Written By Em

Em Morley

Two-thirds of landlords facing tax changes

Published On: September 23, 2015 at 11:53 am

Tags: landlords,mortgage interest,tax changes

A new report has indicated that over 60% of private landlords are facing being forced from basic to higher rates of income tax, following a result of reforms announced in this year’s Summer Budget.

The results were taking from a survey of over 1,000 landlords, conducted by the Residential Landlords Association.

Changes

July’s budget brought the announcement that from 2020, mortgage interest relief for residential landlords will be capped at the basic rate of income tax. The RLA feel that while landlords paying the basic rate could feel unaffected by the changes, many will find themselves pushed up to the higher rate of tax, despite their incomes not having increased.

David Smith, RLA policy director, said that,’ the findings our of survey are deeply concerning. Many landlords currently paying the basic rate of income tax face the prospect of a nasty surprise when they meet with their accountants.’[1]

Continuing, Smith said that many landlords would have to seriously consider whether they wanted to stay in the private rented sector when facing an increase in tax charges but no increase in their income.

‘All the evidence shows that we need more, not less, rented housing,’ he observed. ‘With almost ninety per cent of landlords being individuals renting out just a handful of properties each, it is only by supporting this group that we will boost the supply of homes to rent. The Budget announcements risk undermining the potential for growth,’ he added.[1]

Two-thirds of landlords facing tax changes

Petition

In light of the reforms, the RLA said that it has met with Treasury Officials to highlight their concerns over the impact of the reforms. Additionally, it said that it is still calling on the Government to delay the changes and assess the impact that they could have on the sector.

A petition, titled ‘Say No To George,’ has already gained over 29,000 signatures, from landlords and letting agents alike.

[1] https://www.landlordtoday.co.uk/breaking-news/2015/9/two-thirds-of-landlords-face-tax-bombshell–rla

Non-Adjusted Property Sales Figures Show Decline

Published On: September 23, 2015 at 11:37 am

Author: Em Morley

Categories: Finance News

Tags: buying a home,property market,property transactions,residential property sales

Non-Adjusted Property Sales Figures Show Decline

HM Revenue & Customs (HMRC) has reported that there were 106,480 residential property transactions in August, a monthly and annual rise.

This figure is provisional and seasonally adjusted, indicating a 3.1% increase on July and up 5.7% on August last year.

However, the non-adjusted figures – the actual number – was lower, down 7.4% on July and 1.9% on August 2014.

The non-seasonally adjusted number was 112,490 home purchases in August, down from 121,480 in July and 114,720 in August last year.

The seasonally adjusted and non-adjusted figures are still much lower than the peaks seen in 2006 and 2007.

Buy-to-Let Landlords Owe Equivalent of Hong Kong Economy in Mortgages

Published On: September 23, 2015 at 10:36 am

Author: Em Morley

Categories: Finance News

Tags: buy to let investors,buy to let mortgages,buy-to-let mortgage products,changes to landlord tax relief,landlord finances

British buy-to-let landlords owe over £200 billion in mortgage repayments, equivalent to the size of the Hong Kong economy, says the Council of Mortgage Lenders (CML).

The CML’s report states that changes, such as Chancellor George Osborne’s proposal to cut landlord tax relief and an expected interest rate rise, are currently causing “considerable uncertainty” in the sector.

Buy-to-Let Landlords Owe Equivalent of Hong Kong Economy in Mortgages

The CML has urged ministers to consider the effect of these plans on the wider economy and indicates that rent rises are likely, as landlords attempt to recover lost income.

The report says: “The Chancellor’s announcement of tax changes affecting buy-to-let landlords, which are being introduced over a five-year implementation period, has created another source of uncertainty for landlords, tenants and lenders.

“The measures are likely to deter some landlords from expanding their portfolios, and may encourage others to reduce their property holdings. They could also lead landlords to seek to increase rents to cover some of their additional tax liabilities. Overall, the extent to which the measures may discourage future growth of buy-to-let and the private rented sector is unclear.”

It continues: “Over the last 15 years or so, buy-to-let has made an important contribution to the expansion of the private rented sector, helping to reverse many decades of decline.

“Currently, however, there is considerable uncertainty over the impact of a series of regulatory and fiscal proposals on both buy-to-let and the private rented sector.

“We have, however, already urged the Treasury to take into account the effect of tax changes in finalising its proposals to reform macro-prudential powers.”¹

The CML report also reveals that the private rental sector has doubled in size over the last 12 years, following decades of decline.

Of all buy-to-let mortgages granted in the UK, 24% are for properties in London, compared to just 13% of all owner-occupied mortgages being issued in the capital.

The figures show that landlords favour certain types of properties, with 36% of loans for flats and 34% for terraced houses. This trend is even more marked in London, with flats accounting for almost two-thirds of buy-to-let purchases.

The CML also found that the sector witnessed a stronger recovery than the wider market following the financial crisis, with buy-to-let lending reaching £27 billion last year, after a low of £9 billion in 2009.

At present, there are around 1,100 buy-to-let mortgage products on the market, the highest number since April 2008.

¹http://www.propertyindustryeye.com/buy-to-let-landlords-owe-equivalent-of-hong-kong-economy-in-mortgage-repayments/

Students Most Likely to Lose Tenancy Deposits

Published On: September 23, 2015 at 9:32 am

Author: Em Morley

Categories: Landlord News

Tags: landlord disputes,student rental property,student tenants,tenancy deposit disputes,tenancy deposits,tenant depsoits

Students Most Likely to Lose Tenancy Deposits

Students are some of the most likely tenants to lose part of their deposits at the end of their tenancy, due to leaving the property in an inadequate condition, according to new research.

A study by the Deposit Protection Service (DPS) reveals that less than one in three students, or 27.5%, receive 90% or more of their deposit back at the end of their tenancies, compared to over 57% of tenants as a whole.

The most common reason for deductions to a tenancy deposit among students was cleaning at 32%, followed by repairs at 27%, redecoration at 20% and the replacement of lost or damaged items at 19%.

The DPS has 12 tips for students to hopefully help them receive their full deposit back when they leave their rental homes.

Managing Director of the DPS, Julian Foster, says: “Students must be aware of their responsibilities as tenants and act accordingly throughout their tenancy, or risk losing money when they move out.

“As well as asking their landlord to confirm where their deposit is protected, taking simple steps such as checking household inventories and communicating regularly with landlords can help ensure that deposits are returned in full.

“Deposit protection means both landlords and tenants can have peace of mind that the money is safe, and that there is a free, impartial adjudication service if the tenancy ends in a dispute.”¹

As the academic term begins, the DPS has created a video aimed at students, offering advice on how to avoid losing their deposits. View it here: https://www.youtube.com/watch?v=NivXVALXTfk

¹http://www.propertyindustryeye.com/students-warned-over-losing-rental-deposits/

Rental Property Void Periods at Record Low

Published On: September 23, 2015 at 8:34 am

Author: Em Morley

Categories: Landlord News

Tags: landlord rental yields,landlord void periods,rental property void periods,tenant void periods

The average rental property void period dropped below 2.6 weeks per year in the third quarter (Q3) of this year, according to the latest report from Paragon Mortgages.

Rental Property Void Periods at Record Low

This figure remains historically low and is the first time it has fallen below 2.6 weeks since 2002.

In 2010, the average void period was a high of 3.4 weeks a year.

Paragon has also reported that average rental yields have risen over the last quarter, from 6.3% to 6.4%.

Thinking about the future, most landlords surveyed by the mortgage lender said they expect yields to remain steady over the next year, maintaining current levels.

Over half of respondents called tenant demand stable, with more than 40% stating that demand is either growing or booming.

Landlords are also positive about future demand, with over half of landlords predicting a rise in prospective tenants over the next 12 months, compared to 42% who expect demand to remain stable.

Of landlords hoping to expand their portfolios, 43% are looking for terraced houses, up from 38% in the previous quarter.

The amount of investors seeking semi-detached homes has dropped from 38% to 27%.

The study reveals that requests for long-term tenancies of two years or more remain low, with 58% of landlords stating less than one in ten tenants ask for longer tenancies.

Director of Mortgages at Paragon, John Heron, says: “Our data is indicative of a market growing steadily and sustainably over the long term. With low void periods and steady tenant demand, which is expected to continue growing, yields remain on a gradual upward trend and landlords are confident they will continue to do so.”

Heron continues: “The data also reveals the changing demographic of those choosing to live in the PRS [private rental sector]. This is reflected in the buying intentions of landlords, which seem to be shifting slightly away from investing in multi-occupancy blocks, towards terraced housing – often more suited to young families.”¹

¹https://www.landlordtoday.co.uk/breaking-news/2015/9/void-periods-remain-at-record-low

The Countries with the Highest House Price Growth

Published On: September 22, 2015 at 5:23 pm

Author: Em Morley

Categories: Landlord News

Tags: global house price growth,global property markets,house price growth,property price growth

House prices around the world are continuing to soar, with property booms in Europe, North America and some parts of Asia, according to a new study by Global Property Guide.

The research firm revealed that house prices increased in 28 countries in the second quarter of the year and fell in just 11.

Of the five countries to record the strongest property price growth, three were in Europe and the other two were in Asia.

Despite thinking the UK has a difficult property market, Hong Kong saw the highest house price rises in the global market.

Residential property prices in Hong Kong increased by 16.4% in the year to the end of June, a huge reversal on its 0.66% drop in 2014.

Countries with the strongest house price growth

Position	Country	House price growth
1	Hong Kong	16.43%
2	Ireland	10.81%
3	Estonia	8.99%
4	Philippines	6.61%
5	Iceland	6.19%
6	Japan	6.13%
7	USA	5.39%
8	Israel	5.22%
9	New Zealand	5.19%
10	Romania	4.83%

Of the 20 European countries for which data is available, 13 experienced house price rises in the past 12 months.

Ireland came second overall for global property price growth after witnessing a house price boom, following a difficult year in 2013.

The Countries with the Highest House Price Growth

Prices were up by 10.8% in the year to the end of June, causing the OECD to warn that soaring house prices could pose one of the biggest risks to the country’s financial stability.

The think tank stated that an uncontrolled property boom would “increase vulnerabilities, especially if it were associated with further indebtedness”¹.

Estonia saw the second biggest price rises in Europe and came third in the global market. This was despite prices levelling compared to last year. In its capital, Tallinn, the average property price increased by 9% in the year to June, much less than the 16.1% rise it experienced over the same period last year.

In Romania, prices grew by 4.8% during the year. Norway, the UK and Germany followed with increases of around 4%.

However, some parts of Europe remained slow, according to the study.

Russia has the second weakest housing market and witnessed the biggest annual drop in prices in Europe.

House prices in Russia fell by 11.1% in the year to June, the biggest annual decline since the fourth quarter (Q4) of 2011.

Ukraine’s property market is struggling, amongst an economic and political crisis.

The average house price in Kiev decreased by 10.6% over the year, and fell by 1.6% between April and June on a quarterly basis. These sharp drops were caused by the high interest rates imposed to tackle hyperinflation.

Other weak property markets in Europe include Greece, Spain, Cyprus and Croatia.

The greatest annual decreases were recorded in the United Arab Emirates (UAE), Russia and Ukraine, falling by 11.7%, 11.1% and 10.6% respectively.

House prices have been declining steadily in Dubai over the last few years, affected by a drop in the price of oil, weaker currencies in Russia and Europe and a lack of housing demand.

¹http://www.telegraph.co.uk/finance/property/11871277/Revealed-the-countries-where-house-prices-are-rising-the-most.html