Posts with tag: Buy-to-Let

Rental growth slows during September

Published On: October 14, 2016 at 9:00 am

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Categories: Landlord News

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Rents in the UK increased by just 3% in the year to September, this slowest annual growth rate recorded so far in 2016.

Latest analysis from HomeLet also indicates that tenants signing a new agreement in September agreed an average rent of £910 per month.

Ups and downs

Whilst rents are up by 3% from last year, it represents a monthly drop of 0.8% in comparison to August. Rental price inflation has fallen from a high point of 4.5% in March 2016, with the rate of increase falling in each of the last three calendar months.

This slower rate of growth suggests small decreases in average rents across the UK, which could indicate that affordability thresholds are being reached.

Martin Totty, HomeLet’s Chief Executive Officer, said: ‘Landlords are being very careful to ensure rents remain affordable for tenants. Despite factors such as higher Stamp Duty on purchases for buy-to-let investors and the tax changes coming in from April 2017, it would appear so far landlords have absorbed any actual or expected decreases in their yields, rather than pass this on through higher rents.’[1]

Rental growth slows during September

Rental growth slows during September

Inflation

Private rental sector inflation is now less than house price inflation, with relative affordability of rented owner ownership improving.

The future of the rental market is still uncertain, with factors such as mortgage interest tax relief and Brexit looming.

Despite the rate of annual rental growth slowing, the September 2016 HomeLet Rental Index shows that rents are up year-on-year in 10 of the 12 regions.

Of the regions that have not seen yearly rental growth, Scotland recorded a 1.7% annual decrease, while rents in the North-East were unchanged.

Mr Totty concluded by saying: ‘Landlords and tenants alike will need to monitor the market carefully as we get closer to the April 2017 reduction in tax relief on buy-to-let mortgage interest. The recent trends in rental values appear to be changing, which may yet prove beneficial for both tenants and landlords if it reflects some rebalancing between yields and affordability. Both are important for the proper functioning of the increasingly important private rented sector.’[1]

[1] http://www.propertyreporter.co.uk/landlords/uk-rental-growth-slows-further.html

 

Student check-ins drive rents to record highs

Published On: October 13, 2016 at 8:53 am

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Categories: Property News

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Rents in England and Wales soared to record highs in August, as a result of a surge in student check-ins. Average rents now stand at £887, according to the latest Your Move England .

Seasonal soars

This figure is the highest recorded by the firm, with the pre-referendum slowdown all but over. There was definitely a seasonal influence driving the rents upwards, caused by a rise in students returning to their studies.

In particular, this rise has been noticeable in London, the South East and the North East.

August rents were 8.7% greater than those seen at the same period in 2016. This is in contrast to June, when average rents fell by 2.4%.

Capital increases

The Index also found that it is on average 30% cheaper to rent in the South East than in London.

While the capital has long been the catalyst of rent increases in the UK, other regions are now starting to surpass London. Rents in the capital rose by 6.9% year-on-year to August, to hit an all time level of £1,391.

However, this performance was bettered in the South East, with data suggesting that students drove this record high. With this said, it is unlikely that rents will continue to rise at the same level until the end of the year.

Surprisingly, the North East also saw more increased rental growth than the capital. Rents in this region were up by 12.3% year-on-year.

Student check-ins drive rents to record highs

Student check-ins drive rents to record highs

Moving forwards

Adrian Gill, Director of lettings agents Your Move, noted: ‘The rental market appears to have left any uncertainty about the market behind with prices across England and Wales again reaching record highs. London continues to be home to the highest rents but other areas such as the North East and South East are witnessing even stronger levels of growth over the year-demonstrating the seasonal impact of the student market.’[1]

‘Yields have picked up following a gentle decline in recent months, something which landlords will no doubt watch with interest over the next couple of months,’ he added.[1]

[1] http://www.propertyreporter.co.uk/landlords/students-drive-up-rents-to-record-highs.html

 

Buy-to-let mortgage lending defies tax changes

Published On: October 12, 2016 at 9:39 am

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Categories: Finance News

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Certainly, 2016 has seen landlords faced with some challenging legislations changes, as the Government tries to shift the balance of the housing market.

Former Chancellor George Osborne expressed his desire to return the market to a ‘level playing field’ between homeowners and investors. However, despite the raft of harmful regulation alterations, buy-to-let mortgage lending has actually seen a surge in activity during the last two months.

Increases

According to mortgage provider Connells, the introduction of the 3% extra stamp duty surcharge in April and other tax changes has not deterred investors. The firm’s valuation department reports that valuations for buy-to-let mortgages are actually up by 0.4% on the same period in 2015.

John Bagshaw, of Connells, noted: ‘Despite a bruising period of Government intervention, the buy-to-let sector has been finding its footing over the last couple of months, recovering from the 3% stamp duty surcharge, the restriction of tax relief on mortgage finance costs to basic rate tax only, and the removal of 10% wear and tear allowance.’[1]

‘The Government’s intervention had a significant effect in the short term but we appear to have recovered the lost ground now,’ Mr Bagshaw added.[1]

Buy-to-let mortgage lending defies tax changes

Buy-to-let mortgage lending defies tax changes

Remortgaging

In addition, Connells report that remortgaging valuation activity increased by 14.7% year-on-year. Many more first-time buyers are still entering the market to take advantage of the Help to Buy mortgage guarantee scheme, which comes to an end this December.

[1] https://www.landlordtoday.co.uk/breaking-news/2016/10/sharp-rise-in-buy-to-let-mortgage-lending-despite-stamp-duty-hike

 

HMRC urges landlords to take advantage of Let Property Campaign

Published On: October 11, 2016 at 1:39 pm

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Since the Let Property Campaign was launched in 2013, there have been more than 13,000 disclosures from buy-to-let landlords.

The Let Property Campaign was launched by the HMRC to assist landlords in paying the correct amount of tax. It offers an opportunity for landlords owing tax through letting out properties to get up to date with their arrears.

Monies

To date, the tax campaign has raked in £50m in unpaid tax, with HMRC believing that most investors failing to declare their earnings owe just a few hundred pounds in tax each year.

Many investors owing tax are thought to be smaller scale or amateur landlords, or so-called accidental landlords letting out a home they are unable to sell.

HMRC is urging people to come forward, stating that the Campaign will give those in arrears the chance to take advantage of the best possible terms.

A HMRC spokesperson said: ‘If you’re a landlord and you’ve undisclosed income you must tell HMRC about any unpaid tax now. You’ll then have 90 days to calculate and pay what you owe.’[1]

‘If you make a full and voluntary disclosure of all unpaid liabilities in these circumstances you can usually expect a lower penalty than HMRC would otherwise seek if they raised an enquiry or compliance check without the disclosure,’ they continued.[1]

Concerns

There are growing concerns that professional landlords are using Airbnb and other home sharing websites to not pay their taxes. Under current tax rules, one is legally permitted to earn £7,500 before tax is permitted to be paid.

However, reports are suggesting that a rising number of landlords are using the service in order to let their properties, as they can earn more money than through traditional rents. In addition, they are letting their rooms for more than 90 days a year, in breach of housing regulations.

A further issue is that leaseholders are letting on Airbnb. Recently the Land Chamber ruled that a leasehold flat owner has broken the law by letting out her property in breach of her lease, which stated the apartment was a ‘private residence.’

HMRC urges landlords to take advantage of Let Property Campaign

HMRC urges landlords to take advantage of Let Property Campaign

Misunderstandings

‘Regardless of whether the errors were due to misunderstanding the rules or deliberately avoiding paying the right amount it is better to come to HMRC and admit any inaccuracies rather than wait until HMRC uncovers those errors,’ the spokesperson continued.[1]

They added that any amount due would depend on why a person failed to dispose their income. As such, someone who has purposely kept information from HMRC will pay a greater penalty than if they have made a mistake.

Concluding, the spokesperson said: ‘This is an opportunity to stop worrying about what might happen, have certainty about what you owe and get things right for the future.’[1]

[1] http://www.propertywire.com/news/europe/hmrc-urges-landlords-uk-make-tax-disclosures-sooner-rather-later/

 

Buy-to-let tax alterations could lead to ‘price correction’

Published On: October 11, 2016 at 10:13 am

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Categories: Landlord News

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UK residential property prices could be set to fall sharply as a result of the Government’s buy-to-let tax changes, according to the head of Landlord Mortgages.

Alterations to stamp duty, mortgage interest tax relief and mortgage application rules could make it trickier to make a profit from property investment. This in turn could put off landlords from choosing to purchase property and drive prices down as a result.

Bubble burst

Landlords are facing changes in how much they can claim in mortgage interest tax relief from early next year. This figure will be limited to 20%, eating into many landlords’ rental yields. Higher and additional rate taxpayers could well be deterred, making buy-to-let a less attractive proposition.

Lee Grandin of Landlord Mortgages believes that no one is able to foresee when the buy-to-let bubble will burst. However, he feels that the buy-to-let changes could well be a catalyst for, ‘major price correction.’

Buy-to-let tax alterations could lead to 'price correction'

Buy-to-let tax alterations could lead to ‘price correction’

Addressing the press, Grandin said: ‘If commentators are stating the property market is overvalued then the sudden supply of property post buy-to-let tax changes could well be the catalyst for a major price correction’[1]

‘It was never going to be politically acceptable or sustainable to have Tom, Dick and Harry own a buy-to-let portfolio. Take note: A price correction where the losers are Tom, Dick and Harry with a buy-to-let portfolio and the banks who supported them is a vote winner,’ he added.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/10/buy-to-let-tax-changes-could-be-catalyst-for-a-major-price-correction

 

Another call for Government to abolish Stamp Duty

Published On: October 11, 2016 at 9:10 am

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Categories: Landlord News

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There has been yet another call for the Government to cut stamp duty, in order to stimulate the property market.

The latest plea comes from independent estate agent Haart, as part of their latest market monitor.

Price falls

According to the figures, house prices fell slightly in September (1.1%) to drop down annual house value growth to 2.7%. As such, the average UK price growth now stands at £226,229.

Demand for homes from new buyers has increased by 1.5% since August, but is still down year-on-year by as much as 22.4% across the UK. What’s more, the number of properties coming onto the market has dropped by 2.8% month-on-month and by 2.3% over the year.

Due to this decrease in stock, the number of purchasers chasing instructions has upped slightly. There are now 10 buyers for every new property that comes onto the market in Britain.

Efficiency

The property market has also become less efficient over the month, with the number of transactions decreasing but the number of viewings going up. This indicates that buyers are choosing to look at more properties before they eventually buy.

Average purchase prices for first-time buyers rose during September by 1.7% but are still down year-on-year, currently sitting at £165,092. The number of first-time buyers entering the market is also down, by 12.6% month-on-month and 32.1% year-on-year.

Capital Pains

In London, the average property price has slipped marginally, by 0.7% over the month. However, it is up by 2.4% in the year. This said, it is less than the annual growth seen across the UK.

Demand in the capital rose by 3.8% in September, but is still down by a substantial 38.5% at the same stage in 2015. Additionally, the number of properties for sale fell by 4.8% monthly and by 8.9% over 12 months. Sales are also down, by 1.9% monthly and 24.4% annually.

Average rents in London fell by 1.8% in September to sit at £1,895.

Another call for Government to abolish Stamp Duty

Another call for Government to abolish Stamp Duty

Returns

However, landlords are slowly returning to the market, after initially retreating due to the Stamp Duty rise introduced in April. During September, landlords registering an interest in buy-to-let increased by 9.2% across Britain.

Despite this, the number of overall sales transactions in the UK was down by 13.7% this month. London however saw a monthly increase of 20.8%.

Paul Smith, CEO of haart, stated: ‘Although we are seeing more positive consumer confidence materialising post-Brexit, the UK’s housing market is still marked by a number of negatives, as prices and transactions continue to fall on the month. We are however starting to see some improvements, in the form of the number of new buyers that are entering the market and the number of viewings that are taking place.’[1]

Actions

Mr Smith believes that: ‘Action needs to be taken to reverse the sluggish pace of activity, to turn these initial engagements with the property market into transactions. A greater injection of confidence and stability is also important for housebuilders, in order to reassure them they will get good margins on the potential sale price of new homes if they start building again, particularly crucial in order to reach the ambitious housebuilding targets that Sajid Javid has set.’[1]

‘This month’s monitor shows landlords are starting to return to the market despite the extra 3% hike in Stamp Duty imposed by George Osborne. This is a positive that needs to be encouraged, especially considering the Royal Institution of Chartered Surveyors suggests 1.8m more households will be looking to rent by 2025 and yet 85% of landlords have no plans to increase their portfolios,’ he continued.[1]

Concluding, Smith said that, ‘Surely it is time the new Government overturns the negative Stamp Duty hikes both aimed at buy-to-let investors and at the top end of the scale. Measures need eased in order to increase fluidity within the market as these charges are without as these charges are without doubt causing a log-jam-no wonder when buyers have to fork out and extra 3% on top of the 7% they are already paying.’[1]

[1] http://www.propertyreporter.co.uk/property/calls-for-the-government-to-dr0p-stamp-duty.html