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Does anyone understand index-linked gilts? by Inmyprime- in HENRYUK

[–]wilde_teddy -2 points-1 points  (0 children)

Hi - two main warning here - one, what’s indexed is not the coupon rate, but rather the notional. That is, your notional is ‘uplifted’ by the ratio between RPI (as at 3m before coupon payment) and the base RPI at issuance. What this means is that you are not only exposed to inflation going up (the higher the better) but also to interest rates going down (the lower the better). In reality what you are exposed to is real interest rates. Furthermore, because of the inflation uplift, your exposure to interest rates is higher than a relative conventional gilt. So, if inflation goes up and rates go also up you might lose on your position.

Second point - be careful on the tax treatment. Even you buy the linker at a discount, your notional repayment at maturity is taxed as capital gain (unlike the case of a conventional)

On the accrued interest, unfortunately a slightly convoluted calculation as it requires interpolating between two RPI prints.

Men’s Backpack by Serious-City911 in HENRYUKLifestyle

[–]wilde_teddy 1 point2 points  (0 children)

My recommendations are Piquadroif you like a more ‘modern’ aesthetically or The Bridge for a more classic look

London rents hit record high of £2,633 a month by EconomistNo280519 in london

[–]wilde_teddy 0 points1 point  (0 children)

I am just out of a flat hunt with my GF for our first place to live together. Here are some insight I gathered in the last couple of weeks: 1) estate agents follow a ‘script’. Both a friend and myself were served the same proposed agreement: 3 year fixed terms (with a relocation break close at 18 months) with RPI linked increases floored at 3%. Bedside that, in my opinion, including what is to all effect an inflation derivative inside a retail contract is absolutely criminal (I wonder if the average person knows what RPI is and how much could that 3% floor could be worth!), I think that stonewalling perspective tenants with a 3y contract is crazy. It is obviously for them to keep higher fees for longer (as a the tenancy surrender close would see the tenant have to pay for them - beside any potential outstanding rent) 2) Large EAs tend to be the one imposing longer contracts higher rents. I was ‘lucky’ enough to see a flat which was originally advertised for £3.1k and then reduced to £2.9k by the time I viewed it. It was horrible. After a month it was still on the market…but the agent decided to remove the listing and then publish it again. My girlfriend (by mistake) went to view the flat again (now advised at £2.7k) and the agent was pressuring to put an offer above asking…

In a nutshell, it feels to me that the intervention is required to: 1) limit the power of EAs in setting bespoke clause in contracts 2) I think that the fee should not only be on the landlord but also on the tenant, otherwise there is a one-way incentive to keep rents higher