Buying beats renting in Aberdeen, but it pays to rent in London

  • Buyers in Aberdeen will be £99,000 better off compared to renters after 7 years
  • Dundee, Glasgow, Cambridge and Edinburgh also compelling to buy vs. rent
  • Buying in London with a 10% deposit takes 18 years to become more cost effective than renting
  • Bournemouth, Huddersfield, Bedford and Swansea also make sense to rent not buy

Aberdeen is the most cost-effective town in Britain for buying property compared to renting. Over a typical seven year period, the average property owner in the Scottish town can expect to be £99,040 better off compared to the equivalent renter, according to research from property website Zoopla.co.uk.

The latest Rent vs. Buy analysis from Zoopla shows that it takes buyers in Aberdeen with a 10% just one year of ownership for buying to become more cost effective than renting. The average property price in Aberdeen is currently £206,060 with average monthly rents at £1,275.

London is currently the most renter-friendly location in Britain. After seven years, a typical London renter would be £82,412 better off than a buyer with a 10% deposit of an equivalent property. It would take 18 years for a London buyer with a 10% deposit to begin to be financially better off compared to the equivalent renter. These calculations are based on a conservative estimate of 4% annual house price growth in the capital.

Bournemouth is the second most renter-friendly town in Britain. With average asking prices of £380,206 and average rents of £1,024 it would take twenty two years for a buyer with a 10% deposit to be better off compared to a renter in an equivalent property. After a seven-year period, a typical renter in Bournemouth would be £30,719 better off than a typical buyer with a 10% deposit.

Lawrence Hall of Zoopla.co.uk said: “Despite taking longer to be better off financially, London remains the holy-grail in terms of property investment. It is much more buyer-friendly outside the capital but with rising average prices and low savings rates, accumulating a deposit has become increasingly difficult. It is important to remember that whilst renters may be better off in the short to medium term in some areas of the country, buyers are making a long-term investment. With most buyers opting for mortgage terms of 25 years, over the long term, buyers are likely to be better off compared to those who choose to rent.”

The Zoopla Rent vs. Buy methodology compares all of the costs associated with buying or renting as well as increases in asset or savings value over time. The analysis forecasts the amount of time it will take for buying to become more cost effective than renting across the largest towns and cities in Britain and compares how much buyers or renters are financially better off after the average tenure of a house.

BEST LOCATIONS FOR BUYING

 

Location

 

Av. Asking Price

 

Av. Monthly Rent

Amount buyers are better off after 7 years (10% deposit)

Aberdeen

£206,060

£1,275

£99,040

Dundee

£96,103

£653

£54,378

Glasgow

£139,841

£722

£40,971

Cambridge

£337,586

£1,334

£28,878

Edinburgh

£224,000

£948

£32,725

Coventry

£191,833

£849

£33,730

Newcastle

£180,516

£812

£33,726

Manchester

£178,069

£781

£29,751

Milton   Keynes

£264,038

£1,066

£25,345

Birmingham

£163,594

£719

£27,171

Source: Zoopla.co.uk (February 2014)

 

BEST LOCATIONS FOR RENTING

Location

 

Av.   Asking Price

 

Av.   Monthly Rent

Amount   renters are

better   off after 7 Years

(10%   deposit)

London

£896,124

£2,619

£82,412

Bournemouth

£380,206

£1,024

£49,082

Huddersfield

£177,119

£561

£7,680

Bedford

£288,598

£959

£7,306

Swansea

£185,373

£631

£204

Source: Zoopla.co.uk (February 2014)

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Insurance professionals are rocketing up the career ladder

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People working in insurance have the most opportunities for promotion in the UK when it comes to their career progression according to research by recruiter Randstad.

In a survey of over 2,000 British workers, 38% of British workers said they were content with their career progression.  But 73% of those working in insurance said they were happy with the way they were scaling the corporate ladder.  Those working in property, financial services, nursing, IT and telecoms, and education were also above average.

At the other end of the spectrum, those working in media and wholesale were the least happy with their career progression (12% and 13% respectively).

WHERE ARE YOU ON THE CAREER PROSPECTS LEAGUE?

INDUSTRY SECTOR

I am Happy With My Career Progression

Insurance

73%

Property

59%

Law

55%

Financial Services

46%

Leisure

41%

Health (e.g. Nurse)

40%

IT & Telecoms

39%

Education

38%

UK AVERAGE

38%

Rail

37%

Engineering

36%

Social Care (e.g. Social Work)

34%

Retail

33%

Accountancy

26%

Wholesalers

13%

Media

12%

“Career Blockers” Cutting Down High-Flyers’ Promotions Prospects

The variations between sectors may be explained by how talent is managed across different industries.  Organisations that manage their employees’ careers most effectively adopt “up or out” policies that require the dismissal of employees who fail to attain a promotion after a certain amount of time – ensuring high flyers’ promotions aren’t held up by “career blockers”.  The United States Armed Forces, for instance, require that certain ranks be held for no longer than a set amount of time, a lack of compliance with which could render grounds for dismissal.

In the UK, leading insurance, financial services and law firms have adopted this ‘Up or out’ American model.  And these were three of the sectors in which people are most happy with their career progression.

Mark Bull, CEO of Randstad UK says, “Dynamism in the workforce creates a high performance culture and is fundamental for the success of employers and the happiness of employees.  But there could be ‘career blockers’ holding up the promotion prospects of good employees in sectors like media and wholesaling.  That’s frustrating for those high-fliers who are left with no way to climb past underperforming managers.  Increasingly we see them looking elsewhere.”

Promotion Schedules Halted in Recession

Frustration with career progression in sectors like media and wholesale may also be explained by organisations’ reactions to the recession.  The economic downturn has led to some employers abandoning promotion schedules – assuming that the mere existence of a job should be enough to keep and motivate existing staff.  Randstad’s latest World of Work survey found that more than 60% of UK workers have taken on extra responsibilities as a result of the crisis – without being compensated for the additional demands. 

Mark Bull explains, “Employers had to make difficult choices when deciding where and how to reduce costs in response to falling markets.  Slowing down promotions may have been the obvious choice in the short-term.  However with the focus on cutting employee numbers, it’s easy to forget about the people left behind.  If this was a conventional downturn, most employees would have accepted the lack of promotions as a temporary setback or the price of protecting their job in difficult times.  But this isn’t a temporary downturn and as a result, the UK is left with a talent time-bomb – a bomb that’s likely to go off as alternative jobs become available.  Among the top 15% of the workforce, outside of sectors like financial services and insurance, three in every five employees say they aren’t happy with their career progression.  If companies aren’t forward thinking in their talent management they will see their top 15% go elsewhere.”

While many business leaders are aware their organisations are at risk of losing their top performers if they cannot find ways to progress their careers appropriately, career management is often not easy.  Career discussions can be interrupted by the day-to-day pressures of the working environment and managers can face a conflict between the need to manage their teams in the short-term while balancing long-term career prospects.

Mark Bull comments, “Employers should obviously be looking after the most productive top 15% of their workforce, but they also need to motivate other staff who may have become disenchanted with poor promotion prospects.  High-flyers, for instance, may feel they are being forced to carry under-performing colleagues.  Employers need to take and active approach to managing engagement within their organisation.  Issues raised in staff satisfaction surveys must be addressed.  Line management also has a crucial role in sustaining motivation and indentifying people who have become disengaged through the appraisal process and in day-to-day management.  Finding new challenges for dissatisfied people or better recognition and development of their skills could not only improve their performance, but also strengthen engagement and productivity as a whole.”

Career Progression Doesn’t Always Go Hand In Hand with Headcount Growth

Additionally there appears to be little relationship between headcount growth and how satisfied people are with their career progression, again suggesting employers could relook at how they manage talent within their organisation.  While, the sector which expanded the most between 2009 and 2012 was IT & Telecommunications (in 2012 there were 44% more people working in IT and Telecoms than in 2009 according to the ONS) employees were only marginally happier than the rest of the country’s workforce.  The number of people with permanent jobs in nursing expanded by the second largest proportion (26%) – but nurses were also only slightly happier than average with their career progression.  Over the same period, the UK’s permanent workforce expanded by 10%.  Insurance – the sector in which people were most happy with their career progression – didn’t expand between 2009 and 2012 and the property sector, which had the second highest percentage of employees happy with their career progression, grew by just 1%.

Mark Bull admits: “We expected to find a relationship at some level between career progression in a sector and job growth.  But the figures don’t bear this out.  Insurance remained static in size as a sector between 2009 and 2012, and the property sector expanded by just 1%, but these were the two sectors in which people were most happy with their career progression.  We think this points to pride in being part of a high performance culture with sophisticated application of talent management.”

What Does Career Progression Mean To People Today?

In further research carried out by Randstad, when asked to think back twelve years and remember what they thought the most important elements of career progression were, 62% of respondents said better pay, making it the most important factor.  However, when asked what they thought the most important elements of career progression were today, the most popular factor was Doing work that lets me learn new things, meet new people and participate in different projects – an option chosen by 74% of respondents.

Mark Bull added, “Employees are redefining the meaning of career progression.  When it comes to career progression, not only are the values people hold changingthe whole concept of a career as an upward progression through a sequence of roles in one firm has changed.  Flexibility in the workforce means that for many a career doesn’t involve progression: it may be a series of moves that go sideways, or even backwards, and cross occupational and organisational boundaries for others its simply increasing their skill sets.”

Canada Life expands its offshore bond offering to UK investors with the launch of a new company in Ireland

Canada Life has announced the launch of Canada Life International Assurance Limited (CLIA), a new Dublin based life company designed to provide additional offshore tax-efficient solutions for UK investors.

The new company is a sister operation to Canada Life’s existing offshore operations, Canada Life International Limited (CLI) and CLI Institutional Limited (CLII) which are both based in the Isle of Man.  CLIA has the same parent company in Great-West Lifeco and therefore also benefits from the financial strength and security this brings.

Sean Christian, Managing Director, CLI & CLII, commenting on the launch of the company, said:

“Our existing offshore proposition is built on providing advisers with flexible, innovative products, high quality service and a wide range of investment solutions. We have successfully gained the reputation over the last 25 years in the offshore bond market as not only establishing ourselves as a leading provider but also as the provider that offers the broadest range of choice to advisers and investors.  Our products are linked to 23 platforms and 11 back-office systems rather than being restricted to one in-house platform. Our Estate Planning suite of products is undoubtedly the widest range in the market. This was recognised in the International Adviser offshore awards with CLI winning the Best Overall UK Product Range in 2010 and 2011.  Up until now though we have not been able to offer advisers and their clients a jurisdictional choice of where they take their offshore bond from.  The launch of CLIA out of Dublin, addresses this requirement and allows the Canada Life group to offer a complete end to end package of choice to the market.”

Canada Life has also announced that Mark Armstrong will lead the operation as Managing Director of CLIA.  Mr Armstrong was previously Head of Operations at CLI and will continue to report to Mr Christian in his new role.

Mark Armstrong said:

“Advisers and their clients are looking for a wide range of offshore investment solutions including a choice of Isle of Man and European bonds from providers with strong financial backing and with a long pedigree in this market.  We are delighted to offer the Premiere Europe Account which is based on our award winning and popular Isle of Man Premiere Account offered by CLI. The Premiere Europe Account (and a discounted trust version) will be backed by published service standards as shown in our investment and estate planning service charter, a feature of our offering that has been valued by advisers for many years and which underpins our commitment to offer an unrivalled level of customer service.”

The international operation of Canada Life has witnessed significant growth since its inception in the Isle of Man in 1987.  In 2011 the group reported a record year for new business, in excess of £1.2bn of premium, giving it a market share of over 20% and total assets under administration of £8.0bn (CLI and CLII combined) as at 31 December 2012.

 

– ENDS-

For further information on Canada Life International Limited please contact:                         

For further information on Canada Life International please contact:              

Hugh Murphy

The Wriglesworth Consultancy

020 7427 1400

About Canada Life International Limited (CLI)

Canada Life International Limited is part of the Great West Lifeco Inc group of companies. CLI was established in 1987 and is based on the Isle of Man, a jurisdiction recognised for its stable government, strong regulatory controls and policyholder protection measures. CLI continues to receive exceptional ratings from specialist, independent agencies in relation to financial strength, unit-linked business and commitment to service.

Since formation in 1987, CLI has continually developed expertise in providing wealth management solutions for UK and International clients alike. The combined assets under administration for CLI and its subsidiary, CLI Institutional Limited, are £8.0bn (as at 31 December 2012).

The company employs 135 people at its headquarters in Castletown and has witnessed phenomenal growth in recent years, with assets under administration growing by over 500% since 2002.

Canada Life group consists of Canada Life Limited, Canada Life Investments (both authorised and regulated by the Financial Services Authority), Canada Life International Limited and CLI Institutional Limited, (Isle of Man registered companies authorised and regulated by the Isle of Man Insurance and Pensions Authority). All promotional material produced is approved by Canada Life Limited.

 

 

Adviser research highlights the popularity of whole of life plans for IHT planning purposes

Canada Life International Limited (CLI) has just completed a survey of professional advisers and their findings highlight the popularity and versatile nature of whole of life (WoL) plans. The research shows that 54% of respondents regularly recommend WoL plans for estate/inheritance tax planning to their clients and that a further 36% of advisers present WoL plans as part of their overall estate planning recommendations.

Neil Jones, Technical Projects Manager – Canada Life said:

“The survey highlights that whole of life plans have a multitude of purposes which include inheritance tax (IHT) planning, family protection and in some instances, business protection. A WoL plan is a simple and effective estate planning solution for those individuals who may be asset rich but cash poor. As a provider of a range of flexible onshore and offshore estate planning solutions, we provide daily support to professional advisers who have clients with a range of income and estate planning needs. Some clients have an urgent need for an effective inheritance tax solution but their assets are tied-up in a number of ways (such as in their main family home, various business interests, other long term investments and so on). Flexible multi-purpose WoL plans such as Canada Life International Limited’s Flexible Life Plan (FLP) provide both a cost-effective and long term estate planning solution when they are combined with a trust.”

CLI provides a series of services to help advisers and their clients through the application and underwriting processes which include pro-active case management support, high non medical limits and technical support on the different trust options.

The FLP won the Best Protection Product (UK) in the International Life Awards for the last four years (2009 to 2012) and is backed by CLI’s innovative and award winning FLP service charter.

– ENDS-

Notes to editors

The online survey ran from 22 March to 15 April 2013.

For further information on Canada Life International Limited please contact:

Hugh Murphy

The Wriglesworth Consultancy

020 7427 1400

About Canada Life International Limited (CLI)

Canada Life International Limited is part of the Great West Lifeco Inc group of companies. CLI was established in 1987 and is based on the Isle of Man, a jurisdiction recognised for its stable government, strong regulatory controls and policyholder protection measures. CLI continues to receive exceptional ratings from specialist, independent agencies in relation to financial strength, unit-linked business and commitment to service.

Since formation in 1987, CLI has continually developed expertise in providing wealth management solutions for UK and International clients alike. The combined assets under administration for CLI and its subsidiary, CLI Institutional Limited, are £8.0bn (as at 31 December 2012).

The company employs over 120 people at its headquarters in Castletown and has witnessed phenomenal growth in recent years, with assets under administration growing by over 500% since 2002.

Canada Life group consists of Canada Life Limited, Canada Life Investments (both authorised and regulated by the Financial Services Authority), Canada Life International Limited and CLI Institutional Limited, (Isle of Man registered companies authorised and regulated by the Isle of Man Insurance and Pensions Authority). All promotional material produced is approved by Canada Life Limited.

 

Mortgage Advice Bureau: Quarterly Mortgage Applications up by 25%

  •      Growing purchase activity fuels mortgage market resurgence
  •    22% yearly growth in product range boosts consumer choice
  •     Average two year rates not bettered since June 2007
  •     Incomes are up and purchase LTVs down since March 2012 

A 25% increase in mortgage activity during the first quarter of 2013 points to a growing resurgence in the market, according to March’s National Mortgage Index from Mortgage Advice Bureau – the UK’s leading independent mortgage broker.

Combined purchase and remortgage cases were up by a quarter during the first three months of 2013, compared with the final three months of 2012, and by 18% compared with the equivalent period last year.

Using data from more than 500 brokers and 800 estate agents, the National Mortgage Index shows the strongest momentum is with purchase activity, helped by an 11% monthly increase to March 2013.  This boosted the quarterly increase in purchase business to 26%, compared with 22% for remortgages, which dropped by 2% in the month.

Total mortgage activity for March was 22% higher than in March 2012, fuelled by a 13% annual increase in purchase mortgage cases and 19% more remortgage cases.

Lender competition drives consumer choice:

Competition for business between lenders meant there were more mortgage products available on average during March – 9,269 – than any month since November 2011.  Apart from December 2012, when the average total fell by 1%, consumer choice has improved every month since the Funding for Lending Scheme (FLS) was launched in August 2012. 

There were 20% more products available on average during March, compared with July 2012 before the FLS launched, and 22% more than in March 2012.  Recent growth has been driven by intermediary products, which increased by 4% in the month and by 22% under the FLS to 6,644 – the widest range on offer since December 2011.

While direct-only products have grown by 15% under the FLS, their number fell by 4% in March to 2,625.

March also saw the average two year fixed rate drop below 4% to 3.9%. This figure – the lowest since MAB’s records began in June 2007 – is 0.78% lower than in July 2012 before the FLS came into effect.

Typical homebuyers are nearly £3,400 better off than last year:

The average homebuyer in the first quarter of 2013 earned noticeably more than the same time last year, with an average income of £38,660 – £3,372 more than in the first quarter of 2012.

Better product pricing meant they were also far likelier to opt for fixed rate deals.  While three quarters of buyers (75%) chose to fix at the start of 2012 – when average fixed rates ranged from 4.76% to 4.27% – this increased to 92% during the first quarter of 2013, tempted by fixed rates averaging between 4.47% and 3.90%.

Conditions have improved marginally in 2013 for homebuyers with limited deposits. Average purchase deposits were almost £2,500 lower in the first quarter of 2013 (£61,671) than the final quarter of 2012 (£64,153).

However, despite increasing by 1% in the first quarter of 2013 to 71%, the average loan to value (LTV) for purchase mortgages remained almost half a percentage point lower than in the first quarter of 2012 – signalling the need for initiatives such as Help To Buy to encourage higher LTV lending.

In another sign of continuing caution from lenders, homebuyers’ average income at the start of 2013 continued to make up more of the average loan (25.7%) than in the first quarter of 2012 (24.4%).

Remortgage customers borrow more and put forward less equity:

The biggest shift in LTVs at the start of 2013 benefited remortgage customers as activity continued to improve following a slump in 2012. 

Whereas the typical consumer borrowed 55.5% of their existing property’s value at the end of 2012 – putting £119,134 forward as equity – the typical remortgage increased to 59.8% of the property value in the first quarter of 2013, with the typical equity down by over £5,000 to £113,864.

Brian Murphy, head of lending at Mortgage Advice Bureau, comments:

“There has certainly been no shortage of options when it comes to selecting mortgage products so far this year. Lenders have served up a feast of offers that have fed consumer demand with some exceptionally low fixed borrowing rates.

“What we need are greater helpings of funding for people on the fringes of the market, who are either knocked back because of strict criteria or scared off by towering deposits. We are almost halfway through the FLS, but despite the incentive to increase lending, the average borrower is still putting up almost 30% of their property’s value as a deposit.

“Not everyone has this kind of money available, so Help To Buy is definitely needed to open the market up to more would-be homeowners. Interest in house purchases is already far healthier than it was last year, and we are confident there is plenty more to come.”

 

Canada Life International links with Aegon Retirement Choices (ARC) platform

Canada Life International Limited (CLI) and Aegon are pleased to announce that CLI’s full suite of open architecture investment and inheritance tax bonds are now available through the Aegon Retirement Choices (ARC) platform.

Mario Ricciardi, Executive Director – Investments, Canada Life International Limited commented:

“We are very pleased to confirm the link with the ARC platform bringing together an extremely innovative adviser service with CLI’s award winning product range. In a time of change in the market it is exciting to create a link which brings together a level of understanding in the Wealth Management / Platform space that combines robust technology with adviser support which is second to none in the adviser community.

“Post RDR many adviser firms are reviewing their investment strategies for clients and looking at the benefits offered by different platforms. We believe that adviser firms will choose the platform(s) which most closely match their clients’ needs. Our strategy is to make our products available on those platforms which our clients value.”

Full details of the CLI product range is available at www.canadalifeint.com or by emailing CLI’s Adviser Support Team at advisersupport@canadalifeint.com.

 

– ENDS-

 

Notes to editors

The following CLI products are now available on the ARC platform:

Premiere Account

Premiere Discounted Trust Account

Wealth Preservation Account

Controlled Access Account

Inheritance Planning Account

 

For further information on Canada Life International Limited please contact:

Hugh Murphy

The Wriglesworth Consultancy

020 7427 1400

About Canada Life International Limited (CLI)

Canada Life International Limited is part of the Great West Lifeco Inc group of companies. CLI was established in 1987 and is based on the Isle of Man, a jurisdiction recognised for its stable government, strong regulatory controls and policyholder protection measures. CLI continues to receive exceptional ratings from specialist, independent agencies in relation to financial strength, unit-linked business and commitment to service.

Since formation in 1987, CLI has continually developed expertise in providing wealth management solutions for UK and International clients alike. The combined assets under administration for CLI and its subsidiary, CLI Institutional Limited, are £8.0bn (as at 31 December 2012).

The company employs over 120 people at its headquarters in Castletown and has witnessed phenomenal growth in recent years, with assets under administration growing by over 500% since 2002.

Canada Life group consists of Canada Life Limited, Canada Life Investments (both authorised and regulated by the Financial Services Authority), Canada Life International Limited and CLI Institutional Limited, (Isle of Man registered companies authorised and regulated by the Isle of Man Insurance and Pensions Authority). All promotional material produced is approved by Canada Life Limited.

Conveyancers Must Carry Out More Flood Searches to Avoid Claims of Negligence as Melting Snow Causes Floods

Conveyancers need to carry out more flood searches to avoid accusations of negligence, as parts of the country face the threat of flood from melting snow.

SearchFlow, property search provider

Currently, too many conveyancers only recommend flood searches on properties that are traditionally seen as being at risk of flood – those built on floodplains or located near rivers, according to property search provider, SearchFlow.

Britain faces the risk of flooding, with much of the country having experienced up to 10cms of snow recently, as the cold weather comes to an end.  January’s snow follows massive rainfall in December which left the water-table high and the ground saturated.  The Environment Agency says there are currently 58 flood warning across the country – with a further 239 flood alerts.

Richard Hinton

Richard Hinton of SearchFlow

Richard Hinton, business development director of SearchFlow said: “Conveyancers are accustomed to recommending flood searches on properties built near rivers or on flood plains.  But the current threat of flood highlights that the danger can come from very different hazards – in this case saturated groundwater and thawing snow.  This will affect people who haven’t traditionally had to worry about flooding.  Conveyancers need to bear this in mind if they want to avoid accusations of negligence in the future.  There is a need for much more due diligence in the worst hit areas – especially Wales.”

PERCENTAGE OF PROPERTY TRANSACTIONS INCLUDING A FLOOD SEARCH, BY REGION

London  —  35%
South West  —  21%
South East  —  20%
West Midlands  —  19%
East of England  —  18%
Yorkshire & The Humber  —  12%
Wales  —  11%
North West  —  10%
East Midlands  —  8%
North East  —  6%

The situation is particularly serious in Wales.  While only 11% of property transactions in the Wales have included a flood search in the conveyancing searches, yesterday, the Environment Agency announced flood alerts for Neath Port Talbot, Bridgend, Vale of Glamorgan, Rhondda Cynon Taff, Merthyr Tydfil, Caerphilly, Blaenau Gwent, and Torfaen saying flooding is expected, that residents should be prepared, remain vigilant, and take precautions where possible.  Flood alerts were also in place for Gwynedd, Conwy, Denbighshire, Flintshire, Wrexham, Powys, Ceredigion, Pembrokeshire, Carmarthenshire, Swansea, Monmouthshire, Newport, and Cardiff.

Richard Hinton said: “While 35% of property transactions in London include a flood search – as the city has clearly been built on a flood plain and is obviously under threat of flood – it’s a different story elsewhere in the country.  Only 11% of transactions in the Wales include flood searches.”