Budget & Bricks, Building Futures, no Bingo & BeerEhill
Freeing the Pension Funds
On account of the diminishing returns seen from the annuities market over recent years, the budget yesterday removed the obligation on people to buy an annuity with their retirement fund. The full effect of this new pensions reform legislation will not be felt until April 2015, however with the Chancellor’s temporary rules coming seeing fruition as early as next week, there are going to be some early worms out there for the taking.
As of March 27th, people aged 55 or over who have less than £30k in their pension fund will be able to withdraw the full amount and do with it as they will. The first 25% of this pot will be available to the consumer tax free while the remainder will be taxed alongside their other income for the year.
In this buoyant rental market, wherever there is appropriate product available, there’s surely a strong case to be made for many an older person taking their tax-free 25% (as much as £7,500) and using it as a deposit on a buy to let property. This is a proposition that takes some time and care to be explained fully: it needs to reach an age-appropriate and suitably affluent (not too rich, not too poor) audience in their home and engage with them at their leisure. A well-selected direct mail database is therefore going to be a terrific way to do this. If you would like a quote on a precision targeted database for your campaign, do get in touch.
Corporate Stamp Duty
In a bid to prevent the use of artificial corporate structures as stamp duty umbrellas, the budget also increased the stamp duty paid on homes worth over £500k that are being bought by corporations to 15%. Given the considerable disparity between this new tax and the 4% paid by individuals on homes priced between £500k and £1m, it is expected that this form of tax avoidance will be effectively reduced.
Hopes for further stamp duty reforms in this budget, such as the calls for regionalised thresholds to make buying a first home in the South East more achievable, were not realised.
Quietly announced a couple of days before the budget was an extension to the HTB1 scheme until the end of the decade. Assuming, of course, that there is a Conservative Chancellor in place beyond next May, this would see the HTB scheme continuing to play a major part in the government’s housing strategy for at least another six years.
For many consumers this announcement may have removed a sense of urgency from their decision to buy a new home: your customers can now be reasonably confident that they will have access to the HTB scheme for another six years. However for others, particularly those buying in an area where large deposits are needed, this extension could make buying a house a more achievable goal.
In a buoyant market it’s tempting just to do the little activity needed to make the sales target for the current half or achieve the necessary forward position. However it’s vital that we also take this opportunity to invest in our future needs. For instance, brand awareness, social media, PPC & SEO authority are massive intangible assets that cannot be created overnight- reducing the focus on these essential elements of the marketing mix today could do irreparable damage further down the line. Similarly, if you are looking to build margin rather than volume (or perhaps if you fancy a bit of a both) this is also a position that will benefit from investment: create copy and content that defends the new build premium; use advertising to prove that the product is worth the price it commands.
Now is also the time to be testing, learning and refining- the 70/20/10 model of media planning suggests that a marketing budget is invested in three distinct ways- 70% should go on core activity whose response is assured; 20% should go on relatively new media that is being tested and refined; the remaining 10% should be viewed as a speculative investment, designed to trial new opportunities that may one day earn themselves a share of the 20% or the 70%, and so improve the performance of the whole budget. So if you’ve never given Facebook advertising a go, Twitter ads, Social Media or augmented reality, perhaps now is the time to start. If you love the idea of getting onto TV, speak to us about Sky AdSmart. There are a wealth of opportunities out there and this is a very good time to be learning how to use them best and getting them into your armoury ready to defend yourself against a more difficult property marketplace and a canny future thinking competitor.