Posts with tag: property investment

Basel Committee Joins Crackdown on Buy-to-Let Sector

Published On: December 15, 2015 at 3:28 pm

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The buy-to-let sector could be hit by further restrictions, as the Basel Committee looks set to join the crackdown on property investment.

Basel Committee Joins Crackdown on Buy-to-Let Sector

Basel Committee Joins Crackdown on Buy-to-Let Sector

Mortgage experts have already warned that Chancellor George Osborne’s plans to attack buy-to-let taxes could destroy the market.

The Bank of England (BoE) is also joining the fight, after it called for new powers over the interest cover ratio on buy-to-let calculations.

The Basel Committee sets global financial standards. It wants banks to hold twice as much capital against mortgages when repayments are dependent on rental income. It fears that landlords will struggle to meet their repayments if they cannot find tenants for their properties.

This measure would double the amount of capital lenders must hold against a loan from 35% to 70%, pushing up the cost of buy-to-let mortgages and reducing supply.

The BoE’s Financial Policy Committee (FPC), managed by Mark Carney, warns that buy-to-let mortgages are twice as likely to break down than loans for owner-occupiers.

The FPC has requested powers from the Treasury to restrict lending to landlords, which could include limits on loan-to-value and loan-to-income ratios.

The buy-to-let sector is still growing strongly, despite activity dropping by 4% in November, according to a recent study by Connells Survey & Valuation.

John Bagshaw, of Connells, says buy-to-let remains an attractive venture for prospective investors.

He comments: “Much of the energy is being fuelled by a desire to out-manoeuvre the Treasury’s attempts to take more money from buy-to-let business.

“With the Chancellor imposing more fees and regulations on landlords in his most recent Autumn Statement, many would-be landlords are hurrying to get into the market before these changes kick in from April next year.”1

Buy-to-let investors and second home buyers will be charged an extra 3% in Stamp Duty from April.

1 https://www.landlordtoday.co.uk/breaking-news/2015/12/basel-committee-joins-assault-on-buy-to-let

Controversial Landlords Sell Their Empire

Published On: December 10, 2015 at 10:19 am

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Categories: Landlord News

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Arguably the most controversial buy-to-let landlords in the country, Fergus and Judith Wilson have sold off their property empire.

It is claimed that the couple sold 900 homes in Kent for £250m to individual and institutional foreign investors.

The deal has yet to complete, but means that they must repay around £80m in interest-only mortgages. Fergus Wilson states that the properties were sold at market value.

In a statement to The Guardian, Wilson says: “We reached an agreement today with a consortium of buyers to sell our entire portfolio for a figure exceeding £250m. The consortium is foreign and not of any one specific nationality.”

He adds that prices for homes on his estates “have been rising due to the shortage of available properties on the market”, but he insists that he has “taken steps to ensure the property prices in Ashford, Maidstone and Folkestone are not adversely affected”1 and that the sale will make no difference to existing tenants.

The Wilsons sold 100 properties of their 1,000-home portfolio in June to Chinese and Indian investors for about £25m.

The couple, both ex-maths teachers, previously tried to sell their portfolio in 2008, but were not successful. During the last economic crash, falling house prices meant that they had to stay in the market to meet mortgage payments of around £350,000 per month.

Wilson, 67, claims that he would not be able to get these mortgage deals now: “You couldn’t do now what I did. It’s partly because they will not lend at the higher levels of before. If I was starting again, I’d be pushed to get a 75% loan as a landlord.”2 

The Wilsons began building up their empire in the mid-1990s, at some stages buying several properties a day.

They have long been controversial, with Wilson evicting all tenants on housing benefit last year, in favour of Eastern European tenants. He was also fined after being found guilty of assaulting an estate agent.

The couple will not completely leave the sector, saying they will keep ten properties.

1 http://www.theguardian.com/money/2015/dec/09/fergus-wilson-sells-buy-to-let-property-empire-foreign-consortium-landlord

2 http://www.propertyindustryeye.com/sold-britains-most-controversial-buy-to-let-landlords-finally-sell-up/

 

Best Locations for Buy-to-Let Returns to Change Under New Stamp Duty

Published On: December 8, 2015 at 3:34 pm

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Best Locations for Buy-to-Let Returns to Change Under New Stamp Duty

Best Locations for Buy-to-Let Returns to Change Under New Stamp Duty

The best areas for buy-to-let returns are likely to change when the new Stamp Duty rules come in from April, warns Countrywide.

Landlords seeking the highest returns will have to look to different parts of the country when they are charged an extra 3% Stamp Duty on new property purchases. Find out more about the change here: /16883-2/

Chief Economist at Countrywide, Fionnuala Earley, states: “The effect of the new Duty will be to effectively increase the price investors pay and hence reduce the yield they achieve. New landlords must do their sums more carefully to make sure returns on investment add up.”

Countrywide’s latest research found that its West Midlands offices sold 16.7% of their properties to buy-to-let investors – the highest proportion for any region in England.

However, some individual cities have reported much larger percentages of their stock bought by landlords. These areas are most likely to see their markets affected more significantly when the Stamp Duty changes are enforced in April.

In Leeds, 41% of all Countrywide’s sales in the 12 months to October were to landlords. In Southampton, the figure was 38% and in Harrow, north London, it was 35%. Plymouth and Calderdale followed at 34%.

Earley adds: “While the region with the highest proportion of investors is the West Midlands, the highest concentrations of investors are spread more widely across the country.”1

Are you expecting to change the locations you search for new properties in when the changes are implemented? Use our Stamp Duty calculator to work out how the price of your next investment will change: /calculator/

1 https://www.landlordtoday.co.uk/breaking-news/2015/12/new-stamp-duty-may-redraw-buy-to-let-investment-map-says-countrywide

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Buy-to-Let Stamp Duty Announcement Hides Immigration Issues

Published On: November 30, 2015 at 2:05 pm

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Categories: Landlord News

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Letting agent Martin & Co has spoken out to instil confidence in the property industry after a shocking announcement during last week’s Autumn Statement.

On Wednesday, Chancellor George Osborne revealed that buy-to-let investors would soon pay an extra 3% Stamp Duty on property purchases. Read more here: /btl-homes-hit-with-increased-stamp-duty/

Buy-to-Let Stamp Duty Announcement Hides Immigration Issues

Buy-to-Let Stamp Duty Announcement Hides Immigration Issues

However, Osborne claimed that the extra charges would not hit larger rental firms, such as investors in the build-to-rent sector.

The Association of Residential Letting Agents (ARLA) described the move as a catastrophe.

But Ian Wilson, the Chief Executive of the Property Franchise Group – the trading name of Martin & Co – says this reaction is “overblown”.

He also claims that the changes have helped hide bad news on immigration.

He says: “While admittedly an unwelcome move for letting agents, we believe current thoughts as to the severity have been greatly exaggerated.”

He adds that the Chancellor’s intervention in the industry was unexpected: “It comes at a time when the buy-to-let market is working extremely efficiently and we believe this move has been announced for political rather than economic reasons.

“Lending in this market is at record post-credit crisis levels, with over 1,000 buy-to-let mortgage products available, and about 20% of the population is now housed in the private rental market.

“The day after the Chancellor’s announcement, it was revealed that the Government had once again missed its target to reduce net migration into the UK and the latest figures were at a new high, with 336,000 people added to the UK population over the year.”

Wilson has found that all the factors supporting buy-to-let growth remain strong, including high net migration and affordability.

He believes that total returns from buy-to-let will continue to exceed other investments, including pensions, “and have the psychological and emotional advantage of being an easily understood, tangible asset”.

However, he says that the increase in Stamp Duty will affect how much investors are willing to pay for a property; “this will have a dampening effect on appreciating house prices in some sections of the market”.

He continues: “One may argue as a consequence, that buy-to-let purchasers could be outbid purchasers for owner-occupation, e.g. first time buyers.

“However, we believe buy-to-let purchasers will continue to be better placed to bid/complete on these properties, given that they typically have more cash to inject and less restrictive buy-to-let mortgage conditions, meaning that there is greater certainty of the sale completing.”

Wilson also states that a Stamp Duty rise is the “lesser of evils”.

He says: “Given the Government’s new-found desire to promote homeownership, we believe that higher transaction costs are significantly less severe than other potential regulatory levers, such as restrictions on buy-to-let lending or rent controls.

“In the short term, we would actually expect some benefit to the buy-to-let market, as we would expect prospective investors to bring forward purchases to before the April 2016 deadline for these changes.

“There is also the interesting possibility of tax engineering by creating corporate vehicles, such as Real Estate Investment Trusts, to own larger numbers of properties and escape both the extra Stamp Duty and the taper reductions in mortgage interest relief.”1

Will you be buying any more properties before the Stamp Duty changes are enforced?

1 http://www.propertyindustryeye.com/stamp-duty-shock-was-attempt-to-bury-bad-news-on-immigration-claim/

Pricey Property Investment on the Rise

Published On: November 27, 2015 at 10:08 am

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Pricey Property Investment on the Rise

Pricey Property Investment on the Rise

Expensive property investment in the UK market is continuing to increase, as the world’s richest people hold London assets worth more than £300 billion.

The data was released by industry publication Estate Gazette, which reports that 60 billionaires own property in the capital, compared with just ten in 2009.

Top of the list is Amancio Ortega, the Spanish billionaire boss of Zara, who owns £47.7 billion worth of property in London.

Traditional investment spots, such as the West End and Knightsbridge, are continuing to witness foreign investment, due to extremely strong returns and a steady flow of opportunity.

One example of this is Lord Sugar’s firm Amsprop, which recently sold Burberry’s old flagship store for £65m – more than double the £31m it bought it for in 2013.

However, smart investors are seeking opportunities in areas beyond zone 1. These ultra-rich individuals are not just looking in Belgravia, Chelsea and Mayfair anymore, but also at the lower end of the market. Boroughs such as Croydon are attracting attention due to current regeneration projects and excellent transport links.

Research indicates a geographic shift that is resulting in much more investment opportunities in commuter towns.

CBRE’s house price growth forecast expects London prices to rise by 30% by 2019, as a lack of supply pushes prices up and ensures steady demand.

Which parts of the capital are you looking to invest in?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total London Housing Stock Valued at £1.13tn

Published On: November 11, 2015 at 4:01 pm

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Categories: Property News

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The Halifax has valued London’s total housing stock at £1.13 trillion, almost double the worth of all the homes in Scotland, Wales and Northern Ireland.

Total London Housing Stock Valued at £1.13tn

Total London Housing Stock Valued at £1.13tn

Property in Scotland, Wales and Northern Ireland is worth a combined £582 billion, says the mortgage lender.

The substantial rise in the value of London’s homes means that the capital’s residential property is now worth the same as the total housing stock in the North West, Yorkshire and the Humberside, the North East and Scotland.

The housing stock in the north of England, from Cheshire to Northumberland, is valued at £810 billion.

The Halifax’s research found that the estimated total value of the UK’s private housing stock has exceeded £5 trillion for the first time. However, this hides a huge north-south divide.

House prices in the north have risen by 36% over the last decade. Meanwhile, property values in the south have surged by 66%.

As a result, the south’s share of the UK’s total housing worth has grown from 56% in 2005 to 61% this year.

Although mortgages are typically higher in the south, the average homeowner in London has net equity – the value of the property after the mortgage is deducted – of £306,000, compared to £94,000 in the North East and £82,000 in Northern Ireland.

On paper, Britons are much wealthier than they were a decade ago, with the net value of homes increasing from £3.3 trillion in 2005 to £5.1 trillion today.

The growth of £1.8 trillion is equivalent to £76,316 per household, according to the Halifax. However, it did not specify how much is down to private landlords.

Since lenders began providing buy-to-let mortgages, owner-occupation in Britain has dropped significantly, from a peak of 70% in 2005 to below 65% this year.

The data also highlights how much more property prices have increased than inflation and wages, with growth of 53% over the last ten years, compared with a 35% rise in CPI.

A separate study by the Office for National Statistics (ONS) shows how Britons consider housing the best long-term investment. It found that 44% of people think that property will make them the most money in life, compared to less than 10% who believe the stockmarket is a better investment.

The latest house price index from the Halifax found that the average home in Britain is now worth £205,500, up by 9.7% over the last year.