Search Results For: buy to rent sector

Will Stamp Duty be cut in today’s Autumn Statement?

Published On: November 23, 2016 at 10:21 am

Today sees one of the most important Autumn Statements of recent years. The eyes of the property market are eagerly watching with interest to see if Chancellor Hammond will make any big announcements for the sector.

The latest figures from HMRC has revealed the substantial impact that the 3% Stamp Duty Land Tax surcharge has had on investors. It is hoped that these figures will convince Mr Hammond to make changes today.

Tax changes ahead?

Nick Leeming, Chairman at Jackson-Stops & Staff, noted: ‘Changes to the way in which stamp duty is levied have gone too far. While the changes seen in December 2014 were good news for 98% of property buyers, those implemented in the last budget announcement which saw an additional 3% charge levied on buyers of second homes has resulted in a substantial decline in transaction numbers.’[1]

‘It is quite clear that any Government hopes of more revenue from Stamp Duty Land Tax for residential transactions has not materialised and if overall Budget tax revenue projections are to be achieved more tax rises will be needed elsewhere. The 2016 Autumn Statement urgently needs to address this shortfall by incentivising people to move home. Removing the additional 3% levy will in my opinion do just that, while further measures to support both downsizers and first time buyers must also be implemented if we are to see a true shift in overcoming the housing crisis,’ he added.[1]

Encourage alterations

Meanwhile, Nimesh Shah, partner at accountants Blick Rothenberg, believes: ‘The latest statistics should encourage the Chancellor to urgently reform SDLT and in particular, reverse the alarming effect the 3% SDLT surcharge has had on the housing market. The forthcoming change to the mortgage interest relief restriction should also be reviewed in light of the slowing housing market.’[1]

Shah feels, ‘The Chancellor has a real opportunity to make a meaningful reform to an outdated and complicated tax system that is now system that is now acting as a deterrent to people moving or entering the property market.’[1]

Will Stamp Duty be cut in today’s Autumn Statement?

Plummeted

Statistics from the HMRC indicate that residential property sales have fallen since March. In fact, they are down by almost 80,000 over the same period in 2015 (1 April 2015 to 31 October 2015).

Paul Haywood-Schiefer, Assistant Manager at Blick Rothenber, said: ‘These are the worst sales figures for the same 7 month period for the past 3 years. The actual drop in sales since April is just 630 properties short of wiping out the bumper number of extra sales in the boom month of March when people rushed to beat the 3% SDLT surcharge on second properties.’[1]

‘The actual SDLT increase over the last 12 months is £972m. However, the last 6 months, when the 3% surcharge has been applicable, has only accounted for a paltry £94m of that increase. This is about 0.017% of the total receipts HMRC has collected from al taxes in the last 12 months.’[1]

Concluding, Mr Haywood-Schiefer, said: ‘These statistics show that not only has the market been stunted by the 3% SDLT surcharge on additional properties, which was introduced with the intention of helping first time buyers get on the property ladder by making it more expensive for those purchasing additional properties to buy the same property, but it is not actually adding a significant windfall to the Revenue’s coffers either.’[1]

[1] http://www.propertyreporter.co.uk/finance/sdlt-regime-should-be-reformed-to-tackle-slowing-property-market.html

Letting agent refutes one in four tax quit claim

Published On: November 18, 2016 at 2:57 pm

Author: Em Morley

Categories: Landlord News

Tags: buy to let investors,Buy-to-Let,landlords,tax changes

This week saw a concerning report stating that up to 25% of buy-to-let investors could be driven from the sector, as a result of existing and proposed tax changes.

However, a leading letting agent has moved to quash this prediction from the Residential Landlords Association.

Misleading

Ajay Jagota, head of North East lettings and sales firm KIS, feels the data is misleading and incomplete. He argues that it does not take into account regional variations.

Mr Jagota said: ‘I’m not disputing that these tax changes will affect landlords and that the ultimate losers will in all likelihood be the tenants whose rents go up to cover those costs – but this poll is less accurate than the polls which missed Brexit and the election of Trump.’[1]

‘We work with a similar amount of landlords to the total number who took part in the survey, and not one of them has even hinted to me at any point this entire year that they are thinking of selling up. Other major agents I’ve spoken to have said the same thing. So where are these one in four landlords who are packing in?’[1]

Letting agent refutes one in four quit claim

‘Self-selecting’

Continuing, Jagota said that the survey reflects, ‘1,000 probably self-selecting landlords,’ who in reality do not show the thoughts of the majority of investors.

‘There’s a wider issue here that some eye-catching headline figures are once again failing to accurately reflect reality on the ground. It happened in the 2015 election, it happened in the EU referendum, it happened in the US presidential election – but it also happens in housing,’ Jagota noted.[1]

Concluding, he said: ‘As a local agent you know the micro details about community you serve which will be missed by – even the Office of National Statistics would miss. You can even see when an individual street is on the up. But you are then told that statistics show how things are entirely different from what you’ve seen with your own eyes.’[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/11/letting-agent-rips-into-landlord-survey-of-buy-to-let-quitters

Internet connection now considered essential for tenants

Published On: November 18, 2016 at 11:19 am

Author: Em Morley

Categories: Property News

Tags: broadband,internet connectivity,landlords,rental market,tenants

An interesting new survey has revealed that a reliable and affordable internet connection is one is the most important features that tenants look for when searching for a new property.

For many millennials, a good broadband connection is imperative, whether for work, study and entertainment reasons.

Essential

Research from LivingCom shows that high-speed internet is an essential component of renting a property. 96% said that a lack of internet when moving into a property is cause for massive frustration.

In fact, the survey shows that sub-standard connectivity can have a detrimental impact on rental values. Tenants will be harder to attract and of course, harder to retain. Three-quarters of young professionals questioned said that the are more inclined to rent a pre-installed internet service.

Paul Eaton, commercial manager at LivingCom, commented: ‘77% of young professionals own three or more internet-ready devices, so connectivity is key for the millennial movers and within three in four of this market lacking the funds to buy their own property, the private rental sector should be ensuring high-speed Wi-Fi and internet based services are delivered as an essential amenity, as soon as possible.’[1]

‘With 83% of 25 to 30 year olds having to wait more than a week to be connected in their new homes, it’s clear that high-speed internet connectivity needs to become an essential part of property development and a priority for landlords,’ he continued.[1]

Internet connection now considered essential for tenants

Growing importance

Alternative research from Gocompare.com Broadband has indicated that a number of Britons see a good internet connection as more important than heating!

76% of people asked now view broadband as an essential utility, with 36% saying that they could not live without it. One if five people said that they would not buy or rent a home if there was a poor connection.

23% of 18-24 year olds said that they would go without heating for a week in favour of broadband. 15% said they would go cold for a month!

Ben Wilson of Gocompare Broadband noted: ‘These figures highlight just how important the internet has become in our daily lives, with the majority of people now considering it an essential utility like energy or water.’[1]

‘The internet has quietly become a vital part in many people’s day-to-day lives and as such it’s now more important than ever to make sure you’re with right provider at the right price.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/11/good-internet-connection-now-considered-vital-by-renters

Does the Redfern Review Have Any Real Solutions to the Housing Crisis?

Published On: November 17, 2016 at 12:03 pm

Author: Em Morley

Categories: Property News

Tags: first time buyers,homeownership,housing crisis,Redfern Review

The Redfern Review, an independent assessment of the decline of homeownership, has now been released, after being commissioned in February by the Labour Party.

Led by Pete Redfern, the Chief Executive of housebuilder Taylor Wimpey, the report reviews the state of the property market in the UK and how this has created the current housing crisis. The full study can be accessed here: http://www.redfernreview.org

Fortunately, Redfern’s review isn’t obviously stuffed with measures that would benefit housebuilders.

Does the Redfern Review Have Any Real Solutions to the Housing Crisis?

For example, it doesn’t recommend that the Government throw yet more schemes at homebuyers, in the style of the former chancellor, George Osborne. Instead, the Redfern Review states that Help to Buy schemes are inflationary and should be restricted to first time buyers seeking lower-priced homes.

And the report doesn’t simply focus on homeownership either.

“A fair housing market also needs both a healthy private rented sector and a supportive social housing sector,” it insists.

Over the past 30 years, past governments’ focus on homeownership has deprived local authorities of the funds needed to build affordable homes to rent. Positively, the review argues that all tenure types require equal support.

Disappointingly, however, the report does not offer fresh insight into why homeownership levels dropped by 6.2% between 2002-14. The main finding is exactly as you’d expect: Fewer young people can afford to buy their own homes. Also unsurprisingly, it confirms that house prices rose rapidly before the banking crisis, credit constraints then kicked in, and incomes of those aged 28-40 have declined in relation to older people.

But Redfern does have one original suggestion: Set up an independent housing commission, modelled on the new Infrastructure Commission, to provide long-term thinking on housing. Although this does not provide an instant resolution to the housing crisis, it does highlight the fact that longer-term plans must be put in place to sustain the supply of homes.

While Labour commissioned the report, Theresa May could use its suggestions to form a new housing policy that may indeed go some way to resolving the crisis.

The Policy Manager of Generation Rent, a tenant lobby group, Dan Wilson Craw, responds to the findings of the Redfern Review: “The decline in homeownership is creating significant problems for the future, particularly once renters reach retirement age and depend on the state to put a roof over their heads. The solution is not to load first time buyers with more debt, but to restrain house price inflation so wages can catch up.

“The desperation of private renters to escape their expensive, unstable tenure makes subdued first time buyer numbers a bigger problem than it ought to be. Alongside investment in new homes, the Government should reform renting so it offers tenants stable homes and a genuine choice of tenure.”

Crest Nicholson Contributing to Much-Needed Housing Supply, According to Latest Update

Published On: November 17, 2016 at 10:37 am

Author: Em Morley

Categories: Property News

Tags: homebuyers,housebuilding,housing supply,new build homes

Housebuilder Crest Nicholson is contributing to much-needed housing supply, according to its latest trading update.

The firm has continued to increase housing supply in 2016, with open-market unit completions up by 7%, to 2,292, and overall housing delivery up by 5%.

Open-market selling prices have risen by an average of 20%, to £371,000, in line with Crest Nicholson’s well-established strategy to reposition the business at this level by 2016.

Crest Nicholson Contributing to Much-Needed Housing Supply, According to Latest Update

Underlying sales rates for the year, excluding private rental sector properties, averaged 0.81 sales per outlet per week, down from 0.90 in 2015. This reduction in sales rates in part reflects the firm’s higher average selling price. In addition, sales volumes temporarily dropped during June and July as a result of the EU referendum vote, which caused an increase in the number of cancellations.

By the beginning of August, homebuyer confidence had largely recovered, reports the housebuilder, and sales rates in the last quarter averaged 0.77 – the same level as 2015.

The firm has continued to make selective additions to its short-term land pipeline, while also achieving planning consents on seven strategic sites. A further 20 of its strategic sites are included in allocations or draft allocations and are progressing through the planning process.

Sales in the month of October, excluding the private rental sector, continued at a similar level to the past quarter as a whole, averaging 0.77 sales per outlet per week – up from 0.75 in the same month of 2015. This slight increase in sales has generated a rise in reservations, of 17%, and revenue growth of 57%.

The housebuilder’s forward sales, at £344.5m, are 5% higher than in 2015 (£328.9m), signalling a return in consumer confidence.

Having delivered on its 2013 target to build 2,500 units per year, Crest Nicholson has now set a goal to increase housing supply by 4,000 units and revenue to £1.4 billion by 2019.

Attractive housing market conditions continue to support sales rates and revenue growth, insists the firm. In spite of initial uncertainty following the EU referendum in June, homebuyers are largely returning to the market, as high employment rates, good mortgage access and low interest rates continue to make it a very good time to buy a home.

It adds that sales price and build cost inflation have both moderated over the second half of the year, which will help to maintain affordability and support a stable housing market.

With a strong balance sheet, good land pipeline and a robust business model, Crest Nicholson believes it is well placed to continue on its growth trajectory and contribute to the much-needed housing supply in the UK.

Commenting on the update, the Chief Executive of Crest Nicholson, Stephen Stone, says: “I am pleased to report that we are increasing the number of homes built, opening new sites and ensuring that the pipeline of land that fuels our business is progressing steadily through planning.

“There has never been a better time for housebuilding, and Crest Nicholson remains well positioned to grow volumes and deliver the homes that the UK needs.”

The update follows the latest report from Taylor Wimpey, which states that the housing market will remain strong.

Bank of England receives new powers to ease BTL lending

Published On: November 17, 2016 at 10:06 am

Author: Em Morley

Categories: Finance News

Tags: Bank of England,Buy-to-Let,buy-to-let landlords,Buy-to-let lending,investment

The Bank of England is to receive new powers from the Government in order to regulate mortgages for small-scale buy-to-let landlords, Chancellor Phillip Hammond has announced.

From early next year, the Bank will be able to limit loan-to-value ratios on buy-to-let mortgages, alongside the minimum amount by which the predicted rental income from a home will exceed mortgage interest payments. This move has been designed to help protect the financial system from any future risks in the buy-to-let market.

Powers

Initially, the Bank had asked for these powers over two years ago, with the Government holding a consultation in early 2016.

Chancellor Hammond observed: ‘It is crucial that Britain’s independent regulators have the tools they need to keep our financial system as a safe as possible. Expanding the number of tools at the Financial Policy Committee’s disposal will ensure that the buy-to-let sector can continue to make an important contribution to our economy, while allowing the regulator to address any potential risks to financial stability.’[1]

Buy-to-let investment has outperformed all other major asset classes in recent years. However, the Government’s decision to introduce measures to deter buy-to-let landlords has raised concern that the windfall could soon be coming to an end.

Bank of England receives new powers to ease BTL lending

Alterations

The introduction of the 3% stamp duty surcharge on buy-to-let properties is just one of the measures introduced with the intention of levelling the playing field between homeowners and investors. Mortgage interest tax relief is to be phased out from next year, with the wear and tear allowance also scrapped.

Now, the introduction of new powers for the Bank of England’s Financial Policy Committee could make it even trickier to get a mortgage.

As such, could it be that the buy-to-let market is suddenly be becoming an unattractive proposition?

[1] https://www.landlordtoday.co.uk/breaking-news/2016/11/bank-of-england-gets-new-powers-to-curb-buy-to-let-lending