Posts with tag: Stamp Duty

Available UK housing at 14 year low

Published On: February 29, 2016 at 12:37 pm

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Landlords hurriedly completing deals before the new tax changes take effect in little over one month has contributed to the supply of available UK housing slipping to its lowest level for 14 years.

A report from the National Association of Estate Agents shows investors looking to avoid the extra 3% stamp duty charge on buy-to-let and second homes is seeing already low stock drop still further.

Lows

The January Housing Market report indicates that the number of properties available per member fell to 33 during January. This is the lowest level since December 2002, where only 25 properties were available per branch.

On the other hand, demand for housing increased in January, with an average of 453 house hunters registered per branch. This was the highest recorded since July 2015 and a 21% increase from December, where there was a seasonal lull in activity.

In addition, 72% of estate agents reported an increase in interest from buy-to-let landlords. This was up from 44% in December.

29% of all sales made in January were to first-time buyers, up by 5% from December.

Available UK housing at 14 year low

Available UK housing at 14 year low

Falling supply

Mark Hayward, managing director of the National Association of Estate Agents, said, ‘our findings this month reflect what we are seeing across the market which is that landlords are trying to complete on sales ahead of the changes to stamp duty on additional homes in April. It continues to be a sellers’ market as demand outstrips supply.’[1]

‘The number of sales made to first time buyers has increased this month and we should expect to see their market share rise after April. The fact that housing supply has reached a 14 year low really highlights the need for the Government to push the house building programme to the very top of their agenda and help more first time buyers make their first step onto the housing ladder,’ Hayward concluded.[1]

[1] http://www.propertywire.com/news/europe/uk-property-sales-agents-2016022911613.html

 

1/4 of would-be BTL investors put off by tax changes

Published On: February 27, 2016 at 11:15 am

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Nearly one quarter of would-be BTL investors have been deterred by the forthcoming 3% additional stamp duty hike and reduction in tax relief.

Research from online investment platform rplan.co.uk revealed that 9% of UK adults have abandoned plans to own at BTL property because of the upcoming alterations. 30% said that they were still insure about their plans.

14% of existing landlords admitted that they will now sell one or more of their homes because of the new rules.

Stamp Duty surcharge

Under the upcoming changes, stamp duty on buying a £250,000 BTL property will increase from £2,500 to £10,000 in April. For a property worth £400,000, property will more than double from £10,000 to £22,000.

The survey reveals that those looking to invest in BLT were going to utilise their savings worth an average of £43,592 to purchase a home. Now, 39% of adults will use the money to save in a cash account. 30% said they would invest in an ISA, while 20% will put it into their pension. 13% stated that they would look at other stock market investments.

1/4 of would-be BTL investors put off by tax changes

1/4 of would-be BTL investors put off by tax changes

Late rush

Stuart Dyer, CIO at rplan.co.uk, said, ‘the British have strong faith in property as an investment and many see it as a means of providing a pension income. But the government clearly has a policy to dis-incentivise BTL and the sharp increase in landlord mortgages revealed by the Bank of England credit survey will probably be a last rush before the gate slams shut.’[1]

‘Having a BTL property can also mean an over-exposure to one asset class for many investors, who should strongly consider the alternative of investing in a diversified portfolio for the long term, especially if this can be achieved through a tax-free ISA wrapper,’ Dyer added.[1]

[1] http://www.propertyreporter.co.uk/landlords/one-in-four-discouraged-from-btl-by-government-plans.html

 

Take the Leap into the Property Market This February!

Published On: February 27, 2016 at 9:03 am

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Whether you’re a buy-to-let investor, first time buyer or home mover, 2016 is the year to take the leap into the property market.

Take the Leap This February!

Take the Leap into the Property Market This February!

As we know, we have an extra day this year and the 29th February only occurs every four years. At the height of the property boom, which fuelled the housing crash, this is how frequently many people moved house.

In recent years, buyers and vendors have been more restrained when moving home. The reasons people move have been for more serious and necessary reasons, such as a new job, a baby on the way, debt or divorce.

Due to the need to move quickly, asking prices have also been set at much more realistic values – sellers aren’t just willing to sit in their property hoping that someone buys their property for the hugely inflated figure their estate agent suggested anymore.

With the recession finally behind us, people are considering moving again, and recent data proves that first time buyers are finally being given the chance to get onto the property ladder.

With interest rates remaining low and the economy strengthening, why not make spring the time to move home?

With a shortage of supply and high demand from buyers, it is likely that your home will sell quickly – but ensure you have somewhere to move to first! You may be in luck, however, as many sellers are likely to put their properties onto the market as the good weather arrives.

And if you’re a buy-to-let investor, now is the perfect time to invest. As of April, landlords will face a higher rate of Stamp Duty (3% extra) on the purchase of an investment property. To avoid this surcharge, you must complete on a sale before midnight on 31st March – don’t miss out, the additional costs may crush your buy-to-let dream.

If you’re not quite ready to take the leap into the property market, don’t wait another four years – you don’t know how many opportunities you might miss before 2020…

Concerns aired over buy-to-let competition

Published On: February 26, 2016 at 12:06 pm

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Categories: Finance News

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With buy-to-let investors rushing to purchase property ahead of the stamp duty changes a little more than a month away, fresh concerns have been aired about the future of the market.

Mortgage approvals hit their highest ever level during January. The British Bankers’ Association revealed that its members approved 27% more loans last month than at the same period last year.

However, additional data from HM Revenue and Customs suggests the number of property sales didn’t keep pace, with a slide in transactions over the previous month.

Stamp Duty Changes

Following Chancellor George Osborne’s announcement of a 3% rise in Stamp Duty Land Tax for buy-to-let investors in the Autumn Statement, buyers have been flocking into the sector.

Ajay Jagota, founder and MD of sales and lettings firm KIS, noted, ‘the start of 2016 has seen a significant rise in mortgage borrowing and it seems perfectly reasonable to attribute that to property investors trying to get in ahead of April’s tax changes.’[1]

‘These changes are not insignificant and will undeniably drive up purchase costs and are also being introduced at the same time as the scrapping of the wear and tear allowance which allows landlords to claim tax relief for keeping their properties in good condition,’ he continued.[1]

Concerns aired over buy-to-let competition

Concerns aired over buy-to-let competition

Bottleneck

Mr Jagota observed that, ‘anecdotally the industry is full of stories of a substantial number of homes stalled in the pre-completion stage and even a shortage of solicitors available to carrying out conveyancing.’ He went on to say that, ‘it’s clear we’re seeing something of a competition bottleneck. The real questions are whether or not buyers will persevere with the sales if their transactions are not completed when the tax changes come in. Will they take the hit, or will we see a spate of sales simply abandoned?’[1]

‘It’s more than likely that we will see demand from investors drop off after April, but this is unlikely to have a significant impact on the wider property market as residential buyers, particularly if first time buyers return to centre stage,’ he concluded.[1]

[1] http://www.propertyreporter.co.uk/landlords/btl-investors-warned-of-completion-bottleneck.html

 

The Private Rental Sector Will Continue to Grow, Despite Clampdown on Landlords, Says Savills

Published On: February 24, 2016 at 3:54 pm

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Categories: Landlord News

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Over the last few months, landlords have been subject to forthcoming changes to the buy-to-let market, which could dampen future investment. However, Savills believes that the private rental sector will continue to grow, despite the measures.

The Government has announced a series of policies designed to clamp down on buy-to-let investors and increase homeownership in the country. The changes to landlord law and finances are detailed here: /contrary-to-popular-belief-buy-to-let-is-not-dead-insists-finance-firm/

The Private Rental Sector Will Continue to Grow, Despite Clampdown on Landlords, Says Savills

The Private Rental Sector Will Continue to Grow, Despite Clampdown on Landlords, Says Savills

Despite the changes, demand for rental properties appears to be as high as ever, with the latest forecast from Savills suggesting that the sector will continue to grow for years to come.

The country’s strengthening economy and improved employment figures, which have hit an all-time high recently, would usually push up the number of homebuyers. However, the continuing surge in house prices – the average is edging closer to £300,000 – means that many people are still priced out of the property market, leaving the private rental sector in a state of constant expansion.

Savills reports that the Government’s statistics reveal the private rental sector has grown by around 17,500 homes per month for the ten years to the end of 2014. The firm believes that this growth will continue over the next few years, with Government policies designed to dampen the market having only a minimal impact.

Despite continued demand, private tenants may start to feel the pinch, as landlords are forced to raise rents in response to changes to their finances.

At present, there are 4.6m households in the private rental sector, with 260,000 added each year, says Savills.

But even with the Government trying to push for increased homeownership, it is only expected to bring around 40,000 new homeowners per year from the private rental sector, meaning that rental market growth will still continue, rising by only 15% less than the current level, at 220,000 per year.

With constant high demand expected for the sector, institutional investors are seeking clarity from the Government regarding their exemption from certain policies.

Originally, it was stated that institutional investors (those purchasing 15 or more properties in one transaction) would be exempt from the Stamp Duty surcharge arriving in April, but this has not been confirmed.

Additionally, landlords that operate as limited companies will not be subject to the cut in mortgage interest tax relief, set to be implemented gradually from 2017. Over 40% of landlords are looking at forming a limited company to avoid the change.

If large-scale investors are not exempt from the Stamp Duty surcharge, there is a risk of a lack of money, and therefore shortage of supply, coming into the private rental sector.

New year Buy-to-Let surge recorded by BBA

Published On: February 24, 2016 at 11:39 am

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More evidence of landlords rushing to beat the forthcoming buy-to-let stamp duty rise has been given with the results of the latest figures released by the British Bankers’ Association.

According to the data, gross mortgage borrowing from High Street banks increased to its greatest level since 2008.

Pre Stamp Duty surge

The number of mortgages approved for house purchases was 27% greater that at the same stage in 2015, with the British Bankers Association putting this down to a rush to beat the increased charges.

Recently, the Council of Mortgage Lenders (CML) reported that it had seen an eight-year high in mortgage borrowing.

Mortgage lending may be rising, but the number of completed property sales has yet to show a significant rise.

Figures from HMRC show that the number of property sales in Britain actually slipped on a seasonally-adjusted basis, in comparison with December.

New year buy-to-Let surge recorded by BBA

New year buy-to-Let surge recorded by BBA

Buy-to-let Warning

Stamp Duty increases are expected to bring in an extra £1bn for the Treasury by 2021. However, landlords have expressed concern that it will see off investment in rental accommodation.

Samuel Tombs, chief UK economist for Pantheon Macroeconomics, is convinced that demand will carry on exceeding supply in the market, with house prices rising as a result.

‘Looking ahead, we expect approvals to remain on an upward trend,’ he noted. ‘Consumer confidence is high, real income gains remain strong and mortgage rates are set to fall again in response to the decline in wholesale funding costs.’[1]

Mr Tombs went on to say, ‘new buyer enquiries at estate agents have been rising quickly and point to mortgage approvals rising by a further 5% over the next three months. With the active supply of homes on the market close to record lows, house prices look set for very strong gains.’[1]

[1] http://www.bbc.co.uk/news/business-35648994