Tag Archives: autumn
Landlord campaigners should know soon if tax challenge can go ahead
The legal campaign to overturn the proposed UK Government’s decision to phase out the tax relief that residential landlords can currently claim on their mortgages will know next month if its challenge can be taken further. There will be a hearing around the end of the month to determine whether or not there will be a judicial review of the move to reduce the tax relief from 2017 to 2020 until it meets the basic tax rate. Landlords and organisations have warned it could put off new landlords coming into the private rent sector and also hit existing landlords who will have little choice but to pass on the extra cost to their tenants in the form of higher rents. Landlord campaigners Steve Bolton and Chris Cooper said that they also have a meeting with the new housing minister Gavin Barwell on 09 September when the issue will be discussed. ‘We will obviously be raising our serious concerns about the impact, making him aware of our legal challenge and doing the best job we can to help him become a supporter of our cause within Government,’ they said. It is not the only tax change landlords have faced recently. Earlier this year a new 3% extra stamp duty was levied on the purchase of additional properties which included buy to let investments. The Scottish Association of Landlords (SAL) and the Residential Landlords Association (RLA) have both warned that these tax changes threaten to increase costs, making it easier for irresponsible landlords to provide sub-standard housing to tenants and threaten housing supply for those who believe renting is the most suitable option for them. The Scottish Association of Landlords (SAL), along with the Residential Landlords Association (RLA) south of the border, have launched a joint campaign to convince the new Chancellor of the Exchequer to reverse or amend tax changes in his Autumn Statement expected later this the year. They pointed out that a recent YouGov survey for the Council of Mortgage Lenders suggested that 34% of landlords will reduce their investment in the private rented sector as a consequence of these tax changes. Alongside this, the Scottish Government has introduced a 3% levy on the Land and Buildings Transaction Tax (LBTT) for those buying additional properties, including properties to rent out. ‘We know from our regular branch meetings around Scotland that landlords are already seeing increased costs as a result of tax changes. As well as impacting on individual landlords, we are concerned this could make it harder to tackle the current housing crisis by making it more difficult to attract much needed investment,’ said John Blackwood, SAL chief executive. ‘With the uncertain investment environment that has been created by the Brexit vote, at least in the short term, the last thing anyone in the housing sector needs is tax rises which will only make things worse,’ he explained. ‘Furthermore,… Continue reading
UK property prices up 0.2% month on month in July and annual growth slowed
Residential property prices in the UK increased by just 0.2% month on month in July and by 5.5% year on year to £293,318, according to the latest index data to be published. But there has been a gradual decline in annual growth since February when it was running at 8.9%, and excluding London and the South East year on year growth was 4.8%, the figures from the LSL Property Services/Acadata index shows. The index also shows that quarter on quarter sales were down 20% year on year compared with the second quarter of 2015 but the index report says it is too early to say if Brexit is impacting the market. The East of England was the top performing region with annual growth of 9.3%, up from 9.1% the previous month. This was followed by annual price growth of 7.2% in the South East and 6% in Greater London. According to Adrian Gill, director of Your Move and Reeds Rains estate agents, while the vote to leave has definitely resulted in uncertainty, there’s near unanimity among commentators that the impact is yet to show in the figures and for now, we’re left with mixed signals. He explained that on the one hand, house price inflation on an annual basis continues to slow year on year but last month saw the market continue its fight back following price falls in March to May with July recording a modest gain after June’s 0.5% rise, with average prices up 0.2% or £700. However, overall this means prices remain £3,386 below their February peak, but £15,422 above their July 2015 levels. The index report suggests that the fall in sales is less to do with the referendum vote than the surge in activity to beat the 3% stamp duty surcharge introduced in April on second homes and buy to let properties. It points out that the spike in sales in March was followed by a massive decline the following month, from which the market has since been recovering. It also points out that transaction volumes have grown every month since April and are now well above February levels. Moreover, the exceptional sales level in March 2016 more than compensates for the decline since. ‘Overall, for the first six months of each year, we estimate transactions in 2016 at some 4% higher than in 2015. Sales volumes continued to increase in July, but again this still tells us little about the referendum vote, since transactions recorded at the Land Registry for the month mostly relate to offers made by purchasers in June, or even earlier,’ Gill explained. He added that the April stamp duty change may also account for much of the apparent slowdown in prices as prices increased above trend from January to March after the announcement of the change in the Autumn Statement last year. Meanwhile, from April 2016, with the new tax in place, a reduction in the number of higher-valued properties… Continue reading
Rents in central London’s prime market down but activity is stronger
Rental values in the prime central London lettings market fell by 3.6% in the year to July 2016 but activity is stronger than last summer, the latest index shows. Values were down due to higher stock levels and a degree of uncertainty surrounding the European Union referendum result, according to the report from international real estate firm Knight Frank. Where the rental value is regarded by prospective tenants as being right properties are being taken up and the number of tenancies agreed in the three months to June rose 3% compared to 2015 and viewings increased 15.8%, the data from Knight Frank also shows While overall the number of new prospective tenants fell 6.8% over the same period, the number of tenancies started via Knight Frank’s corporate relocation service increased 72% in the same period but prime gross rental yields were flat at 3.1%. According to Tom Bill, head of London residential research at Knight Frank, there are parallels between the lettings and sales markets because the Brexit vote has reinforced the existent pricing trends rather alter market fundamentals. ‘Demand has been relatively flat since the start of the year due to uncertainty surrounding the state of the global economy, particularly in the financial services sector, which contributed towards a slowdown in rental value growth from its last peak of 4.2% in May 2015,’ he said. ‘This trend has been compounded by higher levels of supply as stock has moved across from the sales market, with more vendors becoming landlords due to weaker conditions in the prime sales markets,’ he pointed out. ‘In the three months to the end of June this year, the number of new rental properties placed on the market rose by 49% compared to the same period last year. As a result, landlords are reducing asking rents to prevent void periods and tenants are becoming more selective,’ he explained. Indeed, properties where the asking rent is perceived as too high are struggling to get viewings and Bill believes that the referendum result has simply reinforced this dynamic and landlords are increasingly taking a pragmatic approach to asking rents against the background of wider Brexit uncertainty and rising stock levels. He also pointed out that despite the three month decline in the number of new prospective tenants registering, the expectation is that rental volumes will continue to rise over the summer and into the autumn. ‘The uncertainty ahead of the Brexit vote could be an explanatory factor for weaker registrations, although early signs are positive with no significant announcements that companies are pulling back from relocating staff to London following the referendum,’ he added. Knight Frank also found that relocation budgets in many cases have risen due to the effects of a weaker Sterling, which means tenants are looking in higher-value areas and at higher value properties compared to last year. The number of new prospective tenants registering with a budget of £1,500 plus per week increased 11% in the three… Continue reading
