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Housing Minister Remains Committed to Building 1m New Homes

Published On: July 21, 2016 at 11:09 am

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The Government’s new Housing Minister, Gavin Barwell, has confirmed that he remains committed to building one million new homes.

Barwell, who was appointed last week, has also made it clear that unless there are very special circumstances, these homes will not be built on the greenbelt.

He said: “The Government is committed to the strong protection and enhancement of greenbelt land. Within the greenbelt, most new building is inappropriate and should be refused planning permission, except in very special circumstances.”

Housing Minister Remains Committed to Building 1m New Homes

Housing Minister Remains Committed to Building 1m New Homes

Answering a question in Parliament, Barwell also highlighted the importance of homeownership.

He insisted that the Government is committed to a “mixed programme” of different housing tenures, but that 86% of people aspire to own their own home.

The new Secretary of State for Communities and Local Government, Sajid Javid, also emphasised his commitment to protecting the greenbelt, describing it as “absolutely sacrosanct”.

Meanwhile, the Managing Directors of the Association of Residential Letting Agents (ARLA) and the National Association of Estate Agents (NAEA), David Cox and Mark Hayward, welcomed Barwell to his new role.

In a joint statement, they said: “We would like to congratulate Gavin on his new appointment and welcome him to his new role.

“This is a crucial time for housing, with demand greatly outstripping supply and an urgent need to reshape Britain’s housing mix.

“We worked closely with the previous administration to increase transparency in the UK property sector, and remain very supportive of the need for a beneficial ownership register.

“Property transparency is particularly a problem in London, where housing stock has increasingly become a vehicle for money laundering operations, so we applaud the decision to provide the minister with a dual oversight for London.”

However, they added: “Despite this, Gavin will have a lot in his in-tray and a number of key concerns still exist in the sector.

“The Government’s decision to sell the Land Registry risks reversing its good work on transparency, and we call on the new minister to work with the new Business, Energy and Industrial Strategy Department to think again on this proposal.

“Secondly, it is also essential that Gavin honours the commitment of his predecessor to bring forward a review of the need for mandatory Client Money Protection (CMP) for letting agents, following the discretionary powers that were brought in as part of the Housing and Planning Act.

“Only this can provide the adequate level of protection for landlords and tenants alike.”

The statement concluded: “These challenges are not insurmountable, and we greatly look forward to working with the new minister to find a solution to these issues in the months and years ahead.”

Demand for Buy-to-Let to Remain Strong This Year, Believe Brokers

Published On: July 21, 2016 at 9:27 am

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Despite recent tax changes for landlords, many mortgage brokers believe that demand for buy-to-let investment will remain strong during the second half of the year, according to a new study by Legal & General.

Although the Government recently introduced a 3% Stamp Duty surcharge for buy-to-let landlords and second homebuyers, scrapped the 10% Wear and Tear Allowance, and plans to implement a

Demand for Buy-to-Let to Remain Strong This Year, Believe Brokers

Demand for Buy-to-Let to Remain Strong This Year, Believe Brokers

reduction in mortgage interest tax relief, buy-to-let still remains an attractive investment option at a time of low savings rate and stock market uncertainty. Average buy-to-let returns currently beat all other mainstream investments.

Yesterday, we released the Government’s guide to mortgage interest tax relief changes: /government-guide-tax-relief-changes-residential-landlords/

The Legal & General research shows that brokers in Scotland are the most confident in buy-to-let’s future, with 63% of Scottish brokers predicting that the sector will remain the same size as last year in 2016, despite a surge in activity in 2015.

This positivity north of the border is joined by confidence from brokers in Nottingham, where 57% expect the buy-to-let market to either expand or remain the same this year, followed by 49% in London.

However, confidence in the future of the buy-to-let market varies massively across the UK, with a huge 71% of intermediaries in Manchester believing that there will be a reduction in the sector this year.

The Director of the Legal & General Mortgage Club, Jeremy Duncombe, comments: “Despite a whirlwind of changes to the buy-to-let market, including the Government’s Stamp Duty hike and the reductions in tax relief on the horizon, it’s clear that a large number of brokers remain confident that buy-to-let will remain strong in 2016. Though there are concerns that Government interference could mean a reduction in buy-to-let activity this year, our research shows that many brokers in both England and Scotland believe the market to be well positioned to absorb the impacts of these measures.

“Even now, amid the uncertainty brought about following June’s referendum result, borrowers will be looking to remortgage their buy-to-let properties as a potential reduction in rates looms. Brokers need to grasp this opportunity by contacting their books now to ensure these individuals get the crucial advice they need when it comes to securing a better rate on their mortgage.”

Do you believe that the buy-to-let sector will remain strong over the next few months?

Final Pre-Brexit House Price Data Revealed

Published On: July 21, 2016 at 8:43 am

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The final pre-Brexit house price data to be released has been published by the Land Registry, which found that annual price growth has been led by London, while the North East storms ahead with the highest monthly increase.

The figures, for May 2016, show that house prices across the UK have risen by 8.1% on an annual basis, taking the average property value to £211,230. On a monthly basis, house prices rose by 1.1% on April.

The year-on-year growth for the UK was led by England, where house prices increased by 8.9% over the last 12 months, taking the average value to £226,807. Monthly house price growth stood at 1.0% in May.

Final Pre-Brexit House Price Data Revealed

Final Pre-Brexit House Price Data Revealed

Wales saw an annual price rise of just 3.6%, which takes the average property value to £142,568. Over the month, house prices were up by 0.9% in May.

However, the greatest annual price increase was recorded in London, where values are up by 13.6% since May 2015 and the average price now stands at £472,163. On a month-on-month basis, values rose by 1.5%.

Regional house price data

Although London experienced the greatest increase in annual house price growth, the North East recorded the highest monthly increase, at 2.1%.

Despite this, the North East saw the lowest annual price growth, of 3.2%.

The most significant monthly price fall was experienced in the North West, with a decline of 0.3%.

Property sales 

Following a surge in property sales in March 2016, ahead of the Stamp Duty deadline for buy-to-let landlords and second homebuyers, transactions fell by 42.3% in April to the lowest level since May 2013. Data for May 2016 shows that sales have only recovered slightly since this substantial decrease.

Figures for March, the most up-to-date Land Registry data available, show that the amount of completed house sales in England soared by 52% to 102,597 annually.

Wales also saw a huge increase, of 49%, to 5,002 sales. However, London experienced the greatest rise in property sales, of a huge 60.6%, reaching 14,783 in March.

The founder and CEO of eMoov.co.uk, Russell Quirk, comments: “The latest official house price index for May and last of the pre-Brexit property landscape echoes that of its predecessors from Halifax and Nationwide.

“A healthy annual increase of nearly 9% across England, with May continuing the upward trend seen for a while now, with a further 1% increase.”

He adds: “However, despite London seeing the largest annual growth, perhaps the shock of the bunch is the North East outperforming the capital with the greatest monthly growth of 2.1%.

“We’ve monitored the slow but steady demand growth in the North East, and it seems that this is starting to translate into an increase in prices, albeit marginal at the moment.

“In terms of sales volume, the market has certainly levelled out since the artificial spike of April’s Stamp Duty deadline. Although there has only been a slight recovery, this is to be expected and will probably take a month or two more before it returns to a level we might expect for this time of year.”

Last Time Buyers Could Help Solve the Housing Crisis, But Properties Aren’t Available

Published On: July 20, 2016 at 11:28 am

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Last time buyers could help solve the nation’s housing crisis by moving to smaller homes, but properties are simply not available, according to new research.

Over the past two years, more than 500,000 homeowners aged 55 or over have had to scrap their plans of moving house due to a lack of suitable properties, says a report from the HomeOwners Alliance.

Almost one in five (19%) homeowners aged 55+ have considered moving since 2014 but have not done so, found the study by YouGov on behalf of the HomeOwners Alliance and BLP Insurance.

Of these, almost one in four (23%) said that a lack of suitable housing was the main reason why they had not moved house. This equates to over 500,000 people across the UK.

Last Time Buyers Could Help Solve the Housing Crisis, But Properties Aren't Available

Last Time Buyers Could Help Solve the Housing Crisis, But Properties Aren’t Available

The report believes that these so-called last time buyers could help ease the housing crisis in the UK. If older homeowners living in homes that are under-occupied moved to smaller properties, more housing stock would be released to first time buyers and second steppers. There are approximately 11.4m homeowners aged 55 or over in the UK.

According to the latest homeowner survey, 6% of homeowners aged 55+ say they have moved in the past two years, and a further 19% have considered moving but have not done so – the equivalent of more than two million homeowners.

A lack of suitable homes is the main reason for older homeowners deciding to stay put, with 23% of those aged 55+ who considered a move saying that this is the primary reason for not moving.

The study also found that emotional ties, rather than financial concerns, are a significant barrier to moving in later life. The stress and upheaval of moving is more likely to be among the reasons not to move for those aged 55 or over who considered a move (30% versus 21% of homeowners overall). Additionally, older homeowners are more likely to not want to move away from friends, neighbours and their community (23% vs. 17%), whereas property prices are less likely to be a barrier (22% vs. 31%).

When thinking about a future move, top priorities are similar for all homeowners, regardless of age. Spaciousness of rooms (72%), good build quality (71%) and parking (69%) top the list across all age ranges.

However, compared with UK homeowners generally, a greater proportion of those aged 55+ identify availability of parking (77% vs. 69%), low running costs (70% vs. 59%), proximity of shops (66% vs. 55%), good transport links (56% vs. 47%) and living on one level (36% vs. 24%) as important criteria for their next home.

When considering a new build home as an option, older homeowners consider new builds to be particularly low on running costs, but less likely to deliver on spaciousness of rooms, the amount of available green space and providing living on one level. They believe that being close to amenities and good transport links are also less typical of new build homes.

The CEO of the HomeOwners Alliance, Paula Higgins, comments on the findings: “The recent Brexit decision means we are now in the midst of uncertain times, and new housing is likely to be a victim. Government needs to focus efforts on negotiating a European exit, but they must not drop the ball in delivering new housing that meets the needs of last time buyers. Housebuilders can’t be allowed to sit on their hands and land bank. The Government needs to keep them building and building homes that meet the needs of last time buyers as well as first time buyers.”

The CEO of BLP Insurance, Kim Vernau, adds: “The issues highlighted by this survey that face last time buyers are as acute as those issues encountered by first time buyers. If we wish to provide the required quality of housing that addresses these concerns, we desperately need an appropriate mix of well-designed homes alongside adequate local infrastructure to help address the current housing shortage.”

The Government’s Guide to Tax Relief Changes for Residential Landlords

Published On: July 20, 2016 at 9:35 am

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Ahead of the phased introduction of tax relief changes for residential landlords in April 2017, the Government has released a guide that explains how the restriction will affect you.

As of April next year, the amount of income tax relief that landlords can claim on residential property finance costs will be cut to the basic rate of tax.

The changes

These changes will affect you if you let out residential properties as an individual, or in a partnership or trust.

The reduction will change how you receive relief for interest and other finance costs, and will be gradually introduced over four years from April 2017.

Under the new rules, finance costs will not be taken into account to work out your taxable property profits. Instead, once the income tax on property profits and any other income sources has been assessed, your income tax liability will be cut to the basic rate. For landlords, this will be the basic rate value of your finance costs.

The Government's Guide to Tax Relief Changes for Residential Landlords

Who will be affected? 

You will be affected by the changes if you are a:

  • UK resident individual that lets residential properties in the UK or overseas
  • Non-UK resident individual that lets residential properties in the UK
  • Individual who lets such properties in partnership
  • Trustee or beneficiary of trusts liable for income tax on property profits

All residential landlords with finance costs will be affected, but only some will pay more tax.

You won’t be affected by the introduction of the reduction if you are a:

  • UK resident company
  • Non-UK resident company
  • Landlord of furnished holiday lets

If you operate as any of the above, you will continue to receive relief for interest and other finance costs as usual.

What does the restriction include?

The finance costs that will be restricted include interest on:

  • Mortgages
  • Loans – including loans to buy furnishings
  • Overdrafts

Other costs affected are:

  • Alternative finance returns
  • Fees and any other incidental costs for getting or repaying mortgages and loans
  • Discounts, premiums and disguised interest

If you take out a loan for both residential and commercial properties, you will need to use a reasonable apportionment of the interest to work out your finance costs for the residential properties, as only the finance costs for the residential property business are restricted. This also applies if your loan was taken out partly for a self-employed trade and partly for residential property.

The introduction 

The changes will be phased in gradually from 6th April 2017 and will be fully in place from 6th April 2020.

As of April next year, you will still be able to deduct some of your finance costs when working out your taxable property profits during the transitional period. These deductions will be gradually withdrawn and replaced with a basic rate tax relief reduction.

You will still be able to use some of your finance costs to work out your property profits and use your remaining finance costs to work out your basic rate tax deduction as follows:

Tax year

 Percentage of finance costs deductible from rental income

Percentage of basic rate tax reduction

2017-18

 75% 25%

2018-19

 50%

50%

2019-20

 25%

75%
2020-21 0%

100%

Other implications of the changes 

These new rules mean that the way taxable income is calculated will change, and that could have other implications for some. For example, if you or your partner receive child benefit and your income is over £50,000, the high income child benefit charge may apply.

These changes were announced in the summer Budget 2015 and are contained in Finance (No. 2) Act 2015, as amended by Finance Bill 2016.

Lettings Market Sees Month-on-Month Growth

Published On: July 20, 2016 at 8:38 am

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After a slowdown in the UK lettings market in May, the latest data from the Agency Express Property Activity Index shows month-on-month growth in both properties to let and let properties over June.

Across the UK, the number of properties let increased significantly over the past month, by 9.6%, while new listings rose by 1.8%.

Although Agency Express did witness some buoyancy across the market, historical data from the Property Activity Index shows that supply has dropped annually.

Lettings Market Sees Month-on-Month Growth

Lettings Market Sees Month-on-Month Growth

Recent reports from the Council of Mortgage Lenders show that landlords borrowed £2.6 billion in May, down by 4% over the year.

Despite this, seven of the 12 UK regions included in the Property Activity Index experienced increases in new listings to let and ten recorded growth in the number of let properties in June.

Some of the regions that recorded the greatest increases include:

Properties to let 

  • North East – 26.5%
  • East Midlands – 13.4%
  • London – 10.3%
  • Yorkshire and the Humber – 8.3%
  • South East – 5.2%

Let properties

  • London – 24.2%
  • South West – 19.2%
  • Yorkshire and the Humber – 18.6%
  • Wales – 15.1%
  • East Midlands – 14.6%

June’s top performing region was the North East, which saw record figures for the month. The number of new listings to let rose by 16.5%, while the amount of let properties was up by 13%.

The greatest declines were seen in central England, with properties to let falling for a second consecutive month, down by 5.9%. The number of let properties also dropped, by 1.6%. However, looking over the past three months, figures for new listings remained resilient, up by 3.5%.

If you are considering a further investment in the private rental sector, it may be best to avoid the areas where the number of properties to let is rising, as supply levels will be high. However, look to the areas where the amount of let properties is up, as demand from tenants is strong in these locations.