Tag Archives: australian
The UK tax changes for landlords trigger lending surge
Radical changes to the tax for buy to let landlords in the UK have already triggered a surge in borrowing with the latest announced last week set to have a similar effect, a new report suggests. The changes announced in the Budget in the summer to lower the tax relief for mortgage interest payments for landlords from April 2017, has already caused an increase in the number of landlords seeking to create limited companies. According to the Buy to Let Britain report from specialist mortgage lender Kent Reliance this has resulted in applications for incorporation increasing 213% year on year. It says that a quarter of all buy to let mortgage finance is now through limited companies, up 13% on a year ago. For the whole buy to let market this means 56,800 buy to let loans will be issued to companies in 2016, conservatively assuming total lending doesn’t grow. This is an increase of over a fifth compared to the estimated total for 2015 and up 90% on 2014. Following the Autumn Statement, the Treasury is now consulting on whether corporate entities with over 15 properties would be excluded from the newly announced stamp duty surcharge, an exemption that will add further incentives for professional landlords to incorporate, boosting demand, the firm says. The switch to limited companies will not be the only impact of the recent tax changes. The average value of a buy to let property stands at £220,726 and the new 3% stamp duty charge announced in the Autumn Statement would represent an additional upfront charge of £6,622. The firm says that many landlords will naturally seek to recoup this through rental charges. If a landlord held a property for 10 years, spreading this cost over the duration would represent an increase in rent of £55 per month for a tenant. This would support rental inflation which currently stands at 8.3% on an annual basis. Andy Golding, chief executive of OneSavings Bank, which trades under the Kent Reliance and InterBay brands, said that the changes to the tax treatment in the last six months will bring unintended consequences. ‘First, the rush to put properties inside a limited company will be sustained, especially if larger scale investors are indeed exempted from the new stamp duty surcharge. Secondly, the buy to let market will see activity hit overdrive between now and April as landlords seek to beat the stamp duty deadline,’ he explained. ‘Smaller scale investors are now more likely to think twice before investing and I see that as a good thing. However, in the longer term, it is tenants who will pay the price of the chancellor’s tax raid on buy to let, as landlords will recoup increased costs through rent increases. Ultimately, the move will do little to help tenants save for a deposit on a home of their own. Making rented homes more expensive was surely not the Chancellor’s intention,’ he pointed out. He believes that… Continue reading
Poll finds UK home buyers think conveyancing process it old and slow
The legal conveyancing process when buying a home in the UK is often seen as too complicated and slow and in need of modernisation, according to a new survey of home owners. Some 42% felt their experience of the process was too complicated and slow and only 4% of felt the process was quick while 23% felt it need to be brought up to date, the YouGov poll for land, environment and property data firm Landmark Information Group. With home buyers becoming more aware of environmental risks that could affect properties following high profile flooding events, the emergence of sinkholes and other such land based risks, some 37% agreed that the home buying process would be improved if all environmental search information was provided online, instead of through the post. To add to this, 22% said they were confused and relied on the guidance provided by the solicitor when receiving the environmental search reports, in order to summarise the key findings and interpret the risks. When asked whether enough environmental information is provided as part of the home buying process, 785 people from the total 1,314 respondents provided an answer, of which 26% felt that not enough information was provided to them by their solicitor. ‘With everything being digital in today's world, people are used to carrying out transactions with speed and immediacy. It is clear that changes need to happen in order to meet people's evolving needs and expectations,’ said Angela Gordon-Lennox, product manager (legal) of Landmark Information Group. The survey also found that 22% want easy to read information, while 37% agreed or strongly agreed that the home buying process would be improved if all environmental information from a conveyancing solicitor was provided via the Web instead of through the post. The firm is currently market testing a new all in one environmental report for the conveyancing industry called RiskView Residential which also provides interactive links to an online portal, enabling home owners to instantly visualise environmental risks on a digital map. The aim is to collectively present the findings previously provided in four separate legal reports in one order. This includes flood risk, contaminated land, ground hazards, and energy and infrastructure. The combined analysis is delivered in an easy to read lightweight PDF report, which includes interactive web-links enabling conveyancers and their clients to click through and instantly view the data within an interactive online map. ‘So far, the feedback received is that not only does RiskView Residential help simplify the process, but it is the first radical step in taking conveyancing due diligence into a fully digital age,’ said Gordon-Lennox. Continue reading
Property price growth in Australian capital cities continues to fall
Home price growth in Australian capital cities fell in November with the slowdown recorded the previous month in Sydney and Melbourne in particular continuing, according to the latest CoreLogic RP Data index. Over the month, Melbourne values fell by 3.5% while Sydney values were down 1.4%. Hobart dwelling values dropped by 2.4%, Darwin values were down 1.3% and down 0.5% in Canberra. Values rose in the remaining three capital cities, with Adelaide showing the highest month on month growth rate at 0.7%, followed by Brisbane with growth of 0.6% and Perth up 0.3%. Overall the combined capitals housing index has seen dwelling values drop by 1.5% over November, taking the rolling quarterly rate of change to -0.5%. Head of research Tim Lawless pointed out that the latest results are now placing downwards pressure on the annual change in dwelling values. The annual rate of growth across the combined capitals index peaked at 11.5% back in April 2014, and has since reduced to 8.7%. Sydney maintained the highest annual growth rate at 12.8%, which is down from a peak rate of annual growth of 18.4% in July earlier this year, while Melbourne’s annual growth rate has reduced from a recent peak of 14.2% to 11.8% over the 12 months ending November this year. The only capital cities where values have declined over the past year are Darwin with a fall of 4.2% and Perth with a fall of 4.1%, where weaker economic conditions and a slowdown in population growth contributed to an early peak in housing market conditions in December last year. The equivalent peak in the cycle for Darwin was May 2014. Since that time, Perth values are down a cumulative 5.9% and Darwin values have fallen by a larger 6.8%. ‘The fact that mortgage rates have risen independently of the cash rate has, in all likelihood, become a contributor to the slowdown in housing market conditions, as well as tighter lending practices evidenced by a recent reduction in lender risk appetite for investment loans and high loan to valuation ratio mortgages. Tighter mortgage servicing criteria across the board and affordability constraints in the Sydney and Melbourne markets are also having an impact on market demand,’ said Lawless. As a consequence of the tighter lending environment for investors, as well as gross rental yields being at near record lows, participation in the housing market from investors has reduced from 54.1% of all new mortgages in May 2015 to 45.4% at the end of September, which is the lowest level since July 2013. The 1.5% decline in capital city dwelling values over the month, coupled with a 0.3% rise in weekly rents, has seen the average gross yield record a subtle improvement over the month. This follows a trend towards lower rental yields which commenced in May 2013, Lawless pointed out. Gross yields remain close to record lows for houses in Melbourne at an average of 3% while Sydney has overtaken Melbourne… Continue reading
