Tag Archives: finance
Remortgage numbers in UK up in June, but value down
The number of remortgages taken out in the UK increased in June, but are down slightly in value month on month and year on year, the latest data shows. The value of remortgaging is now lower than the same time last year, the first month in 2016 where the value of remortgage lending has fallen year on year, according to the figures from LMS. It means that the average amount of equity withdrawn in June has fallen by 15% year on year and 13% month on month while total equity withdrawn is 14% lower than the same time last year. Overall there were 32,873 remortgage loans taken out in June, a rise of 6% from May when there were 30,900 loans and 1% higher than June last year, when there were 32,700 However, June was the first month in 2016 where the value of remortgage lending fell year-on-year, according to LMS and suggesting a drop in momentum. Each month of 2016 saw annual increases in the value of remortgage lending but June bucked the trend, falling from £5.3 billion in June 2015 to £5.1 billion, a drop of 3%. The average amount of equity withdrawn per customer from remortgaging is also lower than last year, down 15% in comparison to June last year when it stood at £34,505. The average amount of equity release has also decreased 13% month on month from £33,691 in May to £29,375 in June. Annually, the total amount of equity withdrawn has also fallen, by 7% from £1.04 billion in May to £966 million in June. This is 14% lower than the same time last year, when equity withdrawn from remortgaging hit £1.13 billion. There is some good news for remortgagors in terms of affordability pressures. In May 2016, average household income was £45,672, recovering slightly from a 10% fall between March and April. The rise in household incomes, and because rates remained stable, means annual repayments for remortgages have fallen from £8,694 to £8,390, nearly £300 less. The monthly rise in income has therefore driven the annual repayment as a percentage of income down from 19.3% in April to 18.4% in May. ‘We witnessed a strong start to the year with remortgage lending up year-on-year each month in 2016, when in a safer, surer climate, home owners had rushed to remortgage in a desire to lock into better rates before a possible rate rise. But activity in June has slowed with the value of remortgage lending down as indecision increased in the lead up to, and following, the referendum,’ said Andy Knee, chief executive of LMS. ‘While we’ll only begin to see the referendum result’s real impact from July’s figures onwards, it is very likely the small drop occurred as people took pause amid Brexit uncertainty before making any decisions. As the terms for Brexit are negotiated, there will be… Continue reading
Foreign owners of property in Australia face new 10% selling tax
New laws introduced at the beginning of July mean that foreign owners of property in Australia worth £2 million or more face paying an extra 10% in tax. Sellers must have proof that they are Australian citizens to avoid the tax which has been introduced in a bid to deter wealthy forging buyers from pushing up property prices. The change came at a time when prices in Australian state capitals were soaring and much of this was blamed on so called wealthy investors, especially from China. The Real Estate Institute of Australia (REIA) supports the legislation, but is concerned that there has not been enough publicity and stressed the importance of real estate and legal professionals understanding their obligations under the new laws. ‘Essentially this is the Goods and Services Tax (GST) process coming into effect in the housing market, which is long overdue in Australia,’ said REIA president Neville Sanders. ‘Failure to get a clearance certificate stating their Australian residency will mean vendors fall under the same conditions as foreign investors and will be required to pay this immediate 10% tax,’ he explained. ‘ ‘It is of the utmost importance that legal professionals ensure the timely receipt of clearance certificates for their clients, to ensure settlements proceed without delay,’ he added. According to Peter Malone, chief executive of GlobalX Legal Solutions, it means that legal professionals are required to ensure their clients are taking the right steps in the selling or buying of property. ‘These changes will affect the growing number of high value homes of Australian buyers and sellers, so it is imperative legal professionals and conveyancers are prepared,’ he added. The new legislation is expected to generate $330 million in revenue over the next four years, with a $770 million compliance cost over the next decade and has been introduced to deter wealthy investors pushing up property prices and making them less affordable for Australians. Maloney said while the imposed tax on foreign investors would help boost the Australian economy and recoup investor funds sent offshore, it was crucial for legal and conveyancing professionals to understand the intricacies of the changes. ‘The onus of proof will now fall on Australian vendors to prove their residency status to exempt them from the new 10% non-final withholding tax but, provided property lawyers and conveyancers are prepared to ensure the necessary documents are readied in advance, this shouldn’t be a timely and complicated process or cause unnecessary delays in the settlement process,’ he explained. ‘We are currently offering our clients a range of informational webinars and sessions to equip them with the knowledge and technical understanding of these changes to ensure the buying and selling process remains a seamless and smooth process for their clients,’ he added. Continue reading
Rents up across most of UK, but down in Wales, latest index shows
Rents in the British private rental sector increased by 2.4% in the 12 months to June 2016, down from 2.5% when compared with the year to May 2016, the latest index shows. Rents increased by 2.5% in England and by 0.1% in Scotland but fell by 0.1% in Wales, according to the data from the Office of National Statistics (ONS). Rental prices increased in all the English regions over the year to June 2016, with rental prices increasing the most in the South East at 3.4%, but overall when London is excluded rents grew by 2%. The index report reveals that since January 2011 England rental prices have increased more than those of Wales and Scotland. The annual rate of change in Wales continues to be well below that of England and the Great Britain average. Meanwhile, rental growth in Scotland has gradually slowed to 0.1% in the year to June 2016, from a high of 2.1% in the year to June 2015. Rental prices in England show three distinct periods; increasing from January 2005 until February 2009, decreasing from July 2009 to February 2010, and increasing from May 2010 onwards. When London is excluded, England shows a similar pattern but with slower rental price increases from around the end of 2010 and since the beginning of 2012, English rental prices have shown annual increases ranging between 1.4% and 3% year on year. The largest annual rental price increases were in the South East with growth of 3.4%, unchanged from May 2016, followed by the East of England up 3.1%, down from 3.2% in May 2016 and London up 3%, down from 3.3%. The lowest annual rental price increases were in the North East at 0.8% and the North West at 1.2%, both unchanged when compared with May 2016 and Yorkshire and The Humber at 1.3%, up from 1.2% over the same period. Looking at data from the UK House Price Index over a longer period shows residential house price growth has typically been stronger than rental price growth for a number of years, with an average 12 month rate of house price inflation between January 2013 and May 2016 of 5.9%, compared with 2.1% for rental prices. The report suggests that inflation in the rental market is likely to have been caused by demand in the market outpacing supply. On the demand side, the Royal Institute of Chartered Surveyors (RICS) reported an increase in demand in June in their residential market survey, however, demand from prospective tenants decreased marginally in May according to the Association of Residential Letting Agents (ARLA). On the supply side, RICS reported that new landlord instructions fell slightly in June and ARLA reported that the supply of rental stock fell in May 2016 and was lower than in May last year. The report also suggest that with the UK economy… Continue reading
