UK Finance: Home movers hit hardest by lockdown

UK Finance’s Household Finance Review for Q2 2020 shows the extent to which house purchase lending plummeted over the quarter as the housing market was halted due to lockdown, with home-mover activity hit severely.

The lockdown across the country had brought the economy to its knees as the country’s workforce had been pressured to work from home or not work at all. UK is now in a recession as the effects of the lockdown has shown through the lack of cash flow going through the various sectors.

Impact on Housing market

Following the first quarter, which showed flat year on year growth, lending turned immediately and sharply negative. For Q2 overall, house purchase activity was down 48% compared to Q2 2019. Volumes in April were less than half those seen a year previously with a similar annual rate of contraction in May.

With the market partially reopening in May, June saw an easing of the rate of contraction, but activity remained considerably below the levels seen in June 2019. With the overall contraction, the heaviest fall was seen in the home-mover numbers, which fell by over 60%. The first-time buyers and buy to let purchases also fell by significant amounts.

Despite seeing the worst of the initial wave of COVID-19 infections, the UK Finance data shows that the southern regions of England have been somewhat less severely impacted, although clearly very significantly down by nearly 50% year on year. The biggest impacts, however, have been seen outside England. Places like Northern Ireland have seen new mortgages for house purchase fall by nearly two-thirds compared with Q2 2019.

Comments from directors and executive officers at these housing firms are suggesting that customers will still need support despite the steady growth in people returning and investing into new apartments and houses.



G20 Officials Want to Tax Tech Giants

On Saturday, G20 Officials said that leading world economies must show unity when dealing with aggressive ‘tax optimisation’ by global digital giants. This included tech giants such as Google, Amazon and Facebook.

The Organisation for Economic Cooperation and Development (OECD) has been developing global rules to make digital companies pay tax where they do business, rather than where they register subsidiaries. The OECD said that this could boost tax revenues by a total of $100 billion a year.

No Time to Wait

The German Finance Minister, Olaf Scholz, told a tax seminar that there was “no time to wait for elections”. He also added that “this needs leadership in certain counties”. While saying this, he was looking directly at the US Treasury Secretary Steven Mnuchin, who was sitting next to him at the seminar.

The taxing of digital firms and the effect of the coronavirus on the economy are two major topics being debated on by the G20 financial leaders. These topics will be discussed during their talks in Riyadh this weekend.

Minimum Tax Level

The OECD want to set a minimum effective level to tax big tech companies such as Facebook and Google. They seek agreements by the start of July 2020, with an endorsement by the G20 by the end of the year.

OECD head Angel Gurria told the seminar that a “coordinated answer” was the “only way forward”. Many questions remain about this policy coming into force.

Digital Tax

Many European countries, like France, Spain, Austria, Italy and Hungary, already have a plan for digital tax or are working on getting one. This creates a risk of a highly fragmented global system that does not achieve the aims of the OECD. Mnuchin added that “you cannot have in a global economy different national tax systems that conflict with each other”.

Facebook Responds

The Chief Executive of Facebook, Mark Zuckerberg, responded saying that he would be ready to pay for tax in Europe and would welcome a global OECD solution that would make taxes the same across different economies.

Home Insurance: Making A Claim

In this instalment, we will feature the most common home insurance claims in the UK. Our list is intended to help guide your choices when taking out a new policy, or amending an existing policy, in terms of what insurance cover and policy additions you may require.

Over the last decade, various statistical trends have shown that the most common cause for home insurance claims has been escape of water. Defined as the entry of water to a property by way of the mains water supply, in a way that causes damage, escape of water represents the most common of claims made against home insurance policies. As temperatures turn cold, the water network becomes increasingly prone to damage. In some places in the country, where Victorian era plumbing still provides the bulk of a locale’s water needs, such as across swathes of London, decreasing temperatures attack an already-prone infrastructure. Waters tanks are just as susceptible to damage as pipes. Joint top of this list of most common home insurance claims is the phenomenon of accidental damage, which can be caused by as many occurrences as your mind may care to wonder.

The definition of accidental damage is helpful, it addresses damage to your property or possessions that occurs suddenly as a consequence of unforeseen and unintentional external action. The third most common cause of home insurances claims is storm damage. In recent years, since the Met Office has begun to name storms, it seems their frequency has increased. In some locations, storms regularly bring floods and their high winds can cause considerable external damage. In an era of changing climates, it is wise to take a long hard look into the future and consider your need for this optional extra to your home insurance policy.