Posts with tag: Stamp Duty

How landlords can avoid getting caught up in Stamp Duty ‘chaos’

Published On: March 3, 2021 at 9:54 am

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‘Biggest package of tax cuts in generations’ includes Stamp Duty cut

Mortgages for Business has provided tips for landlords looking to avoid the chaos caused by residential buyers trying to beat the Stamp Duty holiday deadline.

The specialist buy-to-let broker is offering landlords four key pieces of advice: Be prepared to rethink location, choose a broker offering a portal, carefully consider the type of property you are investing in, and Pick the right lender.

Mortgages for Business says if landlords consider all four of these factors, they could get their transactions completed in spite of the chaos affecting the market.

1. Look at your location in a new light

Mortgages for Business says even lenders still capable of doing deals in sensible timeframes are struggling to get mortgages approved where local authorities are dragging their feet.  The slowest local authorities are now taking more than 100 days to undertake property searches, a key element of the conveyancing process, as the surge in transactions coincides with pandemic-related staff shortages. It highlighted Hackney Borough Council (180 working days), Bedfordshire Council (65 working days), Caerphilly County Borough Council (60), Cambridge City Council (50), and North Warwickshire (50) as the worst performers.

Jeni Browne, director of Mortgages for Business said, “Landlords who just want to get a purchase done are sick of the Stamp Duty rush.  If you have the option, you should consider the effect that the local authority you are dealing with could have on your purchase.  One search we ordered recently took 145 days to complete.  If you are considering purchasing a property in Hackney before the turn of the next century, you may want to rethink”.

2. The importance of portals

Data from Mortgages for Business’s landlord portal shows that it takes less time to process applications if they are done via portals, with average deadlines shortening by 20 days, from 73 working days to 53 – cutting down the time it takes to process a transaction by 27%.

Jeni Browne said, “Portals offer clients a space with clear to-do lists, including which documents are required to move the application forward, and the ability to upload all documents quickly and securely, there and then.  While this research is based on our data, I’m sure we’re not the only broker with a good portal. My advice to landlords looking to take control of their own destiny is to use a specialist buy-to-let broker with portal technology.  It is a very simple way to shave a couple of weeks off a buy-to-let property transaction.”

3. Choose the right property

Mortgages for Business says not all property purchases are created equal and that transactions can take 11% longer if the property in question is a flat, rather than a semi-detached house.

Jeni Browne commented: “Even if you’re not trying to hit the Stamp Duty deadline, you may well find that your deal gets caught in the crossfire.  Picking a semi-detached house, rather than a flat will help smooth the way.”

4. Choose the right lender

The specialist buy-to-let broker also took the opportunity to warn landlords that more than half the buy-to-let lenders who are actively lending at the moment are capable of doing a deal within the usual industry average. Those purchasing vanilla properties can expect an estimated normal eight-week completion time.

Jeni Browne concludes: “Most lenders are still quoting application-to-offer times of about three weeks which doesn’t sound too long. But the reality is that these timeframes are not being met. To get deals down relatively quickly, you need to avoid lenders that are dragging their feet. While we’re not lenders in our own right, we can ensure landlords are using the right lender. Go to the wrong one and you could find yourself dealing with a lender that is taking weeks to respond to enquiries. 

NRLA calls on Chancellor to end tax on new homes bought by landlords

Published On: February 5, 2021 at 9:09 am

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Categories: Landlord News,Property News

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Landlords call for tax review of private rented sector

The National Residential Landlords Association (NRLA) warns that the Chancellor needs to end the tax on new homes in the Budget or risk a supply crisis in the rental housing market.

The NRLA is calling on the Chancellor to scrap the 3% Stamp Duty levy on the purchase of homes to rent where landlords invest in properties that add to the net supply of housing. They state that this should include:

  • Developing new housing
  • Converting large properties into affordable units
  • Changing the use of a property from commercial to residential
  • Bringing one of the almost 650,000 empty homes in England back into use

This comes as the Royal Institution of Chartered Surveyors has concluded that rents will rise because of demand for properties increasing, whilst new instructions from landlords continue to “dwindle.” 

The NRLA highlights that Rightmove revealed asking rents for outside of London increased in Q4 of 2020 for the first time since 2011. This led to a record average of £972 a month. Tim Bannister, Rightmove’s Director of Property Data, commented within their January Rental Trends Tracker report that outside of city centres the available stock is lower than usual for this time of year and demand is higher.

Ben Beadle, Chief Executive of the National Residential Landlords Association said: “To have a tax on developing new housing is completely nonsensical at a time when more is needed. Supporting growth in the private rental market, alongside all other housing types, would provide a significant boost to the economy in the midst of the COVID-19 pandemic. Research published last year suggests that landlords inject over £3.5 billion into local businesses across the UK.”

The NRLA also wants changes to the tax system to encourage the provision of longer-term rental property over short-term holiday lets.

The NRLA says that from April this year the final phase of reducing mortgage interest relief for landlords to the basic rate of income tax will be completed, but this does not apply to furnished holiday lets. They believe this has encouraged the removal of properties from the long-term market for use as short-term holiday lets.

Ben Beadle, comments: “To be taxing long term homes to rent less favourably than holiday lets is simply bizarre. It completely undermines efforts by the Government to encourage the provision of long term, secure housing.

“It is time for the Government to realise that its tax policies have created a shortage of rented housing. This can only mean higher rents and reduced choice for renters. This is not going to do much for the levelling up agenda.”

Is a property market slowdown on its way?

Published On: November 18, 2020 at 8:36 am

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Categories: Property News

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UK property values fell for first time in 13 months in November 2022

Despite a record-breaking summer, the property market is showing signs of slowing. Property portal OneDome believes this is due to the impact of the second lockdown in England and the upcoming end to the Stamp Duty holiday.

Babek Ismayil, the founder of OneDome, believes that estate agencies should offset lower activity in the coming months by maximising the revenue per property sold. He says this can be achieved by generating extra revenue from complementary homebuying services such as mortgages and conveyancing.

Ismayil says: “After a very strong summer, during which some agents may have been overwhelmed by the workload, the question now is how can they get the most out of their pipelines as the market slows down?

“Some of the big corporate agencies and larger independents make an additional 40p for every £1 earned in commission through additional homemoving services. Of course, it’s easier for the larger agencies as they have teams dedicated to additional revenue generation, but this is part of the moving process that all agencies should be targeting.”

OneDome points out that hiring more people could help to increase cross-selling opportunities for estate agents, but in such uncertain times expanding the team isn’t a straightforward decision to take. Taking into account that offices will have a maximum number of transactions they are able to handle per month, agents need to consider how that income can be maximised without having to hire more staff.

Technology is the property portal’s solution, as it can help to speed up transactions. Importantly, OneDome adds, this can be achieved in a compliant manner with transparency about how fees are generated.

Home sellers warned not to miss out on stamp duty holiday deadline

Published On: September 22, 2020 at 9:58 am

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Categories: Property News

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‘Biggest package of tax cuts in generations’ includes Stamp Duty cut

NAEA Propertymark recommends sellers market their properties before 26th September to meet the stamp duty holiday deadline of 31st March.

Mark Hayward, Chief Executive, NAEA Propertymark comments: “With housing market activity excelling following the Chancellor’s announcement of a stamp duty holiday, we expect the market to remain busy into the new year.

“Following all social distancing measures and making sure everything is in order will help maximise your chances of completing ahead of 31st March.”

NAEA Propertymark provides the following tips for selling your home:

1. Show you are serious from the get-go 

Show house hunters that you’re serious about the sale by reading up on and adhering strictly to all social distancing measures. Rearrange any cluttered furniture to prevent viewers from needing to touch too much and ensure social distancing measures are followed in line with Government and Propertymark advice. This includes vacating your property whilst viewings are taking place in order to minimise your contact with those not in your household.

2. Photos and virtual viewings 

When buyers are looking at properties online or within an agency, they make their minds up in seconds. That’s why having the very best photography of your home is vital. The right photos, especially with house hunters currently more apprehensive to book in a physical viewing, could mean higher offers and a quicker sale. Most agents routinely use professional photographers or appreciate the value in investing in the latest technology, so it’s a good idea to have great photos which truly reflect the property to reduce unnecessary visits from buyers who aren’t serious. 

3. Realistic asking price 

The temptation to overprice as you know buyers will be saving on stamp duty is bound to backfire and lose you valuable time on the market. The majority of house viewings happen in the first 20 to 30 days of the listing, with virtual viewings currently taking place even sooner. If you then decide to reduce your initial asking price, the number of views will drop after the initial buzz, so don’t risk your house being stigmatised by an unrealistic asking price from the start. 

4. Choosing an estate agent 

When it comes to choosing an agent to sell your home, it helps to make a shortlist of possible agents. Once you have a shortlist of three or four possible agents, give them a call and ask them to provide a valuation for your property. This is a chance for you to check their communication skills, professionalism and knowledge. Don’t be afraid to ask questions, and make sure to gather as much information as possible – you’re going to need it when it comes to making a decision about who you want to sell your home. 

NAEA Propertymark state that their agents follow best practice, meet all requirements of the profession and work to industry standards. Their estate agents hold Professional Indemnity Insurance and if they are holding monies are required to be covered by Client Money Protection to give you peace of mind throughout the sale of your property.

5. Paperwork

Ask your estate agent about the Propertymark Sales Protocol Toolkit, which will save you money, reduce the length of time you wait to move, minimise the risk of the sale falling through and remove many of the problems that so often occur in a property sale. This contains a Property Information Questionnaire that needs to be completed before your house is ‘sale ready’. Alongside this, you will also need copies of all relevant paperwork, including:

  • A copy of the lease (if the property is leasehold)
  • Documentation related to the freehold (if it’s a freehold property)
  • FENSA certificates for replacement windows
  • Your Energy Performance Certificate (EPC)
  • Relevant building restrictions
  • Building regulation certificate when alterations have taken place
  • A Gas Safety certificate for a new boiler

Stamp duty holiday provides investment opportunities in these London postcodes

Published On: July 28, 2020 at 7:59 am

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Categories: Property News

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stamp duty holiday

With Chancellor Rishi Sunak announcing plans for a stamp duty holiday, lettings and estate agent Benham and Reeves has researched the best areas to invest in London.

The research looks at the current average house process and rental yields of London postcodes. The results show that current rental yields sit at an average of 3.7% across the capital.

The postcode of SE17 appears to provide one of the best investment opportunities, with an average house price of £560,120 and an average rental yield of 4.1%. The stamp duty holiday will mean that buyers can save a maximum of £15,000 in this area.

SE17 covers parts of Lewisham, Southwark and Lambeth.

Other key areas to consider include SE11 in Kennington and SE15 in Peckham.

Director of Benham and Reeves, Marc von Grundherr, commented: “For far too long the government has squeezed the life out of the buy-to-let sector, and so it’s great to see that, finally, there has been some financial breathing room afforded to landlords. 

“As the backbone of the UK rental space, landlords are a vital cog in the machine that so many rely on to put a roof over their heads.

“This momentary reprieve where the cost of stamp duty is concerned means that now is a great time to invest for those considering it, those looking to expand their portfolio, and for those that have exited the sector in recent years. 

“Not only is there a considerable saving of thousands of pounds in stamp duty on even the most affordable investments, but we’re seeing above-average rental yields the length and breadth of the capital.” 

London postcodes with above-average rental yields sorted by the second home stamp duty tax saving
Postcode districtsAverage priceCurrent SDLYPrevious SDLTSDLT SavingRental yield
SE17£560,120£19,810£34,810£15,0004.1%
SE11£568,751£20,500£35,500£15,0004.0%
SE15£522,849£16,828£31,828£15,0004.0%
IG7£519,560£16,565£31,565£15,0003.9%
SW9£526,690£17,135£32,135£15,0003.9%
SE16£527,245£17,180£32,180£15,0003.8%
E9£526,139£17,091£32,091£15,0003.8%
SW2£515,004£16,200£31,200£15,0003.8%
N7£560,678£19,854£34,854£15,0003.8%
IG5£530,809£17,465£32,465£15,0003.7%
SE5£498,293£14,949£29,863£14,9154.2%
TW8£488,008£14,640£29,041£14,4004.1%
E16£478,140£14,344£28,251£13,9073.9%
SE8£468,404£14,052£27,472£13,4204.0%
E7£466,197£13,986£27,296£13,3103.7%
CR5£461,895£13,857£26,952£13,0953.7%
E3£454,032£13,621£26,323£12,7024.1%
NW9£434,162£13,025£24,733£11,7084.0%
RM12£428,160£12,845£24,253£11,4083.8%
DA16£424,285£12,729£23,943£11,2143.8%
SE14£423,951£12,719£23,916£11,1984.0%
N17£422,617£12,679£23,809£11,1313.9%
IG2£421,367£12,641£23,709£11,0683.8%
E15£419,352£12,581£23,548£10,9684.5%
SE18£415,234£12,457£23,219£10,7624.0%
HA1£402,216£12,066£22,177£10,1113.9%
SE19£399,937£11,998£21,995£9,9973.9%
SE13£396,240£11,887£21,699£9,8124.0%
UB1£395,443£11,863£21,635£9,7724.1%
UB8£393,758£11,813£21,501£9,6883.9%
E6£390,117£11,704£21,209£9,5064.4%
E12£389,800£11,694£21,184£9,4904.4%
UB4£389,512£11,685£21,161£9,4763.9%
UB2£379,871£11,396£20,390£8,9944.0%
IG1£377,060£11,312£20,165£8,8534.0%
TW4£376,553£11,297£20,124£8,8283.9%
N18£376,507£11,295£20,121£8,8253.9%
RM13£370,560£11,117£19,645£8,5284.5%
SE20£368,119£11,044£19,450£8,4063.9%
N9£365,764£10,973£19,261£8,2884.0%
RM7£362,158£10,865£18,973£8,1084.2%
E13£361,283£10,838£18,903£8,0644.5%
SM6£360,418£10,813£18,833£8,0214.0%
UB3£359,372£10,781£18,750£7,9694.2%
UB7£357,537£10,726£18,603£7,8774.3%
RM6£355,199£10,656£18,416£7,7604.3%
TW13£350,305£10,509£18,024£7,5154.0%
EN8£349,893£10,497£17,991£7,4953.8%
SM2£349,380£10,481£17,950£7,4693.9%
RM3£347,880£10,436£17,830£7,3944.6%
TW14£347,231£10,417£17,778£7,3624.1%
EN3£347,078£10,412£17,766£7,3544.3%
CR0£345,101£10,353£17,608£7,2554.0%
UB5£341,658£10,250£17,333£7,0834.3%
DA14£334,090£10,023£16,727£6,7054.4%
SE2£333,535£10,006£16,683£6,6774.3%
SE25£331,157£9,935£16,493£6,5584.1%
RM8£326,145£9,784£16,092£6,3074.9%
RM9£323,390£9,702£15,871£6,1705.1%
RM10£319,782£9,593£15,583£5,9895.2%
DA8£300,492£9,015£14,039£5,0254.6%
IG11£296,415£8,892£13,713£4,8215.5%
DA1£290,581£8,717£13,246£4,5294.5%
SE28£275,498£8,265£12,040£3,7755.0%
London Average£485,794£14,574£28,864£14,2903.70%
House price and rental data sourced from PropertyData

Chancellor’s stamp duty holiday provides investment opportunity for landlords

Published On: July 20, 2020 at 8:19 am

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Categories: Landlord News

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stamp duty holiday

With landlords in a position to benefit from the tax savings announced in the Chancellor’s summer statement, Mortgages for Business says that property investors should not squander Rishi Sunak’s surprise boost.

Steve Olejnik, managing director of Mortgages for Business said: “Clearly, landlords need to take advantage of the stamp duty holiday before the window closes in March next year.  

“Property investors are in a better position to qualify for a mortgage now that reduced stamp tax allows them to wield a larger deposit.  

“Furthermore, if the measures Rishi Sunak has put in place underpin property values, the cut will help those looking to remortgage as well.  

“Less obviously, landlords may not appreciate they need to act while they are well-placed to move in a way that owner-occupiers are not. We know property investors have been remortgaging with a view to picking up some bargains. Owner-occupiers have not been doing the same.  

“Landlords have been preparing since the start of the lockdown, remortgaging to enlarge potential war chests with an eye on bagging bargains in the future. First Time Buyers don’t have that flexibility and owner-occupiers haven’t been remortgaging in the same way.

“That means landlords are currently very well-placed to seize the day. But that advantage won’t last forever. That’s why smart investors will start expanding their portfolios immediately, rather than waiting and then scrambling to try to do deals at the last minute.”

Mortgages for Business has carried out an analysis based on data from April and May this year regarding the reasons why investors were taking out buy-to-let mortgages.

The broker found that 30% of property investors did so with a view to expand their portfolio and grow their cash reserves. Comparing this to the information gathered at the same time last year, priorities were more focused on guarding against risk.

The research also indicated that 46% of landlords had been increasing the size of their loans – significantly higher than the long-term average of 38%.

The buy-to-let specialist says that, while sellers are more likely to come to the market before March 2021 – given buyers now have more money to spend – improving the stock of housing available to buy, this will not continue to favour those expanding portfolios forever.

Steve Olejnik also said: “This is all about expectations. At the moment, sellers are grateful for a sale and there are plenty of potential sellers who would put their property on the market if they thought they could get a deal done.

“Currently, sellers aren’t trying to grab the money that buyers had tucked away to pay for stamp duty – cash that was earmarked for the taxman. But the closer we get to March 2021, the more sellers are going to start making bids to grab the money that buyers had originally allocated to the government. 

“They will see the spare cash sloshing around the housing market and become less inclined to negotiate. By the start of next year, the stamp duty holiday will have made sellers much more determined to get a good price – where they might have been more inclined to offer discounts.  Landlords should be aware of that.”

The broker has also highlighted that their monthly mortgage volumes doubled in the run-up to the previous regulatory and fiscal changes, as landlords fought to beat the deadline.

Steve Olejnik continued: “This is all about expectations. At the moment, sellers are grateful for a sale and there are plenty of potential sellers who would put their property on the market if they thought they could get a deal done. 

“Currently, sellers aren’t trying to grab the money that buyers had tucked away to pay for stamp duty – cash that was earmarked for the taxman.  But the closer we get to March 2021, the more sellers are going to start making bids to grab the money that buyers had originally allocated to the government.  

“They will see the spare cash sloshing around the housing market and become less inclined to negotiate.  By the start of next year, the stamp duty holiday will have made sellers much more determined to get a good price – where they might have been more inclined to offer discounts.  Landlords should be aware of that.”

The new threshold for stamp duty has been increased from £125,000 to £500,000 in England and Northern Ireland. This will be in place until the end of March 2021.