Written By Em

Em

Em Morley

This Home Costs Just £10,000, But Could You Live Here?

Published On: February 21, 2016 at 2:49 pm

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Finding a home for sale at just £10,000 is a daydream for young people struggling to get onto the property ladder today, but this property defies the sky-high prices across the UK’s housing market.

Up for auction for £10,000 is a home in Penygraig, Wales. However, there’s a catch – the house does not have four walls. So could you live here?

The triangular home is being sold by Darlows Auctions. The firm’s manager, Stephen Morgan, remarks: “It is without a doubt the most unusual property I have ever sold.

“It needs modernising, but once done, would be a good property investment or ideal for a first time buyer.”1 

The house narrows to a point at its rear. The back wall is no wider than a toilet, which can be seen fitting snugly into the space in the property’s eccentric yellow bathroom.

The triangular property is considerably better value than a similar sized, ten-foot wide home that went on the market in London in the same week for a huge £800,000.

It is also substantially less than the typical price for the UK, which is currently £299,287, according to Rightmove.

Is the low price enough to make up for a missing wall?

Whoever purchased the Penygraig home at Wednesday’s auction in Nantgarw’s Conference Centre, will join a memorable owner of another triangular house.

Sir Thomas Tresham, the father of an alleged Gunpowder plotter, designed one of Britain’s oldest triangular buildings, Rushton Triangular Lodge.

1 http://www.independent.co.uk/property/house-and-home/property/corner-house-wales-penygraig-corner-triangle-10000-but-theres-a-catch-a6872111.html

Landlords told to wait to replace furniture

Published On: February 21, 2016 at 10:10 am

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Landlords are being advised to wait until the 6th April to replace any furniture in their property.

Accountants Blick Rothenberg LLP are guiding landlords to wait until after this date, when the 10% wear and tear allowance is replaced. These costs will then become deductible under a new relief.

Changes

Robert Pullen, personal tax manager at Blick Rothenberg noted: ‘from April 6 2016, the favorable 10% wear and tear allowance for fully furnished residential properties will no longer be available.’[1]

‘Instead, only the actual costs incurred in replacing furniture, furnishings, appliances and kitchenware provided for the tenants’ use will be deductible. Initial costs are not allowed, only the replacement of such items. The Government expects this measure will bring in around £165 million/year from 2017 onwards,’ he continued.[1]

Pullen went on to say that, ‘this is a significant step away from the wear and tear allowance, bringing the position more in line with general deductibility of repair costs or replacing toilets, boilers etc. Landlords of fully furnished properties will feel this change adds additional complexity to an increasingly complicated area of deductible costs, following closely on the heels of the restriction to finance cost expenditure.’[1]

Landlords told to wait to replace furniture

Landlords told to wait to replace furniture

Relief

Mr Pullen sees the changes as good news for landlords owning part or unfurnished homes, who will now be able to claim the new relief. At present, landlords do not generally receive much relief for associated costs after changes brought in from April 2014.

HMRC have pledged to provide ‘comprehensive guidance’ on the more complicated areas of whether a replacement is considered an improvement or not. Where the furniture is replaced to a modern equivalent, the improvement as a result of technological advances should be ignored, so that the cost is allowed in full.

However, qualifying furnished holiday lets and commercial buildings are not covered by these rules. As such, relief on the initial cost of items, as a well as replacements, remain allowed.

[1] https://www.landlordtoday.co.uk/breaking-news/2016/2/landlords-advised-to-wait-until-april-to-replace-furniture

Just 16 Areas are Affordable for Single First Time Buyers

Published On: February 20, 2016 at 3:48 pm

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There are only 16 areas in England and Wales that are affordable for single first time buyers on an average income.

Generation rent is well aware of the sky-high deposits required for getting onto the property ladder, while house prices continue soaring.

Having to save these huge deposits is making it increasingly difficult for couples to buy their first home, meaning that those on a single salary are facing even more hurdles.

Recent research by Savills found that there are now just 16 council districts in England and Wales, out of a total of 348, where a single buyer earning an average salary is able to buy a moderately priced property.

Where can a single first time buyer purchase a home?

Position

 District Region Income needed for single buyer Income needed for two buyers Average house price

Average salary
1 Blaenau Gwent Wales £13,333 £8,571 £75,000 £19,400
2 Burnley North West £15,022 £9,657 £84,500 £20,184
3 Merthyr Tydfil Wales £15,822 £10,171 £89,000 £19,930
4 Hyndburn North West £15,991 £10,280 £89,950 £19,660
5 Pendle North West £16,356 £10,514 £92,000 £21,180
6 Stoke-on-Trent West Midlands £17,067 £10,971 £96,000 £19,236
7 Rhondda Cynon Taf Wales £17,244 £11,086 £97,000 £20,788
8 Kingston upon Hull Yorkshire and the Humber £17,511 £11,257 £98,500 £17,796
9 Blackburn with Darwen North West £17,778 £11,429 £100,000 £18,345
10 Neath Port Talbot Wales £18,667 £12,000 £105,000 £20,412
11 County Durham North East £19,556 £12,571 £110,000 £21,468
12 Barnsley North West £20,000 £12,857 £112,500 £20,396
13 Copeland North West £20,978 £13,486 £118,000 £29,190
14 Liverpool North West £20,978 £13,486 £118,000 £21,184
15 Wigan North West £21,333 £13,714 £120,000 £21,788
16 North Lincolnshire Yorkshire and the Humber £21,867 £14,057 £123,000 £22,835

Unsurprisingly, Savills’ study found that single buyers are priced out of Greater London, the East of England and the South East, where house prices are continuing to soar.

Just 16 Areas are Affordable for Single First Time Buyers

Just 16 Areas are Affordable for Single First Time Buyers

The 16 most affordable regions are either in the North West, North East, Yorkshire and the Humber or the West Midlands in England or in Wales.

And Savills believes that now is a good time to purchase. The Head of Residential Research, Lucian Cook, explains: “While our five-year mainstream house price forecasts for the North East, North West and Wales are lower than the UK average, all areas are expected to experience positive growth to 2020, ranging from 12% in the North East to 14.8% in Wales.”1 

Blaenau Gwent in south Wales is the cheapest place to purchase a home, with an average price of £75,000. To afford a typical two or three-bedroom terraced house in this area, a single buyer would need to earn just over £13,000 per year. As the average salary in Blaenau Gwent exceeds this by £6,000, it is considered the most affordable place for single first time buyers to get onto the property ladder.

The highest average house price of the 16 locations is in North Lincolnshire, at £123,000. Buyers here must earn close to the average annual wage of £23,000 to qualify for a mortgage.

Liverpool is the most expensive of the areas for single buyers, as they will need an income of £20,978 a year to buy a £118,000 home.

Lenders are more likely to consider couples on two salaries, as they are considered lower risk buyers. Purchasing as a pair almost halves the amount each person needs to earn a year, taking the required salaries to just £8,571 in Blaenau Gwent and rising to a maximum of £14,057 in North Lincolnshire.

The individual incomes needed by a couple are not exactly half of the amount needed for a single buyer, as the loan-to-income ratios for single and dual earners are different – usually three-and-a-half times the income for dual earners and four-and-a-half times for single workers.

1 http://www.homesandproperty.co.uk/property-news/buying/uk-house-prices-the-most-affordable-areas-for-single-buyers-in-england-and-wales-a99016.html

40% of landlords considering forming a ltd company

Published On: February 20, 2016 at 9:05 am

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Over 40% of landlords are looking into making their business a ltd company, according to new research from the National Landlords Association (NLA.)

Presently, just only 1% of respondents said that they had already chosen to incorporate. The NLA believe this is due to the high cost of transferring personally held property into a private limited company.

Intentions

Additionally, data shows 31% of landlords have no intention of switching their properties to a limited company. 29% are still not sure about what they are going to choose in regards to incorporation.

Mortgage interest relief for buy-to-let landlords is to be levelled at the basic rate of income tax (20%) by 2021 and will begin to be phased back from April 2017. Landlords then will no longer be able to remove the cost of mortgage interest before they declare their taxable profit. The new moves will see them receive a tax credit of 20% of their mortgage interest costs.

The NLA has called the alterations, ‘The Turnover Tax,’ as landlords’ tax will be worked out on the rental income they earn instead of any profits. and will drive many basic rate payers up into a higher tax bracket. Higher rate payers will be left with increased bills.

40% of landlords considering forming a ltd company

40% of landlords considering forming a ltd company

Transferring

Landlords structured as private limited companies will be exempt from the tax alterations. Instead, they will only pay corporation tax on their profits.

‘Transferring personally held property to a limited company isn’t a straightforward process, so it’s not surprising that so few have taken this action so far,’ noted Richard Lambert, Chief Executive Officer at the NLA. ‘Landlords need to do their research but many will realise that incorporating simply doesn’t stack up financially; doing so will incur capital gains and potential stamp duty charges, which means the process may be prohibitively expensive.’[1]

Richard Price, Executive Director of the UK Association of Letting Agents, also noted, ‘while just one per cent have incorporated so far a significant proportion are still considering the move. If landlords follow through with these intentions then it’s likely that more and more will take a hands-on approach to managing their portfolios in the future, which would mean less business to go around for agents and certainly less of a need for full service offerings.’[1]

‘The changes to taxation are forcing landlords to re-evaluate their business and their place in the market, so our advice for agents is to begin talking to your clients about their intentions over the next few years and consider how you’ll meet their changing needs in a way that is distinct from your rivals,’ Price concluded.[1]

[1] http://www.propertyreporter.co.uk/landlords/incorporating-doesnt-stack-up-for-majority-of-landlords.html

RLA issues warning to Gumtree over letting scams

Published On: February 19, 2016 at 2:27 pm

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The Residential Landlords’ Association (RLA) has called on a leading classified online listings service to issue clear guidance over possible scams involving bogus letting scams.

A warning was issued to Gumtree by the RLA after fraudsters posed online as landlords to post ads on the site asking for money in exchange for property viewings.

Scams

In certain cases, the advertisements posted online show affordable and attractive dwellings. However, when potential tenants attempt to arrange a viewing, they are told that the landlords lives a long way away and that they must provide a deposit in order to secure a viewing. Sometimes, these fees cost £1,500!

The criminals behind these scams have cloned websites’ logos, including that of the RLA’s Deposit Guard Scheme. As such, the schemes look genuine to would-be tenants.

Once tenants pay cash for their fake viewing, they never hear from the fraudsters again and their money is lost.

RLA issues warning to Gumtree over letting scams

RLA issues warning to Gumtree over letting scams

Demands

To stop more innocent renters becoming victims, the RLA has now contacted Gumtree demanding visible warnings on its website.

‘Often, the victims in this type of fraud are young foreign students, who have limited knowledge of how the rental market works in the UK,’ said a spokesperson for the RLA. ‘The fact that our DepositGuard logo is being used in this manner is something we are taking extremely seriously and we have approached Gumtree asking for clear warnings about scams of this type to be included on its website,’ they added.[1]

Any victims of this kind of fraud are being advised to call Action Fraud on 0300 123 2040.

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/2/industry-group-asks-gumtree-to-issue-public-warning-about-letting-scams

Buy-to-Let returns highest for 14 months

Published On: February 19, 2016 at 12:39 pm

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The most recent Buy-To-Let Index from Your Move and Reeds Rains has indicated that returns from buy-to-let property are soaring.

Data from the report shows that returns currently stand at their highest level since November 2014.

Growth

Looking into both rental income and capital growth, the average landlord in England and Wales has seen total returns of 12% in the year to January. This is a rise from the 11.2% recorded in the twelve months to December and represents a fourteen month high. In November 2014, returns stood at 12.3%.

In absolute terms, this means that the typical landlord in England and Wales has seen a return of £21,988 in the last year, before any deductions such as mortgage payments.

Of this, the average capital gain totalled £13,594, with rental income making up £8,394 over the same period.

Rental yields have proven to be sturdy when faced by price increases. The gross yield on a rental property in England and Wales remains steady at 4.9% in January, as it was in December 2015. Annually, this was slightly less than the 5.0% seen in January 2015.

‘Picking up’

‘Buy-to-let returns are building and property prices are picking up-as the housing shortage across the UK intensifies,’ observes Adrian Gill, director of estate agents Reeds Rains and Your Move. ‘Landlords’ balance sheets are looking healthier than at any point since 2014 and property investors are looking at an excellent rate of return from their portfolios. With house prices rising rapidly into the New Year, this acceleration will be a welcome addition to the wealth of landlords on paper, while solid rental yields are underpinning total returns pushing well into the double digits.’[1]

Buy-to-Let returns highest for 14 months

Buy-to-Let returns highest for 14 months

‘Stamp duty premiums on new buy-to-let purchases are the rhino in the room-everyone is talking about the 1st April deadline and the extra purchase costs are perceived by some commentators as potentially hazardous. But this is a little simplistic. Landlords are long-term investors and generally take good advice before making a new purchase, while the real changes will come when some landlords see gradual changes to their tax relief on mortgage interest. The rules around UK property are changing-but there is no bull in the buy-to-let china shop,’ he continued.[1]

Shifts

Mr Gill believes that, ‘in 2016, the big shift is likely to be in favour of existing landlords, potentially at the expense of those planning to start up as a landlord for the first time or expand their portfolio.’ He said that as a result, ‘it will be interesting to see how the rental market responds if there is a disruption to investment in supply.’[1]

Concluding, Gill said that, ‘this is likely to be a short-term effect. Over the longer term there is a consistent and developing lack of housing across all tenures, for a spiralling population. Owners and renters alike will see the cost of somewhere to live continue to rise, whether expressed in rents or prices. Stamp duty surcharges could funnel more money from the industry to the Treasury, but ultimately will not change the level of demand from tenants

[1] http://www.propertyreporter.co.uk/landlords/best-buy-to-let-returns-since-2014.html