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Lack of funding affecting barn conversion rates in UK
The British love affair with barn conversions seems to have come to an end with new figures showing that the number of agricultural to residential property conversions has fallen. For decades the conversion of agricultural buildings including barns and stables into homes has been popular but now new research shows that in England the number has dropped by 24% over the last year. It suggests that developers are suffering from a lack of funding for such projects so people who want this kind of property are left to funding it themselves. This is despite a there being a considerable appetite amongst farmers concerned about European Union subsidies after the recent Brexit vote to target alternative ways to diversify income, says peer to per property funding platform Saving Stream which carried out the research. The firm believes that agricultural to residential property conversions could still make significant financial sense for farmers and it also makes sense in terms of improving the current lack of housing supply in the UK, especially in rural areas. Saving Stream adds that banks are continuing to de-risk their balance sheets as much as possible, driven by the capital holding requirements placed on them by regulators in the wake of the credit crunch and that private investors are stepping in to help finance these projects as they are attracted to the competitive annual returns of 12% on offer for secured loans at a maximum loan to value ratio of 70%. ‘Converting agricultural buildings such as barns are one of the most effective ways of combating the UK’s chronic rural housing shortage and in the uncertain post-Brexit climate, UK farmers are looking to ramp up activity in this area,’ said Liam Brooke, co-founder of Saving Stream. ‘It is important that access to funding is improved, developers are keen to take-up the large number of opportunities available to them but time and time again a lack of funding is holding them back,’ he added. Saving Stream explains that recent research shows that outstanding lending by UK banks to property developers plunged from £32.5 billion in April 2014 to £14.9 billion in April 2016, a fall of 54%. ‘There are housing shortages across the UK, in both urban and rural areas, and with increasing numbers of possible developments available, this is a perfect opportunity to reduce the housing gap,’ Brooke pointed out. ‘Private investors are helping bridge the funding gap that the UK’s property market has suffered from but there are still plenty of projects struggling to secure the finance needed to get off the ground. There is an eagerness from all sides to increase the number of conversions to help meet demand, however, the biggest issue remains access to funding,’ he added. Continue reading
Majority of home owners aged 55 and over in UK don’t want to downsize
Most people in the UK aged 55 and over have no intention of downsizing to a smaller property and it lack of suitable homes available that is putting them off, according to new research. Some 58% don’t want to move despite calls from the property and construction industry for more to be done to free up homes for first time buyers and second steppers, according to the research from My Home Move. For those that would consider downsizing a the lack of suitable properties and the costs involved in moving, including Stamp Duty, represent barriers to doing so. Some 46% of would-be downsizers want to move into a bungalow, while 20% are looking for a detached property while 52% want a property that is easier to manage and 21% want to release equity to help loved ones and enjoy life’s luxuries ‘The housing market has been suffering from a lack of stock for over 12 months, causing demand to outstrip supply time and time again. This has resulted in sky high house prices, instances of gazumping increasing and the Bank of Mum and Dad being called upon regularly to help first time buyers with their deposit,’ said Doug Crawford, chief executive officer of My Home Move. ‘Unfortunately, the findings from our survey suggest the situation is unlikely to ease; especially as 58% of those questioned have no intention of downsizing to release more top end properties onto the market anytime soon,’ he added. The survey also discovered that for the 25% who would like to downsize real and urgent barriers were stopping them from putting their homes on the market. Some 39% said there are not enough of the right kind of properties available to move into, 40% saw the costs involved in moving, including Stamp Duty Land Tax, as too prohibitive to consider moving now. ‘Despite the changes to Stamp Duty in 2014, the costs involved in moving can still tally into the thousands. This is especially true since the introduction of the 3% surcharge for additional properties. For those on a fixed income or heading towards retirement, it is not surprising that the financial reality is a stumbling block,’ Crawford explained. ‘We have seen stamp duty holidays for first time buyers in the past, so there is no reason the government couldn’t extend a similar scheme to downsizers, to help free up the market and get transactions moving,’ he pointed out. 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
