It’s getting busy but is the silly season over?

* Imagine the Pirelli pin-up calendar meeting a gliding calendar and what do you have? Soaring Chillies! http://www.soaringchillies.com/index_english.php?main=kalender07&sub=vorschau_eng All we need now is one for the ladies with hunks instead of women as the pin-ups.
Personally I prefer a simple gliding calendar of which the German Segelflug Bildkalendar with the text in three languages is the best known example
http://www.segelflug.de/
It makes a very interesting Christmas present and people certainly remember you for it.

* A friend with a tiny pension fund wants to take his benefits in cash as the funds are under the £15,000 limit for doing this – £15,000 being 1 per cent of the £1,500,000 Lifetime Allowance. In pension-speak, this is known as “triviality” but sadly my friend will have to wait until he is 60 before he take his pension wholly in cash. Ironically as he has just turned 50, he could take 25% as tax-free cash and a very small annuity now but then the whole point of the triviality provisions in pension legislation is to avoid silly situations like that.

* An accountant refers a couple to me who have sold their house and are let down at the last minute by their lender. Looking at their situation a self-cert mortgage is the obvious solution. Looking closer, the problem appears to be the credit card and business debt some of which will be paid off by the new loan. Once this is clarified, the new lender agrees to make a mortgage offer for the amount they want. The application is done on-line, but it is nice to talk to a real underwriter.

* New rules on Houses in Multi-occupation introduced in April 2006 to tackle rogue landlords have resulted in these landlords either selling their properties or reducing the number of occupiers. This has resulted in a reduction in affordable housing which will means that Government measures to control the private sector have resulted in a higher burden on the state sector. A classic case of the law of unintended effect.

* I talk to a lady that I did some work for a few years ago when she was trying to buy her father’s property from a Trustee in Bankrutcy. Sadly, we never did any business although she did pay me a fee for my time. She is now in financial difficulties and has been considering bankruptcy. Fortunately, I am able to send her my previous blog with its links http://www.georgeemsden.co.uk/?p=34 which ought to keep her out of this.

It’s back to networking at the financial G.Ps surgery

* One of my favourite networking events is the 3Cs event which I have written about previously http://www.georgeemsden.co.uk/?p=44 Last night’s meeting in Russell Square easily lived up to my expectations. The first speaker was James Barnham of Nova-Flo www.nova-flo.com who appeared on Dragons’ Den in May and declined their offer of funding “the best thing I ever did” he said. They were obviously impressed with his idea as 4 out of the 5 were interested in investing. He was offered £150,000 for 40 per cent of his company but is now in the process of securing other investment for a far more sensible equity stake. This will then be used to obtain an extra amount under the Small Firms Loan Guarantee Scheme.

The product prevents baths overflowing by cutting off the water when the water level reaches the overflow hole. Having seen a demonstration, you wonder why no one thought of it before. There is now interest from insurance companies, care homes and property managers.
When finally in production they should retail for about £60 but they are in a classic “Catch 22″ situation. They cannot get the WRAS (Water Regulations Advisory Scheme) approval and therefore most customer orders, until they are in production and the signed orders are needed to get the credit from the bank to fund the production! Non-approval would entail very expensive changes to the £60,000 cost of mouldings. It shows how difficult life can be – even with a brilliant idea.

Interestingly, this product was helped by the London South Bank University which has now sent 3 people to 3Cs to pitch for funding. While the terms offered by the Dragons were off the money, James did point out that 14 minutes of prime time television plus the late repeat would have cost about £3 million and his appearance on Dragons’ Den certainly gave his business a boost.

* The two next speakers which had IT ideas frankly lost me – can someone explain what a “wiki” is please?
But the last one from Solion www.solion.co.uk showed how a boring idea can be a winner. The presentation was about their method of mounting solar panels on flat roofs. What made it more interesting was that these products can me mounted on flat roofs which are not load bearing and have been wind tunnel tested up to 112 mph. New regulations coming in soon require 10 per cent of buildings energy to be generated by environmentally-friendly methods so they are going to be busy. The next 3Cs meeting is 08 November 2006 http://www.soflow.com/affinityClubProfile.html?clubId=781

* Otherwise two buy-to-let enquiries are a surprise after having had none for months.

* Finally, a client tells me he wants me to handle the sale of his business as he dislikes the agents he has spoken to. Another string to my bow?

Summer is over and things are getting busy at the financial G.P’s surgery

* A Late Summer BBQ hosted by my local political friends takes up Saturday evening and I have a very interesting chat with an Indian businessman born in Shillong in the state of Meghalaya in N E India where my ex comes from – small world. After helping the host clear up, we talk politics till past 1 a.m.
I mention a pensions legislation idea to one of the local councillors I helped elect in May and she gives me the details of a policy unit that might be interested.

* I get a sense of deja vu reading an interesting article by Tom Stevenson in Daily Telegraph Business on 12th September 2006 in an article about Exchange Traded Commodities. http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/09/12/ccinv12.xml These are a sort of tracker investment which follows whichever commodity you are trying to speculate or invest in. The article mentions contango and backwardation which takes me back to when I did my banking diploma many years ago – stuff I learned but never used in my banking career.

* At the office we are near selecting a “house” method of assessing investment risk and creating an appropriate portfolio. We have seen several investment houses all offering the latest in portfolio theory but is is good to see an end in sight.

* An accountant telephones regarding two mortgage cases:
i) one concerns a borrower who wishes to increase the mortgage an investment property she owns. The problem is that she has picked up two CCJs both orginating from a dispute with a tenant over service charges. I ask for proper details of these since without this information, it is impossible to see how this would affect lending terms.
ii) the other concerns a client who is: non-domiciled, does not speak English and wishes to invest in property via a trust. Fortunately, I know a solicitor who can handle the language and trust issues and who has done this sort of work before. This means that I can concentrate on the financial services matters.

* Late on Thursday, a fellow swimming teacher telephones to tell me he wants to go ahead with the mortgage we discussed few weeks ago. He is buying an ex-Police flat as an investment and we do the fact find questions over the telephone and I send him a mortgage illustration by e-mail. However, trying to convert the data to a paper application form that the client must sign, fails because of a glitch. Spending twenty minutes on the telephone the next day, I manage to sort it out but this is not what I need when the client has bought under an auction contract with a completion date of early October.

* Benjamin Franklin famously wrote “In this life, nothing is certain but death and taxes”.

* Lord Jenkins famously said when he was Chancellor of the Exchequer “Inheritance Tax is, broadly speaking, a voluntary levy paid by those who distrust their heirs more than they dislike the Inland Revenue”.

* The Government expects to receive £3.6 billion Inheritance Tax in the current fiscal year.

* The current “nil-rate” band or threshold for payment of Inheritance Tax is £285,000 and the rate is 40 per cent, the same as Higher Rate Income Tax.

* It is one of the easiest taxes to avoid with some simple planning – as the old saying goes “You can’t take it with you!”

* I am very impressed with the order line 0845 9000 404 at HMRC for the two extra bits I need to complete my tax return. The lady took my address details very quickly and did not even need my reference number. Maybe they could teach our over-managed NHS a thing or two. Now I need to get it in by the 30th.

* School is back and some parents may be wondering if they should pay (twice) for their children’s education. They have already paid for it through general taxation and with hindsight, I wonder why the previous Government did not introduce education vouchers.
In my years as an IFA, I have met parents who told me that it was worthwhile “You can only get a good education once” as well as those who told me with a sigh that it was not worth the sacrifices they made to pay for it.
It is never too early to plan for this which always costs far more than parents realise.

* A common situation for older people is that they are “asset rich but cash poor”. Equity release is a one way of addressing this – the two main methods are a “lifetime mortgage” where interest is rolled up or a “home reversion scheme” where you sell all or part of the equity in your home in return for a lump-sum or income.
The interest rates used in calculating the above have traditionally been significantly higher than mortgage rates but S.H.I.P. which is basically the trade association for equity release providers, announces that the average rate used in equity release schemes is now lower than the average mortgage interest rate. http://www.ship-ltd.org/bm~doc/02-sep-2006.pdf

* I manage to get my response in (on-line) to the CAA just in time regarding an insane idea that all gliders should be fitted with expensive transponders which will cost about £3,000 each. This seems to be a typical example of “gold plating” that our civil servants love to engage in where other people’s rules are concerned. Implementation of this idea will basically kill off the sport of gliding as we know it.

A short week in the financial G.P’s surgery:

* Interest rates may be moving up but annuity rates for pensions seem to be going down as Norwich Union just advised me today:
Joint life – 85% decreased and 15% unchanged
Single female – 79% decreased and 21% unchanged
Single male – 70% decreased and 30% unchanged

* The Financial Ombudsman Service publishes an interesting report which includes two cases of people investing in the hope of covering borrowing. http://www.financial-ombudsman.org.uk/publications/ombudsman-news/55/55.htm Borrowing money to finance investment is a bit like perpetual motion in finance – it may work for a while but is a very high risk strategy and when things are going well, it is very difficult to know when to stop.

* Reading wills could be different in future as the multi-generation mortgage has arrived and beneficiaries could be inheriting debt rather than assets. I first heard about these years ago in Japan as a result of astronomical property prices there. I asked a few Japanese people I met through networking about these strange schemes, but never got any response. Now the Kent Reliance has done it over here http://www.krbs.co.uk/ and there is a lot of press comment about it.

I try to find out more on their website which is certainly imaginative and attractive and even has a game you can play while the webpage is loading! As there is nothing on their Mortgage page about this new scheme, I phone them and am told that a) they do not know much about it! b) no, there is nothing yet on the website and c) they will send me some info by post.
It seems a strange way to manage a new idea that seems to meet a need as the percentage of first time buyers decreases and more of them need help from their parents – see my earlier blog http://www.georgeemsden.co.uk/?p=48

* I have added a Search box to my site to make it easier for people to get to a particular topic. The categories and monthly listings are still there.

* In order to end on a bright note, I hear from my married daughter who is on an 8 month honeymoon - story below http://www.georgeemsden.co.uk/?p=53