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Em Morley

Crowdfunding site to help tackle rogue landlords

Published On: July 25, 2016 at 12:39 pm

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Categories: Landlord News

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A new crowdfunding campaign has been launched today, in order to raise money that will help to tackle the problem of rogue landlords in Britain.

The scheme is looking to raise £200,000 through Crowdcube to not only seek out rogues, but improve the standard of rental accommodation available in the UK.

Launch

This new campaign has been launched by Peter Ramsey, founder of student property portal Movem. The move comes ahead of plans to expand the website into the residential lettings market, as an alternative to existing property portals.

Movem, which compares itself to Airbnb for residential landlords and letting agents, states that it already has hundreds of private landlords pre-registered to let their properties through the platform. In addition, the portal says it has hundreds more letting agents seeking to advertise their portfolio as soon as it launches.

Crowdfunding site to help tackle rogue landlords

Crowdfunding site to help tackle rogue landlords

Mr Ramsey said, ‘Movem is offering an unprecedented level of transparency in the housing industry and offers tenants a smarter way to rent property.’[1]

What’s more, Ramsey said that hundreds of people have already pledged to invest in the crowdfund. Many students have already rallied behind the website, ‘to stand for better accommodation, more accountability for rogue landlords and ultimately a fairer way to rent property.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/7/new-crowdfunding-mission-to-crack-down-on-rogue-landlords

Think-tank calls for Stamp Duty to be scrapped

Published On: July 25, 2016 at 10:39 am

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A think thank has moved to express its fears towards the stamp duty surcharge for buy-to-let landlords.

The TaxPayers’ Alliance, a British pressure group, believes that tenants could end up bearing the cost of the rises. As such, it is calling on the Government to scrap the stamp-duty surcharge, and reconsider cutting mortgage interest tax relief, to prevent rents spiralling.

Falls

Landlords acquiring buy-to-let property have fallen since the 3% stamp duty surcharge was brought in during the beginning of April. There are further concerns that mortgage interest tax relief cuts, coming into force in April 2017, will drive more investors away from the sector.

This, it is feared, will drive up rents, due to the lower number of properties available on the market.

A number of landlords will be left with little alternative but to pass their extra costs onto tenants, due to their inability to offset their mortgage interest against tax on rental income.

However, the TaxPayers’ Alliance feels that the Government still has an opportunity to undertake more reforms in order to tackle the housing shortage in Britain.

Think-tank calls for Stamp Duty to be scrapped

Think-tank calls for Stamp Duty to be scrapped

Tackling the issue

Jonathan Isaby, chief executive of the TaxPayers’ Alliance said, ‘for decades, politicians have failed to tackle the root cause of the housing crisis: a chronic lack of supply. Stamp duty is still punitively high and gimmicky tweaks to the tax system will ultimately end up penalising tenants and increasing rents,” he added. “The new Chancellor should now seize the opportunity to drastically simplify and reduce property taxes, while removing planning restrictions which prevent huge swathes of land from being built on for no good reason at all.’[1]

The think tank has gained support from the Residential Landlords’ Association. Chairman Alan Ward said, ‘recent tax changes will see many landlords increase rents. This will make it harder for tenants to save for a deposit for a home of their own. It will go against everything the Government claims it wants.’[1]

‘Ahead of the Autumn Statement there is now an opportunity for the new Government to think again about its tax on new housing,’ Ward added.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/7/scrap-stamp-duty-or-watch-tenants-bear-the-brunt-of-buy-to-let-tax-hikes

Confidence in the Property Market Tumbles Following Brexit

Published On: July 25, 2016 at 10:19 am

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Categories: Property News

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Confidence in the UK property market tumbled in the aftermath of the Brexit vote, according to new research from Knight Frank.

Confidence in the Property Market Tumbles Following Brexit

Confidence in the Property Market Tumbles Following Brexit

The consultancy’s House Price Sentiment Index (HPSI), which measures what households think will happen to the value of their property over the next year, dropped to 48.3 in July, from 59.7 in June.

Although 11.2% of the 1,500 households surveyed said that the value of their home had risen over the past month, 14.6% reported that prices had fallen.

This is the first time that the HPSI has dropped below 50 – the reading that points to no change in prices – for the first time since February 2013.

Households in all UK regions, except the South East and the East of England, said that the value of their home had fallen in July, with the greatest loss of confidence coming from London.

The survey was taken between 14th-18th July, to provide insight into the post-Brexit property market.

Although households were negative about the past month, homeowners were more confident in the future, with price rises expected for the next 12 months.

This aspect of the HPSI dropped to 50.3 in July, from 67.7 in June. This is the lowest reading recorded since October 2012, suggesting that households expect more modest rises in property values than the last few years. However, although the index has fallen, the expectation is still for positive, albeit modest, growth over the next year.

The Head of UK Residential Research at Knight Frank, Grainne Gilmore, comments: “The impact of uncertainty in the wake of the Brexit vote is clear from the HPSI index reading for July, especially in light of the relative strength of sentiment in the run-up to the vote. Although there has been a marked drop in the index, the readings are hovering around the no-change mark, similar to levels in 2012/13.

“As well as geographical variations, there are wide differences in expectations depending on age groups, with those aged over 55 expecting the value of their home to dip over the next 12 months, as well as those aged 18-24. All other age groups expect prices to rise modestly.”

Are you confident in the future of the property market?

Buy-to-Let Mortgage Arrears to Drop Below 7,000 by the End of the Year

Published On: July 25, 2016 at 9:34 am

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Buy-to-let mortgage arrears are expected to drop below 7,000 by the end of the year, according to Keystone, the complex buy-to-let, commercial mortgage and short-term finance lender.

The prediction, based on official Council of Mortgage Lenders (CML) data, suggests that the number of buy-to-let mortgages in arrears across the UK will fall below 7,000 by the end of 2016.

Latest official estimates indicate that 9,300 buy-to-let mortgages were in arrears in the first quarter (Q1) of the year, down from 10,300 in the previous quarter and 11,300 in Q1 2015.

Buy-to-Let Mortgage Arrears to Drop Below 7,000 by the End of the Year

Buy-to-Let Mortgage Arrears to Drop Below 7,000 by the End of the Year

Keystone’s forecast estimates that, as of Q2 2016, 8,500 buy-to-let mortgages are in arrears by more than three months in the UK. This is expected to fall to 6,600 by Q4 2016.

The Managing Director of Keystone Property Finance, David Whittaker, comments: “The referendum result was unexpected, the precise impact is unknown, and it is still rather early to tell what will happen. But we have seen no let-up in demand for buy-to-let mortgages and we don’t expect to see any change in the downward trend in buy-to-let arrears as a result. Landlords are confident – and lenders have no reason to feel any differently.”

Despite wider uncertainty in the lending market following the EU referendum, Keystone reports that it is continuing to write new business.

The firm has confirmed that all three of its funding lines are still open: Paratus AMC funds Keystone’s buy-to-let products; Together funds ranges aimed at residential and commercial landlords with some adverse credit; and Aldermore Bank funds Keystone’s Loyalty Range – a series of buy-to-let mortgage rates exclusively available to Keystone customers who have other Keystone-Aldermore products.

Whittaker continues: “There are many landlords out there who still need finance, particularly professionals who are in the process of remortgaging to secure a solid five-year fixed rate or selling their personally-owned portfolios to their limited companies.

“We have ensured Keystone has the funding lines in place to provide landlords with the solutions they need and in the four weeks since the vote we have forged ahead with our lending. We are increasing traction with brokers and investors. Optimism is the keyword here.”

Keystone has recently launched an online portal, KASS, which allows brokers to submit and track all Classic Range cases and earn an increased procuration fee of 0.6%.

In response to CP11/16, the PRA’s consultation paper, which proposed stricter underwriting criteria for buy-to-let, Keystone has introduced separate stress tests for individual and limited company borrowers applying for products in the Classic Range.

For individuals, the new formula of 145% at pay rate or notional rate of 5.25%, whichever is higher, will be applied to term trackers and three-year fixed rates. For borrowers choosing a five-year fixed rate product, the pay rate will be used.

Stress tests for limited companies will remain at 125% of pay rate or notional rate of 5.25%, whichever is higher, for term trackers and three-year fixed rates. For limited company borrowers choosing a five-year fixed rate, the pay rate will be used.

Whittaker adds: “We’ve also improved our criteria for landlords looking to finance larger multi-units. We’re accepting six flats in a block as standard and we’ll consider up to eight on a case-by-case basis. Keystone is tackling market changes head on.”

Landlords told to be aware of tax restrictions

Published On: July 25, 2016 at 9:18 am

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Buy-to-let landlords should pay close attention to tax rules coming into force for residential property in April 2017, or they could face serious consequences.

That is the view of London Chartered Accountants Blick Rothenberg, who have moved to stress the potential costly future facing landlords.

Changes

These tax changes were announced during last year’s Summer Budget, but HMRC only issued guidance on them on Thursday.

The additional 3% stamp duty surcharge has been prominent in the buy-to-let sector, but the restrictions in mortgage interest tax relief could have far-reaching consequences.

Mortgage interest tax relief will limit the amount of interest a residential landlord can deduct to calculate their income tax liability. These restrictions are coming into force in April 2017, being phased in over 4 years until it takes effect in April 2020.

Awareness

Nimesh Shah, partner at Blick Rothenberg, noted, ‘investors in residential property need to be aware of this marked new change and need to start planning for their portfolios now. Whilst the additional 3% SDLT has created the most anxiety amongst buy-to-let investors, the restriction to interest relief may have been overlooked, but this is likely to have greater longer-term effect on after tax returns.’[1]

HMRC say in their latest guidance that ‘all residential landlords with finance costs will be affected, but only some will pay more tax.’  The statement is quite misleading as the changes could have quite far reaching effect, which most buy-to-let landlords will not appreciate,’ he added.[1]

Landlords told to be aware of tax restrictions

Landlords told to be aware of tax restrictions

Rises

Shah went on to note that, ‘A number of individuals have picked up a buy-to-let property in recent years, whether that is an investment property to supplement earnings, a second home which is occasionally rented out or a property which they have inherited and decided to let out.’[1]

‘It is wrong for HMRC to say only some will pay more tax, as entitlement to child benefit, personal allowance and the pension annual allowance will all be affected indirectly through how this new measure operates in practice.  It would also not be an unreasonable assumption to say that the majority of buy-to-let landlords will be higher or additional rate taxpayers and they will be affected without question.  This change will capture a large proportion of the buy-to-let landlord population.’[1]

Impact

When the measures were announced in the Summer Budget, the measure was described as limiting interest relief at the 20% basic rate. However, the actual workings of the restrictions will have a larger impact.

Mr Shah explains, ‘Currently, buy-to-let landlords can deduct all their interest cost to calculate rental profits.  When the new measure takes full effect, the interest cost will be completely disallowed in computing rental profits and instead a tax credit equal to 20% of the interest will be given against the person’s income tax liability. Whilst this may sound like what the Government intended the measure to achieve, the fact the interest is completely disallowed means the individual will have higher overall taxable income.’[1]
‘This could push an individual into a higher rate of income tax (40%/45%), start to reduce their personal allowance (if their income now starts to exceed £100,000), affect their entitlement to child benefit and restrict the amount on which they can claim tax relief for pensions.’[1]

[1] http://www.propertyreporter.co.uk/landlords/landlords-urged-to-pay-attention-to-changes-in-residential-property-tax-rules.html

 

 

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.”