Written By Em

Em

Em Morley

London Land Commission outlines plans

Published On: July 13, 2015 at 4:22 pm

Author:

Categories: Landlord News

Tags: ,,

Today has been a momentous day for house building in the capital with the announcement of the London Land Commission.

The joint announcement by Housing Minister Brandon Lewis and Mayor of London Boris Johnson marks the first conjoined effort between the City Hall, Government and boroughs to free up unused public land in the capital in order to build much needed new homes.

Meeting

As part of the Commission’s first meeting, it was announced that real estate research firm Savills has been appointed to compile a list of all suitable brownfield land in the capital before the end of 2015. Once this has been collated, City Hall plans to use the data to utilise the spread of sites across the city.

Today’s address and subsequent meeting comes on the back of a number of announcements from Chancellor George Osborne regarding planning reforms implemented to quicken up development. It is hoped that the changes will increase the capacity of brownfield sites to build more homes where they are most needed. The Commission will work in tandem with work that has already been started by the Mayor in disposing of his own land holdings for building works.

Mr Johnson has already released land including London’s Royal Docks and the Beam Park site in Rainham.

Long-term plan

As part of a longer-term economic plan for the capital, the Commission will work with Government and public bodies in order to come up with strategies for developing public land. This will see the Commission identifying priority areas for the future and fast-tracking the process for these regions, whilst being conscious of ensuring a solid return for the taxpayer.

Attendees at the inaugural meeting included London Councils, NHS England, Transport for London and Network Rail.

‘The London Land Commission will build on the great efforts we’ve already made at City Hall to ensure brownfield land that has laid empty for years is put to productive use in providing much-needed housing for Londoners,’ said Johnson. ‘In a city like, with its burgeoning population, it is simply madness not to act as quickly as we can to unlock more of these kinds of sites.’[1]

London Land Commission to convert brownfield land

London Land Commission to convert brownfield land

Vital

Mr Johnson added that the Commission’s work, ‘will be vital in coordinating the efforts of a whole raft of public bodies to achieve this important goal, helping to cut through the red tape that has kept valuable land tied up for too long.’[1]

Housing Minister Brandon Lewis added that, ‘as a global city, with excellent opportunities and links to the rest of the world, there is clear demand to release land and provide more homes for Londoners.’[1]

‘The London Land Commission will bring a joined up approach to land release in the capital-regenerating brownfield land and providing more homes, whilst continuing to protect the green belt around our Capital,’ Lewis concluded.[1]

London Councils Executive Member for Housing and Mayor of Lewisham Sir Steve Bullock also believes that it is, ‘vital that our overall strategy to tackle the housing crisis delivers an increase in affordable homes for ordinary Londoners.’ He went on to say that, ‘the efficient use of vacant land, whether owned buy the Mayor, Transport for London, boroughs, the NHS or private sector developers, is a key part of the solution.’[1]

[1] http://www.propertyreporter.co.uk/property/boris-to-build-first-ever-public-land-database-for-london-development.html

 

 

Flood Risk Parts of North East will be Protected by £28m Scheme

Published On: July 13, 2015 at 4:07 pm

Author:

Categories: Finance News

Tags: ,,,

Those whose properties are at risk of flooding in the North East will be protected by a scheme providing tens of millions of pounds worth of work.

Residents in the region will witness £28m worth of work in the next 12 months.

The spending plans are the result of successful schemes totalling around £32m that have provided better protection to over 1,700 homes.

The Northumbria Regional Flood and Coastal Committee (NRFCC) has announced its spending proposals for 2015-16, which include works at Lustrum Beck and Port Clarence in Stockton-on-Tees, Hartlepool, and Skinningrove in Redcar & Cleveland.

The NRFCC revealed that it managed 108 projects conducted by its member authorities costing £31.8m in the last year.

Flood Risk Parts of North East will be Protected by £28m Scheme

Flood Risk Parts of North East will be Protected by £28m Scheme

These schemes have provided defences at Morpeth and work to reduce flood risks at Warkworth, Corbridge and Stanhope, as well as a coastal scheme at Littlehaven, South Shields.

When all of the work is finished, the risk of flooding will be reduced for 1,743 properties, while also helping the water environment.

The 2015-16 schemes form part of a £108m six-year programme of works.

Chairman of the NRFCC, Jon Hargreaves, says: “I’m delighted that upon completion of our £31m programme of works from 2014-15, we will see a reduction in flood and coastal erosion risk to 1,743 houses in the region, as well as creating 25 hectares of new wildlife habitat.

“I’m also pleased that for the first time we have been able to lay out our plans for the next six years for the region, giving many communities some certainty as to when flood risk will be reduced.

“The Committee is a great example of true partnership working, with all local councils, the Environment Agency and Northumbrian Water pulling together on behalf of residents and businesses in the North East.”1

The Agency and local authorities deliver most of the projects, with some conducted in partnership with Northumbrian Water.

Flood and Coastal Risk Manager at the Agency, Phil Welton, states: “The Committee has an essential role in developing and delivering flood risk management programmes which reflect local priorities.

“The work we’ve carried out over the past year has brought significant benefits to communities, property, businesses and the environment, and the launch of the business plan sets out how we plan to protect more people in the year to come.”1 

Councillor Tracy Dixon, Lead Member for Area Management and Community Safety at South Tyneside Council and NRFCC elected member, explains: “The funding we have secured via the committee in recent years has enabled us to undertake three coastal defence schemes, including the multi award-winning Littlehaven Promenade and seawall, as well as delivering property level protection schemes to homes and businesses across the borough.

“We are currently delivering an innovative scheme at the Fellgate estate, Jarrow, in partnership with Northumbrian Water, to reduce the flood risk to over 200 homes on this estate, by removing surface water from the network and storing it in detention basins being constructed around and within the estate.”1

Head of Technical Services at Durham County Council, John Reed, says: “This report highlights the work which has already taken place to reduce the risk of flooding in our area.

“It also offers reassurance to communities that we continue to work together with our partners to reduce the risk of flooding and try to prevent the devastating impact this can have on people’s lives and businesses.”1

Deputy Leader of Northumberland County Council and member of NRFCC, Dave Ledger, comments: “This county has experienced first-hand the damage flooding can do and this report highlights the excellent work taking place to reduce the risks in our area.”1

1 http://www.chroniclelive.co.uk/news/north-east-news/north-east-flood-risk-areas-9623648

Instructions rise during Q2 of 2015

Published On: July 13, 2015 at 3:06 pm

Author:

Categories: Property News

Tags: ,,

Quarterly instruction levels for both purchases and remortgages increased by around a third in the second quarter of 2015, according to new research.

A report from Broker Conveyancing shows that the number of purchase instructions in quarter two of this year were up 35% on quarter one, while remortgage instructions were up by 29%. In all, total instructions were up by 33.5% during the three-month period.[1]

Purchase/remortgage split

The data from the report suggests a surge in remortgage activity during the past few months, but additional figures show the purchase/remortgaging split still remains weighted towards the former.

During quarter two, purchase levels made up 67.5% of total business, compared to 66.5% in the first three months of the year. Remortgage instructions as a percentage of overall activity fell from 33.5% in quarter one to 32.5% in quarter two.[1]

Taking its own instruction levels into account, Broker Conveyancing said that they had improved due largely to an increase in the number of brokers using its online portal. New users, outlined as those placing their first instructions, have run at two per day for the last 15 months, the firm said.

Driver

Harpal Singh, Managing Director of Broker Conveyancing, said,’ despite some considerable improvement in remortgage instruction levels on the first quarter of the year, our ongoing experience is that purchases continue to be the main driver of the market and will continue to do so for some time.’[1]

Instructions rise during Q2 of 2015

Instructions rise during Q2 of 2015

‘There are many reasons for this,’ Singh continued, ‘not least the stricter affordability criteria ushered in by the MMR with the result that a number of existing borrowers are unable to secure refinance, but also the fact that Base Rate remains at a historical low and until we begin to see movement here we are likely to see activity at these levels. While purchases have appeared to fall in number across the wider market space, our own instruction levels have actually increased and this is clearly down to the increased number of brokers who are taking control of the conveyancing process for their clients and using our system in order to instruct and earn.’[1]

[1] http://www.propertyreporter.co.uk/finance/instruction-activity-rises-by-a-third.html

 

Will the Government Boost the Property Market?

Published On: July 13, 2015 at 3:02 pm

Author:

Categories: Landlord News

Tags: ,,,

The general election is firmly behind us, but it is still unknown whether the Conservative Government will boost the property market.

In the past, it has been found that under a Conservative MP, house prices grow at a faster rate than other party constituencies. HouseSimple.com proved this in 2010, when they conducted research on the matter.

Will the Government Boost the Property Market?

Will the Government Boost the Property Market?

However, it is thought that this is inevitable, as property prices and wealth are connected; wealthier areas are more likely to have a Conservative MP.

Further research by eMoov indicated that house prices increase faster under the Conservatives. Considering this, alongside the fact that the market is recovering from the recession and initiatives are in place to support people buying homes, it is expected that property prices will rise over the next five years.

Although, it is important to remember that since the recession, house prices are changing very differently depending on the property type and the area it is in.

For instance, in the prime market – properties costing millions of pounds – activity dropped before the election due to the threat of a mansion tax. Now that this is no longer lingering, buyers and vendors can relax, fuelling a prosperous market.

However, it is not clear that prices will rise as quickly as they have done in the past in any market, and under any Government.

In the past few years, property prices have been reported as increasing, but have only been rising after large decreases when the recession hit. Areas such as Wimbledon experienced falls of 15% during this period. Northern Ireland saw huge declines of 47%.

Since the crash, areas are fitting into three categories: Places like London have seen prices recovering beyond the highs recorded before the recession; prices have started to recover in some areas, like the East Midlands, but are not back at their peak; or they are not experiencing any increases, such as Liverpool and Bradford.

Additionally, in comparing recovery statistics this time around to data from the last recovery after the 1990s, property price growth has not been as strong as previous years, even in wealthy areas.

The London housing market is still steady, but price rises have slowed, to a current 9% year-on-year. This is due to some areas seeing no growth but others experiencing stable increases.

Furthermore, new measures have been put in place regarding lending and this is impacting demand. Banks are now restricted to lending 4.5 times a borrower’s wage and the Mortgage Market Review (MMR) placed tougher lending criteria on banks. Less people can therefore afford to buy a new house.

As long as the economy continues to recover, property prices will likely grow, if steadily. However, the growth of the past may not be repeated in the future.

 

Is the Buy-to-Let Boom Coming to an End?

Published On: July 13, 2015 at 2:07 pm

Author:

Categories: Landlord News

Tags: ,,,

George Osborne announced last week that higher rate tax relief on buy-to-let mortgage interest repayments will be abolished. This could cost some amateur landlords thousands of pounds per year.

This could stop potential investors buying a rental property and even force existing landlords to sell their property and seek other investment options.

So is this the end of the buy-to-let boom?

Since the first buy-to-let mortgage was introduced in 1996, property investment has beaten almost every other investment, as investors have benefitted from not only rental income, but also capital growth from increasing property prices.

They also received income tax relief of up to 45% on their mortgage interest payments, which is unavailable to residential homeowners.

Some have said that this gives investors an unfair advantage over first time buyers, which has pushed them off the property ladder.

In the first quarter (Q1) of this year, buy-to-let lending rose by around 20%, while lending to homeowners increased by only 1.6%, says Equifax Touchstone.

Research Analyst at DTZ, David Ramsden, comments: “There has been a growing trend of first time buyers being gazumped by buy-to-let landlords in much stronger financial positions.”1 

Osborne’s plan to cut the maximum buy-to-let tax relief to 20% from 2017 onwards is aimed at being fair to both landlords and first time buyers. It could also raise £665m for the Treasury in the 2020-21 tax year.

Founder of online estate agent eMoov, Russell Quirk, says that it is a bad decision for landlords: “Based on average rent, they could be up to £2,000 worse off each year.”1

Is the Buy-to-Let Boom Coming to an End?

Is the Buy-to-Let Boom Coming to an End?

Osborne has also abolished the automatic right for landlords to claim 10% of rent received on furnished properties against wear and tear costs. From April 2016, they will only be able to deduct costs that they actually incur and must supply receipts.

Older investors who bought a small number of properties to support their pension will consider this particularly unfair.

Partner at chartered accountants Blick Rothenberg, Genevieve Moore, says that the announcements in the Budget will affect ordinary workers who have saved and invested in property to boost their income.

She believes that many will leave the buy-to-let sector: “We could see a flood of buy-to-lets being sold as the squeezed middle bows out of the rental market.”1

Head of Lending at the Mortgage Advice Bureau (MAB), Brian Murphy, thinks that buy-to-let investors are being unfairly blamed for the housing crisis: “This can be remedied only be a large programme of house building.”1

Recently, the Bank of England (BoE) released its Financial Stability Report, which warned that buy-to-let is a threat as borrowers invest too much and could be forced to sell if the economy takes a downturn, which would worsen house price declines.

Others believe that buy-to-let and the property market generally will survive.

UK Head of Real Estate at EY accountants, Russell Gardner, says that reducing tax relief will only affect landlords who are in the higher rate income tax bracket: “This may marginally dampen down buy-to-let as an investment proposition for the middle classes over time, but we doubt people will sell.

“Despite the changes, buy-to-let still remains quite an attractive part of a broader investment portfolio.”1

Chief Executive at The Share Centre, Richard Stone, claims that mortgage interest tax relief has twisted investor priorities: “Many will now take a second look at other investments, such as stocks and shares.”1 

However, recent market instability will affect the appeal of equities. Chief Executive of LMS, Andy Knee, says that first time buyers have been driven out of the property market by competition from tax-subsidised landlords and should therefore welcome the changes.

He states: “They may now find securing their chosen property a little easier as a consequence.”1

Other critics believe it could be bad news for Britain’s 8.5m private tenants.

Chief Executive of MyOnlineEstateAgent.com, David Grundy, cautions that landlords could increase their rents in an attempt to recover their losses, especially those of furnished properties, while a reduction in supply would have the same effect.

He says: “Increased rents will be a major set back for tenants who are trying to save for a deposit in order to get onto the property ladder.”1

However, landlords may find the changes less damaging than initially thought.

Spokesperson for specialist lender Kensington, Alex Hammond, thinks: “Landlords should not be investing simply for the tax relief. Buy-to-let has been a massive success and should remain so.”1

The tax relief changes will be phased in gradually until they are at the basic rate in 2020-21; landlords have many years to adapt.

Furthermore, there may be a way around the changes, as they only apply to individual investors, not companies.

Head of Property Specialists Assetz For Investors, Stuart Law, says landlords can invest through a limited company instead.

In doing so, they will benefit from forthcoming cuts in corporation tax, also announced in the Budget.

Law states: “Bricks and mortar will still be seen as one of the safest and most profitable investments for years to come.”1

1 http://www.express.co.uk/finance/city/590497/Death-buy-to-let-boom-years-George-Osborne-budget

 

 

 

 

George Osborne’s Changes for Landlords Explained

Published On: July 13, 2015 at 1:02 pm

Author:

Categories: Landlord News

Tags: ,,,

In last week’s Budget, George Osborne made several announcements relating to landlords. Here’s how each of these changes will affect property investors and their businesses:

Rise in rent a room relief

Rent a room relief is provided to homeowners who rent space in their own home, usually to a lodger, as this is not restricted to single rooms.

George Osborne's Changes for Landlords Explained

George Osborne’s Changes for Landlords Explained

The property owner can choose how to be taxed on the income they receive from a lodger. They can be taxed on the amount of rent received in excess of the financial limit, or calculate the profit or loss from renting and be taxed on this instead. The relief is often the best way for someone to take in a lodger.

The amount of relief will increase from £4,250 to £7,500 from April 2016. Small B&Bs will also benefit as they can claim the relief as well, as long as the owner lives on the premises.

The rise is above inflation over the period from when the allowance was introduced in April 1992 to now. If it were increased in line with inflation, the allowance would now be £6,854.

End of wear and tear allowance

Landlords that rent out fully furnished properties can claim a tax deduction of 10% of the rent they receive each year to cover the cost of replacing furniture. This is the wear and tear allowance. They can also claim when they replace items such as crockery, utensils and linen, as and when they spend the money.

From April 2016, the wear and tear allowance will end. It will be replaced with a deduction for landlords when they actually spend the money. It is yet to be confirmed whether the deduction will apply to all expenditure, including kitchen appliances, and if it will be subject to a cap.

Landlords of partly furnished homes were stopped from claiming for the replacement of white goods in 2013. Some of these landlords now offer fully furnished properties, so will also be affected by the new changes.

Cut in tax relief on interest

Full tax relief is currently available for interest on a loan used in a property business. The funds could be used to buy a rental property, to make repairs or to finance the working capital of the business.

From April 2017, tax relief on interest in property businesses will be cut so that by 2020, tax relief will be 20%.

If a business has a low level of interest compared to the borrowings, it will not be too greatly affected. However, landlords with larger portfolios will see their business models change significantly.