Written By Em

Em Morley

Government Decides to Scrap the Help to Buy Scheme

Published On: October 3, 2016 at 9:20 am

Tags: first time buyers,Help to Buy,house prices,mortgage guarantee scheme,tenants

The Government has decided to scrap its Help to Buy mortgage guarantee scheme. The programme will close to new mortgages on 31^st December 2016, Chancellor Philip Hammond has confirmed.

The news arrives following research by online estate agent eMoov.co.uk that found that house prices in almost half of England will be too expensive for buyers to purchase a property through the Help to Buy ISA scheme by spring 2017.

Government Decides to Scrap the Help to Buy Scheme

The agent analysed the average house prices across all 326 districts in England, finding that prices in almost half of the country will exceed the Help to Buy threshold by March next year.

The Founder and CEO of eMoov, Russell Quirk, comments on the Government’s decision to scrap the Help to Buy mortgage guarantee scheme: “Big development for those looking to get that vital first foot on a rather high UK property ladder.

“On the face of it, it might seem like bad news for would-be homeowners, however, the failure of the Help to Buy scheme has been pretty monumental in addressing the growing housing crisis.”

He continues: “Today’s announcement by Philip Hammond marks a significant change in the ideology of this new Prime Minister and her Government – an ideology that clearly does not share the Cameron/Osborne love affair with aspirational homeownership.

“This complete reversal could be seen as a real retrograde step and now leaves several hundred thousand would-be homebuyers that could benefit from the Help to Buy scheme, particularly those first time buyers, without the assisted first rung of the property ladder to step on.”

Quirk explains his expectations: “I suspect that the direction of travel for the Prime Minister is to now promote build-to-let, which is an easier win than chasing ever higher house prices. Although it will be seen as an attack on those looking to buy in an ever inflated market, the Government’s record of actually building new property has been less than woeful, and so any attempt to address the shortage of property stock should be commended at the very least.

“If we do see this supply and demand imbalance start to level out, prices will follow suit, resulting in a more realistic ask for those looking to buy.”

With the Help to Buy mortgage guarantee scheme set to be no more in a matter of months, will private tenants be forced to rent for even longer? While this might be good news for landlords, it is always important to remember to stick to the law in order to protect your renters!

Keep up to date with your responsibilities at Landlord News.

Buy-to-let landlords to increase rents to offset charges

Published On: October 3, 2016 at 9:19 am

Author: Em Morley

Categories: Landlord News

Tags: buy-to-let landlords,landlords,private rental sector,rents,tax changes

New research has revealed that many tenants are likely to be hit with rental price hikes, following recent alterations to tax regimes.

A survey of nearly 3,000 private landlords from the Residential Landlords Association showed that 56% of buy-to-let investors plan to increase taxes in the short-term. This follows the changes to stamp duty and caps on tax relief, scheduled for next year.

Portfolios

In addition, the study found that nearly two-thirds of landlords do not plan on buying any more properties to add to their portfolio. Nearly one-third of landlords are thinking about leaving the market for good.

Following last year’s general election, then Chancellor George Osborne announced plans to cut the rate at which higher rate taxpayers can claim relief on their mortgage payments. These changes are to be phased on from next April and by 2021, all buy-to-let landlords will only receive relief of up to 20%.

54% of landlords said that they did not have full confidence in the future of the sector. 70% feel that the Government will outline new policies affecting landlords in the near future.

More pleasingly, 86% of landlords said they had a good relationship with their tenants. 82% of landlords questioned said that their tenants pay their rent on time.

Buy-to-let landlords to increase rents to offset charges

Review

The Residential Landlords Association is now calling on the Chancellor Philip Hammond to review changes made by Mr Osborne. The firm believes that he should get behind the country’s landlords and encourage more homes to be developed for rent, to meet growing demand.

David Smith, policy director at the Residential Landlord Association, said: ‘these results show how perverse recent tax changes have been. By implementing policy that will increase rents and choke off the supply of homes to rent, the Government is making it more difficult for tenants to save for a home of their own.’[1]

‘We are calling on the Chancellor to use the Autumn Statement to hit the reset button,’ he added.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/10/buy-to-let-landlords-likely-to-increase-rents-to-offset-higher-costs

Fresh Taxes on Landlords May Leave Bitter Taste

Published On: October 3, 2016 at 8:43 am

Author: Em Morley

Categories: Landlord News

Tags: buy-to-let landlords,landlord taxes,mortgage interest tax relief,Stamp Duty

James Davis – Portfolio landlord & property expert

After being a landlord for 22 years and becoming increasingly frustrated with the lack of quality tenant-find services for landlords, James started Upad. Upad has mastered the intricacies of online to provide landlords a service they can rely on. In this article, James walks through the new tax changes for landlords and their potential impact.

Fresh taxes on landlords may leave a bitter taste

Keep abreast of new tax initiatives. It is one way that helps me to anticipate market shifts, making sure that I make the right decisions at the right time.

Fresh Taxes on Landlords May Leave Bitter Taste

I mention this because there has been two key changes recently. Firstly, from April this year, Stamp Duty Land Tax (SDLT) will include an additional charge for residential buy-to-let and second home buyers. Secondly, there has been a careless promise by the Government to introduce mortgage interest relief – something that could impact millions of landlords and tenants.

Stamping out won’t prevent buyers

As of this year, there has been a 3% loading on existing SDLT rates for anyone who is buying an additional property for £40,000 or more. That means anyone who is buying a holiday home, buy-to-let or somewhere extra to live, they will be charged more.

For example, any additional property bought for between £125k – £250k will now be charged SLDT at a rate of 5% instead of 2%.

While this cost mounts up, it shouldn’t deter landlords from buying their second or third property. Many will have already benefitted greatly from increased property prices. Also, landlords can deduct from the sale of their property under Capital Gains Tax.

Mortgage interest is no relief for anyone

In a perceived bid to side with the mass tenant population in the UK, the recently sacked Chancellor of the Exchequer, George Osborne, introduced a restriction on the amount of income tax relief on mortgage interest. That is effectively an additional tax on the cost of owning a buy-to-let property, which is not something we’re used to.

Previously, we have all been comfortable with our predetermined tax on the profit of a property. After taking away mortgage interest and other costs from our rental income, we are left with a taxable amount, usually between 20% and 45%.

Now we are being told that you will no longer be able to deduct mortgage interest in full from your taxable profits/allowable loss, leaving you with a higher taxable profit (or smaller allowable loss). You will then need to deduct 20% of your interest rate in addition.

In short, it means that higher and additional rate taxpayers will be subject to increased tax on their rental income or in the case of loss making portfolios a reduced amount of loss available to offset against future rental income. Moreover, for landlords with highly geared and/or loss making portfolios, the restriction on mortgage interest relief could result in the landlords having to source funds to pay the income tax due on the taxable rental income from other sources. There is still some discussion as to whether or not the tax will come into play. Landlord groups will stand in the way and hopefully the new Government will realise the potential consequences of this law.

House price growth in UK slows in September

Published On: September 30, 2016 at 2:13 pm

Author: Em Morley

Categories: Property News

Tags: Buy-to-Let,house price growth,property prices,residential property values

Residential property values rose yet further in September, according to the latest data released by Nationwide.

Figures from the report show that property prices increased by 5.3% in the last month, in comparison to the same period 12 months ago. This was slightly slower than the rise of 5.6% recorded during August.

Price increases

The building society said that prices increased by 0.3% in comparison to last month, with this down from the month-on-month rise of 0.6% seen in August. The average cost of a residential property is now £206,015.

Nationwide economist Robert Gardner, believes that slight slowdown in growth in property prices is due to a shortage of homes for sale.

Gardner noted: ‘the relative stability in the rate of house price growth suggests that the softening in housing demand evident in recent months has been broadly matched on the supply side of the market.’[1]

Rob Weaver, director of investments at property crowdfunding platform Property Partner, pointed out that despite a slowdown, prices are still creeping up.

‘There’s been a stability in residential property that’s reassuring particularly post-Brexit and proof of the underlying strength in this market compared to the panic seen in the commercial sector. Stable house prices is really positive but the low levels of activity in the market is a continuing concern and an indication that it is still difficult to get mortgage finance despite the recent lowering of the base rate,’ he noted.[1]

House price growth in UK slows in September

Brexit uncertainty

Russell Quirk, founder and CEO of eMoov.co.uk, noted: ‘Today’s report by Nationwide shows that prices have cooled marginally since last month, which could elude to the first real evidence of any post-Brexit uncertainty in the market.

‘I don’t think this is quite what we are seeing. The market remains in a very stable condition and in fact prices are showing stronger rates of growth both quarter to quarter and annually when compared to September of last year.’

‘September has also enjoyed the third largest annual price growth year on year, so I don’t think there is any need to run for the hills just yet. As Nationwide point out, the rate of supply has remained inadequate however, it seems the slight cool in prices is a result of buyers sitting tight rather than sellers and who can blame them,’ he concluded.[2]

[1] https://www.propertyinvestortoday.co.uk/breaking-news/2016/9/uk-house-price-growth-slows-says-nationwide

[2] http://www.propertyreporter.co.uk/property/annual-house-price-growth-slows-to-53.html

Where tops the table for house price growth near Premier League stadia?

Published On: September 30, 2016 at 10:44 am

Author: Em Morley

Categories: Property News

Tags: Buy-to-Let,Football,housing,prices near football stadiums,property prices

They may have had a poor start to the Premier League season but Stoke tops the table for annual property prices increase for homes located near Premiership stadia.

Analysis from Purplebricks shows that homeowners living near the Britannia Stadium enjoyed a 22% rise in the value of their property.

Top of the league

Overall, the average price of property located near to Premier League grounds increased by 8.7% over the year-rising from £284,970 to £309,870. The average price of a home in the UK is currently £216,750.

In London, Spurs took the glory, with prices in Tottenham up by 12.1%. Chelsea came second in the capital, with prices in the region up by 10.9%. Arsenal recorded rises of 10.1%, with West Ham 9.4%.

The red half of Manchester took the plaudits, with property values up by 4.8% near Old Trafford. Prices near the Etihad Stadium saw a smaller, 2.4% increase.

Property prices near the home of Premier League champions Leicester City saw an annual rise of 7.5%. On the South Coast, near St Mary’s stadium Southampton, values rose by 7.7%.

Fighting relegation

Liverpool finds itself in the relegation zone, with prices 6.41% down year-on-year, due to the area around Anfield awaiting major redevelopment.

Land Registry figures for the last 15 years show that the price of property near Premier League venues have increased by 10% more than the national average.

You have to look no further than the Etihad Stadium, opened in 2002, for the impact a new stadium can have on property prices. Before the stadium was built, property in the area could be purchased for an average of just £20,378. Now, the average is £156,092, a monumental rise of 665%.

Prices around Anfield have seen a rise of 277% over the same period, while in Stoke, average values have risen by 215%.

Where tops the table for house price growth near Premier League stadia?

Redevelopment

Michael Bruce, CEO of Purplebricks, said: ‘football stadiums generally used to be in run-down areas of a city, often cramped between back streets, whereas most are now sited in areas which have undergone major redevelopment and boast new transport links, attractive new amenities, shops and bars. This has been reflected in house prices, which are consistently higher than those in neighbouring locations.’[1]

‘Our data proves that living near to your favourite club makes good financial sense-and it’s also handy for home games too.’[1]

[1] http://www.propertyreporter.co.uk/property/premier-league-properties-see-game-changing-price-rise.html

Are property taxes creating unnecessary barriers?

Published On: September 30, 2016 at 8:59 am

Author: Em Morley

Categories: Finance News

Tags: construction,properties,property tax,tax

A new survey suggests that 70% of UK-based property and construction businesses see the tax system as unhelpful to the industry.

The study, conducted by audit, tax and advisory firm, Crowe Clark Whitehill, reveals that 68% of respondents see Stamp Duty Land Tax as the largest barrier to tax growth. 12% saw Capital Gains Tax as the biggest obstacle.

Future

Providing a yearly outlook for the industry, the report uncovered substantial expectation that residential new builds in London will be worst affected by the downturn in the market.

Almost half of respondents believe redevelopment of brownfield sites could be the future of the London property market.

Are property taxes creating unnecessary barriers?

Overhaul

Stacy Eden, head of property and construction at Crowe, observed: ‘an overhaul of the tax system must be high on the Government’s agenda. A reduction in the tax burden will fuel growth and encourage investment. Cuts to SDLT should be the first step towards this, as we are already seeing the negative impacts of the recent raises on the property market.’[1]

‘Simplification to the planning process to promote efficiency and initiatives to regulate the market are also required. Ensuring that brownfield sites are available for development is crucial-and there is clear demand for this within the industry.’[1]

Concluding, Eden said: ‘decisive action is needed as the lingering uncertainty from Brexit is hampering confidence. We need to ensure long-term international competitive of our market and that Brexit does not reduce investment into real estate.’[1]

[1] http://www.propertyreporter.co.uk/finance/are-property-taxes-the-biggest-burden-to-the-market.html