has faced in recent years has been the level of deposit required by lenders. With deposits of sometimes up to 25% being sought by lenders the effect has been to freeze many first time buyers out – particularly young buyers.
This scheme is a government initiative to solve this “deposit problem”. However, apart from the bare bones of the scheme no details have been issued. It apparently will last for three years from the first of January 2014.
“Whilst I would welcome any scheme which stimulates the house market – it is difficult to get enthusiastic till we know more” said David Borrowman of Caesar and Howie. “I don’t even know yet whether the scheme will apply in Scotland and how easy or difficult it will be to qualify for it. So whilst the idea seems positive the jury is out so far as I am concerned until more information is published by the government”.
Wednesday, March 20th, 2013
20th March 2013 is the first UN sponsored International Happiness Day. The idea is to try to bring happiness to someone today. Staff and Partners at Caesar and Howie, members of Solicitors for Older People Scotland will try to do something for someone to make them happy. But what could the firm do? Of course this day is not all about money – quite the contrary. On the other hand it would certainly make a client happy to have their fee cancelled would it not? This is not something for which lawyers are perhaps well known.
The lucky clients on this occasion happened to be Douglas and Alexandra Smith of Aberdeen whose Equity Release case settled today. The legal fee note was cancelled completely. “We are delighted” said Alexandra. “We plan to do a complete garden makeover and other improvements with the money. It was great news to hear we were getting the money today so quickly – then even better to hear our fees were being waived.” Douglas added – “I had never heard of International Happiness Day but we are quite happy now I can tell you! But we will donate some of our windfall to a local charity – hopefully that will help spread the happiness a wee bit further”.
David Borrowman, Senior Partner commented “This has been a bit of fun for all involved. But there is a serious message behind the day and hopefully everyone reading this today will want to do something to bring happiness to someone close to them”.
Tuesday, March 19th, 2013
A SOPS team were out in force at the Discovery Award Association over 50’s event in Motherwell Civic Centre on 6th March. Terry – Ann O’Donnell and Vivienne Malcolm hosted a “stall “in the Exhibition section whilst David Borrowman addressed a large audience in the auditorium on “planning for the future”.
Discovery Award Association Motherwell March 2013 – CH
Tuesday, March 12th, 2013
Conferences of the Scottish Law Society may stir the blood of some lawyers but frankly not always most of the legal profession. A forthcoming debate at the Annual Conference on a “practice rule” typically has not generated much heat – but any decision taken could have considerable effects for lawyers and the house buying public.
Most people buying a house will have a mortgage – and the buyer grants a “standard security” over the property allowing the lender to repossess it should the buyer default on the mortgage payments. For many years now the buyers’ solicitor has also acted for the lender in creating that security document.
Now a vote is to be held on whether to stop this practice and ensure that in any loan transaction the lender and buyers have separate lawyers. A Law Society working party has recommended this change and a vote will be held at the AGM on 22nd March.
The main reason for considering this change has been an increasing worry about potential conflicts of interests between lenders and buyers – and the difficulty this presents for one solicitor trying to do the work for both. A difficulty which has resulted in recent years in an increase in claims by lenders against solicitors where borrowers have defaulted. In fact there is a view that lenders have been openly trying to find fault with solicitors security work even it played no part in the borrowers’ default. So a feeling has grown that it might just be better for lenders and borrowers to have their own solicitor.
If the change goes through there will be changes to the purchase process which buyers will feel. “I suspect with two lawyers involved the chances are that costs may go up and the process will take a little longer” commented Graham Irvine, Head of Conveyancing at Caesar and Howie. “Although I think competition will keep any fee rises to buyers pretty modest” he added. “It is possible the work being done for the lenders will probably be concentrated in the hands of just a few law firms – with High Street firms probably seeing a drop in their conveyancing income since they will no longer be representing the lender’s interests too. Solicitors will have to adapt very quickly to the changes if they are voted through later this month.”
Monday, March 4th, 2013
The appalling Home Report fiasco imposed on the Scottish House Market by the Scottish National Party continues to do harm.
Hated by sellers, not trusted by buyers and not accepted by lenders these expensive reports and the system required for them fails daily. And it is poor clients who have to pick up the costs as the politicians move on to something which interests them more.
Consider just a tiny recent example from our firm. A house is up for sale. An “interested” buyer says he is thinking of offering. But the Home Report is over three months old. So the potential buyer demands a “refresh” of the Home Report. This is duly ordered by the seller – fearing he may lose a buyer if he does not do so. So a “refresh” is obtained – and the “refreshed” Home Report is not now out of date – although identical to the original report.
Then guess what? The buyer changes his mind and decides not to go ahead. Of course the buyer has no obligation to pay for the “refresh”. So what has been achieved? 1. The poor seller is left to pay for a completely pointless “refresh” of a Home Report. 2. The surveyor pockets a fee for a second completely useless service – having previously pocketed a fee for a Home Report which itself has proved useless since it has served no purpose thus far. In fact it is possible that no one except the seller has even read it.
So in this case we have a double survey on one house and no sale. And it could well happen again to this very client. But houses often take many months to sell these days – so how many times is this ridiculous and expensive farce played out over Scotland? Nobody knows of course. Well done the SNP government!
David Borrowman, Senior Partner Caesar and Howie
Friday, February 22nd, 2013
The Scottish Government announced increased funding for the LIFT mortgage scheme this week. Deputy First Minister announced £20 million will be made available to support the scheme through to April 2014.
This money goes to assist first time buyers to buy property by the government effectively offering an interest free deposit, generally repayable on later sale of the property. The Low Cost Initiative for First Time Buyers scheme has been in place for several years now – but the monies available this year have been increased by about £4 million.
Sebastian Kedziora of www.kupdom.co.uk – a specialist service run by Caesar and Howie helping Polish people buy in the UK comments “This will be a welcome boost. We have many clients on our books who didn’t manage to get funding last year but who hopefully now can access some of these new funds. There are properties available on the market now and we anticipate a busy year ahead”.
The senior partner of Caesar and Howie, David Borrowman feels this new funding will help generate activity in a difficult property market. “Being unable to save enough of a deposit is a major difficulty for people – and this scheme gets many first time buyers over that difficulty. Despite the economic conditions being tough, many young folk still aspire to buy houses and this scheme is a good way to get started. I commend the Scottish Government for continuing to support the LIFT scheme”.
For information on how to access a LIFT mortgage see www.liftmortgage.co.uk.
Monday, February 18th, 2013
Increasing longevity has been probably the greatest success story for our society of the last fifty years. But our approach to dealing with the financial and societal pressures produced by an ageing population perhaps has not been as clear sighted as we might have hoped. In fact for many years the topic seemed not to exercise politicians greatly.
Now however you sense things are changing, and fast. No longer is it safe for any politician to let the problems of our ageing society languish in the long grass somewhere. The problems are just too big and too imminent.
Three recent publications added to this growing national debate. The Office for National Statistics confirmed estimates produced by Carers UK of the number of carers in England and Wales. In the ten years to 2011 the number of carers in the UK rose by 25% to the astonishing number of 5.8 million. This must mean huge numbers of families are already feeling the pressure of an ageing family member. So this is a problem probably of now not just the future.
In London we had the UK government announcing a cap on personal care costs in England and Wales. The principle of a cap seems to have been widely welcomed. But with the cap to be set at £75,000 and coming into force only by 2017 – most commentators felt this was not going to be effective for many families.
Then in Scotland we had the quiet publication of the Parliament’s Finance Committee “2nd Report, 2013 (Session 4)” This was on the impact of future demographic change and the planning of the Scottish Government and public bodies to mitigate any impacts of this change. A main issue being considered is financial sustainability. Not normal bedside reading for me and as you might expect pretty hard going.
This document is written in entirely matter of fact language avoiding all forms of rhetoric. The views expressed, however, should cause any dispassionate observer to be worried for our future. In fact if this were a school report – the result in each subject (roughly – housing, health and social care, and pensions) would be “FAIL”. More worryingly the committee’s views translated into a teachers report commentary might read “Needs to do much better but no signs of that happening yet”.
Perhaps I am being unfair – but then I am not writing from a political standpoint. The report suggests that massive funding gaps are identified but not met; new approaches and new strategies are instructed but never happen. Change seems to be impossible to deliver – at least that is what I read into most of the evidence in this report. Yet it must be delivered if our older people are to live in comfort and dignity future decades. At least the scary facts are getting out in the open now and this debate is at last in the spotlight. It remains to be seen what our political leaders are able to do about the massive issues facing us.
David Borrowman, Senior Partner, Caesar and Howie
Friday, February 8th, 2013
An interesting poll published today by Carers UK highlights the widespread financial fear families have about caring for relatives – see news on carersuk.org.
Really high numbers of people – about 7 in 10 of UK adults indicate they would struggle to pay household bills if they had to give up work to care for a family member.
David Borrowman of Solicitors for Older People Scotland comments “These figures don’t surprise us at all. There is real fear out there. And remember this poll deals with caring for relatives at home. I‘d be prepared to bet the figures could have been even higher if the sample had been polled about residential care costs. It is particularly interesting from the survey to note that the fear of this issue affects younger adults as well as older people who may need the care. I am afraid this is set to become a dominating issue for many families as we all live longer. This is not an easy topic for politicians in this time of austerity but you would like to think it possible to come some agreed approach as a society which reduced this widespread worry for families”.
Wednesday, January 23rd, 2013
The new ‘single-tier’ pension & the impact for equity release
TheUKgovernment has announced their latest plans to change the state pension to a simpler clearer system. Under new legislation, from April 2017, there will be one ‘single-tier’ pension set at £144 for all. To qualify for the full amount, 35 years of national insurance contributions are required. To receive any pension at all, a minimum 10 years of contributions are required.
While providing an enhanced pension for those currently relying only on the state pension, it marks a significant cut in income for those higher earners who would currently qualify for the second state pension. Figures in the Government’s White Paper show that of those retiring in 2040, about 45 per cent will be worse off while 35 per cent are expected to be better off, and 20 per cent are expected to remain the same. For those 45 per cent who won’t benefit from the pension scheme – either because they’ll reach retirement prior to the April 2017 start date, or because the new scheme will reduce their expected state pension- equity release could provide a solution.
With recent research* revealing retirement income has hit a six-year low, falling by £3,400 below the average expected UK retirement income of £18,700, understanding all the available funding options is more important than ever for pensioners. Despite being cash poor, many retirees are sitting on hundreds of thousands of pounds of equity in property, with many owning homes which are completely mortgage free. Equity release schemes can help free this property wealth, either providing a loan based on the value of the property or regular cash withdrawals. With various types of equity release plans to choose from, owners can find the perfect solution to meet their financial requirements while remaining in their own home.
The current media spotlight on the new state pension plan has reignited public interest in retirement financing, thus making comprehensive equity release information and equity release advice more important than ever.
*Prudential, January 2013
Released from the Equity Release Solicitors Alliance. Caesar and Howie are members of the Alliance.
Monday, January 21st, 2013
Despite a widespread belief that the UK government was going to announce a cap on care costs – the issue was dodged in the mid term review. It had been widely rumoured that a cap would be fixed at £75,000 but this proved not to be the case. One widely expressed concern is precisely when the UK government will grasp this issue which is worrying for many older people.
Of course a different regime operates in Scotland but commentators believe what happens in England and Wales will have a significant influence on any future Scottish decisions. Currently personal care for the over 65’s in Scotland is free – although many question the sustainability of this policy into the future.
Personal care is only part of the story of course and the “elephant in the room” for both the Scottish and UK governments is the cost of accommodation for older people who need residential care. This is set to go into the stratosphere as our population ages – with many families having to sell their houses to pay these costs and local authorities facing massive increases as well.
David Borrowman of SOPS comments “Meeting care costs is a huge worry for many families – with a forced sale of their house being a major fear. But many of these sales could be avoided if families thought about this issue early enough – before care is even in contemplation. I would urge all families to address this issue by having a free but early consultation with a SOPS advisor. By early I mean when they are 60 or so and in good health – because steps can be taken then to mitigate future care cost issues.”