Posts with tag: Stamp Duty

Buy-to-Let will remain robust, says lender

Published On: August 30, 2016 at 9:13 am

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Another mortgage lender has put forward its plans to join the consumer buy-to-let and initial-landlord market during the coming months.

Accord Buy-to-Let, an intermediary-only lender of the Yorkshire Building Society Group, has acknowledged recent changes are making buy-to-let investment more attractive than ever. Record-low interest rates and volatility in the stock market are certainly contributing to the appeal.

Investments

Buy-to-let investment remains popular despite the increase in Stamp Duty, removal of wear and tear allowance and alterations to mortgage interest tax relief, scheduled for next year. This is due to the fact buy-to-let has performed better than other investment types during recent times.

These include mainstream investments such as commercial property, UK Government bonds and cash.

Chris Maggs, Buy-to-Let commercial manager at Accord, noted, ‘we continually review how we can develop our mortgage proposition to best suit the needs of landlords. Despite the uncertainty in the buy-to-let arena we believe that it will remain a robust market.’[1]

‘As part of our commitment to support landlords we plan to expand into the consumer buy-to-let and first-time landlord markets in the coming months,’ he continued.[1]

Buy-to-Let will remain robust, says lender

Buy-to-Let will remain robust, says lender

Uncertainty

Just this month, Accord Buy-to-Let announced changes to its buy-to-let mortgage range. In addition, the lender launched a range of new tracker mortgages, giving landlords flexibility to exit their mortgage deal early without repayment fees.

Maggs observed, ‘there is a lot of uncertainty in the market due to the recent taxation changes impacting landlords and the tighter underwriting controls lenders are adapting to ensure landlords are not over committed and can support their property portfolio.’[1]

‘It is imperative that lenders look to support landlords by creating innovative products which provide flexibility in a changing environment,’ he concluded.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/8/buy-to-let-market-will-remain-robust-says-accord

Desire to Own a Home is Rising in the UK, but Many Support Stamp Duty Surcharge

Published On: August 25, 2016 at 9:29 am

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The desire to own a home is rising in the UK, but many homeowners and prospective homeowners support the Stamp Duty surcharge for landlords, which could have unintended consequences on first time buyers’ ability to get onto the property ladder.

The latest Homeowner Survey from the HomeOwners Alliance found that homeownership dreams are on the up amongst young people in the UK, but so too are concerns about the availability and quality of housing.

More people now desire to own their own homes, says the report, with the proportion of non-homeowners who aspire to own their home rising to almost three quarters (73%) this year, up from 65% four years ago.

The proportion of aspiring homeowners that say availability of housing is a serious problem has soared to 78% this year, up from 72% in 2015. Hopeful first time buyers are also increasingly concerned about the quality of housing, with 60% describing it as a serious issue.

However, the nation’s top housing concerns continue to be house prices, the ability to get onto the property ladder and saving for a deposit.

Desire to Own a Home is Rising in the UK, but Many Support Stamp Duty Surcharge

Desire to Own a Home is Rising in the UK, but Many Support Stamp Duty Surcharge

The Chief Executive of the HomeOwners Alliance, Paula Higgins, comments: “Despite a blizzard of Government initiatives aimed at helping homeowners, the housing crisis is deepening across the country, with ever more non-homeowners wanting their own home and ever greater concern about the lack of housing. Many Government policies have boosted demand for homes, but what this survey shows is that the real problem is the desperate shortage of houses.

“Until the Government tackles the fundamental issue that we just don’t have enough good quality homes, the housing crisis will continue to deepen and a generation will continue to have their dreams of homeownership crushed.”

Prospective homebuyers across the country will be shocked to hear of the latest Help to Buy ISA scandal, which proves that first time buyers cannot use the Government’s promised bonus to put towards a deposit. Read more here: /help-to-buy-isa-scandal/

The report adds that London is a hotspot for housing concerns. The capital has recorded higher levels of concern than the UK overall for house prices, availability and quality of housing, ability to get a mortgage/remortgage, Stamp Duty rates, gazumping and the leasehold/freehold system.

However, the study also found that many homeowners or aspiring homeowners support the new Stamp Duty surcharge for additional homes, which could in fact halt the journey of first time buyers even further.

More than twice as many people (47%) support the 3% Stamp Duty surcharge than oppose it (18%).

The policy is seen to support first time buyers and homeownership. However, those that oppose the tax hike believe it could have unintended consequences; landlords may put their rents up as they pass the costs onto tenants, or stop investing in the sector altogether.

Despite this, concerns over Stamp Duty have fallen dramatically since the Government reformed the system in 2014. Two years ago, two-thirds of UK adults (64%) said Stamp Duty was a serious problem, compared to half (52%) today.

Those in support of the surcharge explain why:

“It might help reduce number of people buying property for financial gain and allow first time buyers to have a chance.”

“Buy-to-let are pricing people out of where they were brought up, so anything to make it fairer for them I support.”

“If you can afford to buy another property, you can afford to pay tax on it.”

Those that oppose the additional Stamp Duty believe:

“There is a great need for private rental properties – this is just another way of the Government raising taxes to the detriment of others.”

Do you believe that the Stamp Duty surcharge will push rents up, further driving hopeful first time buyers away from their dreams of homeownership?

Property prices in Scotland recovering

Published On: August 18, 2016 at 11:52 am

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Latest data from Your Move has indicated that property prices in Scotland have recovered to maintain an annual growth rate of 4%. This is the largest growth rate since May 2015.

The report shows that prices slowed slightly in the lead up to the EU referendum vote. In addition, the most recent Royal Institute of Chartered Surveyors (RICS) survey indicates that new buyer enquiries and new vendor instructions were also down.

Trends

Your Move thinks that this flattening of the market is a result of common seasonal trends. June often sees a slowdown in activity in the school holidays, but the fundamentals of the market remains strong.

An average property north of the border was worth £170,404 in June, 0.97% greater than the start of the year. What’s more, the Index shows that house prices and transactions were boosted in the second quarter of the year, with buyers looking to complete before the 3% increase on ‘second’ and investment properties.

In March, transactions were nearly 100% higher than they were in February, the largest peak since November 2007.

Property prices in Scotland recovering

Property prices in Scotland recovering

Distortion

Christine Campbell, Your Move managing director in Scotland, said, ‘June was the first month that the spike in house prices as a result of the 2015 LBTT changes dropped out of the annual figures. This previous distortion in property prices goes some way to explaining the seemingly significant annual price increase we saw this June. Whilst market sentiment remains strong, with continued demand from both buyers and sellers, it will be interesting to watch how potential Brexit implications play into transaction and price figures over the coming months.’[1]

‘Long term, the outlook for the housing market looks favourable. However, with housing demand continuing to vastly outstrip supply, it is important that we see a concerted focus on building new property to ensure there are enough homes for potential buyers across the country,’ she added.[1]

[1] http://www.propertyreporter.co.uk/property/scottish-house-prices-bounce-back.html

 

Stamp Duty will impact PCL market more than Brexit

Published On: August 15, 2016 at 9:06 am

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An interesting new investigation has looked at the impact of both Stamp Duty changes and Brexit on the prime central London housing market.

The research from Knight Frank suggests that additional Stamp Duty charges brought in on April 1st is more of an issue for the prime London market than leaving the EU.

However, the Brexit vote has moved to create a short-term period of uncertainty, which as a result is affecting behaviour in the region.

Falls

House price values fell by 1.5% in comparison to one year ago, with the number of new buyers slipping by 6.2% in the same period. In addition, the number of exchanges were down by 10.5% during the first six-months of the year, but viewings rose by a substantial 40.8% compared to 2015.

The below £1m market saw annual price growth of 1.1%.

Tom Bill, head of London residential research, suggests that early indications are that the Brexit vote will reinforce price trends.

During June 2014, yearly price growth in prime central London was 8.1%, the last peak for prices in recent times. Growth then fell steadily to -1.5% in July 2016.

Bill notes, ‘this slowdown was a natural consequence of strong price rises between 2009 and 2013, however the process was accelerated by two stamp duty increases and a series of other tax measures.’[1]

Stamp Duty will impact PCL market more than Brexit

Stamp Duty will impact PCL market more than Brexit

Impact

Continuing, Bill said, ‘despite the widespread media coverage devoted to the EU referendum and its potential impact on house prices, the primary factor curbing demand in prime central London remains stamp duty. The result of this two year slowdown is that vendors had already begun to adapt to the new pricing environment and in many cases Brexit has been a trigger to make overdue reductions to asking prices.’[1]

‘Indeed, had the result of the referendum been a victory for Remain, it is likely there would have been a similar mismatch between expectations and reality that followed the 2015 general election. Following the formation of a majority Conservative Party government, high stamp duty costs acted as a brake on demand that was widely expected to surge. Since the vote, a number of buyers have requested discounts due to the climate of political and economic uncertainty,’ he added.[1]

Mr Bill also said, ‘however, where the asking price was set an appropriate level before the vote, deals are proceeding with no reductions. In other cases, the Brexit vote has encouraged vendors to show increased flexibility. It is too early to say whether the reductions are likely to trigger higher transaction levels.’[1]

[1] http://www.propertywire.com/news/europe/prime-central-london-sales-2016081112252.html

 

 

Landlords Most Discouraged from Investing by Mortgage Interest Tax Relief Changes

Published On: August 12, 2016 at 10:25 am

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Private landlords are most discouraged from investing further in the buy-to-let sector by forthcoming mortgage interest tax relief changes, according to a survey for SellingUp.com.

With a host of new and proposed laws and tax changes hitting landlords recently, many groups have spoken out against the Government, claiming that it is trying to discourage landlords from investing in property in order to raise revenue and stimulate first time buyers.

SellingUp.com identified the major policies involved in the Government’s clampdown on landlords and asked investors which, if any, were the most likely to put them off buying new properties.

The majority of landlords (65%) said that the forthcoming changes to mortgage interest tax relief will discourage them from investing, with the recent Stamp Duty surcharge coming in second, with 56% of landlords.

Behind is the removal of the 10% Wear and Tear Allowance, at 20%, followed by rent control plans, at 8%, and February’s Right to Rent legislation, at 5%.

However, please note that respondents were able to choose more than one answer.

SellingUp.com also found that the majority of landlords surveyed owned multiple properties, with 60% owning between two and nine properties, while 29% hold more than ten. The remaining 11% own just one property. These figures contrast to recent research, which suggests that most landlords manage their investments part-time and own just one rental property: /majority-landlords-part-timers-just-one-property/

The policies that the landlords were asked about were:

Mortgage interest tax relief

Section 24 of the Finance Act 2015 will phase out the tax relief on mortgage interest for landlords to the basic rate of tax. The law is due to come into force from April 2017. The Government has provided a guide for landlords on how the change will affect them: /government-guide-tax-relief-changes-residential-landlords/

Stamp Duty surcharge

As of 1st April 2016, those buying an additional property, either a buy-to-let investment or second home, are charged an extra 3% in Stamp Duty. We have a guide on how the tax hike is calculated: /landlords-guide-3-stamp-duty-surcharge/

Wear and Tear Allowance 

The automatic 10% Wear and Tear Allowance for landlords was abolished in April 2016. Now, landlords can only claim for actual expenditure.

Right to Rent 

As of February 2016, landlords are legally obliged to conduct immigration status checks on all prospective tenants. If they do not comply with the law, they could face fines of up to £3,000.

Rent controls 

During the London mayoral election race, Sadiq Khan pledged to fight for rent controls in the capital. However, since he has been elected, he seems to have gone quiet on the topic. Recently, the Residential Landlords Association (RLA) claimed that rent caps would spell disaster for tenants: /rent-controls-spell-disaster-tenants/

Landlords, which new/recent policy is likely to discourage you from investing further in the sector?

Buy-to-Let Lending Continues Recovery, but Borrowing is Still Down

Published On: August 11, 2016 at 10:03 am

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The buy-to-let lending market has continued its recovery, but borrowing is still down in the sector, according to the latest Council of Mortgage Lenders (CML) report.

Buy-to-Let Lending Continues Recovery, but Borrowing is Still Down

Buy-to-Let Lending Continues Recovery, but Borrowing is Still Down

The study found that buy-to-let landlords borrowed a total of £2.9 billion in June, up by 12% on May. However, the value of these loans was significantly lower than the volume recorded in June last year.

The amount of landlords purchasing property has fallen substantially since the higher rate of Stamp Duty was introduced at the start of April, as reflected by a 15% annual decrease in lending to buy-to-let investors in June. However, the CML claims that this decline was caused by a boost in the market ahead of the Stamp Duty deadline.

The Director General of the CML, Paul Smee, says: “Buy-to-let house purchase activity remains lower than before the Stamp Duty changes at the beginning of April, but showed a large month-on-month increase. As might be expected, buy-to-let remortgage seems to have been less affected by the changes and remains consistent with lending last year.”

But while many buy-to-let landlords have been deterred by the tax changes, first time buyers are taking advantage of less competition from investors in the property market.

First time buyers borrowed a collective £5.5 billion in June, up by 28% on May and 25% on June 2015. June’s figure represents the greatest volume of loans for first time buyers since August 2007.

Overall, mortgage lending in June was up by 29% on the previous month, and 12% year-on-year.

The Director of London estate agent Greene & Co., Stephen Matthews, believes that property purchase activity has remained fairly robust, despite wider uncertainties in the market.

He explains: “The data shows first time buyers continue to be a driving force in house purchase lending, outperforming home movers for the third month running and up 25% annually. Nevertheless, the number of home movers has risen by a healthy 5% year-on-year, despite Brexit jitters and the accompanying uncertainty surrounding future economic stability.

“Buy-to-let house purchase activity still remains lower than before the changes to Stamp Duty at the beginning of April, which has had a bigger impact to annual lending than the EU referendum. However, it is clearly evident that private landlords are beginning to return to the market, as we see a large month-on-month increase.”

The findings arrive as recent data from LSL suggests that a drop in property transactions was caused by the Stamp Duty changes, rather than the Brexit vote.