NEST’s Fawcett challenges investors to ‘be brave’ on ESG

first_imgHe added: “We have to make some bold decisions because, if we don’t, we are just going to keep not learning the lessons, and, as a result of that, no one will trust us.”Making bold decisions was one of the four steps Fawcett recommended.He also said investors should be genuinely long-horizon investors and not worry about short-term share price movements.Aligning incentives between asset owners and fund managers was another important step to take because too much value was extracted in the investment chain between the member and the final investment, which he said created “unfortunate” incentives.“At NEST,” he said, “we do our absolute best to align the incentives of our fund managers with our members, but it is a real challenge.“It is all about fair fees, fair investment horizons, not firing and hiring at will and actually having a long-term relationship with your manager.“We don’t pay performance fees. We have yet to see a performance fee structure that properly aligns the managers with our members’ interests.”Fawcett also recommended true collaborations among asset owners, particularly as they were not competing with each other.He admitted asset owners felt a sense of optimism following the shareholder spring, believing that times were changing.“But then the economy started growing, markets rebounded, and we started forgetting the lessons we should have learned over the last few years,” he said.He pointed to the drop in support for a shareholder resolution calling for the role of chief executive and chairman to be split at JP Morgan from 40% in 2012 to 32% this year, calling it a backward step.He also highlighted that, despite HSBC receiving a $1.9bn (€1.4bn) fine by the US authorities for activities related to money laundering, only 11% of shareholders voted against the bank’s proposal to increase the bonus cap for its finance director from twice to five times his salary.Richard Howitt MEP and European Parliament Rapporteur on Corporate Social Responsibility, who spoke at the same event, said that, despite progress, ESG was fighting an uphill battle.“Short-termism still blights too much of economic decision-making,” he said.“And there is too much talk of who is to blame for that rather than talk about how we overcome it.”He said the European project on the purpose of the corporation and how it was best defined in European company law was trying to answer similar questions as the review on the definition of fiduciary duty by UK Law Commissioner David Hertzell.Howitt said: “We will always be concerned about the rate of returns, but we are starting to ask not just when and how a return is measured but also for whom.“But, as much as regulation and legislation have a part to play, governments cannot and will not achieve the necessary changes alone without markets making their own contribution, and that comes down to [risk].“I am pleased the European proposal includes the requirement to analyse risk, and I suggest this may ultimately prove to be its most important component.“We all know the whole concept of risk is changing for business as it is for everyone on our planet.” Investors should be making brave decisions on environmental, social and governance (ESG) issues, according to Mark Fawcett, CIO at the UK’s National Employment Savings Trust (NEST).He told the audience at the 30-year celebrations of ESG research organisation EIRIS: “We have to be seen to be doing the right thing and make it very clear we won’t tolerate poor governance, poor environmental standards or poor social policies because, ultimately, if those things are delivered badly, the long term looks pretty grim.“We have to make sure companies are held accountable and that we don’t just accept their excuses.”Fawcett said he was frustrated by fund managers and others in the corporate governance area who say they give companies the benefit of the doubt because they can do nothing about any issues that arise.last_img read more

CEE roundup: Poland, Czech Republic

first_imgPostal declarations that arrived after the deadline were acceptable if there was proof they were posted no later than 31 July.ZUS president Zbigniew Derdziuk subsequently predicted as many as 2m sign-ups.The share, at 18.3% of 14m-odd eligible workers, is impressive given that the four-month decision period extended into the summer holidays, and that the new pensions reform law banned pension fund companies from advertising over that period.That piece of legislation, which also applies to future transfer windows, remains contentious and could backfire on the government, experts say.Poland’s Constitutional Tribunal is examining the new law following a request by president Bronisław Komorowski.According to the Attorney General’s Office opinion presented to the Tribunal, the advertising ban has breached the Constitution.In contrast, in the Czech Republic, lack of interest in the relatively new voluntary second pillar has contributed to the scheme’s early demise.Since the second pillar’s implementation at the start of 2013, only 83,000 have signed up, compared with 4.9m in the third pillar.The Social Democrats (CSSD), the leading party in the coalition government sworn in this January, fulfilled its earlier promise to cancel the system.The pillar has been funded by diverting 3% of the 28% first-pillar social contribution, with members adding a further 2% from their gross wages.A cross-party commission set up by the government to determine how the system should be dismantled has recommended that second-pillar members be able to choose whether to receive their funds either into their existing third-pillar funds or private bank accounts.Those who choose the latter route have the option to direct the 3% portion back into their first-pillar accounts, thereby boosting their eventual state pension payout.The outstanding issue is whether the changeover takes place in January 2016 or a year later. A surge in late postal deliveries has pushed the number of workers who want to remain in Poland’s second-pillar funds (OFEs) to just over 2.56m as of 18 August, according to the Polish Social Security Institution (ZUS).Of these, some 52,000 declarations need to be verified because of irregularities or mistakes made in filling the submissions.The near-final number took both the Polish authorities and pensions industry by surprise.As of 31 July, the deadline for submitting declarations, ZUS had registered around 1.7m-1.8m.last_img read more

Pension funds tender corporate bond, ILS mandates with IPE-Quest

first_imgInterested parties have until 13 October to apply, stating gross-of-fees performance to the end of June.Separately, a Swiss pension fund is looking for a manager to oversee an insurance-linked securities (ILS) portfolio.IPE-Quest search QN1456, conducted by an investment consultant on behalf of the fund, would be for a $250m global ILS mandate.The actively managed mandate would be benchmarked against the Swiss Re global catastrophe bond index.The investment consultant did not set a minimum AUM for any existing mandates overseen by asset managers or an AUM threshold for companies as a whole.However, managers should have a track record of at least three years (preferably five).Interested parties have until 6 October to apply, stating gross-of-fees performance to the end of June.The news team is unable to answer any further questions about IPE-Quest tender notices to protect the interests of clients conducting the search. To obtain information direct from IPE-Quest, please contact Jayna Vishram on +44 (0) 20 7261 4630 or email [email protected] A European pension fund is tendering a $250m (€194m) US corporate bond mandate, using IPE-Quest.The fund behind search QN1455, which seeks managers for an investment-grade corporate bond portfolio investing in AAA-BBB bonds, said the proposed $250m size was a soft limit.The actively managed mandate should be benchmarked against the Barclays US investment-grade corporate bond index, the search added.The fund requested that asset managers have at least $1bn in similar mandates and $7.5bn in assets under management (AUM) across the whole firm – which should have a minimum track record of three years, with five preferred.last_img read more

European pension funds unfazed by negative 10-year Bund yields

first_imgTen-year Bund yields moved into negative territory on 14 June for the first time ever in Germany, yet the development has come as little surprise to many European pension funds, with some even hoping to profit from it. The continued decline in interest rates in recent months – including those of German Bunds – has actually been of boon to some pension funds, including Austria’s Allianz Pensionskasse.Andreas Csurda, chief executive at the €616m multi-employer pension fund, told IPE: “Interest rates falling even further have increased returns for our existing bond portfolio. The real tragedy is the policy itself.” Csurda pointed out that seven-year Bunds had been negative for some time and said the drop in the 10-year Bund yield from 0.2 to -0.1% was merely a “calculatory cosmetic”. “The real problem over the long term is that the low-interest-rate environment is not helping funded pensions,” he said.He said the European Central Bank’s (ECB) current interest-rate policy had had no visible effect and that it was “currently unclear how it can actually help”.He added that his Pensionskassen had actually been “rather blessed” in the current environment because it had no guarantees to meet.“This is quite different for the provident funds (Vorsorgekassen), which have to guarantee the level of contributions, as well as for life insurance companies, of course” he said.Csurda argued that the ECB’s interest-rate policy was “slowly destroying” much had been achieved to strengthen funded pensions in Europe in recent years.Günther Schiendl, CIO at VBV, Austria’s largest pension fund, said the negative 10-year Bund yields were “to be expected” and would remain at a “similar level” for some time.At Publica, Switzerland’s largest public pension fund, CIO and chief economist Stefan Beiner said interest rates continued to fall worldwide, due largely to global deflationary pressures and “political uncertainties such as the Brexit vote”.Duration management, he said, had become “more important than ever”.Tom Mergaerts, chief executive at Amonis, a €1.8bn Belgian pension fund for the healthcare sector, said yield changes such as the one seen in the 10-year Bund were “not a big deal”, as the scheme had already been “largely immunised”.“But it is an important issue for investing future contributions,” he added. The pension fund has a 12.3% allocation to German government bonds in its liability-driven investment (LDI) portfolio, used for the asset-liability interest rate risk hedge.The LDI portfolio accounts for 60% of total assets under management, with the remainder invested in a growth portfolio.For its growth portfolio, Amonis tries to avoid buying negative-yielding assets, according to Mergaerts, and may consider selling some “over-priced” bonds.In a statement, Deutsche Asset Management CIO Stefan Kreuzkamp said the 10-year Bund rate was “the measure of all things” in the German financial sector.“The meltdown of this benchmark is distorting all asset classes,” he said.The slipping of the Bund yield into negative territory increases the importance of the German government’s decision earlier this year to extend the calculation basis for the discount rate used for pension liabilities, under local accounting standard HGB.It extended the calculation basis to include the previous 10 years of interest-rate levels, rather than just seven, which would have already excluded any pre-crisis levels.last_img read more

Dutch construction sector scheme boosted by commodities, EM

first_imgIt attributed the 8.3% result of its hedge funds investments largely to distressed debt and relative value credit strategies.BpfBouw’s opportunities portfolio – which invests in film and pharmaceutical rights as well as energy infrastructure – lost 15%, but was the only loss-making allocation. It said a revaluation of an “energy-related investment” was the primary cause of the loss.The industry scheme said it left its strategic investment policy as well as its risk attitude unchanged last year, maintaining its strategic asset allocation of 42% fixed income, 27% equity, and 20% property.It said it also kept the level of its interest risk hedge at 42.5%, in anticipation of possible stagnation in the wake of the UK’s decision to leave the EU. Its regular hedging policy provides for an increase if interest rates rise, and vice versa.BpfBouw kept a full currency hedge in place for its fixed income investments, but reduced the currency cover for its equity holdings to 80%, as it deemed the currency risk for equity to be lower. It reduced the hedge even lower – 64% – for investments in the ‘safe haven’ of the US dollar.Last year, the scheme increased its stake in green bonds from €155m to €298m.It also said it had improved its governance by appointing two external experts for financial risk management, outsourcing policy and IT on its board.BpfBouw said it had also tightened its requirements for strategic outsourcing partners. The measures were taken in the wake of an investigation by supervisor De Nederlandsche Bank into the pension fund’s investment policy and risk management, it said.The pension fund posted administration costs per participant of €101. It said it spent 55 basis points on asset management costs and 11 basis points on transactions.It didn’t grant any indexation and said that the inflation compensation in arrears had increased to approximately 7.5%. At June-end, its coverage ratio stood at 110.1%. BpfBouw, the €54bn pension fund for the Netherlands’ building industry, made double-digit returns from commodities, private equity, property, and emerging market debt and equity in 2016.The fund’s annual report for 2016 showed an overall net yield of 12.2%, in part thanks to a 1.8% return from its derivatives holdings. A 1.5% loss on its currency hedge was more than offset by a 3.3% profit on its interest rate hedge.It achieved positive results on almost all asset classes, with the best results delivered by commodities (18.6%), private equity (15.2%), emerging market equity (14.9%) and emerging market debt (14.8%). Property gained 12.1%.BpfBouw said its allocation to predominantly non-listed infrastructure projects generated 10.9%, citing the impact of low interest rates on the cashflows for its investments.last_img read more

People moves: UK pensions trade body names policy board chair [updated]

first_imgAt Robeco, Oldenkamp will be responsible for expanding the firm’s fiduciary management and multi-asset businesses. He replaces Martin Mlynár, who will step down to fully focus on his role as managing director or Robeco’s manager selection platform Corestone. Gilbert Van Hassel, CEO of Robeco, said the appointment “underlines our commitment and ambition to grow our fiduciary business, which is a key element of our strategy for 2017-21”.USS Joint Expert Panel – Three professors have been named as members of the group of experts who are to examine the valuation of the UK’s biggest pension fund, the Universities Superannuation Scheme (USS). Representing the University and College Union (UCU) will be academics Saul Jacka, Deborah Mabbett and Catherine Donnelly. PLSA, USS Joint Expert Panel, Bayerische Versorgungskammer, EZVK, Association of Consulting Actuaries, Aon, BlueBay Asset Management, Martin Currie, TISA, NewtonPensions and Lifetime Savings Association (PLSA) – Emma Douglas, head of defined contribution (DC) at Legal & General Investment Management, has been appointed chair of the UK association’s new policy board.Creating a policy board was one of the changes announced at the PLSA’s annual conference in October. It will start its work in the autumn, taking strategic oversight of the PLSA’s policy work programme. Douglas is already chair of the PLSA’s master trust Committee and sits on the PLSA’s DC Council. The association will begin searching for the remaining members of the policy board in the coming weeks. PLSA members will be asked to approve Douglas’ appointment and the other appointments. Robeco – The Dutch asset manager has appointed Bart Oldenkamp as head of investment solutions, effective from 1 July. He leaves NN Investment Partners where he has worked for three years as managing director of the integrated client solutions team. He was previously head of Cardano’s Netherlands office. center_img Jacka is professor of statistics at the University of Warwick and a Turing fellow at the Alan Turing Institute; Mabbett is professor of public policy at Birkbeck, and Donnelly is associate professor at Heriot-Watt University, where she heads up a unit focusing on pensions, investment and insurance research.Their appointments followed the announcement of Joanne Segars, former CEO of the PLSA, as chair of the group.Bayerische Versorgungskammer (BVK) – Axel Uttenreuther is replacing Reinhard Dehlinger on the board of the €72bn Bavarian multi-industry pension fund. Dehlinger, who had responsibility for the medical care profession, information processing and mathematics, is retiring. Uttenreuther has been at the Bayerischen Ärzteversorgung, the retirement scheme for medical professionals in Bavaria, since 1997. BVK is an amalgamation of more than 10 schemes providing first pillar pensions to professionals such as doctors, architects, chartered accountants and pharmacists.Evangelische Zusatzversorgungskasse (EZVK) – Christina Jasmin Hofmann is to join the board of the €9.6bn pension and retirement welfare fund for parts of the Protestant church in Germany. Effective from September, she will be the board member with responsibility for finance – and in particular investments, accounting and IT. The position had been vacant since August 2017. She has many years’ experience within the Allianz group, where she is currently department head for finance for its private health insurance company, Allianz Private Krankenversicherungs-AG. Association of Consulting Actuaries (ACA) – Effective from 1 June, Jenny Condron will be the new chair of the UK actuarial trade body, succeeding LCP’s Bob Scott. She is the first woman to hold the role. Condron is currently chief actuarial officer at Mercer, where she has worked since 1991.In a statement, Condron outlined several areas of focus for the ACA, including savings levels within defined contribution pensions, financial education, improved communications, and the retirement income gap between defined contribution and defined benefit savers.At the ACA’s recent annual meeting, Phil Simpson (Milliman) was re-elected honorary secretary and Patrick Bloomfield of Hymans Robertson was elected honorary treasurer.Aon – Vicky Kydoniefs has joined the consultancy as a partner in its EMEA fiduciary management team. She was previously at Charlemagne Capital for 11 years, where she was director and co-head for distribution. Before that she had senior roles at Merrill Lynch Investment Managers, where she was head of UK and Irish institutional business development, and at Mercury Asset Management. BlueBay Asset Management – The specialist fixed income manager has appointed Stephen Thariyan to the newly created role of co-head of developed markets, working alongside Mark Dowding, the other co-head. Thariyan will take on responsibility for the corporate credit investment process and for growing related strategies across investment grade, leveraged finance and convertible bonds. He was previously global head of credit at Henderson Global Investors (now Janus Henderson), a role he held for 10 years. He has also worked at Rogge Global Partners, Natwest Markets and Chevron Corporation.Martin Currie – The Edinburgh-based equity fund manager has hired Zehrid Osmani to lead its “global long-term unconstrained” investment team. He replaces Tom Walker, who has stepped down from the role as part of a leadership succession plan. Osmani joins from BlackRock where he worked for 10 years, mostly on European equity management and research. Walker has led various regional and global teams at Martin Currie since joining in 1996.Tax-Incentivised Savings Association (TISA) – Gregg McClymont, head of retirement at Aberdeen Standard Investments, and Jane Goodland, responsible business director at Quilter, have joined the investments and savings membership organisation as non-executive directors.McClymont is a former shadow pensions minister in the UK parliament. In addition to his role at Aberdeen Standard, he is chair of the board of directors for the PLSA’s Pension Quality Mark. Goodland has over 20 years’ experience in financial services, having worked in sustainable investment in roles for HSBC, Janus Henderson and Willis Towers Watson. Current TISA non-executive director Richard Freeman is retiring from Quilter but will stay involved with TISA.Newton Investment Management – The UK investment manager – part of BNY Mellon Investment Management – has appointed Andy Warwick to its “real return” team, which manages the company’s flagship diversified growth strategy. Warwick is due to join at the end of July as co-manager alongside Suzanne Hutchins and Aron Pataki. He joins from BlackRock where he was a manager on diversified growth and multi-asset funds.last_img read more

UK roundup: Young workers have ‘false sense of security’ on pensions

first_imgYoung British workers risk being lulled into a false sense of security over pension saving and losing money in the long run, according to research from BlackRock.The asset manager’s survey of defined contribution (DC) savers found that many workers aged 25 to 34 were falling well below the savings rate required to meet their future lifestyle goals, with 44% admitting to putting off saving for retirement as it “seems silly to focus on something so far away”.When asked how they would utilise an extra £200 (€225) a month, only 2% said they would pay it into their pension.More than a third (35%) of young savers thought they had a defined benefit (DB) pension with their current employer, while data from the Office for National Statistics shows the figure is closer to 20% for those under the age of 29. Furthermore, only 14% of young savers knew exactly how much money they had in their current employer’s DC pot. In spite of this, 39% of 25 to 34-year-olds surveyed said they were confident their retirement savings are on track. Tax authority admits double-charging errors The UK tax authority HMRC and the Pensions Regulator (TPR) have written to pension schemes asking them to review their benefits data after finding that some DC scheme members received double tax relief on their contributions, while others received none at all.In a pension scheme newsletter, HMRC and TPR said they would work with schemes to help correct the data and “make sure the member gets the tax relief they’re due”.center_img BlackRock surveyed 1,000 adults with DC pension savingsClaire Felgate, head of UK DC at BlackRock, said: “Auto-enrolment has played a very important role in reiterating the importance of planning for later stages of life. But [younger savers] need to factor in a much longer life than previous generations. This means either working for longer or saving more in their working years.”The survey also found that almost half (45%) of those aged 25 to 34 believed they and their employer should between them contribute at least 15% of salary into their DC pension – but less than a third (29%) were doing so.Felgate said: “The government’s move to increase the [auto-enrolment minimum] rate to 8% is a step in the right direction, but our concern is that individuals will think this is ‘enough’. We need to start thinking of 15% as the ‘rule of thumb’, or young savers will face an unwelcome reality check when they leave work.”The survey polled 1,000 UK working adults aged 25-69 with at least one workplace DC pension during July 2018. Rapid increase in DB to DC transfersThe number of people transferring out of DB schemes into DC schemes increased almost sevenfold between 2016 and 2018, according to data published by the Financial Conduct Authority (FCA).Responding to a Freedom of Information Act request, the FCA said 34,738 people had transferred out of a DB scheme between 1 October 2017 and 31 March 2018, based on a survey of 54 companies. This compared to 5,056 in the six months to 31 March 2016.The FCA highlighted that its sample of schemes from which the data was drawn had changed during the period in question, meaning “changes in the data are not necessarily due to market changes, but may be due to more firms reporting the DB to DC data over time”.Bruce Kirton, chief executive of DC master trust Welplan Pensions, said the data “should cause concern at both companies and pension providers”.“Companies need to ensure their members are getting access to the right type of financial advice to ensure this money is not being invested in unscrupulous investments and scams,” he said. Capita commits to £176m scheme recovery planOutsourced services provider Capita has agreed a deficit recovery plan with the trustees of its DB pension scheme in an attempt to plug a £185m shortfall.The recovery plan, announced last week in an update to the stock exchange, will involve four annual payments from the company to the scheme between now and 2021, totalling £176m.Jon Lewis, Capita’s CEO, said: “I made a commitment to our stakeholders to address our pension deficit shortly after I joined Capita and I am pleased that our financial strength and successful disposal programme have allowed us to deliver on this.”Politicians flagged concerns about Capita – which is a leading provider of outsourced services to local and national government – in January when it issued a profit warning.last_img read more

Mandate roundup: LGPS Central picks EM bond managers

first_imgSeparately, LGPS Central has also confirmed that as of 1 May 2020 it is now running a discretionary £211m UK Gilts mandate in-house on behalf of Nottinghamshire Pension Fund, it said.This is in addition to a global investment grade corporate bond fund that the pool launched last month, bringing together £1.2bn of partner fund assets under management, with the initial investors being Derbyshire Pension Fund, Nottinghamshire Pension Fund, Staffordshire Pension Fund and Worcestershire Pension Fund.Swiss pension fund tenders CHF900m bonds mandateA Swiss public sector pension fund has issued two tenders worth CHF450m (€420m) each via IPE Quest.According to the QN-2610 search, the mandates could invest in global, domestic and foreign bonds, following the Swiss Bond Index (SBI) AAA-BBB Total Return benchmark.Managers should have at least CHF10bn in assets under management as a firm, and at least CHF5bn in credit. Their track record should be at least five years, but a minimum of 10 years is preferred.The deadline for applications is 22 May at 5pm UK time. Applicants should state performance data to 31 March 2020, gross of fees.The IPE news team is unable to answer any further questions about IPE Quest, Discovery, or Innovation tender notices to protect the interests of clients conducting the search. To obtain information directly from IPE Quest, please contact Jayna Vishram on +44 (0) 20 3465 9330 or email [email protected] read the digital edition of IPE’s latest magazine click here. LGPS Central has selected two external managers for its £900m (€1bn) Global Active Emerging Market Bond Fund. The two managers selected are M&G Investments and Amundi, with each fund manager receiving half of the total mandate, the investment pool announced.It said that more than 70 fund managers from across the globe expressed an initial interest in tendering for the mandate.Gordon Ross, interim chief investment officer and investment director for fixed income at LGPS Central, said: “When we began the manager search for our Emerging Market Bond Fund, we were looking for candidates which displayed a robust and disciplined investment process, full transparency, value for money and commitment to responsible investment.”He said that both selected managers “showed evidence of all these attributes in managing EMD products and we are very much looking forward to working with them as we deliver the returns our partner funds need for the long-term.”last_img read more

Westpac update predicts drops in home values across Australia

first_imgEarlier this month independent property analysis firm SQM Research predicted Melbourne and Sydney house prices this year to fall by three per cent and four per cent respectively. Video Player is loading.Play VideoPlayNext playlist itemMuteCurrent Time 0:00/Duration 7:28Loaded: 0%Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -7:28 Playback Rate1xChaptersChaptersDescriptionsdescriptions off, selectedCaptionscaptions settings, opens captions settings dialogcaptions off, selectedQuality Levels576p576p480p480p256p256p228p228pAutoA, selectedAudio Tracken (Main), selectedFullscreenThis is a modal window.Beginning of dialog window. Escape will cancel and close the window.TextColorWhiteBlackRedGreenBlueYellowMagentaCyanTransparencyOpaqueSemi-TransparentBackgroundColorBlackWhiteRedGreenBlueYellowMagentaCyanTransparencyOpaqueSemi-TransparentTransparentWindowColorBlackWhiteRedGreenBlueYellowMagentaCyanTransparencyTransparentSemi-TransparentOpaqueFont Size50%75%100%125%150%175%200%300%400%Text Edge StyleNoneRaisedDepressedUniformDropshadowFont FamilyProportional Sans-SerifMonospace Sans-SerifProportional SerifMonospace SerifCasualScriptSmall CapsReset restore all settings to the default valuesDoneClose Modal DialogEnd of dialog window.This is a modal window. This modal can be closed by pressing the Escape key or activating the close button.Close Modal DialogThis is a modal window. This modal can be closed by pressing the Escape key or activating the close button.PlayMuteCurrent Time 0:00/Duration 0:00Loaded: 0%Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -0:00 Playback Rate1xFullscreenPrestige property with Liz Tilley07:29 STORMY TIMES: The Aussie housing market could be in for a tough few years.ANOTHER big player is predicting a tough time ahead for the Aussie real estate market. It could be bad news for real estate investors if predictions from Westpac turn out to be true.In a weekly update released by the bank earlier this week, some grim predictions were made about house prices over the next 24 months. House prices, the update predicted, were expected to fall by as much as 10 per cent over the next two years “with weakness particularly centred on the Sydney and Melbourne markets”.The update added that this predicted drop could also hit the broader economy.“This will represent a considerable change in the “atmospherics” around housing wealth and may weigh further on prospects for consumer spending,” the statement read. BUILDERS’ DECISION TO GO OUT ON A LIMB PAYS OFF More from newsParks and wildlife the new lust-haves post coronavirus18 hours agoNoosa’s best beachfront penthouse is about to hit the market18 hours agoThe Melbourne and Sydney markets have already dropped in 2018.Australia’s biggest city has experienced a rough couple of months, with large drops in housing values across a range of suburbs in the start of 2018.Research for Sydney’s Daily Telegraph earlier this month showed that the median Sydney house sale price had fallen by 5.2 per cent over the past year. MANSION COMES WITH UNDERGROUND CAR SHOWROOM last_img read more

5 things to keep in mind when renting out the family home

first_imgPUTTING your home on the rental market is a decision that will affect many of Cairns’ transient population and, if managed correctly, could be a driver of great financial and economic wealth.First National Real Estate chairman and head of the group’s Cairns Central franchise David Forrest said there were five important things to keep in mind when exiting the family home and getting it ready for a tenant.He said one of the biggest decisions to make was whether being a landlord made financial sense.“There are upfront costs such as insurance and tax implications, so it is essential that you talk to a qualified financial advisor or to your accountant before making any decisions,” he said. “Go through your finances carefully and plan your cashflow to ensure you allow a buffer for those unexpected occurrences which life gifts to us from time to time. “Some property quirks are overlooked by owners but will be picked up instantly by paying tenants. By talking to a real estate agent, you will gain a thorough understanding about your legal obligations and rights.“While you may have spent many happy years there, your connection to the property is likely to be emotional. “Try to take a step back and see it from a potential renter’s perspective. “Are there obvious cosmetic improvements that need to be made in order for it to be more appealing? Should it include furniture or would unfurnished be a better option? “Is everything in full working order? You don’t want the stove to suddenly fail or the air conditioners to stop working during the height of the wet season, so you will need to prepare in advance.“When assessing your plan, keep in mind that property investment is a long-term decision which needs to be carefully considered.”Under law, rented homes need to adhere to strict legislations such as installing working smoke alarms and a pool fence which has been approved by the relevant authorities.Owners can also make your property more appealing by including items such as pool maintenance or lawn/garden care in the tenancy agreement. Then there is the issue of allowing pets. More potential tenants will be drawn to your property if you do allow them.More from newsCairns home ticks popular internet search terms2 days agoTen auction results from ‘active’ weekend in Cairns2 days agoMr Forrest said it was also important to make sure you have fully considered how much you’re charging per week, so you don’t price yourself out of the market.“Your agent will be able to bring you up to date with market facts such as vacancy rates and rental returns,” he said.“As well, make sure you are organised and have copies of everything filed in a safe place. Make sure you select an agent that does proper tenancy checks and is a member of a national tenancy database.“They should also check past tenancies and the employment status of applicants. “Time spent at this stage of a tenancy is important and can save you from encountering problems down the track.“As long as you get professional advice from an accountant, financial advisor, finance broker and real estate agent, your home could provide a nice little nest egg.”last_img read more