Whilst UK house prices are prone to short term fluctuations, when viewed as a long-term investment, property prices will almost certainly continue increase. This combined with today’s high market values means that, in most cases, a person’s home almost certainly, forms a major part of their estate. Given all this, a Will should be revaluated at least every 5 years.
July 2020 figures showed a monthly increase in property values of 1.6% giving an annual increase of 3.8%; all this in spite of the Covid 19 Pandemic, Brexit, and just about all other potentially economy damaging factors.
The Government’s measure to temporarily abolish Stamp Duty on properties up to £500.000 to help boost the property market certainly helped to influence the latest figures. The result is that the average UK house price is now £320,265!
Whilst Covid 19 continues to play a significant part in our lives along with the prospect of possible job losses, a high demand and a shortage of housing stock means that house prices will most likely continue to rise albeit at what might be a steadier rate – after the ‘Stamp Duty’ holiday finishes.
In many circumstances, those who are older tend not to be so bothered about increased values and in some circumstances, oblivious to what is happening within the property market. However, close family and loved ones need to advise them in terms of getting an updated valuation on their homes and if necessary, to re-look at their Wills since it is highly likely their homes will have experienced a considerable rise in value since their last Will was drafted.
One needs to bear in mind that the Inheritance Tax (IHT) threshold is £325,000, and anything above that value is liable to IHT at 40% without effective estate planning measures in place.
£325,000 is an amount that, these days, can more readily be reached with an estate made up of a property, savings, investment’s and possessions. It’s therefore imperative that advice is sort on estate planning, and that a fresh Will is put in place. This will have the benefit of achieving an up to date property valuation, as well as the potential to reduce the IHT liability and to generate measures that serve to ‘ring-fence’ the property (as well as other assets) to help ensure that the bulk of the estates value ultimately benefits the individuals family, loved ones and friends after they have passed.
Dunham McCarthy offers specialist advice on Wills, Trusts and IHT, book a free consultation today by calling 01785 336222.