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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
Average rents in Scotland up 2.3% year on year
Average rents in Scotland increased by 2.3% year on year in January but remained static month on month at £548, according to the latest index figures. However, the average figure is being distorted by high increases in some regions such as Edinburgh and the Lothians where rents were up by 6.4%, the buy to let index from lettings agent Your Move shows. Meanwhile, rents in the East of Scotland were 1.7% lower than a year ago and they fell by 0.2% year on year in Glasgow. The index also shows that slower house price growth is hampering landlord returns with a fall of 5.8% in the year to January but arrears have improved with 11.1% tenants late paying, the lowest level since July 2015. Previously, arrears surged over the autumn to reach a record high of 13.8% in October 2015, before beginning to improve. However, tenant’s finances remain in worse shape than 12 months ago. In January 2015 as little as 7.1% of all rent due was late. A breakdown of the figures show that in January 2016, rents in Edinburgh and the Lothians were 6.4% or £38 higher than a year ago, the fastest annual rent rise on record. This is nearly three times quicker than average rent growth across the whole of Scotland. On average, across Scotland as a whole rents climbed 2.3% in the 12 months to January 2016, equal to £12 in absolute terms. This is only slightly faster than 2.2% in the 12 months from December, though represents an annual acceleration compared to the 1.3% annual lift recorded in January 2015. ‘In different parts of Scotland, powerful interplays between supply and demand are shaping the regional rent patterns that are emerging. In popular cities like Edinburgh where the jobs market is hottest the competition to find homes means tenants have to act quickly. As a result, we’re seeing exceptional rent growth in some parts of the country while in others, lettings market activity is much calmer,’ said Brian Moran, lettings director at Your Move Scotland. ‘However there’s also another ingredient added to the mix now. The private rented sector is in a state of uncertainty, as landlords wait with baited breath while the Private Tenancies Bill progresses through the Scottish Parliament. Nervous landlords may be acting now before their hands are tied, and they lose control of the rent they can charge. This could have prevented a seasonal dip between January and December instead of the steady picture we have seen,’ he explained. ‘Encouragingly, the latest rent rises are underpinned by good news. We should also be looking at tenants’ bottom line. Arrears are falling which speaks volumes for affordability right now. With rents below their price peak, many tenants have been seizing the opportunity to move out of season, while good deals are available,’ he added. On a regional basis three of the five regions of… Continue reading
Female property professionals in UK still paid less than men
Salaries for UK property professionals have continued to rise at an average increase of 7.1% in 2016 but there is still a gender pay gap, according to the latest survey, with men earning £7,000 a year more than women. The survey from the Royal Institution of Chartered Surveyors (RICS) and Macdonald & Company shows that male property professionals earn £57,509 a year compared to their female counterparts on £45,689. It means that the gender pay gap has closed slightly from 27% last year to 25.9% in 2016, the discrepancy is evident across all age groups and is most acute for those aged 18 to 22 where the difference in average salary is 28.7%. The report also says that competition for talent continues with the average salary increase awarded to respondents who moved employer in the last year reached 16.2%, while the average increase received by respondents under 30 jumped by 12%. Bonuses awarded to entry level candidates jumped by 79% this year and employees at this level are also most likely to move job and of those who indicated they are likely to look to change roles this year 35% are relatively inexperienced, compared to 19% last year. ‘The fact that 64% of respondents reported a rise in salary will offer cold comfort to the many women in the sector, especially those at entry level, who are once again confronted with a significant gender pay gap. The industry must urgently take action to create a more balanced workforce that attracts the best talent if it wants to remain competitive,’ said RICS equalities manager Justine Wallis-Leggett. ‘We can achieve this by introducing inclusive working practices such as flexible working. These are key to employee engagement, and in an increasingly competitive market, employers cannot afford to create working environments that only serve the needs of a small majority of the workforce,’ she added. She pointed out that RICS has launched an Inclusive Employer Quality Mark which asks employers to put inclusivity at the heart of what they do, and aims to support them in sharing best practice. ‘We would urge all firms to put their money where their mouth is by signing up. Until there is a true commitment to change within the sector, we will continue to see results like these and the subsequent drift of talent away from our sector,’ Wallis-Leggett explained. Looking at the picture across the UK, those working in greater London continue to earn, on average, the most at £65,050 and command a premium of 20.8% over the South East and 52.2% over Ireland. The majority of the rest of the UK have indicated only a slight growth in average annual salaries, with the greatest growth seen in Scotland with a rise of 2% and the Midlands up 1%. RICS qualifications continue to show their merit with a FRICS earning £69,885 in comparison to a non RICS counterpart at £43,905, while those with… Continue reading
