Short term investment advice please...

helen_clare

I have just completed on the sale of a buy-to-let property and am wondering what the best thing to do with my capital in the short would be. It's been a very long time since I had any money to put into a savings account and it has come as quite a shock to discover just how low rates are. My plan is to reinvest in property or similar in the spring but I'm waiting to see how things pan out politically. I would need easy access but I wouldn't need to access on a regular basis.
I would be really grateful for any advice. In the current atmosphere of economic uncertainty I don't really know where to begin. I have about £200K and I know that after three months I need to split it up and start moving it out of my current account.
Many thanks.

Alexland

This question gets asked about twice a day - why does nobody ever read the recent forum posts before posting it again?

FSCS temporary high balance protection up to £1m applies for 6 months.

https://www.fscs.org.uk/your-claim/temporary-high-balances/

NS&I savings offer 100% protection otherwise if you want to chase best buy rates it's £85k per person per provider.

Alex

eskbanker

helen_clare wrote: »

I have about £200K and I know that after three months I need to split it up and start moving it out of my current account.

The FSCS temporary high balances provision lasts for six months rather than three, so your money is protected wherever it is during that time, although there was some discussion about the potential implications of moving it around in a recent thread.

Alternatively you can put it in NS&I Income Bonds where the whole sum is protected on an ongoing basis without needing to split it up....

bowlhead99

Alexland wrote: »

This question gets asked about twice a day - why does nobody ever read the recent forum posts before posting it again?

FSCS temporary high balance protection up to £1m applies for 6 months.

People not reading forum posts before posting is a common peeve here, but so is people spouting advice without checking the facts or adding caveats.

The original poster said their money came from the sale of a buy to let property. Rather than from the sale of a private residential property which was their main residence. So, they may not have coverage - there is no requirement for the FSCS to cover sales of investments or investment properties.

The PRA said in their Statement of Policy, re Temporary High Balances (THBs), the things covered include:

(1) Deposits relating to a depositor’s private residential property (Depositor Protection 10.2(1)) 32. The protection under Depositor Protection 10.2(1) should enable a person to claim THB protection in relation to amounts deposited in their own account or in a solicitor’s client account on their behalf. 33. The PRA considers references to ‘private residential property’ in Depositor Protection 10.2 (1) to refer to a specific residential property (ie the property is identifiable) in which the depositor resides, intends to reside or has resided as their main or only residence (as that term is understood in connection with capital tax gains purposes). The PRA does not consider that general savings for a property should fall under this category. 34. The PRA considers that land purchased with a view to constructing a dwelling would fall within this category. The depositor should provide evidence that the land has been purchased (or is about to be purchased) with a view to constructing the purchaser’s only or main dwelling. 35. The PRA considers that proceeds from the sale of a property that the depositor owned as a buy-to-let property, or that was the depositor’s investment property, should not benefit from THB protection. Similarly, the PRA considers that funds held by a depositor in preparation for the purchase of second home, a holiday home, or any other investment property (which will not be the depositor’s only or main residence) should not be protected. 36. For the avoidance of doubt, the PRA does not consider that THB claims falling under this category should be restricted to the purchase price of the property. For example, the PRA expects that amounts falling under category 10.2(1)(a) could include deposits for anticipated stamp duty and associated fees.

The FSCS has recently dumbed down and simplified their FAQ web pages which attempt to summarise the regulations for consumers. Like the HMRC did when absorbing their content into the overall gov.uk website. Unfortunately - as with many of these efforts which attempt to make legislation somewhat less impenetrable -the trade off of accessibility is that not every scenario is spelled out and explored to the extent we might like.

So, on the FSCS website when talking about what a temporary high balance is, it mentions that certain life events could cause you to have a balance that's temporarily higher than usual, including "Real estate transactions (property purchase, sale proceeds, equity release)" and goes on to say that with sufficient evidence you may be able to claim for your balance in the event of failure when you have a balance as a result of such a life event, depending on the exact circumstances.

However, when you decide to dispose of an investment asset in your property lettings business and hold the cash to consider potentially investing in something else, that isn't one of those unavoidable life events where the financial services industry should take on your risk, and for the FSCS to cover it would likely not be in line with the EU directive which mandated the improvements in deposit guarantee schemes to make 'temporary high balances' a thing, a few years back.

Alexland

bowlhead99 wrote: »

People not reading forum posts before posting is a common peeve here, but so is people spouting advice without checking the facts or adding caveats..

I did consider this but believe the OP has resided in the flat as their main residence.

https://forums.moneysavingexpert.com/discussion/comment/33759387#Comment_33759387

However yes I probably should have put the caveat that the comment assumed it was the same property.

I don't see how the protection can be less depending on how you might in future use the money.

Alex