Tag Archives: capital-gains
North West of England named as most lucrative region for PRS landlords
The North West of England is the most lucrative region in the UK for private rented sector landlords with Manchester and Liverpool coming out top for rental yields. The latest quarterly report from online property marketplace LendInvest also shows that Cardiff, Coventry and Oldham come next, followed closely by Sunderland, Blackburn and Durham The report, which tracks changes in trends in rental yields, capital gains and landlords’ total return on investment, also shows that London and the South East lead house price growth. Indeed, all of the top 15 performing postcode areas for capital gains are located in London and the surrounding area. However, inner London takes only 18th place for rental yield, but is top for capital gains Overall, capital gains continue to track average house price and 80% of the 15 best postcode areas for capital gains also feature in the top 15 for average house prices. However, the report points out that rental yields are no indication of average house price. Only one of the top 15 postcode areas for rental yield also features in the top 15 for house prices. Christian Faes, chief executive officer of LendInvest, believes that tax changes could impact the market next year. ‘There could be some weakening in London’s dominance of capital gains tables if house price growth does soften slightly as forecast, and as new buy to let stamp duty hikes take effect,’ he said. ‘Inner London margins may narrow slightly, creating opportunities for house prices in other postcode areas, particularly those in the south of England, to better compete,’ he added. But he also explained that changes to mortgage interest tax relief and stamp duty for landlords will help to professionalise the buy to let market and this would benefit tenants and aspiring home owners. ‘Landlords whose tax payments under the new regime make letting their properties unsustainable, may make arrangements to leave the market. In turn, we will see fewer highly geared rental properties that push up prices and take stock out of the housing supply for aspiring owner occupiers and first time buyers drawn to densely populated urban area for work,’ explained Faes, He also said that across the country there is still no one place for market leading yields and capital gains and 2016 could be the year of the ‘cross country landlords’, professional landlords who live in one city and rent out houses in another. ‘We could expect to see more landlords letting property in the North and Midland’s major urban areas for more immediate upside, without moving from their family homes in which gains can be longer to materialise,’ he added. Continue reading
Buy to let industry hits out at extra property tax to be introduced next year
There has been a furious reaction to the UK Government’s plans to introduce an increased rate of Stamp Duty for property investors purchasing buy to let properties and those buying a second home from April 2016. Stamp Duty will be calculated at an extra 3% on top of the basic rate if a property is for buy to let purposes, bringing in some £880 million for the Treasury by 2020. But large corporate investors will be exempt from the charge, the Chancellor of the Exchequer has announced. But the industry is furious, saying that it will result in house prices being pushed up between now and next April as would be landlords wanting to extend their portfolios do so before the new rate comes in, then it could result in a catastrophic drop in buy to let investment which would in turn force up rents due to a shortage of supply. David Cox, managing director of Association of Residential Letting Agent (ARLA), described the move as a ‘catastrophe’. He pointed out that it is a bitter blow to landlords coming on top of recent changes to mortgage interest tax relief and the annual wear and tear allowance. ‘Increasing tax for landlords will increase rents and reduce property standards for tenants. To make owning a BTL property financially viable, landlords will need to pass on the increased stamp duty costs to tenants, who will in turn see less spent on maintaining their property and of course see increased rents,’ said Cox. ‘The changes will also deter new landlords from entering the market, pushing the gap between dwindling supply of available property and growing demand even further apart, which will also in turn push up rental costs. In London, where demand is so strong and last year’s stamp duty changes hurt, rather than helped, will see tenants having the greatest burden to bear,’ he added. Richard Lambert, chief executive director of the National Landlords Association, believes that it will cut off future investment in private properties to rent. ‘The exemption for corporate investment makes this effectively an attack on the small private landlords who responded to the housing crisis by putting their own money into providing homes by the party that they put their faith in at the election,’ he said. ‘If it’s the Chancellor’s intention to completely eradicate buy to let in the UK then it’s a mystery to us why he doesn’t just come out and say so,’ he added. David Gibbs, partner at Alliotts Accountants, pointed out that not only will buy to let investors be hit with additional stamp duty on purchase but also a requirement to pay capital gains tax within 30 days of a sale. ‘Investors will face a hike of 3% on stamp duty for all buy to let purchases from 01 April 2016. That means stamp duty rates will run from 5% for property over £125,000 up to 15% on property… Continue reading
House prices growth flattens in Sydney, latest index shows
House price growth in Sydney has flattened and values in three other Australian capital cities fell in September, according to the latest residential index. Overall there was a 0.9% rise in capital city property prices over the month and a 4% rise in the September quarter, the CoreLogic RP Data home value index shows. However, across the capital cities, the month on month results ranged from a 2.4% rise in Melbourne to a 1.9% fall in Hobart while Sydney, posted a month on month gain of just 0.1% in September. During the September quarter, half of Australia’s capital cities posted a decline in dwelling values with Hobart down 2% over the three months. In Adelaide values slipped by 1.6%, in Perth they fell by 0.7% and Canberra values were down 0.4%. The most substantial capital gains over the quarter were achieved in Melbourne where dwelling values were up by 7.4% followed by Sydney at 4.6 %, Brisbane at 1.9% and Darwin up by 0.4%. Head of research Tim Lawless pointed out that the flat growth rate in Sydney comes after dwelling values increased by 16.7% over the past 12 months and they are 49.6% higher over the growth cycle to date. ‘The slower month on month reading across the Sydney market comes at a time when auction clearance rates have slipped to the low 70% range from week to week and the number of advertised properties has risen,’ said Lawless. ‘Vendors are still enjoying strong selling conditions, but it looks like buyers are slowly regaining some leverage in what has been a very hot market. Meanwhile, while half of Australia’s capital cities have seen values rise over the past quarter and year, the other half did not fare as well,’ he added. In Darwin, dwelling values fell by 3.9% over the 12 months to the end of September, while in Perth values were 0.9% lower over the year. Adelaide home values dropped by 0.3% and Hobart values are 0.2% lower. Weakening labour markets, slower population growth and less demand for housing is placing downwards pressure on prices to differing degrees across these markets, according to Lawless. Looking at which sector of the housing market is driving the highest capital gains, across the combined capital cities it has been the most expensive quartile of the market where growth has been the most substantial. Across the combined capitals, the top quartile of dwellings based on value has recorded growth of 12.3% over the past 12 months, while the most affordable end of the market has recorded a lower growth rate of 8.5%. ‘This trend holds true across Sydney and Melbourne, however in Brisbane, Adelaide and Perth it is actually the most affordable end of the housing market that has recorded the best results,’ Lawless said. CoreLogic's analysis of houses versus apartments reveals some substantial differences in market performances across the capital cities. At a capital city level over the quarter, the results don’t show a great deal of difference with… Continue reading
