Posts with tag: Stamp Duty

RLA Wales Warns of Forthcoming 3% Surcharge in New Property Tax

Published On: January 10, 2017 at 9:36 am

Tags: Land Transaction Tax,Stamp Duty,Wales,Welsh landlords

The Residential Landlords Association (RLA) of Wales has warned its government against forthcoming legislation changes that will include a 3% surcharge on additional properties.

RLA Wales Warns of Forthcoming 3% Surcharge in New Property Tax

From April 2018, Land Transaction Tax (LTT) will replace the UK’s Stamp Duty Land Tax (SDLT) in Wales. Like Stamp Duty, LTT will be payable when someone buys or leases a building or land over a certain price.

Following a consultation carried out across Wales between July and August 2016, the higher rate of tax for additional property purchases that was introduced in the UK last year will also apply in Wales as part of LTT legislation.

The RLA Wales is concerned that the 3% surcharge will threaten the supply of rental properties in the country, which could make it more difficult for families and the homeless to access rental accommodation, at a time when it is increasingly required.

Government statistics show that in 2015-16, a total of 6,891 households were classed as homeless and entitled to help securing accommodation in Wales. Of this figure, 3,534 households were found accommodation, with almost half (1,722) housed in the private rental sector.

Additionally, of 3,108 households that were threatened with homelessness, 35% (1,077) were living in the private rental sector.

The RLA is calling on the Welsh Assembly to scrap the 3% surcharge when landlords invest in housing that will add to the net supply of homes, for example, new build properties or bringing empty homes back into use.

Wales’ LLT legislation will be broadly consistent with Stamp Duty, using the underlying structure and mirroring key elements, in order to provide stability and reassurance to businesses and the property market.

Decisions on tax rates will be made closer to April 2018, the Assembly reports, in order to reflect economic conditions at the time.

The bill was introduced to the National Assembly on 12^th September 2016. It is believed that the bill will receive royal assent by spring this year.

Number of Landlords in Mortgage Arrears at Two-Year High

Published On: January 5, 2017 at 9:25 am

Author: Em Morley

Categories: Landlord News

Tags: landlord finances,mortgage arrears,mortgage interest tax relief,Stamp Duty,tax changes

The number of buy-to-let landlords in mortgage arrears has hit a two-year high, according to new figures from the Council of Mortgage Lenders (CML).

Number of Landlords in Mortgage Arrears at Two-Year High

Mortgage arrears among landlords rose by 6% – from 4,700 to 5,000 – between July and September last year. This was the first increase seen since records began two years ago.

Following a rush of buy-to-let activity early last year ahead of the introduction of the 3% Stamp Duty surcharge in April, fewer investors are now adding to their property portfolios.

But some experts fear that many landlords, especially those entering the buy-to-let sector for the first time, acted too hastily in acquiring property that they could not afford to avoid being hit by the higher tax on additional homes.

The Chief Executive of the National Landlords Association (NLA), Richard Lambert, believes: “Some first time landlords may have rushed in to the market ill-prepared to beat the Stamp Duty hike. Unless landlords begin to make plans to mitigate the impact of these changes, it’s likely that buy-to-let mortgage arrears will continue to rise.”

The increase in the number of landlords falling into mortgage arrears has led to concerns that thousands more investors could get into debt when they are hit by further tax changes in April this year.

The existing rules that allow landlords to offset all of their finance costs against tax will, from 6^th April 2017, be phased out under Section 24 of the Finance Act 2016, restricting the amount of tax relief that landlords can claim on mortgage interest.

The NLA estimates that around 440,000 basic rate tax payers will be forced into the higher tax bracket from April, once the changes come into force.

By April 2020, when the change is fully implemented, the consequences of Section 24 will mean that it is likely that higher rate tax payers will only receive 50% of the relief they currently get, with various experts warning that landlords will be left with little alternative but to pass higher costs onto tenants.

And with the forthcoming ban on letting agent fees for tenants, it’s highly likely that landlords will be forced to put their rents up considerably, leaving many tenants struggling to afford a home.

Rents set to increase by 15% by 2020?

Published On: December 12, 2016 at 10:17 am

Author: Em Morley

Categories: Property News

Tags: Buy-to-Let,landlords,rental accommodation,rents,Stamp Duty

UK rents are expected to rise much faster than property prices over the next three years, according to the chief operating officer of one of Britain’s leading property franchises.

Dorian Gonsalves of Belvoir, suggests there will be a 15% increase in rents by 2020. This, he feels, is due to, ‘a raft of recent anti-landlord Government policies in the past year,’ though he notes the rent rises will vary depending on region.

Buy-to-let measures

New measures introduced, including the new 3% stamp duty rise and tougher mortgage lending criteria, could well see many landlords making a loss. Gonsalves also believes that the Government’s failure to improve the availability of social housing for rent has led to a shortage of quality rental accommodation in the private rental sector.

Mr Gonsalves believes: ‘’Throughout 2017 Belvoir will continue to work with decision makers and we hope that some of the Government’s recent changes will either be reversed or incentives will be launched to help drive up the supply of rental properties. This would then bring down rents and benefit millions of tenants, making for a healthier rental sector.’[1]

The most recent rental index from the firm reveals that 88% of offices had recorded an increase in demand for properties to rent during Q3 of 2016. However, a huge 86% of tenants-around 6m households-had less than the £8,838 needed to secure a 5% deposit on the average home. This means that they are hugely unlikely to be able to buy a property.

Rents set to increase by 15% by 2020?

Struggling

Continuing, Gonsalves said: ‘People from all walks of life, including students, migrant workers and professionals with families, are struggling to meet strigent lender affordability ratios.’[1]

‘When someone is not in a position to buy, they obviously start looking for somewhere to rent, but unfortunately, Government policies seem to lack any direction and have done nothing to benefit either landlords or tenants, so tenants could find it more difficult to find good quality suitable accommodation in 2017 and beyond,’ he concluded.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/12/rents-predicted-to-increase-15-by-2020

Number of landlords still unaware of Stamp Duty surcharge

Published On: December 2, 2016 at 2:47 pm

Author: Em Morley

Categories: Landlord News

Tags: buy-to-let landlords,investors,Stamp Duty

A Liverpool-based law firm has suggested that a number of buy-to-let landlords are somehow still unaware that they are liable to pay the additional 3% stamp duty surcharge, introduced in April.

Jasper Dawson, of Kirwans said he is seeing an increased number of cases where investors are only finding out about the charge at the last minute. He said he is concerned that many will see less returns than expected, as a result of the charge.

Stamp duty surcharges

Those most affected are those changing their property’s use from residential to commercial, buy-to-let landlords and smaller scale developers.

The Treasury is expected to raise an extra £3.1bn in tax as a result of the Stamp Duty reforms.

Surprisingly, according to Dawson many investors are not aware they are subjected to the additional costs. As such, they are forced to seek urgent legal advice to assess if there is any way of them legally avoiding paying the tax.

Number of landlords still unaware of Stamp Duty surcharge

Unaware

Mr Dawson said: ‘Since the 3% stamp duty was introduced in April, we have dealt with a number of clients who have discovered that the residential property they were planning to buy, perhaps to turn into offices or to regenerate and re-sell, is subject to this tax.’[1]

‘Often, these purchasers have been unaware right up until the last minute that this tax affects them, as many assume it only affects those buying second homes for personal use. The range of properties that this charge covers is vast; even off-plan purchases can fall into this bracket,’ he added.[1]

[1] https://www.propertyinvestortoday.co.uk/breaking-news/2016/11/novice-property-investors-failing-to-spot-3-stamp-duty-surcharge

The Chancellor Missed an Opportunity in the Autumn Statement, Insists the SLC

Published On: November 28, 2016 at 9:27 am

Author: Em Morley

Categories: Landlord News

Tags: Autumn Statement,letting agent fee ban,letting agent fees,mortgage interest tax relief,Stamp Duty

The Society of Licensed Conveyancers (SLC) has offered a mixed reaction to the measures announced in last week’s Autumn Statement, which was delivered by Chancellor Philip Hammond.

The Chancellor Missed an Opportunity in the Autumn Statement, Insists the SLC

Firstly, the SLC welcomed the news that the Land Registry will remain in public ownership, which the society has lobbied for over several years. It claims that this will take away any uncertainty for the CEO of the Land Registry, Graham Farrant, and his team, so that they can concentrate on increasing the coverage of the register and eliminating the backlogs in first registrations and more complex transactions.

However, the SLC was disappointed that the Chancellor did not take the opportunity to reverse the “very damaging reforms” brought in by his predecessor, George Osborne, on private landlords.

The increased Stamp Duty obligation and reduction in mortgage interest tax relief will not only increase rents for tenants, particularly at the lower end of the market, warns the SLC, but will also contribute to a slowdown in the housing market in terms of transaction levels.

The Chairman of the SLC, Simon Law, responds to the Autumn Statement: “We are delighted that the Land Registry is going to remain in public ownership and we look forward to working with their executive in a number of areas that should improve the overall home buying and selling experience for consumers.

“We are less than happy, however, that the Chancellor has not heeded calls to reverse the very damaging attack made by George Osborne on private sector landlords. The level of housing market transactions will be adversely impacted in a way that is damaging to the economy, and will ultimately put up rents for hard-pressed tenants.”

In addition, the SLC is not convinced of the benefits of the Chancellor’s plan to ban letting agent fees for tenants.

“At the end of the day, these charges will end up being paid by tenants in rent and will thus be less transparent than when applied directly,” Law believes. “It will be more difficult to identify the behaviour of rogue agents.”

Do you believe that the letting agent fee ban will have a detrimental effect on the private rental sector?

Landlords seeing the Autumn Statement as a missed opportunity

Published On: November 24, 2016 at 10:06 am

Author: Em Morley

Categories: Landlord News

Tags: Autumn Statement,landlords,mortgage interest tax relief,Stamp Duty

Yesterday saw the controversial, packed and as it turns out, final Autumn Statement delivered by Chancellor Philip Hammond.

During his address, Mr Hammond outlined plans to ban letting agent fees in the very near future. This has understandably left many landlords upset, with them now left to fit the bill for these charges.

Missed Opportunity

In fact, many buy-to-let landlords have been left disappointed, considering the Statement as a missed opportunity, to back those investing in the sector. Failure to alter stamp duty rates, or abolish proposed changes to mortgage interest tax relief have been highlighted as two missed chances.

Stamp Duty reforms announced by previous Chancellor George Osborne have moved to slow the housing market and has only raised half as much money as the Treasury forecasted.

The Exchequer has received £370m less in Stamp Duty than the £700m it expected, analysis has revealed.

Figures compiled by the Council of Mortgage Lenders indicate that the total amount borrowed by buy-to-let landlords slipped on an annual basis. The total dropped by 22% year-on-year to £2.8bn in September, with loans also down by 6% to 18,200. This shows a decline of 26% on the same period in 2015.

Anthony Hesse, managing director at Property Personnel, said: ‘Slashing the rate of stamp duty would have been Philip Hammond’s single most effective fix for UK finances. There is no more economically stimulating activity than house sales and purchases-so it would have been a tax cut that would largely have paid for itself. As a result, the continued stifling of the market is a missed opportunity for both the estate agency sector and the country.’[1]

Landlords seeing the Autumn Statement as a missed opportunity

Tax alterations

According to the National Landlords Association, 440,000 basic-rate tax payers will be driven into a higher tax bracket from April 2017. This is due to changes to mortgage interest tax relief, which will restrict the amount of mortgage interest landlords can offset against tax.

By April 2020, when the measures have been fully withdrawn, it is feared that higher-rate tax payers will only get 50% of their current relief. The worry is that these additional charges will be passed down to tenants.

Richard Lambert, chief executive officer at the National Landlords Association, observed: ‘This policy will push 44% of basic rate tax-paying landlords into a higher bracket, forcing them to either sell up and end perfectly happy tenancies, or increase rents.’[2]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/11/autumn-statement-missed-opportunity-to-support-buy-to-let-landlords