Britons target 'cheap' holiday homes as Spanish house prices fall,,,

Bargain-hunting Britons are jumping on to the Spanish property ladder as house prices continue to fall, a specialist mortgage broker has reported.

It says there has been a surge of interest in Spanish properties, which have suffered their biggest slump in value over the past year since the onset of the financial crisis in 2007.

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Bargain hunting: Spanish properties have suffered their biggest slump in value since the financial crisis arrived

But overseas mortgage specialist Conti has seen a 33 per cent rise in Spanish mortgage enquiries over May and June compared to previous monthly averages.

That comes despite the monthly house price index from appraisal company Tinsa, showing that Spanish property values were down by 10.8 per cent year-on-year.

Claire Nessling, director at Conti, says there is a combination of factors which are contributing to the boosted budgets of buyers. She said: ‘The Spanish market has reached a low point, so buyers are using it as an opportunity to shop for a bargain.’

Meanwhile, the growing strength of the pound against the euro and historically low interest rates are making holiday homes attractively affordable.‘It ticks a number of boxes that Britain doesn’t; including the weather,’ she added.

As a provider of mortgages in 45 countries, Conti says there is a healthy appetite for lending in Spain. It adds that figures from the Spanish National Statistics Institute, INE, show that the annual decline in property sales in May was 9 per cent, a lot less than the declines from January to March this year, which were between 21 and 33 per cent.

  More... Spain edges closer to financial disaster

BEWARE THE PAIN IN SPAIN The pain in Spain: Income from Tara Ghale's business has dropped and there's few buyers for her home

Those considering a move to Spain or buying there, however, should consider the country's economic plight.

Expats who moved to spain are suffering, as the country struggles with its banks problems, high unemployment and the eurozone debt crisis

One such expat, Tara Ghale, 44, has seen profits from her catering company tumble with the country’s economic crisis.

She now supplements her monthly income with help from her parents and has missed some of her £640-a-month mortgage payments to make sure she can afford other essentials.

Miss Ghale bought her three-bedroom house in the village of Alhaurin el Grande, near Marbella, for £217,000.

But 12 months ago she put it on the market for £192,000 to try to move back to Britain. She has had scant interest.

‘Things have gone downhill so fast,’ she said.

‘The situation at the moment is very worrying. I never dreamed I’d be living the life I am now when I moved out here seven years ago.

‘I know lots of Brit expats who were doing really well a few years ago but are now in dire financial straits because of the economic downturn in Spain.

If you do buy, think long-term

Despite the rising interest, there is much debate over whether this is a good time for Britons to be buying into the Spanish property market, as the nation’s economy, banking system and property market suffers.

However, Ms Nessling said: ‘If you are looking for the long term market, then it is [a good time to buy], for holiday and retirement homes.’

She added: ‘You should always go through the same process that you would follow if you were buying a property in the UK.

Take independent advice from an English-speaking lawyer who is not connected to your seller, estate agent or property developer. And ensure an independent valuation of the property is carried out, even if you’re buying in cash.’


Conti’s advice for Spanish property buyers: 'It pays to be selective. Many so-called bargains are being offered at knock-down prices because they’re of poor quality and in undesirable locations.

'It’s very easy to be pulled in by descriptions of ‘cheap’ or ‘knock down’ prices, but you really don’t want to end up with a toxic asset simply because you didn’t do your homework or take the right advice.

'It may be wise to look at re-sales, where you can get references from previous buyers and check any other re-sales being offered on the same development. As a result, you’ll get a much better idea of the property’s true market value.’

That warning comes as reports rise of an increase in sharp property salesmen looking to take advantage of Britons hunting for bargains.

Money Mail reported last week how holidaymakers risk being duped out of their life savings by salesmen desperate to offload bargain properties and time .

A glut of temptingly cheap homes have come on the market in Spain this year, following a property crash in which prices have been slashed in half.

But the reason many of these homes are so cheap is because developers or the banks that repossessed them are desperate to get them off their books.

Many are among the estimated 300,000 Spanish homes that do not have planning permission, and are often without mains water, gas or electricity.

Overseas mortgage broker Simon Conn says: ‘In many cases, people are seduced by the sea, sangria and relaxed Spanish lifestyle. They do not think straight about why a property is so cheap.

‘Before you buy, always ask yourself: Is the price low because the owner has fallen on hard times or just needs to sell? Or is it a property that should never have been built in the first place?’

The '50% off' property bargains

Chris Mercer of Spanish estate agent Mercer, based in Costa Calida, said: 'Prices are certainly coming down but they have been for the past few years.'

'Many of the people selling are those who bought into the Spanish property market in 2001 and 2002 when the euro to sterling was much better.'

But getting finance on most properties is a struggle.

Mercer said Spanish lenders are reluctant to lend more than 60 per cent of the value of privately sold homes. In other words, buyers will need a 40 per cent deposit.

However, banks will be more generous on homes they have repossessed and are selling off. Mercer says it is possible to borrow 100 per cent of the value on bank-owned properties.

Mercer claims that the market has shifted more to euro based buyers, in particular Belgian buyers in his area who are keen to take advantage of low prices.

He flags up two villas that would have gone for as much as €290,000 at the market peak in 2006:

Property in Spain: 2 bedroom, 2 bathroom villa with private pool in Murcia, priced at 125,000 euros (£98,425)

This two-bedroom, two-bathroom property (1 en suite) villa, with a private pool and a golf development in Mazarron, Murcia, is a twelve minute drive from the beach and ten minutes from the future Paramount theme park. It is on the market at €125,000 or £98,425.

Property in Spain: 3 bedroom, 3 bathroom with a private pool at 189,995/ £149,602

This three-bedroom, three-bathroom (two of them en suite) villa has a private pool and is on the same development as the other property. The price is €189,995 or £149,602.

French house prices warning for British owners already hit with 15% tax hike,,,

Britons with homes in France who already face a substantial tax hike on any profits they make if they sell are also at risk of a property slump as transactions dry up.

A perfect storm is said to be blighting the market across the Channel. According to a report in the newspaper Le Parisien, property sales are being driven down by a sellers refusing to cut asking prices, higher taxes from the new French Socialist government, tighter credit conditions and would-be buyers stalling to see if house prices will fall.

The report claimed 'the market is in freefall' with estate agents and solicitors reporting sales of previously owned homes down between 17 per cent and 40 per cent since the start of the year.

In the gite: New French leader Francois Hollande has imposed tax hikes on the wealthy and overseas owners of French property.

British owners of French property have already been hit this summer with the imposition of a 15.5 per cent extra social charge on profit on their homes, which cannot be offset against their UK capital gains tax bill.

Signs point to France suffering the same property market stagnation as Britain, where prices have failed to fall substantially, thanks to low interest rates propping up owners’ finances, but sales have dived.

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SIMON LAMBERT: France will still remain tempting to British buyers

French property is still likely to look attractive to British buyers even with the market catching a cold and higher taxes if they sell.

Most of those still buying in France will aim to own their property for many years and are unlikely to be trying to striking it rich on it.

Instead they are looking for the good life that France is still seen to promise, relaxed days and evenings, good food and wine and, of course, better weather - something likely to be heightened by our dire summer.

British buyers already buoyed by the pound's revival may see current weakness as an opportunity to target a bargain. The view among such buyers is that although prices could drop in the short term, in the long-term they will rise again.

Own a property for the long-term and buyers will also see their French capital gains tax bill fall thanks to taper relief and after enough time they will simply end up owing HMRC the 28 per cent due here anyway.

Mortgage rates for those looking to buy are also good. John Busby, a French mortgage expert at French Private Finance, has highlighted the long-term nature of French mortgages, with current deals available including a 20-year fixed rate mortgage at 3.85 per cent for those with 20 per cent deposits.

He said: 'The ability to fix your mortgage interest rate at under 4% for 20 years is a holy grail for many buyers. Effectively, you are paying under 2% mortgage your mortgage once you take out inflation.

'If you are looking for long term value and low risk France has a lot to offer. The current combination of soft property prices with such excellent mortgage products mean there are bargains to be had in spite of the recent tax changes.'

However, French consultancy PrimeView painted a more pessimistic view earlier this summer, telling the Telegraph that house prices in France were at the top of a bubble and could fall by 40 per cent over the next five to ten years.

Another study by The Economist, based on comparing rents and average wages against house prices - and then plotting this against historic norms, suggested the French property market was one of the most over-valued in Europe. The market was said to be 47 per cent too high.

Estate agents quoted in Le Parisien said high prices had squeezed buyers out and unless sellers were willing to lower their expectations their properties would be left on the shelf.

Patrick Jolly, of group Particulier a Particulier, said prices 'have reached such a level that buyers simply can’t keep up'.

As with the British property market, however, homeowners are reluctant to sell below what they believe their property is worth – leading to a stand-off between sellers and buyers.

Frederic Monssu, of the Guy Hoquet agency, said: 'Convinced that their housing is the most beautiful and because a neighbour has sold theirs for a good price, the sellers will not lower theirs. The result is that the transaction does not happen.'

Laurent Vimon, of estate agents Century 21, ruled out a ‘complete collapse in prices’ but said falls of 5 to 10 per cent could be on the horizon.

The report said that while prices in Paris had remained stable this year, they had fallen 3 per cent in Toulouse, Lille, Lyon and Nice and 7 per cent in Marseille.

French property prices have leapt over the past decade. PrimeView said prices across France were up 160 per cent since 1998, although household incomes were up just 35 per cent.

It added that changing demographics would drag on the market, as the ageing population meant an extra 1.2m net sellers every five years – identified as those over 58 – but a stable number of 33m net buyers.

The consultancy’s Pierre Sabatier said: 'Starting this year, the demographic structure will have a profound deflationary impact on property, reversing the last 40 years. We could see a vicious circle of falling prices.'

Britons hit by 15.5% social charge they can't offset against UK tax

A further dampener to the market in areas popular with British owners has come as overseas owners of French homes now also face higher capital gains taxes when they sell due to the addition of a 15.5 per cent social charge.

Down: Property sales in France have fallen substantially this year, the report in a French newspaper warns.

Previously, overseas owners from within the EU had been in a better position than French resident second homeowners, who had to pay this tax which goes towards services in France on top of 19 per cent French capital gains tax.

France’s new socialist leader Francois Hollande announced he would bring in the social charge for overseas owners in July, and this was recently agreed by the country’s Constitutional Council, despite claims it could be against EU law.

While those selling properties in France can offset capital gains tax there against the higher British rate of 28 per cent, HMRC says that they will not be able to offset this social charge against it – delivering an extra 15.5 per cent bill on top of what they must already pay.

Many will not end up paying the full higher charge, as the complicated French system of taper relief reduces the amount that capital gains tax and the social charge is levied on. This starts after six years of owning a property but was changed at the start of the year so that homes only become fully exempt after 30 years rather than the previous 15 years.

Owners pay the full amount for the first five years and then get a deductible allowance stepping up two per cent each year to Year 17, then four per cent a year to Year 24, then eight per cent a year until Year 30, when they get a 100 per cent deduction.

But even if you do get let off all your capital gains tax by the French taxman, you should still be paying the rest in the UK.

Britain’s flat rate capital gains tax is levied at 18 per cent for basic rate taxpayers and 28 per cent for higher rate taxpayers, however long you have owned an asset.

But the system adds your profit onto your annual income to decide whether you fall within the basic or higher rate tax brackets and then allows you to deduct your annual capital gains tax allowance of £10,600.

In practice this means anyone making a decent sum from a property in France is likely to pay the 28 per cent rate.

Brits who bought a place in France in the boom turn to renters to make sums add up,,,

Back in the days of booming property prices and a strong pound, thousands of British people realised their dream of owning a holiday home in France.

These lovingly renovated farmhouses or grand manoirs were intended to be used by themselves or family and friends for weekends and holidays. But not any more.

Today, increasing numbers of holiday homes are being turned into part-time gites.

Enlarge   To market: Second home owners are increasingly renting out their holiday houses

Sally Stone, whose company Les Bons Voisins manages properties in France, says: ‘When I went into business ten years ago, the vast majority of my clients kept their home for themselves.

‘Over the past five years this has changed — considerably more than half now look to recoup some of the costs of owning a home in France by letting it commercially for holiday guests.’

But maximising a home’s rental potential needs careful preparation.

‘Guests now expect high standards — similar to staying in a good hotel,’ says Stone, who recently launched the online advice site ‘The Gite Doctor’ for owners.

  More... Warning that French property market is 'in freefall' delivers double whammy for British owners already hit with 15% tax hike Bargain-hunting Britons target 'cheap' holiday homes as Spanish property prices continue to fall Costa catastrophe: Spanish bank bailouts and property crash wreck Brits' retirement plans

‘This means it has to be well-equipped and in excellent condition. You might love that squashy sofa but it won’t cut the mustard with your clients, so be prepared for some initial investment to bring your property up to scratch.

‘All of this takes time, thought, experience but not necessarily vast amounts of money.’

Regardless of whether it is rented out or not, maintaining a second home has to be a priority.

Some try to do the work while they are there on holiday. But according to Stone: ‘We have found that for the first 12 to 18 months, people are happy to spend their breaks mowing knee-high grass and painting shutters. Then they realise that they have no time to relax.’

ESSENTIAL TIPS FOR RENTING YOUR FRENCH HOLIDAY HOME Expect to rent out your home for eight to ten weeks a year. It needs to be wellpresented and properly marketed. Guests will expect a dishwasher, Wi-Fi, satellite TV — and often a swimming pool. To get sufficient bookings, you need an agency.About 30 per cent of rental will go on caretaking costs. Any income earned from letting a property is taxable in France and in the UK. Under the double taxation system, charges made in France can be offset by UK income. If you have a swimming pool, you need the correct safety measures (adequate fence, alarm or cover) or you risk high fines.

An empty property is also vulnerable to extreme weather such as freezing temperatures, which can burst water pipes. One solution is to ask a local friend or neighbour to keep an eye out. But Sally says: ‘This can be a difficult relationship. If you are not paying someone, they don’t feel obliged to visit regularly and may not do so.’

Property managers are a popular solution — and often a must-have for commercial lettings. They charge a regular fee for holding the keys and a monthly check of the home.

All other services, from cleaning and gardening, to welcoming guests, cost extra. ‘Good caretakers are like project managers — aware of all possible problems,’ says Stone.

‘So if there’s a storm or torrential rain, a caretaker should automatically check your property and email you an update.’ However, holiday-home insurance is compulsory. ‘And it must be in place from the day you purchase the property,’ says Sally.

Home owners in France must also pay two local taxes to which all homes are subject — taxe foncière, for local services, and taxe d’habitation, which is payable on January 1 of the year being taxed. Stone advises having a French bank account for these and other bills.

‘While it is possible to pay utilities without one, a French account makes running a second home much easier,’ she says. ‘And that is, after all, what every owner wants.’

Sober man DUI: Result of breathalyzer test leads to custody for 64-year-old Black man

Sober man DUI story took turn when the Result of breathalyzer test leads to custody for 64-year-old Black man. A elderly sober man was charged with DUI, and on Monday, the man who says he was a victim of a wrongful arrest is claiming that he was charged with Driving Under the Influence because he was black.

Why would a man make such an accusation? Because he not only was charged with DUI unjustly he says, but the fact that he took a breathalyzer and blew 0.00 and still was hauled off to the police station has a lot to do with it.

According to Thorton, he was pulled over by police, and when the officer came to his car door, he accused the older man of being under the influence.

"'An officer walked up and he said 'I can tell you're driving DUI by looking in your eyes.' I take my glasses off and he says, 'You've got bloodshot eyes,’ says Thorton, recalling the story.

That’s when the officer insisted that Thorton take a breathalyzer test. Thorton obliged, and passed with flying colors, because the test came up as 0.00.

According to Thorton himself, he knows the reason the test came up with triple zeros: he hadn’t had a drink that night.

But apparently, the officer didn’t care. The officer insisted that Thorton was under the influence because he looked drunk, as opposed to being genuinely under the influence based on the breathalyzer.

Thorton says he was arrested and taken to the police station, where more tests were formed. At the end of the day, Thorton blames racism rather than alcohol.

"It was driving while black. I just don't want any of this to happen to somebody else."

For more on the sober man DUI story, return to this column.

Spain offers residency to anyone buying a home worth more than £130,000 in bid to save its housing market,,

Spain plans to offer foreigners residency permits if they buy houses worth more than 160,000 euros - approximately £128,500 - to try and reduce the country's bloated stock of unsold homes. 

Spain currently has more than 700,000 unsold houses following the collapse of its real estate market in 2008.

Trade Ministry secretary Jaime Garcia-Legaz said the plan, expected to be approved in the coming weeks, would be aimed principally at the Chinese and Russian markets as the domestic demand was stagnant and showed no sign of improving.

Badly hit: Spain has more than 700,000 unsold homes sitting vacant after its property boom collapsed in 2008

New measures: Foreigners who buy property worth more than 160,000 euros - approximately £128,500 - would be given residency permits under new proposals

The country's economy is still struggling and is currently in recession with 25 per cent unemployment.

Thousands of houses have been repossessed by banks and their owners evicted because they cannot pay their mortgages.

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The government last week approved a decree under which evictions would be suspended for two years in specific cases of extreme need.

The country's offer beats others in bailed-out countries such as Ireland and Portugal, where residency papers are offered to foreigners buying houses worth more than 400,000 euros - around £322,000) and 500,000 euros - approximately £402,000 respectively. It was not immediately clear if the residency would only refer to Spain, and not the European Union.

The stricken state of the country's real estate market was highlighted Monday by figures from the Bank of Spain which showed that the level of bad debt in the country's banks had risen to a record 10.7 per cent of their loan total in September.

Struggling: Many home owners in Spain have been struggling to pay their mortgages

Unhappy: Residents in Madrid pictured protesting against evictions at the beginning of November after an estimated 350,000 were evicted from their homes in the wake of the recession

The bank said the amount totaled 182 billion euros, up from 179 billion euros in August - the 15th monthly increase in a row.

The 16 other countries that use the euro have agreed to lend Spain up to 100 billion to help support the country's banks weighed down by these bad loans and investments.

On top of the bank loan, Spain has been under pressure to apply for more outside financial aid to help it manage its debt and deficit.

The European Central Bank has insisted on the move before it will make good on its pledge to buy the bonds of certain troubled countries to help lower their borrowing costs.

Spain says it is waiting to know all the conditions that might come attached to the rescue package before making a decision.  

New rules: A new decree means housing evictions for failing to pay mortgages can be suspended for two years in extreme cases

Downturn: Promoters who could sell new homes just by showing crude blueprints a few years ago are now struggling to sell new properties

France and Spain most popular places to buy home abroad,,,

Despite ongoing financial problems in the eurozone, the top two destinations for home buyers looking to snap up a property abroad are within the troubled region, research suggests.

France tops the list, with 23 per cent of potential buyers looking to own a property across the Channel, according to the HiFX Property Hotspots report.

However, interest from would-be buyers has dwindled in recent months - the same survey in March found that 35 per cent were interested in snapping up a property in France - a 12-point drop.

French fancy: Properties across the Channel remain popular. Pictured, Moselle, in the East of France

The fall could follows a recent property tax hike for foreign owners as the new socialist French government attempts to raise extra revenue.

British owners of French property were hit this summer with the imposition of a 15.5 per cent extra social charge on profit on their homes, which cannot be offset against their UK capital gains tax bill.

But many of those looking to buy in France will probably aim to own their property for many years, rather than sell it on for a profit shortly down the line.

Despite the fall in interest, Mark Bodega, director at HiFX, remains upbeat. He said: ‘France remains a safe bet for Brits. It goes without saying that the sun and lifestyle are a big pull but buyers can now get better value for their money and take advantage of the weakening euro.’

Just behind France in the popularity stakes is Spain. According to the survey, 19 per cent of potential overseas property buyers want to buy in the sun. This is a rise of three per cent compared to the March survey findings.

Potential buyers were less keen on France in October than they were six months earlier in March 2012

However, the allure of Spain and popular 'hotspot' areas with British buyers - such as the Costas - are lower in the rankings with experienced property owners. Just nine per cent said they would buy there if they were considering purchasing another property.

In May, Money Mail – This is Money’s sister title – highlighted how many expats with properties in Spain are struggling to sell-up. In some instances, it has taken three years - and in during that time, prices have fallen by as much as 70 per cent, eating into equity.

In June, we reported figures showing property prices have slumped by 12 per cent in just one year in Spain – and despite this being the steepest fall in five years, experts suggest the figures underestimate the drops being seen. However, some may see lower prices as an ideal opportunity to scoop up a bargain home in the sun.

Mark Bodega added: ‘Spain is still popular with Brits who are hoping to take advantage of lower property prices. In years gone by bargain-hunters would focus inland, particularly looking for rundown properties that needed some work. 

‘As inland prices have fallen the most since the property crash this is still true, however, prices have fallen on the coast dramatically as well giving bargain hunters plenty of choice.’

Home in the sun: Despite property prices crashing in Spain, many are still lured in by the better weather and relaxed lifestyle

The third most popular destination for people looking to buy abroad is across the Atlantic, with seven per cent saying they are turning their attentions to the US - another property slump hit location.

Italy, Cyprus, Portugal and Switzerland make the rest of the top seven list for destinations to buy overseas.

The countries Brit buyers were considering in March 2012, according to Hifx

Of those buying a home abroad in the coming years, 28 per cent said they will spend between £50,000 - £100,000, while a further 16 per cent said they plan to spend between £100,000 and £150,000.

Purchases will largely be funded through savings, with 43 per cent stating this was how they planned to buy abroad - almost a quarter said they plan to sell their UK home to fund their overseas property dream.

The report revealed that lifestyle and culture are the most appealing aspects when it comes to considering buying a place abroad, closely followed by the allure of foreign weather.

Having a better standard of living and the belief that it is cheaper to own a property abroad than in the UK is another key reason for those who were questioned.

Mark Bodega added: ‘It’s still a big dream for many Brits to either sell up and move abroad or own a second property overseas, and many understandably think now is a good time to pick up a bargain in the sun and make the most of the foreign weather and culture. 

‘Our advice is always to make sure people research their options fully first, there are chances now to pick up some great deals but the current eurozone problems still mean some countries can be quite unstable.’

Sterling has strengthened against the euro

Sterling is towards the upper end of its five-year range versus the euro, boosting overseas home buyers' spending power.

The current rate of €1.25 (80p to the euro) is well above the January 2009 low of €1.02. However, it is still well off the rates of €1.40-50 last seen in late 2007.

For the first half of 2012, the pound made gains against the single currency as the eurozone debt crisis re-erupted.

At its July peak of more than €1.28 (78.1p to the euro), it was nearly 18 cents or 16 per cent stronger than it had been a year earlier at its 2011 trough.

Read the This is Money guide - where is the pound heading against the euro and dollar?

St Lucia luxury resort turns to nightmare for British investors,,,

British investors who bought holiday homes and time in St Lucia have been left paying bills for their dream apartments, even though the development has been closed.

The investors in Marlin Quay on the paradise Caribbean island claim they paid up to £40,000 for shares in holiday villas and apartments they cannot even visit. Some claim they are being forced to keep up maintenance payments to cover the upkeep of their unusable holiday homes, or risk losing ownership.

Angry investors have turned on British-born Gavin French, a former car salesman from Aldershot, who is behind the development, dubbing his flagship site ‘the Fawlty Towers of the Caribbean’.

French has already lost three legal cases brought by British investors in the St Lucia courts and been ordered to repay money. So far he has yet to pay out a penny.

Marlin Bay – closed in 2008 for redevelopment – is not French’s only venture on the island. He has launched three others – Cotton Bay, which has been completed, and Canes and L’Avant Mer, which are unfinished.

Last week he was at a holiday home exhibition in London selling apartments for a new hotel planned for the Cotton Bay site, which has further angered people who are still waiting to move into their new homes.

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‘Some people have really suffered,’ said one investor, who has handed over several hundreds of thousands to French for a property she says is still not even half-finished. ‘There are people who have put there pensions in and lost everything. How can you have two unfinished developments and be selling on a third? It’s crazy.’


His continued business has bewildered some of his earliest investors. Linda Lloyd-Jenkins’ husband Clive travelled to St Lucia many times as a captain with the Geest shipping line and the couple decided to spend £40,000 on a timeshare after meeting French.

It is a decision she bitterly regrets – Clive died in 2001 and Linda says she has been desperate to sell the timeshare. But she has been unable to do so because the site is still closed.

Linda, 67, says that until recently she was still being asked for maintenance payments and cannot afford to write off the investment. ‘It is a lot of money,’ she told The Mail on Sunday last week. ‘Gavin French is an objectionable man.’

Caribbean nightmare: A picture of Marlin Quay in St. Lucia

One woman who contacted this newspaper said that she bought a two-week timeshare in Marlin Quay in 1994. ‘In its heyday it was wonderful. But as time went on and no money was reinvested in Marlin Quay, the resort became more and more like Fawlty Towers, only worse,’ she says.

Businessman Terry Popely paid £10,000 for a timeshare in Marlin Quay 15 years ago but says the area went downhill rapidly once French became involved in other developments. ‘One year we came back and it was just a shambles – doors and windows were hanging off. It is just derelict now,’ he says. Popely has written off his investment but adds: ‘I feel desperately sorry for people who invested much more and lost everything. French is a charmer, but he just leaves a trail of destruction.’

Confronted by The Mail on Sunday last week, French admitted Marlin Quay had been a failure, but he blamed some of the investors for the disaster. He said: ‘The timeshares didn’t really work. Our mistake with Marlin Quay was to borrow money from the bank and they kind of took control of the situation.

‘Then the recession hit and people stopped paying the money they owed. But if those people had  been paying their payments, we would have had the money. We  could have sued everyone but we didn’t, although we probably should have done.

Tranquil: Petit Piton and Soufriere Bay in St. Lucia

‘Most developers would have walked away but we didn’t. The bank stopped the project and the contractors were owed a lot of money. 

‘People have been slagging me off all over the island, but we don’t want to get into a situation where we are suing everyone. We’re doing the right thing.’

French admitted he had lost at least three legal cases and been ordered to repay investors. But he said his money was tied up in his newest developments.

Last week, French insisted he was going to finish the Canes and L’Avant Mer developments and get people back into their timeshares on Marlin Quay, but admitted: ‘The timeshare owners have a genuine beef, but we haven’t asked people for maintenance.

‘And people have been able to use Cotton Bay instead, so we have looked after them. Some people have been loyal, they have stayed. People always look for someone to blame.’

He added: ‘I’m not out here just having a good time enjoying myself. I’ve remortgaged my house over here, I’ve borrowed money from my family, to keep everything going, because I believe it’s going to work. We’re on the verge of it all coming good, after four years.’

How endowment payouts have crashed,,,


Endowment policies have proved disastrous for many savers. We reveal how payouts on a 25-year policy have crashed over 20 years

ENDOWMENT CRASH: PAYOUTS ON A 25-YEAR £50 POLICY Year Axa Equity & Law General Accident/CGNU Friends Provident Norwich Union Standard Life Source: Money Management, Money Mail. Benchmark 25 year policy at £50 a month 1992 104,403 110,093 106,948 100,723 110,399 1993 101,296 110,452 103,733 97,645 105,897 1994 104,436 110,639 103,980 98,423 106,632 1995 102,476 108,081 100,271 92,457 103,704 1996 104,944 111,900 103,658 92,535 104,671 1997 100,679 114,578 103,719 93,179 102,674 1998 97,497 120,809 106,188 100,247 107,379 1999 100,412 116,672 106,434 98,037 109,618 2000 98,495 118,567 102,341 89,518 100,373 2001 94,889 106,090 93,145 86,028 110,136 2002 78,666 89,795 82,100 73,640 99,747 2003 60,373 69,976 70,222 59,567 75,984 2004 50,697 62,832 54,984 53,770 62,603 2005 45,998 57,223 45,295 48,451 51,219 2006 40,676 51,815 38,843 46,653 41,806 2007 41,305 45,911 37,654 47,677 38,338 2008 39,653 46,820 36,425 40,545 38,970 2009 39,746 43,158 29,184 34,496 32,508 2010 33,899 36,797 29,966 28,325 28,139 2011 34,930 33,937 31,374 25,253 28,900

Crippling legacy of endowments revealed,,,


Payouts on endowment policies have crashed by 75% since the late Eighties and early Nineties when most were sold, according to Money Mail research.

Failure: The majority of endowments will not cover the accompanying mortgage.

The research lays bare the desperate failings of these investments, which have blighted a generation of homeowners.

Millions were sold in a commission-driven frenzy without regard to the risks they posed. More than 250,000 will pay out this year followed by another two million over the next five years.

Throughout the Nineties, many policies paid out more than £100,000 to homeowners who had saved £50 a month for 25 years — some paid as much as £120,000. Now most pay less than £30,000 and some little more than £20,000.

The vast majority won't produce enough to pay off the mortgage they were supposed to cover. Homeowners have been forced to pay extra each month on their mortgages, divert savings from elsewhere or carry on working past their planned retirement date.

Aviva warns that only 2% of its 63,000 mortgage endowments maturing this year will reach their target.

At Standard Life, 42,000 out of 44,000 policies will have a shortfall. Friends Provident warns 93% of policyholders can expect a shortfall, while at Axa Sun Life the figure is 71%.

With-profits endowments were sold alongside interest-only mortgages. Sales peaked between 1988 and 1992 — policies which will start maturing from now.

Homebuyers were promised their mortgage would be repaid and they'd get a tax-free lump sum on top. They were told their money would grow as guaranteed annual bonuses were added to their savings, and at the end of the policy's term they would get a large 'terminal' bonus.

  ›› See how payouts on your endowment have plunged...


Insurance companies said they would set aside some profits from the good years to smooth out returns when investments underperformed.

Instead, investors have experienced a headlong dive as payouts have plummeted since the turn of the century. When these policies were sold, endowments were giving returns of 13% a year; now some give less than 4%.

At Standard Life, a benchmark 25-year, £50-a-month with-profits endowment has slumped from more than £110,000 at its peak to less than £29,000 today.

A 25-year Norwich Union endowment — owned by Aviva — pays £25,253 compared with £28,325 last year and £100,247 as recently as 1998. This represents a return of just 3.9% a year.

A General Accident policy — also now owned by Aviva — will pay out £33,937, 8% less than a similar policy last year. At its peak, GA paid out £120,809, figures from Money Management magazine show.

At Friends Provident, payouts rose by 4.6% last year, against a 13% rise in the fund. But the £31,374 value compares with a peak in 1992 of £106,948.

Savers have more than £330bn tied up in these funds, which can lock your money up for up to 35 years and levy hefty penalties if you want to get out early.

Investment specialist Patrick Connolly, of adviser AWD Chase de Vere, says: 'It seems that, almost regardless of investment performance, with-profits funds are still paying for mistakes they have made in the past. We can expect further reductions in bonus rates and payouts in the coming years.'

He adds: 'Aviva's with-profits investors are in a much stronger position than with-profits policyholders with many other companies because it has a relatively large proportion of its fund investing in .'

Insurance companies have committees that are supposed to protect policyholders' interests over issues such as deciding how much to award in bonuses.

But a report from City watchdog the Financial Services Authority last year raised fears that some committees were failing, saddling investors with paltry bonus rates and inflated charges.

With-profits funds face another obstacle: financial regulations force them to adopt a more cautious approach if they pay large annual bonuses, which are guaranteed, to policyholders.

Last week, Standard Life said it was freezing or cutting annual bonuses to allow it to invest more of the fund in shares.

At Aviva, annual bonuses were kept at the same level as last year even though its £49bn fund grew by 12%. Prudential, Legal & General and Scottish Widows will announce their payouts soon.

However, the worst could yet be to come. The Phoenix Group controls a range of funds which are closed to new savers, many of which have little money invested in shares. These include Pearl, Phoenix, Scottish Mutual, Scottish Provident, Royal Life and Royal Sun Alliance.

›› See how payouts on your endowment have plunged...

If you have an endowment shortfall, you have limited options. These are:

• EXTEND your mortgage term to repay the shortfall;

• CONVERT part of your loan to a repayment mortgage and pay extra to your lender while interest rate are low;

• SET up another savings plan such as an Isa — not with your insurer — to cover the shortfall.

• DO NOT take another endowment or increase payments to your existing one because the insurer will take yet more charges.

'I was let down so badly'

John Parker, 68, was expecting to receive at least £45,000 from the endowment he was sold in October 1990. It was set up to run for 23 years and is costing him £77 a month.

John Parker

Now, Aviva has told him that at this stage the policy is on track to pay out just £26,700 — even though he will have paid in £21,252. Endowments were regularly sold to run beyond housebuyers' retirement age.

Another problem that can make them poor value is part of each monthly payment goes towards life insurance, which is more expensive for older people.

Mr Parker says: 'I have already paid off the mortgage with money from elsewhere. But I fail to understand why this policy has done so much worse than expected.'

An Aviva spokesman says: 'Mr Parker's payment will be boosted to £35,000 once we include our mortgage promise.'

FSA will force insurers to give a better deal on with-profits,,,


Insurers face tougher rules over the way they manage with-profits funds.

Policy police: Sheila Nicoll of the FSA

The Financial Services Authority is consulting on changes to ensure funds are run in the interests of more than 15 million savers who still hold plans.

One aim is to clamp down on unfair exit penalties when savers want to cash in their pensions, endowments or bonds. Another is to make sure that policyholders get a fair share of any surplus funds.

Sheila Nicoll, the director of conduct policy at the FSA, says: 'People are not always getting the treatment that they deserve.' Proposals include tougher regulation of market value reductions (MVRs), the charges levied when customers cash in early.

The regulator wants to ensure these are proportional and not used to lock in savers.

Patrick Connolly of adviser AWD Chase de Vere in Bath, Somerset, says: 'These MVRs are far from transparent. The new proposals should give policyholders greater confidence that they are being treated fairly.' The FSA wants larger funds, those worth more than £500 million, to have management committees with a majority of independent members to oversee the way they are run.

Meanwhile, Prudential has announced fresh bonuses worth more than £2.2 billion for its four million with-profits investors.

The insurer grew its with-profits fund last year by 12.7 per cent. Maturity values also increased on some policies, with a £10,000 ten year bond now paying £15,489 compared with £14,346 last year.

Lower endowment payouts at Royal London,,,


Homeowners with mortgage endowments from Royal London Mutual and Scottish Life will face a shortfall when their policies mature.

New figures show a with-profits endowment policyholder at Royal London Mutual can expect a payout of £34,304, down 3.3% on a similar policy maturing last year.

This is based on a £50-a-month saving over 25 years taken out by a man coming up to his 30th birthday.

At Scottish Life, part of the same group, the figure is £29,313, down 4%. The figures are both less than the £35,837 paid out by Prudential, the largest insurer, on a similar policy.

Some 95% of all mortgage endowment policyholders at Scottish Life will face a shortfall — and 53% of those with Royal London.

The payout on a personal pension plan with Royal London Mutual is £90,296 based on a £200-a-month saving over 20 years for a man retiring at 65.

The payout is 1.3% up on a similar policy which matured last year.

At Scottish Life the pension payout is £77,408, 4.3% down on a similar policy maturing last year.

LV= with-profits and endowments investors share £10m,,,


Some 200,000 investors in with­ profits bonds and mortgage endowments with mutual insurer LV= are in line for an average bonus of £50.

This is the first time the mutual, previously known as Liverpool Victoria, has paid out a dividend of this type since its formation in 1843.

It says it has been made possible by its 'substantial growth' in the past few years.

The bonus, which amounts to £10m, will be paid into the mutual's giant with­-profits fund on September 1.

Investors will get the money when their plan matures or when they cash in.

It equates to a boost of just 0.5% for each member.

But the firm says it hopes to be able to issue a bonus of 1% each year in future, if all goes well.

It aims to provide members with another £50 boost on average by the end of the financial year next April. This could make a big difference to savers in the longer term.

Without the bonus, a £25,000 investment in a with-­profits bond would be worth £45,900 in ten years.

With a 1% annual bonus it would be worth £50,700 — more than 10% more.

This assumes annual invest­ment growth of 5.75%.

Savers have £330bn in with­ profits plans, including bonds, endowments and pensions.

The returns on my endowment policy are rather small - should I cancel it?,,,

Last year, the value rose by only £309 for an outlay of £496. If I cancelled, what could I expect? Mrs M.G., Derbyshire

Dilemma: In October 1996, I took a mortgage endowment with the Woolwich, paying £41.35 per month. I have paid in £7,443 and the value is only £7,601...

Money Mail's financial agony uncle Tony Hazell says: One vital aspect of an endowment, because it includes life insurance, is your age. After speaking to your husband, I have discovered you are 45, that he is 20 years older than you, that you have no dependent children and your mortgage is paid off.

You have a secure job with a good pension. It is therefore reasonable to question why you would need the life insurance provided by this endowment.

  More... ASK TONY: The catalogue of woes that's cost me £1,700

You have what is known as a unit-linked plan, which basically means the value of the investment will go up and down as share prices rise and fall. When I inquired, it was worth £7,286.77.

The policy also includes critical illness cover for £24,300, which would pay out if you contracted one of a number of ‘dread diseases’.

The final decision is yours, but you are right in thinking there are alternatives that might suit you better.

You would, for instance, have got a better return from a decent cash Isa than you did from this endowment over the past year. Although interest rates are low, there is no risk and you could make just over 3.05 per cent with the AA or 2.85 per cent with Virgin.

Both offer easy access to your money.

Another option is to make it ‘paid up’. In this case, the money would remain invested, but you would not have to pay any more. The drawback is that the cost of your life and critical illness insurance would be deducted from the value of your investment.

This could well result in the investment gradually dwindling to nothing over the years.

TONY HETHERINGTON: Adviser's 'help' left me with an unfinished Cyprus apartment,,,

Tony Hetherington, Financial Mail's investigator, takes on readers' problems. This week, an adviser who left a customer sorely out of pocket and a student's Santander difficulty that highlights a cheque fraud menace

If you believe you are the victim of financial wrongdoing, write to Tony Hetherington at Financial Mail, 2 Derry Street, London W8 5TS.

P.L.writes: I needed to rethink my finances after a relationship break-up and I contacted the Marcus James Group in Essex for advice. It arranged to remortgage my home to fund a down-payment on a property in Cyprus that it suggested would be a great investment for me. I have had nothing but problems ever since, and have been committed to an arrangement that is unaffordable. I complained, but the firm says it is simply an ‘introducer’ and will take no responsibility. I have lost more than £30,000.

Broken dream: Victim's flat in Paphos, Cyprus, is still unfinished

When you split up with your partner you wanted to remortgage your home to raise money towards a settlement with her. At the same time, you had a badly performing pension plan so you needed advice on saving for later life. You also had a poor endowment that was supposed to pay off your interest-only mortgage but was clearly going to miss its target.

You needed advice on how to save towards redeeming the mortgage before retirement. Not surprisingly, you consulted a local firm registered with the Financial Services Authority – Marcus James Financial Services.

But in an almost bewildering sequence of events, you emerged with a fresh mortgage of £125,000, far more than you wanted or needed, and a large chunk of this went as the deposit on an apartment still to be built at Paphos in Cyprus.

This apartment was supposed to become an investment towards your retirement and the mortgage was supposed to become affordable because it was at a low interest rate. But the mortgage was in Swiss francs. Any shift in exchange rates could cost you a fortune.

I asked Stephen Dodd, boss of Marcus James, for a copy of the Fact Find that his firm would, or should, have prepared. This is the basic document advisers prepare, showing details of your income, circumstances, aims, and willingness to take risks. I also invited him to comment on what you told me.

‘I will respond to you as soon as possible,’ he said. Then a fortnight later, Dodd gave me a seven-word statement: ‘We will not be making any comment.’

With your approval, I used the Data Protection Act to issue a formal demand to him, compelling him to hand over a copy of the Fact Find and any other personal information he held about you.

What happened next was curious. I received two large envelopes. One contained details of your mortgage, the other held details about the Cyprus property deal. The first included a letter headed ‘MJ Financial Services’, a second had a letter headed ‘Marcus James Overseas Property’. Both letters were signed by Dodd.

You have told me you had been dealing unwittingly with two separate companies, both run by Dodd from the same address. And at some point, the adviser who was recommending a big mortgage turned into a salesmen selling off-plan apartments in Cyprus.

While the mortgage is fully regulated and protected by the FSA, speculating in foreign property is not. I asked Dodd to say whether he ever explained that halfway through the proceedings you lost all investor protection guarantees.

I asked again for a copy of his basic Fact Find, if he prepared one. And I asked why he recommended a Swiss franc mortgage that exposed you to big exchange rate risks. And I also asked him why, among all the papers about you, he had sent me paperwork relating to two other clients. He failed to respond.

Instead, his lawyer told me that as you had now begun proceedings to sue Dodd’s firm, ‘it is inappropriate for our client to debate what occurred with a newspaper’. In that case, I wondered, what was it that stopped him debating for all those months before your patience cracked and you sued him?

You have been left deep in debt and you have told me there are question marks over your title to the unfinished Cyprus flat as the developer appears to have borrowed against the value of the land. It will be interesting to see how Dodd and his company defend themselves in court, and I look forward to reporting it.

I just hope they can come up with the documents they seem to have had such trouble producing over the nine months I have been pressing for them.

  More... TONY HETHERINGTON: Santander denied it had lost my £10,000 FSA puts 'sale and rent back' deals on hold after review shows poor practice in the sector

Santander blames the customer (again)

S.B.writes: My son lost his Santander bank card. When he reported this next day, the bank informed him without warning that his account was shut down for a serious breach of security, and he would have to make other banking arrangements. Nobody would tell him anything more. All we could find was that the previous night someone had tried to deposit £10,000 into my son’s account and then transfer it out again immediately.

Santander was investigating whether my son was involved. At the time, he was a 23-year-old student, living at home, with a student overdraft of £1,400. Santander then hounded him to repay this, and after it issued a default notice, I paid the money, but this has still left a stain on my son’s credit file.

Financial Mail has reported a series of frauds that have left Santander customers out of pocket or under threat from the bank. First, their cards are lost or stolen. Then crooks either deposit a forged cheque into the account or transfer funds from someone’s online account that they have hacked. Finally, they use the innocent person’s card to arrange a withdrawal of the funds in cash.

By the time Santander realises the cheque is forged, or by the time the online account-holder realises savings have vanished, it is too late. The money has been withdrawn. Santander then turns on the person – like your son – whose account was used as a halfway house and holds that person responsible. In this case, the scam did not work.

The £10,000 came from the account of a haulier in Wales, but Santander will not say whether it was an online transfer or a forged or stolen cheque, and will not say what made it suspicious enough to block it.

For your son’s sake, it is a good job the £10,000 did not go through, or he might be facing a demand to repay it. I did ask the bank whether it informed the police, but it would not say. It did say, though, your son had agreed to pay off his overdraft at £80 a month, but had fallen into arrears.

Because you paid the debt promptly when the default notice was issued, the bank has removed the record of this from your son’s credit agency file so he can move on with a clean sheet.


The City’s regulator, the Financial Services Authority, has issued a public warning advising investors not to deal with EV Business Limited, the crooked east London firm exposed last Sunday by Financial Mail.

The FSA says EV Business, which is offering interest of up to 18 per cent a day on short-term deposits, is not licensed to handle savers’ money and is not covered by the official compensation scheme in the event of problems.

EV Business claims to have more than 165,000 investors, but as I reported last week there is no sign of it at its only published address, where the company’s mail sits in an open cardboard box awaiting collection. Since last Sunday, complaints have been mounting as depositors have tried and failed to withdraw their cash.

70,000 homebuyers can expect a shortfall on endowment mortgages with Aviva,,

More than 70,000 homebuyers can this year expect a shortfall on endowment mortgages with one of Britain’s biggest insurers.    

Aviva, which looks after £50 billion for some 1.8  million customers in its with profits fund, has cut some bonuses paid on its funds.    

The payouts for those with policies with the old General Accident and Norwich Union — both part of Aviva — coming to the end of their term this year are down on similar deals which matured last year.     

A 25-year policy invested in the CGNU (General Accident) fund produced £31,950, down 5.9 per cent on last year’s £33,937.

Policies linked to the Norwich Union fund will pay out £23,465, down 7.4 per cent on the £25,353 last year.

The figures are based on a 25-year endowment taken out by a 29-year-old man paying in £50 a month.

  More... Mortgage tricks: How to keep your ultra-low tracker AND protect yourself from rate rises Is the mortgage market heating up? Post Office slashes fixed rates by as much as 1%

Endowment mortgages were designed to help homebuyers pay off their mortgage.

Borrowers made interest-only payments on their mortgage and saved extra in to an endowment plan with an insurance company.   This savings pot was supposed to grow sufficiently to repay the capital to the lender at the end of the mortgage term, typically 25 years.

  More... Mortgage tricks: How to keep your ultra-low tracker AND protect yourself from rate rises Is the mortgage market heating up? Post Office slashes fixed rates by as much as 1%

When policyholders signed up for these savings plans, savers were told they could get £85,000. In their heyday in the early Nineties, pay-outs topped £100,000.

Aviva has 71,000 endowment policies maturing this year, and estimates some 70,290 will fail to pay out enough to cover the policyholders’ home loan.

JAMES CONEY: Many find that dreams are turned to dust,,,

Many who lived through the Eighties remember it as holding the promise of untold wealth for those who had previously been unable to share in the country’s prosperity.

At the heart of this was a soaring stock market and a boom in house prices. But where there is money there is greed.

And this also became a time when platoons of unscrupulous salesmen for financial services companies were unleashed to sell untold dud policies to millions — most devastatingly, endowments.

Culture of excess: At the heart of the Eighties' boom was a soaring stock market

The cost of these chronically failing investments is only now becoming apparent. The toxic nature of these policies has turned to dust the dreams of millions of borrowers still repaying interest-only mortgages. For nearly a quarter of a century, hundreds of thousands of borrowers have faithfully paid into endowments after being convinced that one day they would repay the capital value of their home.

They were flogged by starry-eyed salesmen who believed their own hype that these policies would always grow by 10 per cent a year — or more. Few ever mentioned that should they fail to deliver, you would have to pick up the tab for the capital value of your home at the end as well.

  More... Up to 360,000 families may be forced to sell homes this year as endowment policies fail to deliver

And as markets tumbled, so did the value of policyholders’ endowments and their ability to pay off the value of your home. At times over the past two decades these policies paid out as much as £120,000 — the promise of this alone was enough to give thousands a false sense of security.

Many now face a terrifying shortfall —sometimes tens of thousands of pounds — which must now be covered. Goodness knows how many families, already hard-pressed and under a financial cosh, will be able to do this.

Although compensation has been awarded over the years, the stain of the scandal will be very hard to get rid of. The impact of lenders’ and  insurers’ behaviour remains all too painful on a day-to-day basis for hundreds of thousands of families.

Companies pointed the finger at the historic fall in inflation and interest rates for the low returns.

Insurers have trotted out the excuse that, back in the late Eighties when stock markets were motoring at great speed, projections of annual growth of 10 per cent were not the nonsense they appear today — and were, in fact, entirely sensible.

Yet these endowment policies also carried excessive charges that were concealed from customers.

Many policies were sold using what was known as ‘standard charge projections’ — set by what was once the industry’s regulator.

It was supposed to give an idea of how much hefty charges would eat into an endowment over the years.

Yet, in reality, these under-estimated the actual impact on the endowment, with much of the fees sluicing through the industry being funnelled into commission payments for sales staff.

And while these greedy salesmen are enjoying the rewards of their labour, thousands of families are waking up to the nightmare that they may never own their own home.

Flight mare

Since I’ve had my own family I’ve generally refused to fly by so-called budget airlines.

I rarely pay more than a few pounds extra and their rules seem designed to catch out those who travel with anything other than a change of socks and pants.

One of modern life’s most desperate scenes is of people trying to wrestle over-packed hand-luggage in to those metal cages at the airport check-in. Or of families pleading with air hostesses to allow their seven-year-old daughter to sit near them, or at least within eyesight.

These budget airlines now offer a dazzling array of charges that can catch out anyone.

There’s another reason I won’t fly Ryanair, unless it’s the only or last option. It’s because I’ve seen the total disregard they show the complaints of Money Mail readers.

I’m much happier paying a few extra pounds to avoid the headaches. What may look like a cheap deal at home could easily leave you paying more at the airport.

Exiting with-profits: Ten things you need to consider,,,

The Great Escape: If you are thinking about exiting your with-profits investment there are important things to consider first

Endowment policies and with-profits investments have proved to be a major disappointment to many savers in recent years.

While some with-profits policies have done well, the industry has been dogged by mis-selling and poor performing investments that have failed to meet expectations.

With-profits is sold as a cautious investment that helps smooth out the bad years by keeping aside some of gains in the good years.

However, for many investors projected growth has proved over ambitious and simply paying into a best buy savings account could have proved more lucrative.

An extra level of complexity is added by the fact that due to their complicated structure, it is far harder to work out how a with-profits policy is performing than with an investment fund.

All of this means that many savers end up ditching poor performing policies.

But another big problem savers holding with-profits policies face is that some are hit with big penalties for leaving early, in the form of Market Value Reductions, while calculating projected growth can be difficult.

That means what if you are thinking of staging a great escape from your with-profits investment, or end up staying, there are some important things to consider.

  More... Check the best savings rates Check your investment fund's performance FREE GUIDE: How to review your with-profit bonds

Ten things to consider before exiting with-profits

1. Remember why you took the policy out: If your policy is a mortgage endowment, was the maturity payment to cover a specific purpose such as repayment of a mortgage? If it's a pension policy, look at the projected pension payment on retirement and see if it covers your retirement needs.2. If the policy no longer meets your needs, have you made additional provisions such as changing your mortgage into a repayment one or increasing your pension contributions / made other financial arrangements for your retirement?3. If you are thinking of surrendering your endowment policy or moving your pension:

- Contact your provider for a projection to see what your policy might be worth at retirement or maturity.

- Check you don't have valuable guarantees in place which only pay out once the policy matures or when it is converted into an annuity. You may also have the opportunity for a good final/terminal bonus. For many policies, the bonus paid at the end could be considerable and it could be worth hanging on for this.4. Check if the policy includes life cover. The policy could include a valuable life insurance benefit which would be lost if the policy is cancelled. This is particularly important for consumers in poor health who may struggle to get a new life insurance policy elsewhere or pay more for it.

5. Does your policy have a Market Value Reduction? This is essentially an early exit penalty and can take almost 20% off the value of your investment if you jump ship. MVRs are supposed to cut the face value of the bond — what they tell you it's worth — to reflect your actual share of the with-profits fund when the stock market falls. Whether you have to pay an MVR depends on who your bond is with, when you bought it and the value of the stock market when you cash it in. Speak to your provider to find out the exact details - and get them in writing.6. Does the policy have a Market Value Reduction (MVR) free date? Some policies have these built into the terms and conditions which means they can be cashed-in without having to pay an MVR (which reduces the value significantly when you sell-up early).7. Are there any tax implications which will reduce the amount you receive on surrender? It could be worth speaking to an adviser about this.8. As an alternative, find out if you can leave the policy paid up where you don't pay any more premiums but it remains invested in the fund and some life insurance benefits are received.9. Make sure your personal details such as name and address are up to date so the insurance company can let you know when the policy matures and provide essential information about the policy. Don't forget to inform your insurance company when you move home.10. If you haven't received a statement for some time, contact your provider - it may be that they don't have your most recent details.

Lettings agents are to be regulated for the first time - what will it mean for tenants and landlords?,,,

MPs are today set to approve rules that are hoped will banish rogue lettings agents, forcing them to sign up to schemes that provide victims of unscrupulous practices with compensation.

After years of calls for regulation of the lettings industry the Government is set to bow to pressure to implement rules, via an amendment to the enterprise bill, that will compel agents to repay tenants and landlords they have cheated.

While estate agents already abide by a strict set of rules, this will mark the first time that the lettings industry has seen statutory regulation after years of self-regulation.

Booming business: But the country's huge demand for rentals allows rogue agents to slip through the gap.

What's the problem?

There are two redress schemes currently run in the UK - The Property Ombudsman (TPO) and Ombudsman Services: Property - but they are voluntary only.

Trade bodies such as the Association of Residential Letting Agents (ARLA) and the UK Association of Lettings Agents (UKALA) are covered by these redress schemes and have their own forms of insurance protecting tenants and landlords, but again membership is not compulsory for agents.

Many small agents are reluctant to hand over subscription fees to the trade bodies so will not have access to the schemes.

Most of the major lettings agents, often attached to estate agent companies, will be members of these bodies and offer these protections. However, it impossible to say with any accuracy what proportion of agents are signed up because anyone can start a lettings business without any form of registration or licence.

  More... Are you a landlord? Then fill in This is Money's Buy to Let survey Surge in landlords in the last 12 months, can you cash in on the buy to let boom? As complaints about lettings agents grow, is it time to regulate to help both tenants and buy-to-let landlords? Looking for a mortgage? Find the best deal Find a better buy-to-let landlord insurance deal here

There are 4.7million households in the UK private-rented sector and particularly in areas of growing demand - such has London -  it has led to a rise in the fees and charges that renters and landlords have to hand over on top of hefty deposits and exorbitant levels of rent.

In some cases charges for things such as credit checks, inventories and 'administration' can total as much as £540, which are levied on tenants even before a deposit is laid down.

And sometimes agents sneakily double-charge fees, with tenants and landlords being hit with charges for the same work.

The ombudsman services also rule on complaints about poor service, repairs and maintenance, security deposits and unfair business practices, but cannot do anything currently if the agent in question is not signed up with its scheme.

In 2012 TPO receive 8,334 lettings complaints - a rise of nine per cent on 2011 - but some 2,121 were about agents unregistered with the service.

What will the rule change mean for tenants and landlords?

When implemented - although it will first have to go through a consultation process - it will mean all lettings agents would have to be part of a Government-approved redress scheme.

Currently they only have to join voluntarily and as such hundreds, and maybe thousands, of agents are not subjected to any form of self-regulatory body.

It will mean that any tenant and landlord that has fallen foul of unscrupulous practices, exorbitant and unfair charging, and poor service can complain to an ombudsman who, if they find fault with an agent's actions, can order them to provide financial redress.

Breakdown: Complaints about lettings have been growing in the past five years. Data: The Property Ombudsman

What happens to agents who fall foul of the rules?

Approved ombudsman services will be able to order agents compensate tenants and landlords they have wronged.

In more serious cases orders can be made banning someone from engaging in lettings agency work or property management work.

What's more, criminal offences will be created to tackle anyone who breaches their orders.  Those found not to have signed up to a redress scheme will also be banned from operating.

Does it go far enough?

The Office of Fair Trading (OFT) has previously called on rules that force lettings agents to reveal a breakdown of their fees and charges to prospective tenants and landlords, but there is no mention of this in the amendment to the bill.

That is not to say it will not follow, with the National Landlords Association (NLA) telling This is Money that details of the implications of the amendment are yet to emerge.

The Advertising Standards Agency (ASA) has taken a stand on this issue recently, last month rapping Your Move for not making clear that non-optional fees and charges would be added to a quoted price.

The ASA said that although the law had not been changed, advertisers would have to make it clear in quoted prices if there are compulsory fees and charges.

Will the changes work?

Which? executive director Richard Lloyd said: 'With renting now the only housing option for millions, we're pleased the Government will now give tenants and landlords access to a complaints scheme.  Our research revealed an alarming lack of consumer protection in this market so it's vital the Government puts these plans into action as soon as possible.'


Chris Norris, head of policy at the National Landlords Association (NLA), said: 'The Housing Minister’s announcement that the Enterprise and Regulatory Reform Bill will be used to provide a basis for future, specialised regulation of letting agency standards is very welcome as it will provide the best means to ensure that landlords and tenants who choose to use professional letting services receive adequate protection.'

Caroline Kenny, of the UK Association of Letting Agents (UKALA), said: 'At UKALA, we have long been of the opinion that a bespoke solution was needed to address the issue of accountability and transparency within the lettings sector and that a poorly devised regulatory approach could do great damage to the sector at a time when it’s growth is essential to providing a healthy housing market.  We must not forget that the vast majority of letting agencies are small and medium sized businesses which will face greater hardship complying with additional burdens.

Coastal towns and Northern cities now buy-to-let hotspots as landlords cash in on high yields,,,

Inexpensive property prices coupled with strong rental demand have made seaside towns and areas of the North such as Blackpool, Hull, Manchester and Nottingham the most lucrative hunting grounds for buy-to-let landlords, research has revealed.

Southampton tops the list of locations with the highest average rental, at 7.82 per cent per year. Landlords seem to have cottoned on to the high returns as rental accommodation makes up almost a quarter of the housing in the City, according to the data from high street bank HSBC.

The average Southampton property costs £138,311, while the average rent is a meaty £901 a month.

Buy-to-let winner: The seaside town of Blackpool is one of the top places to invest in a rental property, according to data

But making up the rest of the top five are northern areas. Blackpool for instance has an average property price of £75,943 and rents of £494, giving it a rental yield just behind Southampton of 7.81 per cent.

  More... Buy-to-let rent calculator Are you a landlord? Compare buy-to-let insurance rates here Are you a landlord? Then fill out our buy-to-let survey Ten tips for buy-to-let: the essential advice for property investors

Hull, Manchester and Nottingham have rental yields of 7.77, 7.6 and 7.55 per cent respectively.

Blackpool, Bournemouth and Brighton top seaside towns

Due to holiday rentals and seasonal work, many seaside towns are buy-to-let hotspots according to HSBC with 17 of the top 50 areas found on the coast.

Blackpool easily tops the list of seaside towns for top rental yields.

The rest of the top ten is made up of southern seaside areas, including holiday destinations such as Brighton, Bournemouth and Southend-on-Sea.

While property prices tend to be higher in these areas, rents are also above average, meaning yields are strong for investors.

High house prices mean low yields in London

The study, by HSBC, of the fifty towns and cities with the highest concentration of private rental housing stock found that despite rising rents in London, the capital doesn’t score highly in terms of rental yields due to the comparably high property prices

Southwark tops the list of London boroughs with a yield of 6.15 per cent. Areas in outer London offer some of the strongest yields in the capital including Newham, Enfield, Brent and Kingston upon Thames.

Just three of the top ten areas are in inner London and each of these is in the East of the city, traditionally the more affordable end of the capital.

According to the latest buy-to-let index from LSL Property Services rents in London have hit a fresh record.

London posted a 1.3 per cent rise in the last month, taking rents in the capital to a record high, averaging £1,106 per month.  In February 2013, the average London rent stood at £1,092.

Of all regions of England & Wales, London experienced by far the fastest annual increase in rents, leaving rents in the capital 7.9 per cent (£81) more expensive than a year ago. In March 2012 the average rent in the capital was £1,025.

Recent Office for National Statistics (ONS) data found that the average house price in London went up almost six per cent in the last 12 months. 

Peter Dockar, head of mortgages at HSBC, said: ‘Buy-to-let remains a good investment for those looking for above average returns. Twenty-three of the top 50 areas offer yields above five per cent significantly more than is available from more traditional savings options.

‘However, it is clear there is a fine line between a property in a desirable area, the rents that can be achieved and the returns that can be yielded so it is key landlords do their research as often the most popular locations may not offer the best return.’

Time to drag buy-to-let mortgages out of the wild west | Bank of Ireland,,,

In the wilderness: Buy-to-let mortgages remain in the regulatory wild west, despite their popularity

Imagine a financial product potentially worth hundreds of thousands of pounds a pop and sold a shade under 150,000 times a year, often by High Street banks and building societies.

People tempted into these deals are regularly putting down their life savings, or a substantial chunk of them, and many are taking their first foray into such investments.

You could be forgiven for thinking that such a concept would be regulated. But, instead, the buy-to-let mortgage remains firmly stuck in the wild west when it comes to consumer protection.

This is something some Bank of Ireland buy-to-let borrowers are finding to their cost. Their tracker mortgages have leapt from a pay rate of 2.25 per cent to 4.99 per cent at the lender's whim.

A similar hike is also hitting some residential mortgage borrowers, but while they can complain to the watchdog landlords cannot, because buy-to-let loans are unregulated.

Is it right that mortgages commonly sold to unsophisticated investors sit in this wilderness, especially when there is pressure for landlords and letting agents themselves to be regulated?

While you can lose a hefty amount to a dodgy landlord or letting agent, you can end up a whole lot more out-of-pocket on a buy-to-let investment that comes crashing down to earth.

  More... The secret to buy-to-let riches? A one-bed flat in Wales could deliver the best returns Ten tips for buy-to-let: the essential advice for property investors Can you find a better buy-to-let mortgage? Check the best buys

It is also worth noting that the almost complete disinterest in regulating the hardly niche buy-to-let market stands in contrast to the desire to crackdown on offbeat investment schemes in wine and timber.

That juxtaposition is not aimed at belittling the aim of stopping sharp characters flogging suspect investments to the unsuspecting, but seeing as buy-to-let advances make up 10 per cent of gross mortgage lending they may also be worth some attention.

Previous attempts to look at regulation have faltered on technical disputes about where buy-to-let ends and commercial mortgages start.

The cold hard fact remains though that many buy-to-let mortgages are sold to ordinary consumers and they need better protection.

Movers cash in on the rental boom to invest buy-to-let,,,

Movers are cashing in on a buy-to-let boom by hanging on to their existing home and then renting it out.

The number of borrowers buying a new property and letting their old one soared by 40 per cent in 2012, according to broker John Charcol.

And the surge is continuing this year.

The average rental yield, which shows rental profit as a proportion of the value of a property, is now 5.3 per cent — compared with 4.7 per cent three years ago, according to LSL Property Services.

And buy-to-let mortgage rates have plunged. The average fixed deal has fallen from 5.09 per cent in August to 4.44 per cent today.

The average variable rate is down from 4.58 per cent to 4.22 per cent.

Plus, there are now 488 buy-to-let loans up for grabs compared with just 283 in April 2010.

As a result, many people looking to move home are seizing the opportunity to become a landlord.

The first hurdle in this process is working out what you can afford. It can be tricky calculating how to split your borrowing between the two properties.

First, look carefully at how much equity you have in your existing home.

You’ll probably need to take out a buy-to-let mortgage on your old property and a residential mortgage on the new house you intend to live in. To get a buy-to-let deal you’ll typically need at least a 25 per cent deposit — though they are available with as little as 10 per cent. So you’ll need to leave enough cash in your old home to cover this.

Say you have 50 per cent equity in a property worth £150,000, so £75,000. You need to leave £37,500 in this house as a deposit for a buy-to-let loan. You’ve then got £37,500 to put towards a deposit for your new place.

  More... Rise of the 'let-to-buy landlord': Tax breaks and rental boom see keep homes and let them Ten tips for buy-to-let: the essential advice for property investors The secret to buy-to-let riches? A one-bed flat in Wales How do buy-to-let mortgage rates compare? Check the best buys

You may want to take your existing mortgage with you to your new property — particularly if you are locked into a fixed-rate that charges hefty early-exit fees if you leave it before the term is up.

Once you have an idea of your deposit size and how much you can realistically afford to borrow, you can then compare deals.


Nottingham Building Society offers a 3.49 per cent, two-year buy-to-let deal for those with a 25 per cent deposit.

On a typical £150,000 interest-only  loan, payments work out at £436 and the total cost over the two years, including a £1,999 fee, is £12,463.

You will also get a free valuation and legal work if you are remortgaging.

Those with a 30 per cent deposit can get a competitive five-year 4.29 per cent rate with Skipton BS.

It has a £995 fee and also offers free valuation and legal work. Monthly repayments are £536 and the total cost £33,155.

You can ask your existing lender if they will allow you to let out your old home and keep your existing mortgage.But bear in mind they could increase your rate or charge a fee.

If you don’t inform your bank that you plan to let out your property, you’ll be in breach of your mortgage conditions - you could also invalidate your buildings insurance.

There are also a number of deals specifically aimed at first-time landlords looking to let out a property they already own.

Platform offers a two-year deal at 3.84 per cent for borrowers with a 40 per cent deposit. It has a £1,040 fee, a free valuation and free legal work. Monthly repayments are £480 and total cost £12,560.

Regardless of whether you keep your existing mortgage or switch to a buy-to-let deal, both typically demand your rental income is at least 125 per cent of your mortgage payments.

This ensures you will still be able to cover your repayments if your rate increases.

Homeowners delving into the buy-to-let world for the first time need to seek advice from an independent broker.

Before deciding to let their home, owners need to do their homework and find out if there is a strong demand for rental properties in the area.

Considering buy-to-let? Don't miss the essential Ten tips for buy-to-let

A guide to how to pay off your mortgage early,,,


Paying off your mortgage early is one of the best investments you can make.

You get rid of your biggest debt fast, you are no longer at the mercy of the see-saw property market and you can put the money you are no longer paying on the mortgage to good work.

Borrowing heavily makes sense in a world of high inflation, which we saw in the Seventies and Eighties, because inflation reduces the value of the debt.

But in a world of low inflation the debt stays pretty much as it is.

Inflation may have risen in recent years but it is currently relatively low historically speaking, especially using the Government's preferred Consumer Prices Index measure. Crucially, however, just having inflation is not the key to eroding your debt,  you also need wage inflation. This has been virtually non-existent since the recession hit and if you can't rely on large wage increases reducing your debt then paying it off asap is a wise move.

>> Check the current inflation rate


Why you should overpay

Say you have a £100,000 mortgage taken out over a 25-year period, with an interest rate of 6%. Overpaying by £100 a month could save you a healthy £26,892.54 and knock six years and four months off the life of your mortgage.

Interest rates are low at the moment. And that means many people on tracker or SVRs are paying low mortgage rates.

On the surface, the impact of the saving from overpaying is greatly reduced by comparison to when rates are high - but if you use the money that you are now saving by having a lower mortgage rate to add to overpayments you'll get the debt cleared even faster.

For example: our borrower above at 6% has monthly repayments of £644, if their mortgage rate falls to 3% their new monthly repayments are £474.

If they overpaid by £100 they would save £10,730.94 and knock 5 years and 11 months off their mortgage, but add the £170 they are getting from lower monthly payments and overpay £270 a month and they save £20,178.89, but most importantly clear their mortgage 11 years and 4 months early.

What to watch out for

Beware with some lenders there is a minimum amount you are allowed to overpay. If you pay in less than this, your money sits in the lender's coffers until the end of its financial year, which means you are giving it an interest-free loan.

If you pay more than the minimum, your interest bills will be recalculated from the following month.

>> Advice from This is Money readers on whether to repay early

Some firms offer flexible or 'offset' mortgages that recalculate your balance daily. The effect is to help you get rid of your loan even faster and people can take advantage of this by paying extra every month.

Many High Street lenders have given normal loans flexible features, although some set minimum or maximum amounts you can overpay.

Watch out for charges

If you are on a fixed or tracker rate deal, you may have to pay an early redemption penalty if you pay off your mortgage completely, or go beyond permitted overpayments. On some poor value mortgages. this can stretch for several years after the initial rate is over. Making repayments in this situation is unwise.

Neither should you repay some of your mortgage if you have heavy credit card debts on regular (and high) APRs - mortgage loans are still the cheapest around.

It doesn't make sense to repay a mortgage at 6% if you have credit card debts where you could be paying 15%-20%.

The mortgage storm...and how to beat it

What next for house prices? What next for mortgage rates? Calculate mortgage costs (including fees) Find the best mortgage for you How to avoid mortgage arrears

And finally...

If you really want to achieve a mortgage-free life, you need to be disciplined. To put down lump sums on your mortgage, you will obviously need to some how free up money elsewhere and be a money master.

Fortunately, This is Money has everything you need to help you make more money and spend less...

1. Read our quick round-up of how to spend less and make more

2. Read our guide to getting a pay rise

Term life insurance: How to get the cheapest quote,,,


Choosing the right way to buy life insurance can save you thousands of pounds. We explain how at the bottom of this guide, but first a few other issues...

What to buy

A range of insurance policies will pay some kind of benefit if your health suffers or you are unable to work. You can read about the different types here.

Life insurance is the cover that pays a specified sum if you die. Unlike other health related insurances, there are no criteria that need to be met when the insurer decides if you can claim: you are either dead or you're not.

That means that the policies on offer are, broadly speaking, the same and that buyers can hunt for the cheapest policy without having to compromise on the standard of cover. However, there are some important points to remember.

You can buy three types of life insurance - level term assurance, decreasing term assurance and whole-of-life insurance.

Level term assurance is taken out for a specified period of time - known as the term. The term is set according to the length of time the customer wants to be covered. They may base this on the period they expect their family to be financially dependent on them, or the term of their mortgage. The lump sum that level term assurance pays out remains the same throughout the term.

For decreasing term assurance the sum the insurance pays will fall over time. This is so that it can be bought in connection with a repayment mortgage where the amount the individual wants to cover gradually reduces in line with the debt. Because of this, decreasing term assurance is usually cheaper than level term assurance.

Whole-of-life insurance pays a guaranteed amount when you die and there is no specified term. However, the premiums for this type of insurance can change. A proportion of the premium you pay is invested and its growth helps keep the premiums low.

However, there have been reports of sharp increases in whole-of-life premiums.

These polices are often used as part of inheritance tax planning and you should consult a financial adviser before buying one.

How much insurance should you get?

Decide what you want the insurance to do. If it is to pay off all debts, including a mortgage, and provide a good standard of living for your dependents you should calculate the cost of these when you buy.

If these potential costs are likely fall over time – the mortgage is repaid and children become financially independent – you could reduce the cost by buying decreasing term assurance.

Think about other costs your insurance might have to cover, for example funeral expenses. It may be that you have other insurance polices or employee benefits that provide if you die. Take these into consideration to reduce the cost of your cover.

Many people already have 'mortgage term assurance'. Usually, these policies are sold to people when they take out a mortgage. Put simply, it covers the value of the mortgage, but nothing more. If you have it, you can subtract the cost of your mortgage from the amount of life assurance you need to buy.

Use our life insurance calculator to give you an idea of how much you should be taking out.

Get value for money

Some relatively simple measures allow you to greatly improve the value you can get from life cover.

Couples are often offered joint life insurance polices. This means the policy pays the same sum if either of them dies. However, this is only suitable if both parties need the same level of cover.

What's more, the price of joint cover is often only slightly cheaper, if at all, than two single life policies with the same sum assured for each. Taking out two separate policies instead of a joint policy means that, if the very worst were to happen and both parties died, any dependents would get twice the pay out.


›› Compare life insurance deals


Get you policy written 'in trust'

Another important step when buying life cover is to ensure it is written 'in trust'. Put simply, this means that the proceeds from the life insurance policy would fall outside an individuals' estate when they die, and would therefore not be taken into consideration when calculating inheritance tax.

Writing a policy in trust is relatively simple but does require some form filling. Customers who buy insurance without receiving advice from a regulated adviser are not always made aware of the option of writing the policy in trust.

You can read more about this here. If you are unsure about the best course, it may help to speak to a financial adviser.

Pay less for your cover

Insurers calculate your life insurance premium by using information about your health, age, occupation and lifestyle. So a stunt man with a 50-a-day smoking habit will pay more than a vegan librarian.

Most people will be unwilling to do something as drastic as changing their occupation to get cheaper life insurance, but some may be willing to lose weight or give up smoking.

You have to have given up for at least one year to be classed as a non-smoker but making the effort can can wipe pounds from monthly premiums. And even if you go back to becoming a smoker, your insurance policy should still stand.

How to get the cheapest life insurance policy

Nowadays you can pick up life insurance from the shelves of your local supermarket, as well as through price comparison websites as well as the traditional insurance broker or a financial adviser.

Traditionally, brokers have been a better option than going direct to an insurance company - they help you to compare the cheapest.

Now, a new breed of broker is far cheaper than traditional brokers. Here is why...

• Brokers are paid by commission from the insurance company, typically £700.

• Some of these brokers are willing to give up the commission they recieve in order to make your policy cheaper.

• They spread the commission, say £700, over the monthly premiums on your policy, possibly making it a few pounds cheaper every month. On some policies, this could save you thousands of pounds.

• In exchange, these firms charge a one-off fee, typically £25 or £35, for making the comparison and handing back the commission.

This fee option is great if your situation is uncomplicated and you just want to buy basic term assurance. is one such broker. It will hand back ALL the commission to you through the quote - so the monthly premiums should be much cheaper than comparable quotes from usual brokers. In return, you just need to pay the site a fee of £35.

It also has a tool to help you decide if your making the right decision. And if you're still not happy, you can speak to an adviser on the phone or get one to come to your home - although you'll then pay higher premiums to pay for the advice.

Discount services are also offered by Cavendish Online (£35 online or £45 by telephone) or MoneyWorld (£25 or £30) or Life Insurance Online.

An example of savings (March 2009)

  Life assurance savings Provider Smoker(monthly) Smoker(full term) Non smoker(monthly) Non smoker(full term) Data based on 35-year-old male on a level term assurance of £300,000 over 20 years Discount brokers used in comparison: Cavendish Online, Life Assurance Online, Moneyworld Aviva - direct £36.17 £8680.08 £20.18 £4843.20 Aviva - through discount brokers £26.60 £6384.00 £14.90 £3576.00 ---------- ---------- Savings £2296.08 £1267.20


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Updated by Gillian Bevis - May 2010