The Bank of England’s Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5%.  The Committee also voted to maintain the stock of asset purchases financed by the issuance of central bank reserves at £200 billion.

After a substantial fall in output, the United Kingdom economy recorded sluggish growth in the final quarter of 2009.  Spending by households appears to have picked up a little, though that may partly reflect temporary factors.  The rate of decline in businesses’ investment spending appears to have eased.  And the world economy continued to recover, raising the demand for UK exports.

Emilio Botín, chairman of Banco Santander, said: “This is a historic day for Santander as its name is firmly established on the UK high street.

“When Santander acquired Abbey in 2004, there were some who doubted we could make it a success. Today, there can be no doubts. Over the last five years we have transformed our UK business into one of the most successful banks in the country. The decision to become Santander will put us in an even stronger position the UK.”

The National Employment Savings Trust – NEST – has been unveiled as the new brand name for Personal Accounts.

 The NEST Corporation will be the name of the trustee body running the scheme. The name of the scheme was announced by Pensions minister Angela Eagle.

 NEST is the scheme being introduced, in stages, from October 2012. The Government-implemented scheme is being created to provide a low-cost, independent, workplace pension scheme which any employer can access. The Government created the scheme to give millions of mainly low to middle income workers access to an employer sponsored scheme. NEST accompanies the introduction of auto-enrolment into a qualifying workplace pension scheme from 2012.

 Occupational schemes set up by firms can be used to auto-enrol workers if they meet certain criteria. However, the employer can use personal accounts as an alternative for all, or part, of their workforce.

 National Association of Pensions Funds chief executive Joanne Segars says: “We all need a pensions nest egg to enjoy a comfortable retirement. Already almost 12 million people are saving in a workplace pension with contributions from their employer. Today’s announcement brings us a step closer to the 2012 reforms when nearly all working people, especially those on low and moderate incomes, will be given this opportunity.”

 Hargreaves Lansdown head of pensions research Tom McPhail, adds: “I am optimistic that NEST will have a positive impact on the UK’s retirement savings and that it will help millions of non-savers to build up a decent retirement pot.’ The key message is don’t delay. Enrolment into NEST won’t be fully up and running until 2017 and every year of delay means a lower eventual pension. Don’t wait for your employer or the government to take the initiative, start saving for retirement today,”

 A full-roll out of the scheme, which requires all employers to enrol their staff into a pension plan, had been due to start in 2012. But a series of political setbacks have seen the plans delayed twice. In December’s Pre-Budget Report, the Chancellor announced a phased introduction of the scheme for smaller employers would be extended from a 2015 finish to a 2017 start.

 The move followed a Government decision in October to scrap a blanket roll-out of the scheme in favour of a phased approach, with only the largest employers being forced to start the scheme in October 2012. Smaller employers had then been expected to join the trust-based occupational pension scheme over the following three years.

The £125,000 threshold for when you start to pay SDLT was introduced again on 1 January 2010. The previous starting rate was £175,000 – for purchases made between 3 September 2008 and 31 December 2009.

If you buy a property in the UK over a certain purchase price you have to pay Stamp Duty Land Tax (SDLT). This is charged on all purchases of houses, flats and other land and buildings.

If you buy either a freehold or a leasehold property and the purchase price is more than £125,000, you pay SDLT of between one and four per cent of the whole purchase price. If the purchase price is £125,000 or less you don’t pay any SDLT.

See the table below for more detail.

SDLT Disadvantaged Areas Relief

If you buy property in an area designated by the government as ‘disadvantaged’ you may qualify for Disadvantaged Areas Relief. In this case the threshold for SDLT is £150,000.

Disadvantaged Areas Relief did not apply for residential property purchases between 3 September 2008 and 31 December 2009 inclusive. The threshold during that period was £175,000 which is higher than the previous Disadvantaged Areas Relief threshold. You can check the HMRC website to see if the property you are buying is in an area designated as disadvantaged.

HAPPY NEW YEAR

Wishing you all a Happy, Healthy and Prosporous 2010

From all at 1 STOP Financial Services

A new independent survey has found IFAs are rated by consumers as the “most fair” of the financial services professions.

The ‘Fairness Index’, produced by the Financial Services Research Forum at Nottingham University Business School, looks at consumer perceptions of fairness with regards to financial services. The Index takes into account a wide range of measures including impartiality, familiarity, courtesy and communication.

The Index found IFAs enjoy by far the highest ratings on overall fairness, with an index score of 84 out of 100, significantly higher than the industry average of 72. When the data is broken down further, IFAs also rate the highest across each of the fairness measurements.

Brokers/advisers were followed by building societies (75), investment companies (73), Life insurers (72), and general insurers (72). Banks (68) and credit card companies (63) received the lowest ratings.

Chris Cummings, Director General of AIFA, commented: “AIFA strongly welcomes these impartial findings on fairness from the Financial Services Research Forum, and believe they provide a strong endorsement of the IFA profession.

“Not only is the profession the most trusted, but it is also regarded as the most fair – this is no mean feat given the recent economic conditions. It also further reaffirms that the public recognises the IFA profession’s core value: ‘The guiding light is to do well by the client’.”

The Bank of England’s Monetary Policy Committee (MPC) has announced that the base rate of interest has been frozen at a historic low of 0.5% for the ninth month in succession.

The MPC also voted to continue with its programme of Quantitative Easing (QE) – which was extended by an additional £25 billion last month to £200 billion – a move welcomed by businesses who believed that the economy would stall without it.

According to the Halifax House Price Index house prices rose by 1.4% in November. Prices increased for the fifth consecutive month with the average house price up by 4.2% (£6,803) in the first eleven months of 2009.

Commenting, Martin Ellis, housing economist, said:
“The recovery in house prices since the spring has been driven by increased demand for property, largely due to the improvement in affordability for existing homeowners and first-time buyers who can raise the necessary deposit.

Somewhat higher demand has combined with a low level of properties available for sale to push up prices.  Further ahead, the prospects for the market will depend on how the UK economy evolves and whether there is a significant increase in the supply of properties for sale. Overall, our view is that house prices will be flat during 2010.”

Key facts
- Prices over the period September to November were 3.7% higher than in the previous three months. This is the biggest increase on a three monthly basis since November 2006.

- Prices have increased by 8.5% since reaching a trough in April 2009; an increase in the average price of £13,174. This follows a decline of 23% between August 2007 and April 2009.

- House prices in November were 1.6% lower on an annual basis. The annual rate of change (measured by the average for the latest three months against the same period a year earlier) has improved significantly from a low of -17.7% in April.  

- Housing market activity continues to pick up. Completed house sales in England and Wales were 11% higher on an annual basis in August, according to the latest Land Registry figures.

- Bank of England industry-wide figures show that the number of mortgages approved to finance house purchase, a leading indicator of completed house sales, increased, on a seasonally adjusted basis, for the eleventh successive month in October.

- Approvals were 79% higher than in October 2008 and were at their highest level since March 2008.  Despite this improvement, approvals remain 56% below their late 2006 peak.

- Increasing demand and low supply are causing house prices to rise. The increase in sales in recent months has outpaced only a modest rise in the stock of properties available for sale. 

As a result, the ratio of house sales to the stock of unsold properties on surveyors’ books increased for the tenth consecutive month in October. The increase in this ratio suggests that market conditions will provide further support for house prices in the short-term.

According to Nationwide House Price Index for November 2009, house prices increased by 0.5% – the same rate as in October.

The Lender also reports that year-on-year house price inflation has increased from 2.0% to 2.7%, and states that the Labour market has so far held up better than expected this year.

Commenting on the figures Martin Gahbauer, Nationwide’s Chief Economist, said:

“The monthly rate of house price inflation for November is at a seasonally adjusted 0.5%, leaving the average price of a typical property 2.7% higher than a year earlier. At £162,764, the average house price is at a similar level to where it was in early 2006.

The 3 month on 3 month rate of change – generally a smoother indicator of the near term trend – dropped to 2.8% from 3.5% in October and 3.8% in September. This suggests that house prices are now rising at a more moderate pace than in the spring and summer months, when they experienced a very strong bounce from the early 2009 lows.

“The outlook for the housing market remains crucially dependent on labour market conditions, and here recent developments have been somewhat more encouraging than might have been expected.

With the UK experiencing its longest and deepest recession since WWII, most economists expected unemployment to increase very sharply in 2009, perhaps breaching the psychologically important three million mark by the end of the year.

While unemployment has indeed increased noticeably, the rise has not been as rapid and pronounced as previously feared. Based on the latest labour market figures from September, it now looks unlikely that the jobless total will reach three million before the year is up.”