Category Archives: News

Childrens First Home

Childrens First Home

Childrens first homes are becoming of increasing concern: getting that vital first foot on the ladder is steadily getting harder and harder.   Families who have taken the wise precaution of setting up Home Protection Plans already will have sound mechanisms in place to help, but for the majority that just is not the case.    The PR which follows should not to be considered an endorsement for the product (we are lawyers, not financial advisers!) but it does make an interesting contribution to the debate.

Funding Childrens First Homes

New research from Castle Trust reveals that 49% of parents who have or plan to contribute to their childrens first home, plan to raise money through cash savings. In order to keep pace with house price inflation (as measured by the Halifax House Price Index) over the past 10 years, a higher rate tax payer would have had to receive 4.3% gross AER on their cash savings and a basic rate tax payer would have needed 3.2% Gross AER. However, the Castle Trust analysis shows that the average return of the top five instant access savings accounts with a minimum of £1,000 or less is just 1.6% Gross AER.

Other findings include:

·        32% intend to raid their stock market related investments, and a quarter (26%) will use JISAs and Child Trust Funds

·        19% intend to cut back on certain aspects of their lifestyles in order to help their children on to the property ladder

·        The average contribution will be £16,300

·        73% don’t expect to get the money back    (wisely! Ed)

Castle Trust’s two investment products, the Growth and Income Housas, which are suitable for ISAs and Junior ISAs provide returns linked to and in excess of the Halifax House Price Index. Someone who invested in the Growth Housa when it was launched in October 1st 2012 for a ten year term  would have seen their money grow by 10.3% today.


·       The Castle Trust Growth Housa has delivered growth of between 7.6% and 10.3% since launch in October 2012

·       The Castle Trust Income Housa provides an annual income of between 2% and 3%, and since launch in October 2012, it has delivered growth of 6.0%

Half (49%) of parents, who have or plan to contribute to their children’s first home, plan to raise money to help their children buy their first property through cash savings, new research(1) from Castle Trust, the housing investment and equity loans provider, shows. However, its analysis reveals that to keep pace with the Halifax House Price Index over the past 10 years, a higher rate tax payer would have had to receive 4.3% gross AER on their cash savings to just match this rise.   The return for a basic rate tax payer would have needed to be 3.2% Gross AER.

Analysis by Castle Trust reveals that the average return of the top five instant access savings accounts, with a minimum investment of £1,000 or less, is 1.6% Gross AER.

In contrast to this, Castle Trust’s two investment products, the Growth and Income Housas, which are suitable for ISAs and Junior ISAs provide returns linked to and in excess of the Halifax House Price Index.  They can be taken out for terms of three, five or ten years.

The Growth Housa outperforms the Halifax House Price Index by between 25% and 70%, whether the index rises or falls, boosting any gains or reducing potential losses.   Someone who invested in the Growth Housa when it was launched on 1st October 2012 for a ten year term, would have seen their money grow by 10.3% today.

The value of the Income Housa tracks any rise or fall in the Halifax House Price Index and it also pays an annual income of between 2% and 3%, depending on the chosen term.

Childrens first homes

As well as using their cash savings, Castle Trust’s research also reveals that a third (32%) of the parents who have or plan to contribute to their children’s first home intend to raid their stock market-related investments, a quarter (26%) will use JISAs and Child Trust Funds, and one in five (19%) intend to cut back on certain aspects of their lifestyles in order to help their children on to the property ladder.

On average this contribution is likely to be £16,300, and three out of four (73%) don’t expect to get the money back.


Sean Oldfield, Chief Executive Officer, Castle Trust said: “Relying on savings accounts to help children build up their first deposit may be an uphill struggle with rates at an all-time low and unlikely to rise in the near future.


“Residential property is one of the most stable asset classes, and has historically delivered annual returns of about 6 per cent a year – which is comparable to equities, but with much greater stability.  We offer investors an accessible way to invest in housing, without the hassle and significant cost involved with buy-to-let, with no management fees and guaranteed returns in excess of the national housing index.”


Castle Trust’s two investment products, Growth and Income Housas, are suitable for ISAs and Junior ISAs. They provide returns linked to, and in excess of, the Halifax House Price Index and can be taken out for terms of three, five or ten years.

Future returns cannot be predicted and past performance is not an indicator of future performance, but if Housas had been available 10 years ago and £5,000 had been invested in a 10 Year Growth Housa, it would now be worth £7,423, equivalent to 4.0% a year.

Minimum investment is from just £1,000 and investments of up to £50,000 are protected by the Financial Services Compensation Scheme.

Childrens first homes.

Extra Retirement Income for 200,000

Extra Retirement Income

200,000 each year miss out on extra retirement income worth £237m.

We think that’s a crime, and we urge everyone who is retiring to consult a financial adviser to see if extra retirement income can be extracted from pension funds and other investments.   If you don’t have a financial adviser, feel free is contact us and we will happily introduce you to one who may well able to generate extra retirement income for you.   But the earlier you do this, the greater the possibilities.   But don’t forget your Home Protection Plan!

But here is the MGM article on the topic:

£237,000,000 is a conservative figure…it could be as high as £715m

MGM Advantage, the retirement income specialist, has revealed the true cost of baby boomers1 not shopping around for their annuity this year. Around 50%1 of people retiring each year do not shop around when it comes to choosing their annuity and collectively could be losing out on income worth more than £237m2 over a typical 22 year3 retirement.

Andrew Tully, pensions technical director, MGM Advantage said: “Having saved hard for retirement, it seems a cruel blow to lock into an annuity with your pension provider unaware you could have shopped around the market to get the best rate. Our research shows there is an entrenched lack of awareness of the ability to shop around for not only the best annuity rate but also the most appropriate product for individual needs.

“The lost income over a typical retirement can add up to thousands of pounds, although we think the numbers are actually on the conservative side. A significant number of people could qualify for a better annuity rate because of existing health or lifestyle conditions, and yet only 4%4 of people buy an enhanced annuity from the provider their pension savings are with. We have also only looked at the annuity rates from providers competing in the open market. Many providers choose not to publish the rates they offer internal customers.

“The size of the prize is quite staggering as the numbers only relate to the number of people retiring this year. As the baby boomer bubble retires, more and more people will be looking to turn their pension savings into a retirement income using an annuity.

“We welcome the ABI OMO Code of Conduct and other industry initiatives which will make a difference. However these numbers show there is significant progress still to be made. The value of seeking independent financial advice is highlighted by the additional income advisers can generate for clients.”

According to Retirement Nation 20125, 42% of the over 55s have not heard of the open market option.


1. Source: ABI. 400,000 people a year purchase an annuity, 50% of whom do not shop around.

2. Source: Analysis by MGM Advantage of Money Advice Service annuity data, based on an average £40,000 pension pot at retirement before tax-free cash. Loss of income is based on the difference between the average annuity rate and best annuity rate (as at 7.3.13), grossed up for the number of people retiring in 2013 and unlikely to shop around for their annuity.

3. Source: average life expectancy from GAD.

4. Source: analysis of ABI market data for 2012.

5. Source: MGM Advantage Retirement Nation 2012. The research was conducted by Research Plus+ who polled 2,003 people over the age of 55. Fieldwork was conducted during 13-19 July 2012.

6. Table shows the difference in income for someone aged 65 retiring with an average £40,000 pension pot (£30,000 net purchase price after 25% tax-free cash taken). Nil guarantee, level income in arrears, no spouse benefit. Rates from Money Advice Service (7.3.13) and MGM Advantage (7.3.13).

Annual income at best standard rate Annual income at worst standard rate Annual income at average rate Annual income on enhanced rates (mild impairment) Total difference in income over 22 year retirement
£1,668 £1,513 £1,614 £1,823 £1,188 (av. conventional rate and best conventional rate)£3,410 (worst conventional rate and best conventional rate)

£4,598 (av. conventional rate and MGM Advantage enhanced rate for those who might qualify for enhanced rate)

 Extra retirement income.

Attitudes to saving

Attitudes to saving creating national financial precipice.

(Which is precisely why parents need to create Trusts to benefit future generations – not just their children.)

  • A quarter of people have loaned ‘a substantial amount’ to their children
  • 30% have been forced to cut back on savings due to spiralling costs
  • One in five people are worried about job security in 2013

Almost 15 million people across the UK (31% of the adult population) are not currently making any efforts to save for the future, while eight million people (17%) have no savings to their name at all, according to Scottish Widows’ seventh annual Savings and Investment Report.

Although 63% of Britons are managing to put something away, nearly a third (32%) have a total pot of less than £1000, which is less than the UK average combined monthly mortgage and council tax costs (£1009). In addition, almost one in five of those who expect their financial priorities to change are seriously concerned about job security for the coming year.

These statistics paint a bleak picture of people’s ability to cope with financial shocks that could hit now or in the future.

Families shoulder the burden

A quarter (25%) of respondents with families have loaned ‘a substantial amount’ to their children, often to simply help them meet daily living expenses. Support is also provided for higher education and property purchases, with an average loan of almost £15,000 – an 11% increase from the amount reported last year. Interestingly, when asked what they’d rather give their children money for, parents opted for helping them get on to the housing ladder (63%) over university fees (21%).

This level of support is having a stark impact on parents’ finances with a quarter (24%) cutting back on their savings and almost one in ten (8%) stopping saving altogether.

However, it isn’t just parents funding their children; whole families are pulling together to support each other. The report shows that grandparents are helping their grandchildren; children are lending money to their parents, and siblings are also supporting each other. Specifically, on average grandparents have lent £3,665 to their grandchildren, 6% have lent to their parents with an average amount of £4,371 exchanging hands and 9% of people have lent an average £3,485 to their sibling.

The savings shortfall spiral

The wider economic climate is also increasing the pressure on those struggling to save. 30% of people report that they have been forced to cut back on their savings by rising costs, whilst a further 27% are saving less than two years ago, principally due to a lower level of disposable income. Across the board, the majority (64%) of people report that having no money available is a major barrier to saving.

Iain McGowan, Head of Savings and Investments at Scottish Widows said:

“People clearly recognise the importance of saving something towards their future financial wellbeing, which is encouraging. The importance of building a safety net for themselves and their families is a priority, with 63% of people reporting that they managed to save some money in the last 12 months. However, just a quarter of those people believed they were saving enough to meet their long-term needs; with a further 37% saying they would definitely not be achieving this goal.

“When we are faced with immediate financial commitments, such as mortgage payments and day to day living expenses, then it is absolutely necessary to give these pressing needs priority. However, taking a wholly short-term view of our finances will mean we are unprepared for the financial needs and challenges that lie ahead in the future.”



•      But the biggest deposit is five times the lowest in England and Wales

•          Castle Trust urges buyers to look at all saving options

 (Grandparents, uncles, aunts  god parents and others can help with average homebuying deposit at minimal long term costs)

Homebuyers need to find a deposit of nearly £26,500 to buy a home in England and Wales – but, depending on where they are looking to buy, the deposit can be as much as five times bigger than elsewhere, new analysis1 from housing investment and shared equity mortgage provider Castle Trust shows.


Its analysis of the top 30 cities and regions in England and Wales shows the average deposit needed to put down 20% of the purchase price is £26,468 – but it can be as high as £72,760 or as low as £14,470.

Homebuyers in London need an average of £72,760 in savings or equity to secure a 20% deposit – and the average deposit there is almost double the second most expensive area to buy, with deposits in Reading at £39,789.

In Blackburn, the deposit is a fifth of the London average at £14,470 and more than £1,200 lower than Blackpool, the next most affordable at £15,707.

Castle Trust, which aims to provide a safer way to buy a home and a safer way to invest in property, is advising homebuyers – and parents or family who may be helping children on to the housing ladder – to consider all their options when raising deposits.


Sean Oldfield, chief executive officer, Castle Trust said: “Parents and grandparents are being called on more and more to help children with their first deposit and the proportion of the population owning their own home without family help is likely to continue to fall.

“Aspiring homeowners need alternatives to borrowing from family which is why the Government has launched a range of initiatives including NewBuy and FirstBuy.

Avergae HomeBuying Deposit

“However, private companies need to play a role as well in offering innovative and affordable ways to help those who want to buy homes and Castle Trust is determined to play its part with housing investment and shared equity products.”


The cities and areas requiring the lowest and highest deposits for homebuyers are outlined below.

Lowest deposits                                                Highest deposits

Blackburn (with Darwen) £14,470 Portsmouth £28,688
Blackpool £15,707 Southend-on-Sea £30,487
Oldham £16,386 Milton Keynes £30,654
Hartlepool £16,934 Bournemouth £34,493
Bolton £18,492 Gloucestershire £34,607
Manchester £18,547 Cambridgeshire £36,030
Liverpool £18,767 Kent £36,590
Bradford £18,807 Exeter and Devon £37,605
Wolverhampton £19,718 Reading £39,789
Darlington £20,767 London £72,760


Castle Trust is offering a new type of shared equity mortgage, called Partnership Mortgages, which enables homeowners under 55 to issue equity in their home, as well as investment products, called HouSAs, which enable savers to invest efficiently in the national housing market via their SIPP or ISA.


Partnership Mortgages are for 20% of the value of an owner occupied home alongside a repayment mortgage of up to 60% from a traditional lender and a deposit or equity of at least 20%.  There are no monthly commitments on the Partnership Mortgage and Castle Trust will share 40% of any profit made by the homeowner when they sell or come to the end of the mortgage term.  The company will also share 20% of any loss made on a home bought with a Partnership Mortgage.


Castle Trust’s HouSAs are suitable for ISAs, Junior ISAs and SIPPs. Its Income and Growth HouSAs can be taken out for terms of three, five or ten years. The Income HouSA tracks any rise or fall in the Halifax House Price Index and also pays an annual income of between 2% and 3%, depending on the investor’s chosen term.


The Growth HouSA offers a multiple of between 1.25 times and 1.7 times any increase in the Halifax House Price Index and limits the loss to between 0.75 times and 0.3 times any decline. Both HouSAs are available for investments of between £1,000 and £1million.

Lower income families hit by rising insolvencies

Rising Insolvencies in some areas.

(“Don’t leave it until you are in trouble to take precautions against insolvencies, entrepreneurs and older folk warned by Legacy Protection Trusts.”)

Putney, Chiswick and Richmond also buck UK wide insolvencies decline

New analysis from Experian®, the global information services company, today reveals that the economic downturn continues to hit the poorest sectors of the UK population with a marked rise in insolvencies amongst welfare dependent groups and lower income families.

Figures published today by the Insolvency Service showed there were 10.2 per cent fewerpersonal insolvencies in Q2 2012 compared with the same quarter in 2011.

Demographic insight

Experian’s analysis of insolvency statistics using its Mosaic classification revealed that insolvencies increased most amongst the Claimant Cultures demographic group. This group represents some of the most disadvantaged individuals in the UK and saw insolvencies rise by 83 basis points compared to the same period last year and now accounts for 9.10 per cent of total insolvencies across the UK.

The Ex-Council Community group, consisting of people living on council estates where a large proportion of residents have exercised their right to buy, and the Upper Floor Living segment, people on limited incomes renting small flats from local councils, also saw insolvencies increase in the last quarter. These groups represented 14.64 per cent and 5.50 per cent of insolvencies respectively from April to June this year. The largest share of UK insolvencies continues to be within the Ex-Council Community demographic.

In stark contrast, young professionals experienced the biggest drop in their share of personal insolvencies in the last 12 months.  The Career and Kids group, consisting of young, professional and middle class families saw its proportion of insolvencies decrease by 29 basis points to 5.99 per cent in Q2 2012.  The New Homemakers group, typically young professionals who have recently bought a new home also experienced a fall in its share of insolvencies, from 6.03 per cent in Q2 2011 to 5.73 per cent in Q2 2012.

Geographical analysis

While the total number of individuals being declared insolvent has fallen across the country, some pockets of the UK continue to struggle, including some of Britains wealthiest areas.  Putney saw the biggest increase in insolvencies –111 per cent – with three in every 10,000 households becoming insolvent in Q2 2012, compared to one in every 10,000 this time last year. Richmond, one of London’s most affluent boroughs, and Chiswick also saw rising personal insolvency levels, up by 83 per cent and 100 per cent respectively.

St Albans recorded the UK’s biggest drop in insolvencies, with one in every 10,000 households being declared insolvent, 78 per cent less than in Q2 2011.

Simon Waller, Head of Customer Management and Collections at Experian UK & Ireland, commented:  “In a downturn the least well off are always likely to suffer most as financial pressures lead to the challenge of meeting their repayments. It remains vital for organisations to be able to identify and segment customers by their specific needs and characteristics and for lenders to identify those that are generally struggling to pay their bills.  Lenders can use this insight to gain an overall picture of an individual’s circumstances so that they can treat customers sensitively and put in place measures to help the most vulnerable.”

Consumer groups most prone to personal insolvency
Mosaic Group Description Insolvencies per 10k households Q2 2012 Insolvencies per 10k households Q2 2011 % of Q2 2012 Insolvent Total Change on Q1 2012 (basis  points) Change on Q2 2011 (basis  points)
Ex-Council Community Practical and enterprising people who have created comfortable lifestyles for themselves. Many live on pleasant well-built council estates where a large proportion of residents have exercised their right to buy. 12 15 14.64% 4 14
Suburban Mindsets Mostly married or middle aged people, bringing up children in family houses. Some commute to city jobs from affluent suburbs while others earn good wages from manufacturing jobs close to where they live. 8 9 10.57% -40 -15
Industrial Heritage Traditional people living in communities historically dependent on mines, mills and assembly plants. Typically married and approaching retirement, many work in offices and shops although large proportions still derive incomes from manual and craft skills. 10 12 9.82% 0 -22
Terraced Melting Pot Poorly educated people working in relatively menial, routine occupations. Majority are young, some still single, others living with a partner with young children. Many belong to groups that have recently arrived in the UK. 11 9 8.50% -34 -19
Claimant Cultures Some of the most disadvantaged people in the UK, including significant numbers who have been brought up in welfare dependent families. Common on the periphery of provincial cities which have struggled against declining demand for low skilled labour in docks and maritime industry. 13 14 9.10% 52 83
Small Town Diversity People living in smaller towns inneighbourhoodsof older housing where there is relatively little change in the population. They have friends and family who live nearby and are likely to live the rest of their lives in the same community. 7 9 8.03% 7 -32
Careers and Kids Young couples whose lives are focused on the needs of their growing children and creating a comfortable family home. Well-educated and established in a technical, junior or middle management careers. 8 11 5.99% -30 -30
New Homemakers Mixture of young single professionals, young couples starting a family and older people downsizing into modern accommodation living in homes which are likely to have been built only in the last five years. 10 13 5.73% 34 -29
Liberal Opinions Young, professional, well educated people, cosmopolitan in their tastes, liberal in their views, who enjoy the vibrancy and diversity of inner city living. Popular occupations include jobs in journalism, politics, entertainment and the arts. 5 6 5.33% -5 11
Upper Floor Living People are on limited incomes renting small flats from local councils or housing associations. Typically these people are young single people or young adults sharing a flat. 8 9 5.50% 40 35
Elderly Needs Pensioners who can no longer easily manage a house and garden. This group contains a large number those in their 70s, 80s and even 90s, who are no longer as physically active as they once were. 8 9 5.41% 59 16
Professional Rewards The UK’s executive and managerial classes. Often in their 40s, 50s or 60s, some may be owners of small or medium sized businesses whilst others have risen to senior positions in large multinationalorganisations. 6 4 4.54% -29 -21
Rural Solitude People who live in small villages, isolated farmhouses or cottages where farming and tourism are the mainstays of the economy.Neighbourhoodshave a traditional country way of life with a strong sense of community. 7 6 3.22% -13 -23
Active Retirement Retired people who have decided to live in a community among people of similar ages and incomes. Likely to have an occupational pension accompanied by savings accumulated during their working lives. 4 5 2.34% -36 4
Alpha Territory The most wealthy and influential individuals in the UK. Have risen to positions of power as owners of businesses, bankers, senior managers in industry or as top lawyers, surgeons or civil servants. Includes small but influential cadre of celebrities in sport, the arts and entertainment. 3 3 1.10% -26 13
Source: Experian 2012



Highest concentrations of personal insolvencies by town/territory


Town / Territory

Q2 2012: Insolvencies per 10k households

Q2 2011: Insolvencies per 10k households

Year-on-year change

















Source: Experian 2012


Top decreases in personal insolvencies by town


Town / Territory

Q2 2012: Insolvencies per 10k households

Q2 2011: Insolvencies per 10k households

Year-on-year change

St Albans




















Source: Experian 2012



Top increases in personal insolvencies by town


Town / Territory

Q2 2012: Insolvencies per 10k households

Q2 2011: Insolvencies per 10k households

Year-on-year change

Newton Abbot








Richmond (London)












Source: Experian 2012



Bankruptcies Fall

We mention this as unexpected bankruptcies can be protected against to an extent with Trusts, though it is no good leaving it until you are already in trouble.  Contact us for more information on precautions which may save assets in the event of bankruptcies.  But here is the Baker Till story:

The overall number of personal insolvencies in Q2 2012 fell by over 10% compared with the previous year and the number bankruptcies by over 27%, according to the insolvency statistics published today by The Insolvency Service.

“The 10% fall in the number of personal insolvencies is very welcome, although I am concerned that this headline figure masks the underlying financial problems that many households continue to face.” says Alec Pillmoor, Head of Personal Insolvency at Baker Tilly.

He continues: “These statistics do not include schemes such as debt management plans.  The recent economic review suggests that real household income is at its lowest since 2005 and the unexpected fall in GDP reported last month has made many people question their job security.”

“It is to be hoped that the feel good factor of the recent Olympic medals successes by Team GB will lift confidence and the next economic review will show an improved situation for beleaguered households.  The recent sporting news has been a welcome change from the usual diet of issues in the Eurozone.”

That’s from Baker Tilly.  We feel that the practice of entrepreneurship in the UK would be well served if more business people were aware of the benefits of trust.  Business is by its’ nature a risk, and anything individuals can do to safeguard their families seems to be just sensible practice to us.   But Trusts don’t work for fraudsters!

Private Education for Grandchildren

The cost of Private education for grandchildren

(To discuss trusts for private education for grandchildren, contact us.) On with Duncan Lawries PR:

It now costs in excess of £500,000 to send three children to private school, according to latest figures from Duncan Lawrie Private Bank. This will involve a significant financial sacrifice, even for a wealthy family. One way to help pay the bill will be for grandparents to make a contribution to private education for grandchildren, which can be done by setting up a discretionary trust. This has the double benefit of efficient inheritance tax planning, whilst at the same time funding the grandchildren’s education.

Paul Barry, a Chartered Financial Planner at Duncan Lawrie Private Bank, commented on private education for grandchildren:

“School fees will have to be paid for 10 years before all three children complete their education, assuming they start at age eight. At its peak, with all the children at school at the same time, the cost will hit £60,458* in one year alone. The demand on the parents’ finances is therefore considerable, which is why grandparents often offer to help out, but all of this requires very careful tax planning.”

Grandparents can individually offset the maximum amount of £325,000 permitted under the inheritance tax threshold, known as the nil rate band. This means a discretionary trust set up to help with private education for grandchildren will not have an immediate tax bill. Assuming the grandparents live for a further seven years after the gift is made, the capital is outside their estate for inheritance tax purposes.

Even though the money is in a trust, the grandparents retain control of it, including  making distributions of capital directly from the trust to contribute towards the fees for private education for grandchildren in the most tax efficient way. Trustees can also invest and manage the underlying trust fund using various asset classes such as cash, fixed interest and equities, timing dividends and interest receipts to match fee payments.

Paul Barry adds:

“Creating a discretionary trust, along with long term financial planning, enables us at Duncan Lawrie Private Bank to tailor solutions according to individual client needs. For instance, we can point out that flexible trust rules allow payments for grandchildren who have not yet been born, or cover any future change in circumstances such as divorce.”

*Figures are based on UK averages from the 2012 census from the Independent Schools Council, assuming three children attending day school between the ages of 8 – 18 and school fees rising annually at a rate of 5%.

Stephen Pett of TPD Ltd Legacy Trusts (that’s us on this site) added:

“The Home Protection Trust is just a variant of a lifetime trust specifically designed for a home to go into.  It is great for funding private education for grandchildren – but not until you have died!  If you are looking to finance private eduction for grandchildren during your lifetime, we use a different (and cheaper!) variation.  Just let us know that you are looking for your trust to provide help with private education for grandchildren.

Trusts for Private Education for Grandchildren