View more on these topics

Newcastle brings out third property bond

Newcastle Building Society has brought out the third issue of its guaranteed property bond.

The bond works in a similar way to guaranteed equity bonds that are linked to stockmarket indices, but it is linked to the performance of the Halifax House Price Index for five years.

To calculate the final returns, the level of the House Price Index is recorded at the start of the term and again at the end. The bond offers up to 100 per cent of any rise in the index and guarantees the return of the original capital.

The bond can be held within an Isa wrapper and could suit people who want to invest in residential property because they have seen house prices increase rapidly. But they may be reluctant to take the responsibility that goes with renting out property.

It could also attract self-invested personal pension (Sipp) investors as a means of gaining some exposure to residential property, since Sipps allow investment in commercial property only.

The housing market has been booming due to low interest rates, low unemployment and a shortage of good quality properties to meet the demand from people who are moving home.

However, property prices have escalated beyond the means of many first time buyers. This could result in a slowing down of prices and could affect the returns from this bond.

In the five years between November 1997 and November 2002, the Halifax House Price Index rose from 226.2 points to 402.1 points &#45 an increase of 77.8 per cent. Although economists at the Halifax feel a substantial rise in interest rates is unlikely, they predict a slowdown in the residential property market over the next 12 months.

Recommended

Munich Re&#39s critical view

I am writing to clarify Munich Re&#39s position in the critical-illness marketfollowing the recent article on Norwich Union&#39s 40 per cent premiumincrease.In this article, reference was made to “the decisions by Swiss Re andMunich Re this year to stop reinsuring long-term guaranteedcritical-illness cover”.Munich Re would like to make it clear that we, in fact, withdrew […]

Manulife&#39s sterling pledge on Canada Life

Canadian giant Manulife Fin-ancial has confirmed that it would pay Canada Life UK shareholders in sterling if its hostile bid for the company is successful and they elect to take cash rather than shares in Manulife.Manulife has written to all Canada Life&#39s 200,000 shareholders, 60,000 of whom are in the UK and Ireland, with an […]

Open the Green portal

It was possible to read the long awaited Pensions Green Paper and skateover an important announcement on page 43 to an Online Retirement Plannerand an aim to launch such a service in 2004.This is a massive opportunity for the adviser community to demonstrate howit can help people in pension planning and the Government in addressing […]

Jason Butler

The new Sofa director is not short of a few words, which could be explainedby a spell as a market trader in South London when he was younger. Butrather than turn him into a wheeler-dealer type, Jason Butler insists thatworking on a stall helped him learn how to “read” people.Although Butler has two entrepreneurial brothers […]

Inheritance tax when it is relevant

Neil Jones is Technical Support Manager with Canada Life’s ican Technical Services Team. Canada Life offers a range of wealth management solutions, including retirement income planning, estate planning and investment solutions from a choice of jurisdictions, including the UK, Isle of Man and Republic of Ireland. A trust can offer significant advantages when an individual is […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com