Tag Archives: consumer
CML warns of negative impact of new 3% tax on second homes on UK housing market
The UK property market is facing a slowdown in buy to let activity due to tax changes for private landlords, says a submission to the Treasury over the extra surcharge on second properties. The Council of Mortgage Lenders is urging reform of the plans to charge an extra 3% for buy to let landlords and second home buyers from April this year to mitigate potentially negative impacts on the housing market as a whole. It says in its submission that even without the new surcharge, the forthcoming adverse tax changes for private landlords and the potential macro prudential interventions in the buy to let market will result in a slowdown. It points out that there is a risk of overkill in dampening investor sentiment to the extent that the flow of available private rented property could be disrupted, without any necessarily corresponding increase in the ability of households to become home owners. In addition, with around a fifth of households currently renting in the private sector, there is the perverse risk that the stamp duty increase could cause landlords to charge higher rents, and so actually make it harder for tenants who want to buy to save the deposit needed to do so. Under current proposals, some people will be caught by the requirement to pay the 3% surcharge even when they are buying their main residence, for example, if they have a short term overlap between owning their previous home and acquiring their new one, perhaps as a result of problems in the housing chain, the CML points out. ‘It would be better to allow people to defer their payment of stamp duty for 18 months subject to conditions, rather than require them to pay it upfront and then potentially reclaim it in the form of a rebate. This would be both fairer and more efficient,’ the submission says. ‘The government should clarify whether its policy intention is to favour institutions facilitating new build activity, or new build activity more generally. If the policy focus is on the perceived benefit arising from the economic activity, then the proposal should recognise the potential for even small scale and individual investors to contribute to this through off-plan purchases, and should not discriminate against them,’ it adds. Director general Paul Smee said that the CML’s longstanding view is that stamp duty is a blunt policy lever. ‘Given the complexity of the proposals, we also suspect that in practical terms the surcharge could cause more problems than it solves,’ he pointed out. ‘We urge the government at least to move away from a position where people will have to pay and then potentially claim back to one where payment is deferred, and only triggered if the buyer genuinely falls into the intended target category,’ he explained. ‘If the surcharge proposal is designed to promote home ownership, we think that there should be better evidence as to why this requires a reversal of growth in the private rented sector,’… Continue reading
Rebound in property prices in Sydney and Melbourne in first month of 2016
Property values across Australia’s capital cities were 0.9% higher in January driven partially by a rebound in Sydney and Melbourne, the latest real estate index data shows. The recent growth conditions have pushed the Melbourne property market into first place for annual growth with an 11% rise compared with Sydney where values were 10.5% higher over the past 12 months. The January 2016 CoreLogic RP Data Hedonic Home Value Index also shows that property values across Australia’s combined capital cities increased by 0.9% after recording no change in December and a 1.5% drop in November. Quarter on quarter values were 0.6% lower. Hobart led the monthly figures with a 4.7% jump in values, followed by Melbourne with a rise of 2.5% higher, Canberra up 2.8% and Sydney up 0.5%, while in the remaining four capital cities values were flat or down. Four of Australia’s eight capital cities recorded falling values over three months with Sydney down 2,1% over the rolling quarter, Darwin down 1.4%, Adelaide down 0.9% and Melbourne down 0.1%. The strongest growth in home values over the quarter was 3% in Hobart. Despite recording the largest annual decline in home values at 4.1%, Perth saw a rise of 1.7% over the three months to the end of January while they were up 0.8% in Brisbane and 1.2% in Canberra. While still a high rate of annual growth, Sydney’s annual rate of capital gain is now at a 29 month low and has been progressively softening since peaking at 18.4% in July last year. According to Tim Lawless, CoreLogic RP Data head of research, Melbourne’s housing market has been more resilient to slowing growth conditions which has propelled the annual growth rate to the highest of any capital city, with values 11% higher over the past 12 months. ‘Previously, during the height of the growth phase, there was a large separation between Sydney’s housing market, which was streaking ahead, and Melbourne’s, where the rate of capital gain was substantial but still well below the heights being recorded in Sydney. The latest data reveals Sydney’s housing market is now playing second fiddle to Melbourne’s, at least in annual growth terms,’ he said. ‘In fact, over the past six months, the performance gap between Sydney and Melbourne is stark. Sydney dwelling values have reduced by 0.6% between July last year and the end of January 2016, compared with a 3% rise across Melbourne,’ he explained. He also pointed out that in the last six months both Brisbane and Canberra have seen values rise by 2% while Hobart values are 1.3% higher and Adelaide dwelling values have been virtually flat with a 0.1% rise. The annual pace of growth across the Canberra market has been progressively improving, with values up 6% over the past 12 months, the strongest annual gain since November 2010. ‘The nation’s capital has benefitted from improved buyer confidence while rising demand has seen much of the housing oversupply absorbed, particularly across the detached… Continue reading
Mortgage approvals end 2015 on a strong footing, bank data shows
Approvals for home purchases in the UK increased towards the end of 2015 with December being a strong month, according to the latest figures from the Bank of England. The number of loan approvals for buying in December was 70,837 compared to an average of 69,462 over the previous six months while the number of approvals for remortgaging was 41,708, compared to the average of 39,540 over the previous six months But the next few months are likely to be very different, according to David Whittaker, managing director of Mortgages for Business. ‘The next wave of activity will be powered by landlords scrambling to complete transactions before they are hit with extra taxes. This is only just beginning,’ he said. ‘With 01 April marking the point at which Stamp Duty on buy to let properties bites, many investors have been rushing to get their mortgages completed and expand their portfolios before this date,’ he pointed out. ‘Expect this flurry of activity to continue into the first few months of 2016, as investors rush to apply for their buy to let mortgages and lenders do everything in their power to get the good applications completed before the April crunch point,’ he added. Peter Williams, executive director of Intermediary Mortgage Lenders Association, pointed out that December was the busiest month for remortgaging in over two years, with activity growing more than twice as fast as overall approvals. ‘The continued appetite for remortgaging was likely to be a sign of home owners eager to capitalise on market competition and lock into lower rates, especially with US raising interest rates for the time in nine years and expectations the UK would follow suit in the not too distant future,’ he explained. After the Autumn Statement extensions to Help to Buy, and the rock bottom base rate lasting out the year, first time buyers were feeling decisive, and this was mirrored by a clear upswing in house purchase approvals from November to December, according to Peter Rollings, chief executive officer of Marsh & Parsons. ‘This energy has definitely been carried over into 2016, and January has already seen an impressive influx of motivated buyers, eager to progress up the property ladder,’ he explained, adding that 2015 was also the year of remortgaging for many existing home owners and this momentum is showing no signs of dissipating while cheaper fixed rate mortgages remain available. ‘But in the coming months we can expect strong buy to let lending, as the April introduction of higher stamp duty for second homes gives a new sense of urgency for those looking to invest in property or expand their existing portfolio,’ he added. Continue reading
