Tag Archives: government
No good news for buy to let landlords in UK Budget
There was little good news for residential landlords in the UK’s Budget announcement with the Chancellor of the Exchequer adding to their woes by excluding them from a tax giveaway. Just weeks before landlords in the growing buy to let sector face an extra 3% stamp duty charge under a change to tax on additional homes, George Osborne announced they will be excluded from Capital Gains Tax change. ‘Buy to let investors could be forgiven for being completely paranoid. On this evidence, the Chancellor really has got it in for them and has excluded buy to letters from a huge CGT giveaway,’ said Jamie Morrison, private clients partner at the chartered accountants HW Fisher & Company. ‘With more incentives to help savers and first time buyers get on the property ladder, buy to let owners have once again been cast in the role of fall guy,’ he added. David Cox, managing director of the Association of Residential Letting Agents (ARLA), pointed out that this is now the third Budget which directly attacks landlords. ‘The sector has been punitively taxed, with stamp duty on buy to let properties, mortgage interest relief and now capital gains tax changes. It’s an outright assault on the sector,’ he said. ‘Every other sector has been offered a tax break yet there is nothing here to help the private rented sector, including landlords and most importantly tenants, who will see rent costs rise to subsidise the taxes that landlords pay on property. The government talks about wanting to help the younger generation get onto the property ladder, but with the changes announced today the supply of available property is bound to decrease, and as a result rents will rise,’ he explained. ‘In November, when Osborne announced an increase in stamp duty tax on buy to let properties, we described this as a catastrophic move. The news that larger investors will also have to pay the tax is even worse. Professional landlords, those who typically own more than 15 properties, play a vital role in providing rental stock to the market, and providing the army of renters we have in this country with housing,’ Cox added. ‘Our members forecast that the supply of buy to let properties will dwindle when the new tax comes in to effect, and this news means that supply will fall even faster and harder. We’re already in a position where demand out-strips supply and as supply falls, rent costs rise, meaning the goal of home ownership falls even further out of reach for most of the country’s renters,’ he concluded. Richard Lambert, chief executive officer of the National landlords Association (NLA), said it is clear that the Chancellor does not regard ordinary people putting their own money into providing homes as worthwhile. ‘The steady upward ratchet of taxation on landlords over the past year shows that George Osborne is determined to bear down on the private rented sector, but he still depends on… Continue reading
Buy to let lending grew in 2015 at expense of first time buyers
The rapid growth of the buy to let market in the UK during 2015 was at the expense of first time buyers despite Government initiatives to encourage home ownership, new research has found. The proportion of buy to let mortgage enquiries grew by 4.4% to 18.2% during 2015 compared with 2014, whereas the proportion of enquiries for first time buyers fell by 3.7% to 23.5%. According to price comparison website comparethemarket.com the inverse correlation indicates that the buy to let market has gained a chokehold over first time buyers, as many struggle to get out of rented accommodation and on to the housing ladder. January showed no signs of a reducing market, as the first month in 2016 showed year on year growth of over 16% and 62% increase compared to December, reinforcing the sentiment that the current buy to let market may be unsustainable. Evidence indicates that if the market continues in its current direction, the number of enquiries for buy to let mortgages will outstrip the number for first time buyer enquiries, which would be a blow to the Government’s home ownership drive. Overall the buy to let market saw growth during of over 23% in enquiries on the website in 2015 and the initial cut on tax relief also did little to reduce the swelling of the buy to let market as enquiries rose by 14% in the three months after the announcement made by the Chancellor at the Summer Budget, compared to the three months before. However, with the new stamp duty on buy-to-let properties, announced at the Autumn Statement, coming into effect this spring, many expect the market will finally dampen. Elsewhere, January proved to be a particularly buoyant month for the mortgage market as the number of enquiries rose by more than 8% compared to 2015. It seems that January is the time that consumers get their respective houses in order with a recent study by comparethemarket.com finding that 44% of consumers used the month to ‘sort out’ their finances. ‘The buy to let market has been subject to both extensive discussion and criticism over the past year with even the Bank of England’s Financial Policy Committee labelling it a risk to the UK’s financial stability,’ said Jody Baker, head of money for comparethemarket. ‘This data only reinforces the view that over the past year, families and others looking to get a foot on the housing ladder are being priced out by landlords. It was great to see the Government take action in the Autumn Statement but time will tell as to what the material impact will be on the market after 01 April,’ Baker added. Continue reading
Budget announcements set to boost India’s residential property market
India’s residential real estate market is set to see a boost with moves that will increase the supply of properties for sale and demand. Experts point out that change announced in the 2016/2017 Union Budget will see a reduction for first time buyers of INR 50,000 on interest repayment for loans up to INR 35 lakh where the cost of a house is INR 50 lakh and this will boost the demand for housing at the lower end of the market. This move is also likely to benefit purchasers in tier II and tier III towns such as Surat, Nagpur, Lucknow, Vadodara, Jaipur, Pimpri-Chinchwad, Indore, Chandigarh, Gurgaon, Rajkot, Bhopal, Kanpur, and Thane, according to Shishir Baijal, chairman and managing director of Knight Frank India. On the supply side, a 100% tax exemption on profit for developers and an exemption from service tax for the construction of houses up to 325 square feet in metro areas and 650 square feet in other cities will encourage supply in the affordable housing segment. The budget has also increased the limit of deduction of rent paid under section 80GG which provides for deduction of house rent paid, provided that a deduction for payment of House Rent has not been claimed under any other section of the Income Tax Act, from INR 24,000 per annum to INR 60,000 per annum, thus providing relief to those who live in rented houses. For investors, the abolition of the dividend tax (DDT) means that there will be no barrier to launching REIT schemes. ‘Removal of REITs from DDT will also make this type of investment more appealing to retail investors. In the long run higher transparency levels will ensure that the cash strapped real estate sector will get easier access to funds at a reasonable cost,’ said Baijal. A focus on improving infrastructure and rural development is also expected to give a much needed fillip to the real estate sector. This includes a significant outlay on improving roads, railways and developing smaller airports to improve regional connectivity. Additionally, incentives to MSME, Make-in-India will get a further boost that will benefit the real estate sector in the long run. ‘Additionally, the government’s focus on digitization of land records is a step in the right direction, especially in more rural areas. The move will also lead to higher transparency levels in the real estate sector,’ Baijal added. There is also likely to be more demand from overseas investors with the forthcoming Indian Property Show in London in April expected to be well attended by Indian expats seeking to invest in real estate. They are expected to be interested in smart gated communities which are being developed in major cities such as Delhi NCR, Mumbai, Hyderabad, Chennai, Bangalore, Pune and Kolkata. According to Srividya Rajan, general manager for sales and brand engagement at Sumansa Exhibitions, the Indian Property Market is affordable compared to other international investment destinations and capital appreciation on real estate in India… Continue reading
