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Em Morley

NLA warns over changes to mortgage interest payments

Published On: July 8, 2015 at 12:43 pm

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Ahead of today’s first Conservative only budget in over twenty years, the National Landlords Association has issued a warning that costs could spiral in the private rented sector.

The NLA’s concern surrounds the issue of buy-to-let mortgage interest payments possibly being made non tax-deductible. The firm believes that this means costs could rise to as much as £2.6bn.

Detrimental

In a letter addressed to Chancellor Osborne, Chief Executive of the NLA Richard Lambert said that any move to make mortgage interest payments non tax-deductible would be detrimental to the UK economy. Lambert believes that the proposed changes would only put increased pressure on the value of housing.

‘It has been suggested that private landlords receive too many ‘perks’ or reliefs which give them an unfair advantage compared to owner-occupiers, but this ignores the fact that letting residential property for profit is a business,’ said Lambert. ‘No business pays tax on their gross turnover alone so why should landlords be treated any differently? Removing their ability to deduct legitimate costs before declaring their taxable profit would essentially force them to suck up one of the most significant expenses they face in being able to provide homes for others.’[1]

NLA warns over changes to mortgage interest payments

NLA warns over changes to mortgage interest payments

Rise in rents

Having used figures compiled by the Council of Mortgage Lenders from the back end of 2014, the NLA suggests that costs in the private rented sector could increase by up to £2.6bn, should mortgage interest payments be reclassified as non-deductible. The firm warns that should this become law, landlords would be left with no option but to raise rents.

Concluding his letter to the Chancellor, Mr Lambert said that his firm was seeking, ‘an unequivocal reassurance that the Government will continue to regard buy-to-let mortgage interest payments as a legitimate business cost, and give landlords the confidence and certainty to invest for the future.’[2]

[1] http://www.propertyreporter.co.uk/landlords/warning-issued-over-mortgage-interest-payments.html

 

 

 

RLA’s Plea to George Osborne

Published On: July 8, 2015 at 11:51 am

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Categories: Landlord News

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The Residential Landlords Association (RLA) has spoken about what it would like to see in today’s Budget.

RLA's Plea to George Osborne

RLA’s Plea to George Osborne

Alan Ward, Chairman of the RLA, says: “The private rented sector is now the only housing tenure growing, with demand set to increase further.

“As the Financial Secretary to the Treasury has alluded to, encouraging growth in the sector is good for jobs and good for all those looking for a home.”

Last month, the Financial Secretary to the Treasury, David Gauke MP, responded to a parliamentary question by saying that private rental housing “supports the economy through improved labour market flexibility.”1

As most landlords are individuals renting out just a small number of properties, the RLA believes that the Government should recognise this as a business activity through the tax system.

The RLA is hoping for an end to tax rules that mean VAT can be reclaimed when a new home is built for owner occupation, but not for renting.

The RLA is also supporting the Government’s plans for growing homeownership, by calling for rollover relief on capital gains tax (CGT) when the sale of a rental property is to a first time buyer, with controls such as a maximum limit on price.

Ward adds: “The Chancellor has a golden opportunity to go for growth, which we urge him to seize.”1

1 http://www.mortgageintroducer.com/mortgages/253025/5/Industry_in_depth/Landlords’_plea_to_Osborne_ahead_of_budget.htm

Valuations in residential sector up in June

Published On: July 8, 2015 at 11:44 am

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A substantial growth in the UK property market has seen a surge in residential property valuations, according to a new report.

Increases

Data from an investigation by Connells Survey and Valuation shows that property valuations in June were up by 42% month and month and 23% year on year.

Valuations for current owners occupiers looking to move home were particularly strong, up by 34% June in comparison to the same month last year and 51% in comparison to May.[1]

The report suggests that home movers especially are showing different trends to those seen in April and the beginning of May. Demand is growing faster than in the market as a whole, even more quickly than the surging buy-to-let sector.

Additionally, the data indicates that valuations for first-time buyers during June were up by 16% annually and by a large 42% on last month. For the buy to let sector as a whole, valuations increased by 24% year on year and by 22% in comparison to May. For those looking to remortgage their home, valuations rose by 17% annually and by 44% month on month.[1]

Valuations in residential sector up in June

Valuations in residential sector up in June

Double-digit growth

John Bagshaw, corporate services director at Connells Survey and Valuation, commented that, ‘first-time buyers haven’t benefitted from higher house prices in the same way as those already on the property ladder. An era defining shortage of suitable first time homes, combined with still rapid rises in average prices are keeping many would be home owners renting for the time being.’ Despite this, Bagshaw observes, ‘numbers of valuations for new buyers have shown double digit growth.’[1]

However, he went on to say that remortgaging valuations fall behind many other sectors in terms of yearly growth. He feels that, ‘this could also be a sign that the numbers remortgaging to access a better mortgage rate may have reached a plateau.’[1]

[1] http://www.propertywire.com/news/europe/uk-residenital-property-valuations-2015070810722.html

 

Government Housing Plan Due

Published On: July 8, 2015 at 10:49 am

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The Government has pledged to deliver an action plan this week, explaining how it will implement some of the vague policies it has already vowed, in a bid to solve the country’s housing crisis.

Government Housing Plan Due

Government Housing Plan Due

In an announcement at the weekend, the Department for Communities and Local Government said the plan was due “early” this week. However, the Chancellor’s Budget is scheduled for lunchtime today (Wednesday 8th July).

The Department for Communities and Local Government has outlined the Government’s main plans:

  • Help to Buy – to be extended to 2020.
  • Starter homes – 200,000 to be built in the next five years for first time buyers under 40-years-old at a 20% discount on open market values. 58,000 people have already signed up to this.
  • Right to Buy – to be expanded to include housing association tenants, at a discount of up to 70%.
  • Self-build – doubling the amount of custom built and self-built homes by 2020, by giving councils a new duty to help find land for those wanting to build their own home.
  • Public sector land – identify enough public sector land for 150,000 new homes over the next five years.
  • Brownfield sites – the Government hopes to unlock sites for 400,000 new homes on brownfield land. There is an existing commitment to ensure planning permission is in place on 90% of brownfield sites by 2020.
  • Further planning reform – a Department for Communities and Local Government statement says: “We will also take action on councils that have failed to produce a plan for the homes their community needs – ensuring plans are written for those areas.”1

1 https://www.estateagenttoday.co.uk/breaking-news/2015/7/government-housing-action-plan-coming-this-week

 

 

 

Average UK house price exceeds £200,000

Published On: July 8, 2015 at 10:46 am

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Categories: Property News

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Unaffordability fears have heightened with the news that the average cost of a home in Britain has soared to over £200,000 for the first time.

According to the latest report from the Halifax, the growth in value of residential property rose for the fourth consecutive month in June to now stand at £200, 280. This means that property prices have grown higher than the £199,612 recorded during the economic boom in August 2007.[1]

Growth

The Halifax report shows that the annual growth rate has risen from 8.6% in the year to May, to 9.6% in the 12 months to June. This is the highest rate of inflation recorded since September 2014.[1]

‘House prices in the three months to June were 3.3% higher than in the preceding three months,’ noted Martin Ellis, the Halifax’s chief housing economist. ‘This measure of the underlying rate of house price growth picked up following two successive falls.’[1]

Ellis continued by saying, ‘supply remains very tight with the stock of homes available for sale currently at record low levels. This shortage has been a key factor maintaining house price growth at a robust pace so far in 2015.’ He feels that, ‘economic growth, higher employment, increasing real earnings growth and very low mortgage rates are all supporting housing demand with signs of a recent modest pick-up in demand.’[1]

Sales

Despite stock remaining low and with mortgage constraints hindering buying, the study also showed that the total number of homes sold increased during the last month by 1% to 98,540.[1]

What’s more, sales during the last quarter of the year were up 0.5% on the first three months, but were 4.2% down on the same time twelve months ago.

Across the country, house prices per square metre were found to have increased by 18% since 2010, from an average of £1,719 to £2,033 in 2015. Greater London has seen the fastest growth in Britain, with an average increase of 45%. The South East came next with a rise of 22%.[1]

Average UK house price exceeds £200,000

Average UK house price exceeds £200,000

Stunning

Economist Howard Archer went as far to say that the Halifax report was, ‘a bit of a stunner.’ He continued by saying, ‘latest data and survey evidence indicate overall that housing market activity is on the up. Additionally, reduced uncertainty following May’s general election appears to have given a lift to buyer interest.’[1]

‘Nevertheless, the upside for housing market activity and prices is expected to be constrained by more stretched house price to earnings ratios, tighter checking of prospective mortgage borrowers by lenders and the likelihood that interest rates will start rising gradually from the first quarter of 2016,’ Archer added.[1]

[1] http://www.telegraph.co.uk/finance/property/11725547/House-prices-crash-through-the-200000-ceiling.html

 

Letting Agent Fined for Not Applying for HMO Licenses

Published On: July 8, 2015 at 9:45 am

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Letting Agent Fined for Not Applying for HMO Licenses

Letting Agent Fined for Not Applying for HMO Licenses

A letting agent has been fined £8,000 for failing to apply for House in Multiple Occupation (HMO) licenses at three properties in Birmingham.

Ultrabarn did not apply for licenses for three properties in Erdington and Sutton Coldfield. The firm was fined £1,500 for each of the three offences, plus £500 each for seven breaches of HMO management regulations. It was also ordered to pay full costs of £2,631 and a victim surcharge of £120.

At one property, the letting agent did not ensure the fire escape route was maintained and there were holes in the ceiling around service pipes. It also failed to guarantee the good working order of firefighting equipment and fire alarms.

At another property, the agent breached HMO regulations regarding fire escapes. Furthermore, there was no fire blanket in the communal kitchen, no smoke detectors where required in communal areas, and insanitary conditions and inadequate provision for the disposal of rubbish.

A Birmingham City Council spokesperson says: “Ultrabarn is an experienced and well-known letting company in this part of Birmingham, and really should be setting an example. Instead, they fell well below standards we expect of the private rented sector.”1

1 https://www.lettingagenttoday.co.uk/breaking-news/2015/7/letting-agent-fined-after-not-applying-for-hmo-licenses