Posts with tag: Stamp Duty

Property Sales Lowest for 3 Years Due to Stamp Duty Rush

Published On: July 25, 2016 at 8:46 am

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Property Sales Lowest for 3 Years Due to Stamp Duty Rush

Property Sales Lowest for 3 Years Due to Stamp Duty Rush

Residential property sales were at the lowest level for three years in June, partly due to the rush to beat additional Stamp Duty for landlords in the first few months of the year.

The latest tax data from HM Revenue & Customs (HMRC) shows that UK residential property transactions dropped to the lowest level seen in the month of June for three years.

Around 102,010 property sales were recorded in June this year, more than the 91,270 seen in June 2013, but less than the 108,460 and 114,770 for June 2014 and 2015 respectively.

Additionally, the first quarter of the new tax year (2016/17) recorded a 13.4% drop in residential property sales compared to first quarter results of 2015/16, with 40,020 fewer transactions than the previous year.

As of 1st April 2016, buy-to-let landlords and second homebuyers are now charged an additional 3% Stamp Duty when purchasing a property. Our guide will help you understand how the change will affect you: /landlords-guide-3-stamp-duty-surcharge/

The Assistant Manager at chartered accountants Blick Rothenberg LLP, Paul Haywood-Schiefer, comments on the figures: “It is clear that so many buyers rushing to beat the Stamp Duty Land Tax (SDLT) increase on second properties has had an impact on the market and it will be interesting to see if this downward trend continues in the next few months.

“Interestingly, and more importantly for the economy, SDLT is still up by £16m against the results of June 2015, which suggests that many of the transactions that have gone through are higher valued properties and/or second properties, as the SDLT will be more on them.”

Nimesh Shah, a partner at the firm, adds: “The fact that SDLT is up by £16m suggests that most purchases are second property purchases and so subject to the 3% surcharge.

“The 3% surcharge, whilst introduced as a measure to help first time buyers, is clearly becoming a revenue generator and a back the door increase to SDLT rates when only 18 months ago, the new progressive rate SDLT system would have seen the majority of purchases (below £937,500) pay a lower SDLT. It would be fair to say that any expected reduction in SDLT has been recovered through the 3% SDLT surcharge.”

Property Demand Up by 3% in Q2

Published On: July 19, 2016 at 8:49 am

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Property demand across the UK rose by 3% over the second quarter (Q2) of the year, according to the latest National Hotspots Index from hybrid estate agent eMoov.co.uk.

The property hotspots study records the change in supply and demand for the most populated locations across the UK, by monitoring the total number of properties sold in comparison to those for sale.

The national average

Over the UK as a whole, property demand rose by an average of 3% between Q1 and Q2 this year, now standing at 40%.

However, it’s not good news for homeowners in the capital, with demand in London down by 2% to 39%.

Despite an artificial surge in demand ahead of April’s Stamp Duty deadline for second homeowners and buy-to-let landlords, the tax change seems to have had a detrimental affect on property demand in London.

Excluding the decrease in demand in the capital, the rest of the UK has experienced a significant 8% rise in property demand since Q1.

Property Demand Up by 3% in Q2

Property Demand Up by 3% in Q2

Property hotspots

Despite a slowdown in demand in the capital, the London Borough of Bexley remains the top hotspot for property demand in the UK. At 71%, demand for homes in Bexley is the highest across the nation, although it has dropped by 7% since the start of the year, in line with the decline seen across the capital as a whole.

Bristol remains the hottest spot outside of London, with property demand increasing to 69% between Q1 and Q2. Bedford, at 67%, also retains its place as the third property hotspot of the UK, as commuter zones around the capital continue to grow in popularity, due to sky-high housing costs in London.

Aylesbury has climbed two places to take fourth place, with demand now at 64%. Medway (64%), Ipswich (61%), the London Borough of Sutton (61%), and Watford (61%) have also retained their top ten spots.

Both Cambridge and Milton Keynes have dropped out of the top ten, and have been replaced by Northampton and Coventry, where property demand now stands at 64% and 58% respectively.

Edinburgh continues to lead the way north of the border, with the Scottish capital sitting in 18th place, at 54%, ahead of Glasgow (48%) at 34th. This is also the case in Wales, where property demand in Cardiff stands at 44%, putting it at 44th on the list, while Swansea sits in 90th place, at 27%.

Greatest growth in property demand

It’s not all bad news for the capital, as Kingston upon Thames, at 59%, and Southwark, at 47%, are two of five boroughs to have recorded an increase in property demand since Q1.

There has also been a resurgence for property demand across the North East, after a difficult year for homeowners in the region.

Cold spots

At just 12%, the City of Westminster continues to be the coldest spot in the UK for property demand, joined by its prime central London neighbours, Kensington and Chelsea (12%) and Hammersmith & Fulham (17%).

Despite a slight revival in Q1, demand for property in Aberdeen is also incredibly low as of Q2, at just 13%.

The founder and CEO of eMoov, Russell Quirk, comments: “The changes to Stamp Duty tax brackets for those looking to secure a second home or buy-to-let property seem to have hit the London market harder than the rest of the UK.

“Despite London tending to drive the UK market as a whole, it would seem, for once, it has taken a backseat whilst the rest of the UK has enjoyed upward growth on the first quarter of this year.”

He continues: “That said, national demand is still lower than the levels seen at the back end of last year, and the big decider on which way it goes now will be Britain’s choice to leave the EU.

“There has been a lot of talk about the consequence of this vote on the UK property market, with many forecasting a detrimental impact on house prices. We don’t believe this to be the case and I’m certain that come Q3, our index will show a further increase in property demand across the nation.”

New Chancellor Urged to Suspend Stamp Duty Hike

Published On: July 18, 2016 at 11:06 am

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The ex-President of the National Association of Estate Agents (NAEA) has urged the new Chancellor, Philip Hammond, to suspend the 3% Stamp Duty surcharge for medium-tier landlords, which he believes would help prevent rents from spiralling and exacerbating the housing crisis.

New Chancellor Urged to Suspend Stamp Duty Hike

New Chancellor Urged to Suspend Stamp Duty Hike

With a drop in landlords purchasing buy-to-let properties following the introduction of the 3% Stamp Duty surcharge in April, there is some concern that the supply of rental properties could lead to a sharp rise in rents. Simon Gerrard insists that the only way to curb this increase is to uspend the surcharge for mid-tier landlords – those with five or more properties in their portfolios.

Gerrard, who is also the Managing Director of Martyn Gerrard estate agents, explains: “In the wake of Brexit, the only people actually pulling out of deals are investors. The Chancellor’s Stamp Duty hike on second homes in April had already sent them running for the hills, but Brexit could now be the final nail in the coffin.

“We already have a serious housing shortage, particularly in London, and desperately need to support medium-sized landlords so they can continue providing much-needed accommodation to the so-called generation rent. The only way to keep these individuals in the market and encourage them to keep calm and carry on in the midst of much panic is through removing the tax disincentives.”

He adds: “Brexit, a double-whammy tax from Osborne and a spooked property market – there is only so much an investor will take before they simply put their money elsewhere, which will derail the supply of new rental property to the market and mean an immediate spike in rental prices. Nobody wants to see what that will look like for this country’s housing crisis.”

Last week, the Residential Landlords Association (RLA) also called on the new Chancellor to reconsider the Government’s approach to the private rental sector, and to recognise that forcing some landlords to leave the market and preventing investment through higher Stamp Duty and a reduction in mortgage interest tax relief will only make it more difficult for many people to find suitable homes and will push up rents for private tenants.

The Chairman of the RLA, Alan Ward, comments: “Access to decent, affordable homes to rent is vital to supporting a flexible labour market, and ensuring that young people and families have a place to live.

“Whatever the new Government does to support homeownership, demand will continue to increase for homes to rent.

“The new Chancellor has an important opportunity to reverse recent punitive tax changes and support the majority of landlords who are providing good housing to their tenants to invest in the new homes we need.”

Buy-to-let investors looking North

Published On: July 12, 2016 at 10:44 am

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A new report has revealed that buy-to-let investors’ rush to beat the Stamp Duty deadline saw property prices in Britain’s largest 20 cities rise at the highest rate for 12 years.

During the opening quarter of 2016, house price growth in these UK cities reached 10.8%, which outstripped the 8.7% recorded in the rest of Britain.

City rises

Liverpool, Cardiff and Southampton saw some of the largest quarterly price rises, as investors searched for cheaper cities in which to invest. The largest house price rises during the quarter were recorded in Liverpool and London, where prices rose by 4.1%.

A typical home in Liverpool is valued at £113,100 and in London £468,100.

Cardiff saw the second largest rises at 3.5%, with Bristol and Southampton seeing increases of 3.3%. However, the smallest rises were recorded in Belfast and Newcastle, where prices rose by just 0.9%.

Savvy investors

Peter Armistead, of Armistead Property Ltd, believes that the most savvy investors will be looking to the North of England. Here, yields are a typically higher, with lower capital investment.

Armistead noted, ‘though London gives investors unparalled capital growth, it comes at a cost. Yields in the capital are not as good as many other cities and property prices are very high. Investors buying in the north can acquire two to three properties for the price of one in London. Landlords that are looking to invest, post the stamp duty rise, will be looking carefully at any investment, to ensure it maximises profits.’[1]

Manchester and Liverpool deliver some of the best rental yields in the UK, with Manchester recording average annual rental yields of 6.02% over five years, followed by Liverpool with 5.15% yields. An average residential property in Manchester is just £155,000, while a flat in a good area, costs as little as £120,000,’ he continued.[1]

Buy-to-let investors looking North

Buy-to-let investors looking North

Northern Stars

Mr Armistead went on to observe that, ‘A property in Manchester can provide a 5% minimum cash rental yield and a typical 12% total cash yield, including 7% capital appreciation.  Demand for rental accommodation is strong and by comparison with other regions, housing is cheaper.’[1]

In comparison, yields in London and the South-East are much lower – around an average of 4.86% in outer London and 4.71% in the City, according to LendInvest. House prices in London are about five times what they are in parts of the North West, but salaries are only 30% higher.’[1]

[1] http://www.propertyreporter.co.uk/landlords/btl-investment-driven-north-by-rising-city-prices.html

 

 

Buy-to-let purchases at six-year low

Published On: July 11, 2016 at 11:55 am

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A new report has suggested that in the three months from the additional 3% Stamp Duty surcharge, property purchases from landlords accounted for just 8% of total property sales. This represents the lowest proportion since 2010.

Further statistics from the report by Countrywide shows that the largest shift in activity was prominent in the North, Midlands and Wales.

Stamp Duty slowdown

The slowdown came after a surge in transactions during the first quarter of the year, when landlords made up 18% of the total number of home buyers in the country, the highest level seen since 2010.

In the North East, 29% of homes sold were purchased by buy-to-let landlords during the first quarter of the year. However, this figure dropped to 9% in the second quarter.

Wales saw a drop from 19% to 3% and the East Midlands 22% to 8%.

Increased purchasing activity from buy-to-let landlords at the beginning of 2016 has led to the number of homes available to rent rising by 22% in June in comparison to June last year.

London and the South West have seen the largest increase in homes available to rent, which numbers in these regions rising by 33% and 55% respectively.

Buy-to-let purchases at six-year low

Buy-to-let purchases at six-year low

Slower growth

Rising supply, coupled with affordability issues, has cut the annual rate of rental growth. The majority of British regions have seen slower growth rates in the course of the year.

Typical rents in Britain rose to £960 during June, 3.6% greater than at the same time last year.

Johnny Morris, research director at Countrywide, noted, ‘the lull in landlord activity is mostly due to investors bringing forward purchases in the first three months of the year but upcoming changes to mortgage tax relief and the prospect of heightened uncertainty in economy during the lead up to the referendum, will also have made investors warier of entering the market.’[1]

‘Those extra homes bought by landlords at the start of the year are still making their way to market. Despite tenant numbers still growing, the increased supply is slowing rental growth,’ he added.[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/7/countrywide-says-buy-to-let-purchases-now-at-a-six-year-low

 

Annual House Price Growth Eases in June

Published On: July 7, 2016 at 8:36 am

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Annual house price growth eased off in June, down from 9.2% in May to 8.4%, according to the latest House Price Index from Halifax.

The report found that the annual rate of house price growth seen in the three months to June is the lowest since July 2015, when it was 7.8%.

Over the quarter, house prices were 1.2% higher in the three months to June than in the preceding three months (January to March). This was slightly below May’s 1.5% increase and is the lowest

Annual House Price Growth Eases in June

Annual House Price Growth Eases in June

rise on this basis since December 2014.

On a monthly basis, house prices rose by 1.3% between May and June, following a 0.9% increase in May. However, the report notes that month-on-month changes can be erratic, and the quarterly data is a more reliable indicator of underlying trends.

The average house price in the UK now stands at £216,823.

The Housing Economist at Halifax, Martin Ellis, comments on the figures: “There is evidence that the underlying pace of house price growth may be easing. House prices in the three months to June were 1.2% higher than in the previous quarter, down from 1.5% in May. The annual rate of growth fell from 9.2% in May to 8.4%, the lowest since July 2015.

“House prices continue to increase, albeit at a slower rate, but this preceded the EU referendum result, therefore, it is far too early to determine any impact since.”

The latest research by estate agents suggests that property sales and new instructions have surged since the Brexit outcome.

Halifax has found that home sales stabilised in May, following the introduction of the 3% Stamp Duty surcharge for buy-to-let landlords and second homebuyers in April.

A rush to complete sales ahead of the tax hike caused a sharp rise in March, followed by a significant decline in April. However, sales stabilised in May, rising by 1.5%. Despite this, the number of sales recorded over the month (89,700) remained 16% below the average over the six months to February.

The index also shows that mortgage approvals rose modestly in May, after the Stamp Duty change affected the market. The volume of mortgage approvals for house purchase – a leading indicator of completed property sales – rose by 1.3% between April and May. However, approvals in the three months to May were 6% lower than in the previous three-month period.

The founder and CEO of online estate agent eMoov.co.uk, Russell Quirk, comments on the data: “Today’s figures show, even in the wake of Brexit, that the UK housing market is fundamentally strong. With a continuing, acute shortage of new housing being built and a growing population, even if immigration numbers are now curtailed, the demand vs. supply imbalance and the prospect of even low interest rates will underpin the market – even if there are short-term confidence wobbles fuelled by a media hungry for bad news.”