86% rise in volume of valuations for purchases of buy to let units

mortgage applicationThe number of valuations conducted for buy-to-let properties soared by 86 per cent between December 2014 and December 2015, according to Estate Agency and Valuation firm Connells.

“In an environment of competitive mortgage rates and strong demand for rental property from tenants, the buy-to-let sector is always going to be a popular option for investors with the time to devote to being a landlord. However, the added factor of the April 1 stamp duty increase has spurred many investors who might have been sitting on the fence to take the plunge and enter the buy-to-let market before its profitability takes a hit” according to John Bagshaw, corporate services director for the agency.

The buy to let increase came despite a one per cent dip in BTL valuations in the single month of December 2015 – a fall described as a typical seasonal variation by the firm.

The BTL increase over the past year far outstrips the rise in valuations conducted for remortgaging purposes – up 34 per cent over the 12 months.

“The remortgaging market has typically been a strong performer over the last year. A Bank of England rate rise now looks very likely at some point in 2016 – especially considering the US Federal Reserve has already raised their base rate. Many remortgagors realised this and, like buy to let investors, opted to take advantage of favourable borrowing costs while they lasted” says Bagshaw.

Across the whole market, valuations – for whatever purpose – were 29 per cent higher in December 2015 than in December 2014; the rate of annual growth of all valuations over the past year was nine per cent.

“There is a steady confidence in the market that wasn’t present in 2013, or even 2014. December’s results are also a reflection of the ever-increasing demand for homes as investment opportunities, as buy to let landlords join home movers seeking to make some sort of profit from their property” according to Bagshaw.

Source: Letting Agent Today

Largest monthly rise for England and Wales house prices for a year

Land Registry logoProperty prices in England and Wales increased by 4.6% in July year on year, taking the  average property value to £183,861, according to the latest data from the Land Registry.

Month-on-month they increased by 1.7% with the East of England seeing the largest monthly rise of 2.8% and the biggest annual price increase with a rise of 8.9%, the data also shows.

The North East saw the lowest annual price increase of 0.4% and Wales saw the only monthly price decrease with a fall of 0.3%.

But transactions are down. The number of completed house sales in England and Wales decreased by 15% to 65,619 compared with 77,488 in May 2014. From February 2014 to May 2014 there was an average of 70,029 sales per month. In the same months a year later, the figure was 61,283.

The Land Registry figures also shows that the number of properties sold in England and Wales for over £1 million decreased by 21% to 878 from 1,113 a year earlier.

John Eastgate, sales and marketing director of OneSavings Bank, pointed out that it is the biggest monthly rise in house prices for a year and he believes it is driven by positive sentiment continuing after the general election and also by the lack of houses on the market for sale.

“The simple fact that demand exceeds supply will continue to push house prices upwards and as long as that is the case, it’s hard to see prices moderating. The mortgage market remains supportive, and low rates aren’t going anywhere.” he explained.

“If economic turbulence from China pushes back a base rate rise until late 2016, as it appears to be doing, we may well see even more people capitalise on low mortgage rates to take their first step on the ladder.” he added.

Adrian Gill, director of Your Move and Reeds Rains estate agents, pointed out that there is still a considerable gulf between the rates of growth in the East, South East and London and other regions, but this hasn’t knocked confidence nationwide.

What happens in London is being affected by outside factors, according to Peter Rollings, chief executive officer of Marsh & Parsons: “As the first port of call for international investors and prime property purchases, the housing market in London is more exposed to regulatory and stock market turbulence than the rest of the country.” he said.

“We’re still experiencing tremors from the new Stamp Duty banding, and as demand for million pound homes has eased, the harsher taxes at the top end may continue to rock the boat in London for the coming months. But this all needs to be kept in perspective. London is still achieving significantly above average house price growth, and retains its position at the top table.” he explained.

“In addition, the Chinese stock market slump may present more of an opportunity than a threat to the London property market as while it’s made property more expensive for Chinese buyers, those looking for a secure capital investment in these volatile times will still be attracted to the stability of the returns to be made in the capital.” he added.

Jonathan Hopper, managing director of the buying agents Garrington Property Finders, believes there should be concerns about supply with the fall in sales demonstrating that buyers outnumber sellers by far: “The result of this is a rise in prices almost across the board, although the notable exception is the prime property market, which is still reeling from the rise in the top rate of Stamp Duty. Mortgages remain cheap and real wages are growing briskly, all of which is stoking buyer confidence and spurring on demand.” he said.

“The stock market turmoil and the deflationary pressure of falling oil prices mean the Bank of England will be in less of a hurry to raise interest rates. So with the cost of borrowing likely to stay low for a while longer, some buyers may be tempted to stretch themselves.” he explained.

“But sellers should resist the temptation to see the current constrained supply as a licence to keep increasing asking prices. For all their enthusiasm, buyers remain astute and sellers must be wary of letting their pricing ambitions run away from what the market will tolerate.” he added.

Source: Property Wire

Budget 2012 – Property industry reaction

Chancellor George Osborne has spoken. Here, key members of the British property industry deliver their  verdict on yesterdays Budget…

The British Property Federation said it had enjoyed lobbying successes in areas such as stamp duty land tax, which would not extend to commercial property, a consultation on the simplification of green taxes, and the NPPF, which retained the “presumption in favour of sustainable development” – all policies the BPF had championed ahead of the Budget.

However the BPF said the property industry was left disappointed by “small beer” tax increment financing proposals, the lack of Mortgage REITs to support bank deleveraging, and the Chancellor ignoring calls from his own backbench to provide empty property rate relief.

Liz Peace, chief executive of the British Property Federation, said: “We asked the Chancellor first and foremost to do no serious harm in his Budget to an industry that is still struggling – by and large we’re satisfied this is the case. It certainly could have been a lot worse.”

Adrian Coles, Director General of the Building Societies Association said: “Although we are not surprised, given how well trailed the content of this Budget has been, we are disappointed that there is precious little in it for ordinary savers and aspiring borrowers.

“The Chancellor has failed to take an easy opportunity to help UK savers by allowing them to use their whole ISA allowance in a cash ISA. He hasn’t helped those nearing retirement by permitting transfers of ISA money from stocks and shares to cash either. It is also a shame that the focus on stamp duty has been at the top end of the market, ignoring the cost of this tax for first-time buyers.”

David Salusbury, Chairman, National Landlords Association, said: “Regrettably, there has been no recognition in the Budget statement of the barriers to investment presented by the current system of property taxation.

“While the NLA believes the Government is justified in closing the Stamp Duty loophole to prevent tax avoidance, the Treasury should not ignore the impact these measures will have on legitimate companies which buy property to let as their primary business activity.

“This is likely to adversely influence investment decisions made by landlords who operate as small businesses and provide much needed housing.

“The NLA will seek discussions with the Treasury to see whether it is possible to differentiate genuine property businesses from companies set up purely for tax-avoidance.

“Calls for a comprehensive review of Stamp Duty continue to be unheard. This could have been a good opportunity to stimulate more investment and encourage growth in the residential property market.”

John Whiting, Tax Policy Director at the Chartered Institute of Taxation, said: “Nobody can be surprised at the decision to take action against SDLT avoidance. The targeting of ‘non-natural persons’ for both SDLT and CGT additional charges is an understandable attempt to catch all manner of vehicles but the legislation will need careful drafting to make sure the measures are practical and workable.

“It is also interesting to note the clear warning about retrospective action if people attempt to sidestep these new rules. The Chancellor is building some solid walls around the SDLT system and wants to make sure the foundations are equally watertight.”

Suren Thiru, Lloyds TSB housing economist, said: “The impact of the increase in the stamp duty rate for homes sold for over £2million on the housing market is likely to be very limited. However, strong demand from wealthy cash rich buyers, as well as limited supply of such properties, is likely to continue to boost the level of activity at this end of the housing market.”

Richard Gordon of UKPI said: “Overall this Budget has been well received within the property sector. However, as far as the UK property market is concerned, it is felt more could have been done in certain areas, particularly in the way Stamp Duty Land Tax (SDLT) is applied. The banding of SDLT means those buying or selling a property priced just above a particular threshold are disadvantaged.

“I am also concerned about the effect the 15% SDLT rate will have for Companies whose business is investing in blocks of apartments for buy-to-let. The additional tax could make certain deals financially nonviable. We await further clarification on this point.”

Budget 2012 – Chancellor cuts 50p top tax rate

British Chancellor George Osborne has announced that the Government is to reduce the controversial 50p top rate of income tax to 45p from April 2013.

But his Budget has taken a swipe at the wealthy in a series of other tax and anti-avoidance measures.

Justifying the end of the 50p top rate of income tax paid on earnings over £150,000, Osborne said it damaged competitiveness and had only raised a third of the £3billion expected.

Instead, five times as much would be raised from the very rich by other policies in the Budget.

New “anti avoidance” tax rules would tackle the “morally repugnant” practice of people not paying the tax that they should.

Most notable of these is the plan for a staggering 15% stamp duty charge levied on people who buy expensive homes using offshore companies.

Individuals buying property costing more than £2million will also pay a new rate of 7%, up from the current 5%.

At the other end of the scale, the threshold at which income tax is paid – £8105 from next month – will rise to £9205 in 2013.

Osborne’s outlook for the economy in general saw the growth forecast for 2012 rise marginally from 0.7% to 0.8%.

He also said the Government was “on course” to eliminate the structural deficit by 2016-7.

And, while the UK was expected to avoid a “technical recession” the euro zone and oil prices remained a threat.

Unemployment is expected to peak this year at 8.7% before falling.

Osborne said it was a “Budget that rewards work”.

“Britain is going to earn its way in the world,” he said. “There is no other road to recovery.”

Source: Investor Today