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Em Morley

Stamp Duty cited for increased April transactions

Published On: May 23, 2017 at 2:05 pm

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Categories: Finance News

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The most recent analysis from HMRC has revealed that property transactions dipped slightly during April – dropping by 3.2% in comparison to March.

HMRC’s data reveals that the provisionally seasonally adjusted UK property transaction count for April 2017 was:

  • 99,910 residential
  • 9, 980 non-residential

These figures were 20.3% higher than in the same month of last year.

Stamp Duty

However, HMRC have quickly moved to state that direct comparisons of residential transactions between April 2017 and April 2016 should be avoided for one specific reason. This was due to the introduction of the 3% Stamp Duty surcharge being introduced in April 2016.

Stephen Wasserman, Managing Director at West One Loans, observed: ‘The property market will take a while to fully recover from the jitters caused by stamp duty hikes and economic uncertainty. On top of this, the result of the upcoming General Election is likely to have an impact over the coming months. Nevertheless, we’re confident the sector will bounce back. Although the market is resilient, during times of prolonged economic uncertainty it is important that borrowers are aware of the range of financing available. Flexible borrowing options, such as bridging loans, can help to speed up the transaction, enabling buyers to move faster and capitalise on opportunities in this uncertain environment.’[1]

Shaun Church, Director at Private Finance, also noted: ‘While residential transaction levels are significantly higher than a year ago, the changes to stamp duty for second homebuyers in March 2016 render an annual comparison pointless. Homeowners and investors rushed to beat the deadline last year, which led to an explosive March followed by a quiet April for the residential market. Today’s market remains slightly sluggish, with the number of seasonally adjusted transactions dipping between March and April.’[1]

Stamp Duty cited for increased April transactions

Stamp Duty cited for increased April transactions

‘The upcoming election is unlikely to be having a significant effect on property transactions, particularly as the residential market took last year’s Brexit vote in its stride. The main reason behind weaker transaction figures remains the changes to stamp duty, which have particularly limited activity towards the upper end of the housing market.’[1]

Steady Progress

Jeremy Leaf, former RICS residential chairman, commented: ‘At first glance one might think these figures are hugely disappointing but when you consider what was happening this time last year and what has happened to property transactions in the past few months, they represent steady progress for the housing market. Transaction numbers are really key to what is going on in the market – how many people are actually getting on with the business of moving – and these numbers suggest some resilience.’[1]

‘What the HMRC figures do show is the huge impact that changes to stamp duty can have, not just on property transactions but the wider economy bearing in mind how many people are dependent in other trades on people moving home.’[1]

[1] http://www.propertyreporter.co.uk/finance/stamp-duty-cited-as-cause-of-slow-april-transactions.html

 

BTL deals for LTD companies doubles in last year

Published On: May 23, 2017 at 9:48 am

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Categories: Landlord News

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It is certainly a challenging period for buy-to-let landlords, with a host of recent Government-implemented changes threatening to cause long-lasting harm to the sector.

The phasing out of mortgage interest tax relief, the introduction of the 3% Stamp Duty surcharge on buy-to-let and second homes and the Right to Rent scheme, amongst others, have led a number of landlords to leave the market.

Those that remain will be left with increased tax bills moving forwards, with many left with little alternative but to increase rents. Many will also be thinking how best to conduct their commercial and business duties.

Limited Companies

To avoid being badly hit by the changes to mortgage interest tax relief, a number of investors are looking to set up company structures in order to manage their rental assets.

This has been highlighted by the substantial rise in mortgage lending to buy-to-let landlords via limited companies. Now, this number looks set to increase further, thanks to a rise in the number of mortgage products being aimed at limited companies.

The most recent research from Moneyfacts indicates that the proportion of buy-to-let deals available to limited companies has doubled during the last year.

BTL deals for LTD companies doubles in last year

BTL deals for LTD companies doubles in last year

Shift in Focus

Charlotte Nelson, finance expert at Moneyfacts.co.uk, noted: ‘It feels like the BTL market has been hit from all angles recently, and this has left landlords feeling vulnerable and wondering whether it is still worth continuing in the BTL sector. This has resulted in a shift in focus to limited companies, away from individual ownership, which is influencing not just landlords but also providers offering BTL mortgages.’[1]

‘As the reality of April’s tax changes starts to bite, the proportion of deals available to limited companies has grown dramatically, having increased by 7% in just six months. With the extra pressure in the BTL market and the added interest in limited companies, it is no surprise that lenders have leapt into action and started offering more deals to limited companies,’ she continued.[1]

Concluding, Nelson observed: ‘Despite the boost in product numbers, borrowers considering this type of mortgage should be aware that they could find themselves on a more expensive deal compared to the rest of the BTL market. For example, the average two-year fixed rate BTL mortgage for those applying as a limited company stands at 4.22% today, whereas the average two-year fixed rate for the rest of the market is significantly less at 2.97%. With all the extra legwork a limited company option entails, any borrowers considering it should consult a financial adviser to ensure it is the right route for them.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/5/btl-deals-available-to-limited-companies-double-in-a-year

 

Is the lettings market in London favouring tenants?

Published On: May 23, 2017 at 9:00 am

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New data reveals that private landlords in London are beginning to feel the impact of reduced tenant demand, with many being forced to cut rents to attract new tenants.

With more properties to select from, tenants are in control of the private rental market in the capital, according to the most recent analysis from HomeLet.

What’s more, the capital’s new build housing market has been particularly impacted by the slowdown in the rental market, according to London Central Portfolio’s (LCP).

Period Homes

A recent report from LCP showed that sales in London have fallen by as much as 41%, with the company suggesting that many new build properties are being left vacant as more renters are targeting period homes.

With a number of regions seeing falls in demand, LCP believes that places with vast numbers of planned new homes are, ‘really beginning to suffer.’

One of these regions is between Battersea and Nine Elms. Typically, foreign buyers look to purchase in this region as rental investments. There has been an increase in stock of 28.1% during the course of the last year. What’s more, there has been a reduction in asking rents of 6% during the last quarter.

Despite this, the number of properties actually let has fallen by 14.8% during the same period, alongside a fall of 2.8% in achieved rents.

Is the lettings market in London favouring tenants?

Is the lettings market in London favouring tenants?

Fragmentation

Naomi Heaten, CEO of LCP, observed: ‘In much the same way as we see in the sales market, there is increasing fragmentation in the lettings market, according to property type (new build or traditional stock) and by price point.’[1]

‘Alongside the oversupply of rental stock in new build heartlands, the uncertain economic outlook has resulted in tighter tenant budgets. It is therefore not surprising that recent reports indicate a 14.8% fall in the number of properties rented south of the river over the last three months and a 6% discount on asking rents,’ she continued.[1]

The research also found that the rental market in London was far stronger in areas with more limited new build potential.

In prime central London, where stock levels has risen by only 5%, rents have not been negatively impacted. In addition, they have seen an increase of 1.5% in the last three months. The number of properties being let out has also risen by 2.5% in the same period.

Heaton went on to note: ‘In contrast to the dynamics south of the river, the mainstream rental market in prime central London has continued to perform positively as demand for well-presented rental property remains high and stock remains scarce.’[1]

 

[1] https://www.landlordtoday.co.uk/breaking-news/2017/5/its-a-tenants-market-in-london

 

Britain’s favourite property TV shows are revealed

Published On: May 22, 2017 at 3:05 pm

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Categories: Property News

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A fun new survey conducted by My Home Move has revealed the UK’s favourite property-related television shows and presenters.

The investigation, conducted by the research agency Gorkana, quizzed 700 members of the UK public to pick their favourite property television show, presenter and iconic home.

Property Favourites

DIY SOS, fronted by Nick Knowles, was voted as Britain’s favourite television property show. Coming in a close second was Grand Designs, while Homes Under the Hammer was back in third.

The top five most popular property television shows, as per Gorkana’s research, were found to be:

Show Percentage of votes
DIY SOS 19%
Grand Designs 18%
Homes Under the Hammer 17%
Location, Location, Location 16%
Escape to the Country 9%

In terms of presenter, Nick Knowles made it a double for DIY SOS, perhaps surprisingly beatinh Kirstie and Phil from Location, Location, Location into third and fourth position respectively.

Britain’s favourite property show presenters were found to be:

Presenter Percentage of votes
Nick Knowles (DIY SOS) 21%
Kevin McCloud (Grand Designs) 12%
Kirstie Allsopp (Location, Location, Location) 10%
Phil Spencer (Location, Location, Location) 10%
Martin Roberts (Homes Under the Hammer) 9%
Britain's favourite property TV shows are revealed

Britain’s favourite property TV shows are revealed

Doug Crawford, CEO of My Home Move, observed: ‘Property is a very British obsession, so naturally there are many programmes on our television dedicated to properties of all shapes and sizes. What the results show is that property is aspirational; whether it’s improving the properties that we own or building and buying the properties we dream about.’[1]

Dream Homes

In addition, respondents to the survey were asked what ideal property would make up their ideal home.

The fictional estate in Downton Abbey came in first, followed by the Southfork Ranch, as seen in Dallas. Harry Potter’s Hogwarts School of Witchcraft and Wizardry came in third.

Continuing, Mr Crawford said: ‘The properties the Nation has chosen as their dream homes are interesting, as they are all unique in their own ways. Home ownership and the type of property we own in the UK has typically been an indicator of social status; the bigger the property is, the more successful we are, so it’s no surprise that the Nation’s dream home is that of the Earl of Grantham.’[1]

Concluding, he noted: ‘It seems that while the public prefers the ‘good-news’ story of people coming together to help those in needs, the industry recognises and uses the educational value of property shows. Either way, the Nation’s obsession with property continues to be reflected in the variety of property shows on our screens, and I am sure we will see more of them in the years to come.’[1]

[1] http://www.propertyreporter.co.uk/property/what-is-the-uks-favourite-property-tv-show.html

Flats see largest increase in pricing since 2009

Published On: May 22, 2017 at 11:33 am

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Categories: Property News

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The most recent research from the Halifax has shown how different property types have increased in price during the last seven years.

Data from the report indicates that flats have seen the most prominent rise- increasing in value by 53% during the last seven years. This was in comparison to 39% for all property types.

Increases

Flats have typically increased in value by £1,008 per month, from the £159,292 recorded in the final quarter of 2009, to £243,936 in the last three months of 2016.

Terraced homes saw the next biggest rise over the period, increasing in value by 43% over the seven years. On the other hand, detached homes saw the smallest increase, of 19%.

Much of the rise in the price of flats since 2009 can be attributed to the major increase in flat prices in London, where values have risen by 65%. In addition, flats make up 48% of all sales of property in the capital, in comparison to the UK average of just 11%.

The average price of a flat in London currently stands at £398,038, with the price in the rest of the UK much lower at £167, 144. In fact, should London be excluded from the data, terraced homes saw the greatest increase over the period (41%), followed by flats (35%).

Regional Rises

By region, flats have been the best performing property type since 2009 in five of the eleven regions assessed. These were:

  • North- 31%
  • North West – 37%
  • South West – 33%
  • Yorkshire and the Humber – 30%
  • Scotland – 21%

Terraced houses rose quickest in:

  • London – 73%
  • East Anglia – 46%
  • East Midlands – 35%

Six in ten property transactions are for terraced or semi-detached properties. This said, semi-detached homes have risen in popularity with first-time buyers, making up 30% of purchases in 2016 – a rise from 28% in 2009.

Flats see largest increase in pricing since 2009

Flats see largest increase in pricing since 2009

Affordability

Averaging at £215,690, terraced properties are the most affordable property type in the UK. This was followed by semi-detached homes (£225,070) and flats (£243,936).

Outside of London, flats are most affordable (£167,144) followed by terraced housing (£185,116).

Martin Ellis, Halifax housing economist, said: ‘Nationally, terraced and semi-detached homes are the most affordable and popular homes with buyers accounting for 60% of sales during 2016. However average price growth for flats, helped by the London market, have outperformed all other property types since 2009.’[1]

‘There has been an increasing trend for first time buyers to choose semi-detached homes over the past seven years, whilst terraced homes have shown a decline in popularity. The rise in the age of a typical first time buyer may partly account for this change in preference towards the family-friendly semi,’ he added.[1]

[1] http://www.propertyreporter.co.uk/property/flat-prices-up-over-50-since-2009.html

 

Where are the top university locations for buy-to-let investment?

Published On: May 22, 2017 at 9:29 am

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Categories: Landlord News

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The top university cities for buy-to-let investment have been revealed in a new report from StudentTenant.com.

It indicates that landlords can earn substantial returns when purchasing near a university, with shrewd investors able to enjoy the best yields.

Northern Delights

A mixture of low property prices and spiralling demand for rental accommodation in prominent student cities in the North of England is seeing some landlords enjoying double-digit returns.

This said, data from the report suggests that the typical rental yield in the student buy-to-let market across Britain is substantially lower.

Durham came top of the class, offering the best buy-to-let of the top-ten ranked universities in the list. This was followed by Warwick and Loughborough.

Landlords purchasing near Durham University can look forward to average yields of 5.22%. Warwick and Loughborough offer typical returns of 5.11% and 5% respectively.

Capital Pains

On the other hand, London was found to be the worst performing region for buy-to-let student landlords. All three of the top ten ranked universities here saw the lowest rental yields.

Here, landlords can expect rental yields of 3.46%, with property prices here amongst the highest in the UK.

The table below shows the top-ten ranked university locations for buy-to-let investment in the UK:

Rental Yield Rank Location University League Table Rank Student Population Avg. Property Price Avg. Rental Yield
1 Durham Durham University 6 17,927 £151,465 5.22%
2 Warwick University of Warwick 8 25,615 £338,220 5.11%
3 Loughborough Loughborough University 10 16,500 £237,005 4.93%
4 Fife University of St Andrews 3 8,790 £158,113 4.60%
5 Lancaster Lancaster University 9 13,336 £148,268 4.46%
6 Oxford University of Oxford 2 22,602 £497,603 4.12%
7 Cambridge University of Cambridge 1 19,672 £465,588 3.64%
8 London Imperial College London 5 14,700+ £717,217 4.53%
9 London London School of Economics 4 8,895 £1,125,671 3.46%
10 London University College London 7 38,000+ £1,125,671 3.46%
Where are the top university locations for buy-to-let investment?

Where are the top university locations for buy-to-let investment?

Rental Yields

Danielle Cullen, managing director at StudentTenant.com, observed: ‘For anyone looking to invest in a student property, it’s always advised to assess the potential rental yields in the area to see if it’s a sound investment. However, I must stress that rental yields aren’t everything and there are many things to consider before purchasing a student rental property.’[1]

‘Is the property located near the university? Does the property have parking spaces? What is the current condition of the property? It’s important to collect as much information before taking the plunge, to ensure you get the best possible deal,’ she continued.[1]

Moving on, Cullen said: ‘Looking just at rental yields for the top ten ranking universities, it might seem attractive to invest in a student property in an area like Warwick or Loughborough where yields are around 5%. However, when you account for the higher property prices, it might not be the best option available for investors.’[1]

‘Durham could well be an up and coming investment location for the student sector. It’s typically not what I would consider a ‘hotspot’ for private landlords looking to increase their portfolio, but could well be one to watch.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/5/top-university-towns-for-buy-to-let-revealed