Retired property owners £26,000 better off

People aged over 65, who have paid off their mortgage, are on average £26,000 tax-free better off this year, as a result of their property investment.

This group of mainly ‘baby-boomers’ have seen their total property wealth reach a new high of over £1 trillion (as calculated in the last three months). They have each seen an increase of £2,300 a month since the turn of the year. This represents an increase of £114 billion since January 2016. The only relative losers, according to Key’s Pensioner Property Index, were the Scottish over 65s, who managed to see falls in their property values over the last three months. At the other end of the scale, Londoners saw a gain of £15,445 each, whilst those resident in South West saw a gain of £6,275.

Financial watchdog may come to the rescue of borrowers

The Financial Conduct Authority (FCA) has announced that, as part of a wider market study into competition in the mortgage market, it intends to investigate whether the tough new rules introduced by the Government in 2014, following the Mortgage Market Review (MMR) have been unsuccessful.

The MMR rules obliged mortgage lenders to obtain written evidence of a borrower’s income, together with details of their monthly financial obligations, thereby ensuring that no one was offered a mortgage that they could not ultimately afford.

The FCA now believes that the rules are making it harder and more expensive for those borrowers to get the mortgage they require, prompting the belief that the measure may have back fired and is locking potential new home owners out of the mortgage market.

UK has the highest property taxes of developed world

According to the internationally recognised Organisation for Economic Co-operation and Development (OECD), the UK has the highest property taxes amongst the organisations 35 member states.

Its latest analysis shows that property taxes here account for 12.7% of the country’s tax burden. This represents an increase of 0.3 percentage points compared with the previous year and more than 1% higher than that seen in 2011.

By comparison, property taxes in the UK are more than double the OECD members’ average of 5.6% of the tax burden.

The UK is also bucking the global trend, as since 1965 the international average has fallen from about 8% whilst here it has increased significantly. Property taxes are equivalent to 13% of UK GDP, compared with 3.9% of GDP in France and 2.8% in the US.

Click here for further insights into house prices, price changes by region and mortgage activity.

Please note: Our monthly property market review is intended to provide background to recent developments in the residential property market as well as to give an indication of how some key issues could impact in the future. We are not responsible or authorised to provide advice on investment decisions concerning property, only for the provision of mortgage advice. 

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