Tag Archives: government
Big rise in new rental properties advertised in run up to additional homes tax hike
The rush to beat the April additional homes stamp duty deadline in the UK saw a big rise in new rental properties being listed in the week of the tax hike, research has found. Some 20.6% more properties were being advertised compared to the previous week in more than 90 towns and cities across the country, according to a study from property crowdfunding platform Property Partner. The research looked at the number of new rental properties being advertised between 28 March and 03 April and compared it to the period of 21 March to 27 March. In 85% of the locations there was an increase in the number of new rental listings over the past week compared to the previous week and in many areas, there was a significant increase in new rental properties advertised. Telford in the West Midlands, for example, saw rental listings up almost 160% in the week of the stamp duty deadline, compared to the previous week, and in Stevenage new adverts almost doubled. While five out of the top 10 areas in terms of a rise in rental properties being advertised, were in the North of England. Of the major cities, London saw new rental property listings up 19.4% between 28 March and 03 April, compared to the previous week. While, in Manchester and Birmingham, new rental ads were up 28.7% and 49.9% respectively The following table shows the UK towns and cities that saw the biggest increase in new rental property listings between 28th March and 3rd April, compared to the previous week, 21st March to 27th March. ‘Inevitably there was a final rush by investors to complete on property purchases ahead of the 01 April stamp duty surcharge deadline. More rental properties on the market is good news for tenants, but sadly this looks like a temporary blip,’ said Dan Gandesha, the firm’s chief executive officer. ‘The savings landlords have made may turn into losses further down the line. Future cuts to mortgage interest tax relief and likely interest rate rises, could wipe out profits and force many landlords to sell up,’ he explained. He believes that in the longer term it is likely that the supply of rented properties will fall and rents increase and the most important issue is to build more homes for tenants as well as buyers. ‘The Government has changed the whole structure of the UK buy to let market and made it less attractive and viable for amateur landlords. Once the dust has settled on the stamp duty hike, anyone looking to invest in residential property would be wise to consider alternatives to traditional buy to let, which do away with the hassle, expense and tax implications,’ added Gandesha. Continue reading
Many UK landlords unaware of new mortgage legislation, research suggests
Accidental landlords in the UK are most at risk of being caught out by new European Union mortgage legislation, new research suggests. Some 55% buy to let mortgage applicants are unaware of the impending changes to mortgage law and accidental landlords, those who did not intentionally set out to rent out a property, are least likely to know about these regulatory changes. The research by landlord insurance provider Direct Line for Business amongst mortgage brokers also reveals that 62%of applicants were unaware of either the changes to mortgage tax relief or the EU's Mortgage Credit Directive (MCD) and therefore changes which could impact their ability to secure a mortgage. This lack of awareness rises to 71% amongst 'accidental landlords', namely those who rent out property due to unforeseen circumstances such as being unable to sell, or inheriting a home. Mortgage advisers estimate that accidental landlords account for 17% of new mortgage applications, with overall buy to let mortgage applications growing by 29% in the past year. The research also shows that only 7% of mortgage advisers believe that the MCD will have a positive impact on approvals of buy to let mortgage applications while 59% expect it to have a negative impact. The EU's MCD could see circumstances where landlord mortgage lending will be viewed as ‘consumer’ lending and therefore could be subject to more stringent lending criteria. Accidental landlords with one or two rental properties may not be able to pass the expected new affordability tests. Changes to the mortgage tax relief are set to be phased in from April 2017 with landlords no longer able to deduct mortgage interest payments before calculating their tax bill. They will instead get a tax credit equivalent to 20% basic rate tax on this amount. Landlords are also now paying a 3% surcharge on stamp duty. ‘The new EU legislation on mortgages coupled with the Government's increase in buy to let taxation could significantly alter the buy to let market, so we would encourage any mortgage applicants to think carefully about the new law and how this could impact them as a landlord,’ said Nick Breton, head of Direct Line for Business . ‘With house prices in the UK rising by 7% in the year leading to October 20152, and with the estimated average deposit standing at more than £61,000, it is imperative that landlords are able to maintain a suitable amount of property to house the population of young people saving up to buy their first property, or those seeking a temporary stay in a town or city,’ he added. With the new legislation set to be phased in between 2017 and 2020, Direct Line for Business is providing landlords looking to protect their income with suggestions. It says that as letting and management agents currently charge between 10% and 15% of the monthly rent in fees those with the time and who are prepared to take on the… Continue reading
UK new house building target not over ambitious, analysis suggests
The UK Government’s target of building a million new homes over the next few years is not as ambitious as some may think, according to a new analysis from the Royal Institution of Chartered Surveyors (RICS). The individual components of the goal includes 200,000 Starter Homes, an initiative still working its way through parliament, and 135,000 shared ownership properties about which little has been said to date. Trying to access the success of such a programme it about the official data on housing starts, according to RICS chief economist Simon Rubinsohn, and these show that a mere 144,000 new units were begun through the course of 2015. But he points out that other data produced by the Department for Communities and Local Government (CLG) casts some doubt on the accuracy of the quarterly figures which are produced on a high frequency basis and released within a short period following the end of the quarter. He explains that there is arguably more value to be gained by focusing on the less frequently released net supply numbers, which are based on completions rather than starts, as they reflect the additions to the stock of housing units for habitation. The quarterly completions series showed an additional 125,000 homes built in 2014/2015, the last full year for which data is available, while the annual net supply series puts completions at 155,000. Rubinsohn adds that net conversions added close to nearly 5,000 additional units over the period and this was supplemented more than 20,000 units from ‘change of use’. The latter figure has increased sharply over the past few years as a result of Permitted Developments Rights enabling the shift from office class to residential. And then demolitions amounted to just over 10,500 in 2014/2015. ‘So pulling this altogether, in the last financial year, there may have been 125,000 housing completions in England, 155,000, just over 180,000 or, after demolitions, 170,000. And on the basis of the higher number (gross additions to supply), the government doesn’t appear that far off its ambition for 2020,’ Rubinsohn argues. ‘None of this is designed to minimise the fundamental nature of the housing crisis which reflects the fact that household formation is still projected to comfortably outstrip projections for the supply of new units even on the most generous calculations,’ he says. ‘This is also clearly visible in the estimates by our professionals for medium term growth in house prices and rents. The February Residential Market Survey suggested both are likely to increase by at least another fifth over the next five years comfortably outstripping the probable rise in wages,’ he adds. Continue reading
