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Equilibrium’s finance and investment news roundup

This week’s roundup includes news of new-build retirement homes selling at a loss, a continued decline in annuity sales, a widespread lack of awareness among consumers regarding the cost of broadband, and calls for the suspension of a major pension reform.

Half of new-build retirement homes sell at a loss

Approximately half of new-build retirement properties sold during a 10-year period were later resold at a loss, new research has revealed. Conducted by the Elderly Accommodation Counsel (EAC) for the BBC, the investigation found that many homes built after 2002 had underperformed in the general property market.

The research looked at thousands of Land Registry Records for resale details of homes built between 1998 and 2012. It also found that of new-build retirement properties that were sold between 2005 and 2007 and then resold between 2012 and 2014, more than four-fifths declined in value. The average loss for these homes was found to be 25%.

Adam Hiller of the EAC, said it was unclear why the declines were happening. He added: “The traditional model was to hand over these properties to a managing agent to run them… Does the developer have that much of an interest in investing in the property?”

Annuity sales continue to fall

Annuity sales have continued on a path of decline two years after new rules allowed people to cash in their pension pot. Since 2015, individuals aged over 55 have been permitted to withdraw 25% of their pension pot as a tax-free lump sum, with the remainder subject to the normal rates of income tax.

However, figures from the Financial Conduct Authority showed that the changes had led to a fall in the popularity of annuities, which offer guaranteed income for life. According to the body, sales fell by 16% in the six months to April 2017 compared to the previous year. The total of 33,561 sales was also 21% lower than the previous six months.

The data revealed 150,806 pension pots were taken entirely in cash during the six months to the end of March 2017, down 8% on the previous six months, but 9% up on the same period in 2016.

Consumers ‘unaware of broadband costs’

Consumers across the UK are unaware of how much they are paying for their broadband package or the details of their subscription, new research has revealed. According to Comparethemarket.com, six out of 10 people have never been informed by their provider that their contract was coming to an end.

The findings emerged as a result of regulator Ofcom exploring ways of helping households to secure a better deal on their internet. At present, there are no rules in place to ensure a provider alerts a customer that their contract is close to finishing, as with other products such as car and home insurance, where prompts are sent out to customers.

Peter Earl, Head of Energy and Utilities at Comparethemarket, said people were “in the dark” over the conditions of their broadband packages at a time when prices continue to rise. He added: “Whilst price is clearly viewed as the deciding factor when it comes to choosing a broadband package, our research findings suggest that many customers may not actually have a view on whether what they pay is appropriate.”

Citizens Advice calls for suspension in major benefit reform

Citizens Advice has called for a suspension of the further reform of a major benefit amid fears it will run families into further debt. According to the charity, those counted under the Universal Credit system were more likely to struggle with priority debts, despite the government claiming the system offers additional support to those in need.

Universal Credit merges six existing benefits into a single payment, encompassing tax credits, housing benefit, income support Jobseeker’s Allowance, and employment and support allowance. It is predicted that by 2022 more than seven million households across the UK will receive the benefit, with at least half of these in work.

Citizens Advice analysed 52,075 cases, concluding that those on Universal Credit would appear to have less than £4 per month left to pay all their creditors after they had paid household bills. This compared with £16.25 per month for those in receipt of the individual benefits under the old system.

Gillian Guy, Chief Executive of Citizens Advice, said: “While the principles behind Universal Credit are sound, our evidence shows that if the government continues to take this stubborn approach to the expansion of Universal Credit, it risks pushing thousands of families into a spiral of debt.”


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