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Buy to let investors put off by UK government tax changes
Around one in four of people in the UK who were considering investing in a buy to let property have been put off by the Government’s plan to introduce a 3% additional stamp duty and cut tax relief on their finance costs, according to new research. Overall some 9% have given up on aspirations to own a buy to let property and 14% of existing landlords say they will sell one or more of the properties in their current portfolio because of the changes. The research by online investment platform rplan also found that 30% say they are planning to invest their buy to let deposit in an ISA instead. Under the changes, the stamp duty on buying a £250,000 buy to let property will rise from £2,500 to £10,000 from April, while that for a £400,000 property will more than double from £10,000 to £22,000. Also, from 2017, the tax relief currently allowed on finance costs such as interest payments on mortgages and loans to buy furnishings will be gradually reduced over four years. Those planning to invest in buy to let were going to use savings and investments worth an average of £43,592 to buy a property. Instead, 39% of these adults will use the money to save in a cash account, 30% will invest in an ISA, 20% will put it into their pension and 13% will put it in other stock market investments. Latest figures in the Bank of England’s Credit Conditions Survey have revealed a rush for buy to let properties before the new tax is introduced. Lenders reported that demand for secured lending for house purchase increased slightly in the fourth quarter of 2015 and is expected to increase in the first quarter of 2016. But within this, demand for buy to let lending increased significantly in the last three months of 2015. ‘The British have strong faith in property as an investment and many see it as a means of providing a pension income. But the government clearly has a policy to dis-incentivise BTL and the sharp increase in landlord mortgages revealed by the Bank of England credit survey will probably be a last rush before the gate slams shut,’ said Stuart Dyer. ‘Having a buy to let property can also mean an over exposure to one asset class for many investors, who should strongly consider the alternative of investing in a diversified portfolio for the long term, especially if this can be achieved through a tax free ISA wrapper,’ he added. Continue reading
Prime property sales rise in Italy with prices up in areas popular with overseas buyers
The prime residential property market in Italy has turned a corner with viewings and sales increasing in 2015, new research shows. The weak euro and a growing realisation that prices are at, or close to, their floor has boosted buyer confidence, according to a new analysis from international real estate firm Knight Frank. Across key second home destinations price performance has converged with annual growth ranging from 2.1% in Venice) to a fall of 3% in Sardinia in 2015. The report says that market confidence is strengthening and residential sales increased by 7% in 2015 and the outlook is helped by the fact that Italy’s consumer confidence index is up 39% since its low in 2012. In 2015 the number of enquiries from buyers looking for an Italian property jumped 57% year on year and Tuscany continues to generate the most interest but Liguria and the Italian Lakes from Como to Maggiore are increasingly on buyers’ radar. The report also points out that in the last two years, the Euro has slipped from 0.83 to 0.73 against the pound and from 1.38 to 1.09 against the dollar providing British and US buyers with a strong buying incentive in Italy. A breakdown of the figures shows that in Venice prime property prices increased by 2.1% in 2015 and Dutch, Italian and French buyers are most numerous there, preferring waterside apartments. In Florence, another popular destination for overseas buyers, prices increased by 2% last year and the bulk of buyers are from the UK, Belgium and Canada while prices are also up, by 1.5%, in Liguria which is popular with buyers from Italy, Switzerland and Sweden. Prices increased by 0.2% in the Italian Lakes where all types of properties are sought after by buyers from Italy, the UK and Russia. Prices also increased by 0.3% in Rome with buyers from Italy, Germany and Russia. Elsewhere in places popular with overseas buyers prices fell in 2015, led by a decline of 3% in Sardinia with most buyers coming from Germany, Italy and the UK. They fell by 2% in Umbria which is popular with buyers from the United States, Germany and the UK. Prices fell by 1.9% in Milan where buyers from Italy, China and Egypt opt for apartments. Prices also fell by 1% in Tuscany with buyers from the UK, Germany and the Netherlands also looking for rustic renovations projects as well as apartments and houses. Looking ahead the firm expects prices to stay level. ‘We don’t see immediate rises or substantial drops on the horizon. What we are seeing is a return to the long term trusted locations,’ said Rupert Fawcett, head of Knight Frank’s Italian Department. He explained that at the market’s peak, buyers looked to regions such as Le Marche, and Abruzzo for greater value for money. With prices having dropped across the board since 2009 and now resting at about 30% below their peak, Chianti is back in favour, along with Lucca and… Continue reading
Average apartment prices up in Dubai but down in Abu Dhabi
Average apartment rents in Dubai increased by 3% in January compared to the previous month but amounts varied across property types, the latest data shows. Average rents reached an annual rate of AED138,000 overall with the market seeing some adjustments, according to the latest report from property portal Bayut. The firm also reports an improvement in yields for apartment property investors, reaching an average of just over 6% but these do vary according to property type, location and quality with some reaching up to 10%. One bedroom apartments recorded an average of AED97,000 in January, down 0.8% month on month while two and three bedroom rents were up 0.1% and 2.2% respectively AED151,000 and AED211,000. Rental values for four bed apartments also fell, down 2.2% in January compared to December 2015 to AED330,000. Yields improved across all apartment types. Studios offered average yields of 7.235, one bedroom apartment 6.4%, two bedroom apartments 5.7%, three bedroom apartments 5.3% and four bedroom apartments 3.55%. Dubai Marina remained the most popular locality for renting apartments in Dubai, followed by Jumeirah Lakes Towers. Bur Dubai, Downtown Dubai and Business Bay. In neighbouring Abu Dhabi rents are falling with values across all property types apart from three bedroom flats falling in January. The firm said that this could be the market adjusting to growth in 2015. Average apartment rents fell 5% from AED 141,000 in December 2015 to AED 135,000 in January. Studio apartment rents were down 3.6% to AED64,000, one bedrooms were down 1.3% to AED99,000, and two bedroom flats down 4% to AED136,000. Four bedroom apartment rents well the most by 4.6% to an average of AED252,000 while three bedroom apartments saw rents rise, up 2.3% to AED192,000. The firm also pointed out that although apartment rents fell last month in Abu Dhabi, average yields still offered a lot of value for investors, averaging 7% across all types. Yields for studios were 9.4%, one bedroom apartments 8%, two bedroom apartments 7.3%, three bedroom apartments 7.4% and four bedroom apartments 4.6%. In terms of popularity Al Reem Island, Al Raha Beach, Al Reef, Al Ghadeer and Saadiyat Island remained the top five locations for renting apartments in Abu Dhabi. Continue reading
