Posts with tag: Buy-to-Let

RLA calls for changes to tax relief proposals in Budget

Published On: March 7, 2017 at 10:32 am

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Tomorrow sees another important Budget announcement that is sure to have implications for the UK property market.

The Chancellor Phillip Hammond is being encouraged to use the Budget to change upcoming alterations to mortgage interest tax relief.

Tax Relief Changes

Existing rules permitting landlords to offset all of their mortgage interest against tax is being phased out from next month. The process will take until 2020/21 to complete.

Once the relief has been fully withdrawn, Section 24 will mean that landlords can only claim back basic rate of tax at 20% from their tax bill. Of course, this will impact on their rental returns.

The Residential Landlords Association has again called for changes to the proposals ahead of tomorrows Budget. The trade body is challenging the Government over suggestions that buy-to-let investors are taxed more favourably than homeowners. This claim has been highlighted as the main reason that the controversial interest relief changes have been suggested.

RLA calls for changes to tax relief proposals in Budget

RLA calls for changes to tax relief proposals in Budget

Hardships

Chairman of the RLA, Alan Ward, said: We are now weeks away from a tax change that risks investment in new homes and will cause considerable hardship for tenants. It is troubling that Ministers have not published any evidence to back up their assertions that landlords are taxed more heavily than home owners. This is no way to make policy.’[1]

‘We call on the Government to use the Budget this week to halt its planned tax changes which will do a little to provide the new homes to rent they claim to want,’ Mr Ward added.[1]

In addition, the RLA is writing to the Office for Budget Responsibility to give clarification on the extra burden on landlords in comparison to homeowners

[1] https://www.landlordtoday.co.uk/breaking-news/2017/3/government-challenged-on-tax-changes-that-will-cause-considerable-hardship-for-tenants

London the second most expensive city in the world to rent a property

Published On: March 7, 2017 at 9:39 am

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A new study has revealed that London is the second most expensive city in which to rent a property in the world.

The English capital stands only behind San Francisco in the expense stakes, according to a new report from Barratt London.

Rising Rents

Tenants in the capital are now paying on average, half of their monthly salary to rent a one-bedroom flat. On average, the price of this kind of accommodation in London is £1,250pcm.

Despite this falling below the £2,532 seen in New York and £1,558 in Sydney, Londoners are paying more based on average salary and average rental prices. Typically, Londoners spend 45% of their wages on rent, second only to the 47% paid by those in San Francisco.

A Barratt London spokesman said: ‘Rental prices in London continue to demand too much of the occupier, to the extent of almost half of their monthly pay cheque. Renting must remain a viable option for those looking to move home, but residents might want to consider a buying market that offers plenty of incentives for first-timers.’[1]

London is the second most expensive city in which to rent in the world

London is the second most expensive city in which to rent in the world

‘The London Help to Buy scheme, for example, is helping first-time buyers get on the property ladder more affordably, with just a 5% deposit and an equity loan that is interest-free for the first five years,’ the spokesperson added.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/3/london-crowned-second-most-expensive-city-to-rent-in-the-world

 

Is Preston the next hot buy-to-let region?

Published On: March 6, 2017 at 10:16 am

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The North of England is thriving, with support from the Northern Powerhouse concept drawing plenty of property investment.

In turn, this concept is helping to drive up property prices and rental values across the region. This has been led by Manchester, but other areas are likely to see further growth.

However, last year saw a turning point for the North West’s third city, Preston.

Regeneration

Big scale investment and regeneration programmes such as the £440m City Deal, are expected to create more than 20,000 new jobs in the next ten years. This is expected to boost the local economy by more than £1bn.

The University of Central Lancashire, based in Preston, recently announced plans to invest a further £200m into the city campus. This will see numbers rise to over 50,000, making this University the fourth largest in England.

What’s more, the city has seen the refurbishment of Winckley Square, with plans to convert several unoccupied buildings here into high-end residential apartments.

Preston offers easy access to the M6, M61, M65 and M55 motorways and is less than an hour from Manchester, Liverpool and the Lake District.

Just over 40% of the UK’s working population live within a one hour commute, making Preston an ideal location for firms. In addition, the city was named as the number one place to live for quality of life in the North of England in 2016.

Is Preston the next hot buy-to-let region?

Is Preston the next hot buy-to-let region?

Savvy Investors

Smart investors are now looking to the city centre, where large Victorian and Georgian properties can be purchased for the same price as a two-bedroom apartment in Manchester.

Typical rental yields are Preston are:

1-2 bed new build city centre apartment-7.8%

2 bed terraced house or flat-6.2%

3 bed semi detached house-5.5%

3-4 bed detached house-5%

Rental price inflation running below general inflation

Published On: March 3, 2017 at 9:43 am

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New figures indicate that rental price inflation is running below general inflation, as many landlords are coming to the conclusion that a number of tenants have, or are approaching, an affordability ceiling.

The HomeLet Rental Index shows that the annual rate of rental price growth reached 0.8% in February. This is below the general rate of inflation, which stands at 1.8%, according to statistics.

Rents

In addition, the figures show that the average UK rent for a new tenancy starting in February was £895pcm. This was a rise from £888 seen at the same period last year.

Annual rental price growth has slipped from a high point of 4.7% in June 2016. There has been a fall in pace of rental inflation in regions of the country where rents were previously rising most.

HomeLet’s research suggests that more than half of the 3,726 landlords questioned could have no alternative but to raise rents in the face of increasing pressures. These have been caused by upcoming tax changes, though almost a third said they will defer rent rises until 2018.

The table below shows how rents have risen month-on-month and year-on-year in twelve regions surveyed:

Region Average rent in February 2017 Average rent in January 2017 Average rent in February 2016 Monthly variation Annual variation
Yorkshire & Humberside £623 £615 £604 1.3% 3.0%
Northern Ireland £604 £602 £589 0.3% 2.5%
North West £677 £673 £661 0.7% 2.5%
Wales £602 £606 £589 -0.6% 2.1%
East Midlands £596 £583 £586 2.3% 1.8%
West Midlands £660 £658 £650 0.2% 1.5%
East of England £896 £893 £885 0.3% 1.2%
Greater London £1,520 £1,497 £1,514 1.6% 0.4%
North East £524 £527 £524 -0.7% 0.0%
South West £791 £791 £791 0.0% 0.0%
South East £992 £989 £994 0.3% -0.2%
Scotland £597 £606 £603 -1.5% -0.8%
           

 

Rental price inflation running below general inflation

Rental price inflation running below general inflation

Affordability

What’s more, the survey found that landlords appear to be sympathetic to ensuring that rents are affordable for tenants. Pleasingly, 96% of landlords said that they are happy with their existing tenants.

Martin Totty, Chief Executive of Barbon Insurance Group, parent company of HomeLet, said: ‘Our research again demonstrates that the vast majority of landlords have positive working relationships with their tenants.’[1]

‘In recent months, we have seen landlords treading very carefully with rental price rises, amid concerns about tenants’ ability to pay. With more than one in five landlords blaming an increase in their tax liability for raising rents, it remains to be seen if this can sustain. Landlords will hope the Chancellor does not make it harder for them to continue supporting their tenants in this way, with further changes to the tax system or legislation, as he prepares to unveil his Budget on the 8th March,’ he added.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/3/private-sector-rents-rise-below-inflation

North East property prices stagnant in February

Published On: March 2, 2017 at 12:22 pm

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New analysis from North East based property firm KIS has shown that property prices in the region have been largely unchanged in the last four weeks.

Prices increased by just 0.1% or £203 in cash terms.

Steady

This is in comparison to a fall of 3.1% in January, which saw £5,200 taken of the value of a typical North East property. Now, a typical property in the region will cost £163,794-4.3% greater and £5,609 more than figures seen in February 2016.

Seaham (1.7%), Whitburn (1.5%) and Darlington (1.4%) saw above average rises in house values. However, nine out of twenty areas surveyed prices fall, including Blyth (-2.9%), Houghton-le-Spring (-1.2%) and Peterlee (-1.1%).

Year-on-year, Killingworth leads the way for property price growth, with values 6.9% greater than in 2016. Other strong performers included Tynemouth (6.8%) and North Shields (6.2%).

Rents

North East rents increased slightly to £589 in the last month, a rise of just £3 in the last four weeks. Year-on-year, rents are £34 higher on average-6.1% more.

Rental yields stayed the same, with landlords receiving an average return of 4.3% on their investment.

Investors in the North East are seeing returns 25% greater than in London and almost double than those in Cambridge. Blyth is the cheapest place to rent in the region, at £418pcm, while Tynemouth is most expensive (£993pcm).

North East property prices stagnant in February

North East property prices stagnant in February

Waiting Game

Ajay Jagota, founder and Managing Director of sales and lettings firm KIS Group, noted: ‘With a budget just around the corner and the government intending to trigger Article 50 at the end of March it’s pretty predictable property buyers and sellers alike are adopting a ‘wait and see’ approach for the time being.’[1]

‘It’s fascinating that although house prices across the region were static as a whole house prices behaved markedly differently in the different halves of our region. With the exception of Blyth, prices followed the regional trend of stability North of the Tyne. In the South, there was a lot more volatility – with property values noticeably exceeding regional growth in places like Seaham, Whitburn and Darlington, but bucking the North East trend by falling in Houghton-le-Spring and Peterlee,’ he continued.[1]

Concluding, Jagota said: ‘From a buy to let perspective, the North East continues to perform strongly, offering returns for investors which are on average 25% higher than London, and as good as twice as strong as perceived investor hotspots like Cambridge.’[1]

[1] http://www.propertyreporter.co.uk/property/north-east-house-prices-remain-flat-in-february.html

 

Prime Scottish locations luring overseas buyers

Published On: March 2, 2017 at 11:31 am

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An increasing number of high-end property investors, including many from overseas, are looking for prime central Scottish hotspots.

This has helped to boost property market activity in Scotland, with the residential market at its strongest since 2008.

Rises

Research conducted by Savills reveals that the number of residential sales in Scotland last year was 9% above the ten-year annual average.

The firm said that the Scottish property market lured more top-end buyers from outside of the country, partly as a result of more favourable exchange rates.

Andrew Perratt, head of Savills residential sales in Scotland, noted: ‘In times of political and economic uncertainty, high net worth investors are drawn to prime central hotspots which are considered safe investments and good value for money. That is exactly what we are seeing here: interestingly not only is there more investment from outside Scotland in residential property, but also in commercial and rural markets.’[1]

‘Scotland is being seen as a sensible place to do business and invest in land and property across the sector. Scotland is not depicted by boom and bust but by a healthy functioning market,’ he continued.[1]

Prime Scottish locations luring overseas buyers

Prime Scottish locations luring overseas buyers

Supply/Demand imbalance

A growing imbalance between rising demand and lack of supply in central regions is leading to increased price growth. This is now filtering through to the heartlands of Tayside, Stirlingshire and Fife.

In 2016, transactions and prices in Scotland rose by 3% and 3.5% respectively.

Faisal Choudhry, head of research at Savills, said: ‘Buyer sentiment across the UK market will remain sensitive over the next few years as the process to leave the EU unfolds. However, so far, the market north of the border as been more protected from political vagaries: we anticipate a slowdown in value growth and for realistic pricing to drive a continued recovery in transactions.’[1]

[1] https://www.propertyinvestortoday.co.uk/breaking-news/2017/3/prime-hotspots-provide-safe-investments-and-offer-good-value-for-money