Written By Em

Em

Em Morley

Stamp Duty tax avoidance schemes rising

Published On: July 4, 2016 at 8:55 am

Author:

Categories: Landlord News

Tags: ,,,,

A higher number of landlords are looking to avoid paying the additional 3% Stamp Duty surcharge by being sucked into unscrupulous tax schemes.

An investigation by the Telegraph has revealed that there has been a rise in firms selling so called ‘tax solutions’, claiming to exploit loopholes in the to legally mitigate the surcharge. These firms propose to offset the costs for buy-to-let investors in England, Wales and Northern Ireland when buying property in return for an upfront fee.

Stamp Duty cons

David Hannah, consultant at Cornerstone Tax, a conveyance firm offering legitimate tax planning services to reduce Stamp Duty, spoke exclusively to the Telegraph. Mr Hannah noted that demand from investors worried by Stamp Duty charges had turned into a, ‘tsunami’ following its inception on 1st April this year.

Hannah said, ‘my team has gone from doing one or two of these cases to doing 15 or 20 a day.’[1]

However, HMRC warned that these schemes do not generally work, classing them as tax avoidance. It notes that people taking part in them could be forced to pay 100% of the original tax plus interest, which will leave them substantially worse off.

Stamp Duty tax avoidance schemes rising

Stamp Duty tax avoidance schemes rising

Costly

A spokesperson for HMRC noted that, ‘these kinds of schemes don’t work. We have investigated thousands of cases since 2013, bringing in over £200m in Stamp Duty Land Tax. These individuals have had to pay 100% of the original tax plus interest.’[1]

‘They will be much worse off than if they had just paid the right tax at the right time, especially where they have paid fees to the promoter of the avoidance scheme which are not refundable,’ they added. [1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/7/dodgy-tax-avoidance-schemes-could-cost-landlords-thousands

Property Market Showed Strength Before EU Referendum

Published On: July 4, 2016 at 8:38 am

Author:

Categories: Property News

Tags: ,,,

The property market showed strength ahead of last month’s EU referendum, according to the latest Property Activity Index from Agency Express.

The month-on-month data shows a nationwide increase in both new property listings, at 10.6%, and the number of properties sold, at 2%, over June.

Property Market Showed Strength Before EU Referendum

Property Market Showed Strength Before EU Referendum

The growth recorded by Agency Express corresponds to recent figures from Dr. Rebecca Harding, the Chief Economic Advisor at the British Bankers’ Association, who reports: “Mortgage approvals have bounced back following the sharp drop in April, caused by the initial reaction to the Stamp Duty surcharge.”

The Property Activity Index found that gross mortgage lending rose by 10%, or £12 billion, in June compared to the same month last year, while remortgage approvals were up by 18% – the highest level since February 2011.

On a regional basis, Agency Express found that nine of the 12 UK regions recorded increases in both new property listings and properties sold over the past month.

The following regions recorded the greatest growth in new listings:

  • London – 72.3%
  • South East – 22.3%
  • North East – 10.1%
  • Yorkshire and the Humber – 9.6%

These regions saw the largest rises in the number of properties sold:

  • West Midlands – 25.9%
  • East Midlands – 11.8%
  • South East – 4%

The standout performer of the month was the West Midlands. After a three-month lull reaching -14.5% in May, the number of properties sold bounced back to 25.9% in June – a regional best.

London also made robust monthly increases over June, with new listings standing at 72.3%. Although this wasn’t a record, figures were up by 14.9% on June last year.

The greatest decline in June’s Property Activity Index was recorded in East Anglia. The amount of properties sold fell for a second consecutive month, at -4.2%.

The Managing Director of Agency Express, Stephen Watson, comments: “During June, we expect to see a buoyant property market and this month’s Property Activity Index has shown growth for a large proportion of the UK. However, with the EU referendum only a week ago, the Brexit affect is yet to unfold. Looking forward into the second half of the year, it will be interesting to see how it affects the usual trends of the market.”

While activity remained strong during June, recent figures also show that house prices continued to grow last month.

Should You Continue With Your Property Purchase or Sale Following Brexit?

Published On: July 3, 2016 at 8:23 am

Author:

Categories: Property News

Tags: ,,,,

You were happily looking for a new property, or to sell your property, and the country voted for Brexit. What seemed like a solid, healthy investment may now seem less reliable. So should you continue with your purchase (or sale) now that the UK has decided to leave the EU?

The Governor of the Bank of England, Mark Carney, has recently announced that interest rates may be cut following the shock vote last week. The Bank of England’s full statement, released the day after the Brexit announcement, can be found here: /bank-england-releases-statement-following-eu-referendum-result/

Should You Continue With Your Property Purchase or Sale Following Brexit?

Should You Continue With Your Property Purchase or Sale Following Brexit?

If interest rates do come down, then mortgage costs will inevitably be affected, which could give you the opportunity for a better deal.

So, if you’ve had your offer accepted, secured a mortgage and maybe even exchanged contracts, should you pull out?

Naturally, if you have exchanged contracts, then there is nothing you can do without incurring significant penalties. However, if you haven’t got this far, it may be worth waiting to see whether mortgage rates come down in the near future. If they do, you could possibly renegotiate your mortgage to get a better deal.

The majority of mortgages are offered on a fixed rate basis. However, if interest rates remain as low as expected, it could be more affordable than ever to have a tracker mortgage.

Some lenders will allow you to change your mortgage if you pay an arrangement fee, although this changes from lender to lender. It is important to keep in touch with your mortgage provider at this time, to find out which deals are available and how much it would cost to renegotiate.

If interest rates drop by a quarter point or so, which is likely, and your lender does not react to the change, but others have and are offering better deals, it could be wise to change. However, be aware that this could take some time and could be costly.

Although Zoopla reported before the EU referendum that house prices would fall by 20% if we voted to leave, the latest house price indices suggest that values are continuing to climb. Whether they decline or not will be down to wider economic conditions, although current uncertainty may lead to a decrease in transactions.

If demand does wane, this could actually be a good thing for buyers. Fewer homebuyers in the market will give greater buying power and the opportunity to negotiate lower prices.

If you have been looking for a property for a long time and have finally found the one you want, it’s a good idea to go for it at this point in time, as property prices don’t look to be coming down substantially.

However, if you’ve only recently started your search, it could be wise to hold tight for a while to see whether prices come down.

General economic uncertainty will naturally affect the housing market, particularly in the near future. But since the UK will not officially leave the EU for two years, the sector will likely stabilise in this period.

If the markets do slow down in terms of activity, then mortgage lenders will need to be more competitive, which is positive for homebuyers and movers.

The London property market especially is expected to remain buoyant during this time, which is particularly good news for investors, who may find bargains during this volatile period.

Whether you decide to wait and see what happens to house prices and mortgage rates or take the plunge, the property market appears to be holding itself up in the face of uncertainty.

Build to Rent aims to lure tenants from buy-to-let

Published On: July 1, 2016 at 3:07 pm

Author:

Categories: Property News

Tags: ,,,

The chief executive of a newly-formed organisation servicing the growing British Build to Rent sector has expressed his desire to attract tenants away from traditional buy-to-let properties.

Mr Michael Green, chief executive of the UK Apartment Association said that in time, he hopes the sector will pull renters away from, ‘tired and poorly maintained properties.’

Build to Rent boosts

The UK Apartment Association is a trade body focusing entirely on new institutionally-funded and managed purposely-built rental accommodation.

Knight Frank suggests that Build to Rent could provide 5% of the country’s privately rented residential buildings by 2020.

Writing in his blog, Mr Green said Build to Rent will give, ‘ a high quality product tailored to the needs of modern living for a market that is becoming increasingly discerning and will demand certain levels of service.’[1]

Build to Rent

Build to Rent

USA trends

Mr Green notes that the USA, where Build to Rent is called ‘multi-family’ accommodation, has had a head start on Britain for the last 20 years, meaning its rental market is on a different level.

Green observes that, ‘over time as the multi-family offering in the UK develops, we hope that customers will choose to switch from tired and poorly maintained properties run by small scale landlords to new, professionally operated communities that offer resident services and amenities as standard.’[1]

‘This is when renting really becomes a tenure of choice that benefits both residents and the wider economy,’ Mr Green concluded.[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/6/build-to-rent-chief-bids-to-lure-tenants-from-poorly-maintained-buy-to-lets

 

Brexit boost for North East properties

Published On: July 1, 2016 at 2:08 pm

Author:

Categories: Property News

Tags: ,,,

Property prices in the North East have enjoyed a resurgence both in the lead up to and in the aftermath of the EU referendum.

Statistics released from North East sales and lettings firm KIS shows that house price values in the area increased by 4.8% in the last four weeks. This has added £8604 to the value of an average home in the region.

Regional rises

This rise comes on the heels of a 0.4% increase recorded in May and means that house prices in the area are now positive in 2016. Previously, they had fallen by 3.1% and 4% in April.

The average North East property is now valued at £165,039. Prices are 6.5% greater than those seen in June 2015.

In fact, house values rose in all of the twenty regions surveyed, with rises recorded ranging from 0.7% in Gateshead to 9% in Durham City. The strongest regions in terms of growth include Tynemouth (7.6%), North Shields (7.5%) and Killingworth (7.2%).

Moreover, the average rent in the North East rose by £10 per calendar month to hit £580. Rents in the region are now £28 greater than in March and have grown by 4% year-on-year.

Rising property prices now mean that the North East average rental yields have fallen by 0.1% to hit 4.3%.

Brexit boost

Leading property expert Ajay Jagota, founder and MD of North-East based lettings firm KIS, said, ‘if you listened to the way some people have been banging on in the media you’d be forgiven for expecting the Brexit vote to have had an apocalyptic impact on the North End and national housing market. But these figures prove just how wrong they were and to me that’s no surprise at all.[1]

‘I don’t believe there is a financial crisis around the corner and never have. Of course we saw some pretty unprecedented market volatility in the aftermath of the Brexit vote itself, but thankfully the markets have now calmed down and my prediction is from herein we can expect to see not just continuing growth but the region’s largest gains for some time,’ he continued.[1]

Brexit boost for North East properties

Brexit boost for North East properties

Uncertainty

Jagota notes that, ‘buyers and sellers traditionally put off big decisions when there is electoral uncertainty and that’s bound to have happened in recent months. But we still saw prices rising by more than seven percent in places like Tynemouth, North Shields and Killngworth. Imagine what’s possible now that uncertainty is over.’[1]

‘Of course we need to be aware of the impact a financial crisis could have on the regional housing market, unlikely as it looks to me. North East house prices only returned to their pre-financial crisis levels in 2014. But rising rents and stable returns are likely to have been a driving force behind this month’s growth, with anecdotal evidence continuing to suggest that the region is continuing to emerge as a destination of choice for national property investors.’

‘If this is the case, the region’s property prices would be more insulated from any financial shocks than last time around, even in the unlikely event they even existed,’ Jagota concluded.[1]

[1] http://www.propertyreporter.co.uk/property/brexit-vote-gives-boost-to-north-east-homes.html

 

Landlord Licensing Scheme Receives Support from Redbridge Councillors

Published On: July 1, 2016 at 11:06 am

Author:

Categories: Landlord News

Tags: ,,,

A selective landlord licensing scheme for those letting property in Redbridge has received support from councillors.

Landlord Licensing Scheme Receives Support from Redbridge Councillors

Landlord Licensing Scheme Receives Support from Redbridge Councillors

The scheme has been proposed for 14 wards that are particularly popular with private tenants in the London borough.

Discussions about the plans dominated the Neighbourhood and Services Committee meeting this week, with councillors deciding to press ahead with the scheme.

Councillor Gwyneth Deakins, the Liberal Democrat leader for Roding, says: “I support [the plans] because I have always supported landlord registration in the borough.”

The proposals will now go before the full cabinet meeting on Thursday 21st July, before going out for formal consultation.

Deakins adds: “It certainly gets my support, because I think landlords get a lot of money from the council and Government through housing benefit. It is about time more had to toe the line in terms of standards and priorities.”

However, Conservative councillors in Redbridge are unhappy about the proposals, after witnessing a similar scheme across the whole borough fail.

Describing Wednesday’s meeting as “déjà vu”, Conservative Councillor Paul Canal called the plans nothing short of a “tax” aimed at raising money for the council.

He explains: “When it was brought a year ago, we said that we would support the introduction of the scheme covering less than a fifth of the borough, without having to refer it to the Government.

“They were determined to do a 100% scheme. Our view was that it would be a tax. We wrote a formal objective about the scheme. A year on, they are now going for a scheme that covers 78% of the borough.”

The National Landlords Association’s Richard Blanco described the council’s plans to introduce a selective landlord licensing scheme as a “cynical” attempt to raise fees to fund the council’s private sector housing department.

Do you believe areas with high levels of private tenants should operate selective landlord licensing schemes?