General – Page 8 – Blue Bricks Magazine

General

4 March 2021

Tapered Tax Break for Buyers in Budget

The tax break for those buying property continues for another three months, Chancellor Rishi Sunak confirmed in his budget today.

As we predicted last week in this column, thousands of people who were mid-transaction will benefit from the extension of the Chancellor’s popular Stamp Duty Holiday scheme until June 30. It was originally due to end on March 31.

A ‘slow down’ rather than a halt

After June buyers will continue to save on property up to £250,000 until October when the threshold will go back to £125,000.

But the extension of the current threshold of £500,000 means buyers in England and Northern Ireland will continue to benefit from up to £15,000 savings. Those in Wales and Scotland will benefit from paying no tax on properties worth up to £250,000.

The gradual nature of the extension allays fears that the ‘cliff edge’ nature of the original ending of the scheme would result in a disaster for the market, leaving thousands of property transactions to fall through. Now property portal Rightmove are predicting another 300,000 property sales before the end of October.

Around 150,000 individuals – including many industry professionals – had signed an online petition urging the chancellor to think again about ending the scheme abruptly in March. Much of this has to do with a log jam where surveyors and solicitors have been unable to keep up with demand and transactions are taking longer than usual – up to 20 weeks, rather than 12.

Estate agents’ regulator Propertymark today put out a statement saying they were pleased with the chancellor’s move.

Policy Adviser Mary Hayward pointed out such a move would have meant members losing out on up to £4,000 per property sale.

House prices to benefit from continuation

The Stamp Duty Holiday extension will also have an effect on house prices, which are expected to increase in line with buyer demand. So far, the price of the average property has increased by as much as £20,000 as a result of the Stamp Duty Holiday.

But not everyone agrees with the beneficial effect of an extension. Auction house owner, Mark Peck, Director, Cheffins warned the property industry would need to “brace itself for further pandemonium throughout the summer months.”

He added: “Whilst the stamp duty holiday certainly allowed the property market to continue with full force throughout the coronavirus pandemic and ensure that property sales continued at a fast pace, it has created an unhealthy scenario with values increasing at unsustainable levels within a short space of time.”

New scheme to incentivise mortgage lenders

A new Help to Buy scheme means 95% mortgages will once again be back on the table. Only this time, it’s not just restricted to first-time buyers. Anyone will be able to make use of the scheme, including existing home owners. The scheme will be available for property worth up to £600,000 – although not for investors.

Some analysts though are worried that these high loan to value mortgages will only serve to inflate house prices – as evidenced in the past.

Portfolio landlords hit by corporation tax

Portfolio landlords operating as a limited company may be amongst those hardest hit from the budget. That’s because from April 2023, corporation tax will increase from 19% to 25%.

Small companies earning less than £50,000 profit will continue to pay the current rate of 19% but it will increase gradually over that sum. Only those earning more than £250,000 in profit will have to pay the full 25% tax.

Jill Stevenson

General, Market Pulse

29 January 2021

More Power to Pets in Tenancy Rights

From today landlords will no longer be able to refuse a tenant with a pet from renting their property – unless they have a very good reason.

Changes to the government’s new Model Tenancy Agreement puts an end to blanket bans on cats, dogs, rabbits, guinea pigs and other animals. Most landlords automatically exclude pets when letting out their house or flat on the grounds the animal may cause damage or annoy neighbours. Now they will no longer be able to do this.

Landlords have 28 days to lodge pet objection

That’s because from today, the right for a tenant to live with a pet will be the default position. A landlord who insists he or she doesn’t want their tenant’s pet in their property will have 28 days to write to their tenant and outline why they feel this way.

But that reason has to be a good one, such as the property being too small to house a large dog or the sheer impracticality of having a pet. A continually barking dog annoying neighbours may also qualify as a justifiable reason.

Only 7% of tenancies ‘pet-friendly’

At present, figures show more than 50% of householders have a pet and yet only 7% of private landlords advertise their property as ‘pet-friendly.’

The move was introduced by Housing minister, Rt Hon Christopher Pincher who noted that over the past year in particular pets have brought comfort to many householders.

“But it can’t be right that only a tiny fraction of landlords advertise pet friendly properties and, in some cases, people have had to give up their beloved pets in order to find somewhere to live,” he said.

He went on to add: “This strikes the right balance between helping more people find a home that’s right for them and their pet while ensuring landlords’ properties are safeguarded against inappropriate or badly-behaved pets.”

Move applies to “responsible” owners

Pincher pointed out the ruling is for “responsible” owners with “well-behaved” pets. Landlords will still be able to claim compensation through the tenancy deposit for damage caused by pets, such as chewed skirting boards and torn curtains etc.

Landlord and estate agent representatives, such as Mark Hayward, chief policy adviser at Propertymark, admitted having a pet in a property would probably encourage a tenant to stay there longer.

Landlord agent question tenancy deposit cap

But he questioned whether pets being the default position in a Tenancy Agreement was a good idea considering the government’s current cap on a tenant’s deposit.

“…even the best-behaved pets will have an impact on a property,” he said.

He also objected to the blanket ban saying the issue was far more complex and that it should really be determined on an individual basis. Concerned landlords, he said, should approach their letting agent for advice.

At present the changes to the right for tenants to own a pet when renting apply only to tenancies in England. However, they may also be rolled out in Scotland, Wales and Northern Ireland in due course if the move proves successful.

Jill Stevenson

December 2020, General, Market Pulse

10 December 2020

The 2 Million Forgotten Property Sellers

While many investors these days get caught up in the whirlwind that is the UK property market, there are the would-be sellers sitting mournfully at the side lines.

These are the home owners who are the most desperate to sell. And there are around two million of them. They either can’t get mortgages because of cladding issues, or they are stuck in a freehold nightmare and facing escalating land rents.

These are also the individuals who must find the latest statistics on property price rises, in particular, incredibly galling. Many of the homeowners whose apartment blocks have ‘dangerous’ cladding have been told their homes are now ‘worthless.’

Cost of average UK property up more than £15,000

So, what are the latest rises? Well, take a look at this month’s Halifax building society statistics. They have just declared that the average UK property has increased by £15,409 since the summer (June). Their figures are based on the number of mortgages approved.

Other House Price Indexes, including government property sales figures, tell a similar story of a buoyant property market.

The estate agency body NAEA Propertymarket, for instance, announced via its latest survey that the number of prospective property buyers was the highest ever for the month of October ie since records began back in 2006. An average of 12 sales were agreed per estate agents. Not only that, but the number of first-time buyers also increased – from 19% in September to 21% in October.

Grenfell sales legacy looms large

Campaigners from the End Our Cladding Scandal group say there are a huge 1.93 million homeowners in England unable to get their homes sold and move on. No-one wants to buy their property, mortgage lenders won’t entertain them and, as you might expect, home insurance is through the roof.

For those high-rise apartment dwellers whose homes are surrounded by safe cladding, they have a long wait ahead of them to prove it. An EWS1 form will do this, but the waiting list is huge, and it doesn’t come cheaply either. This EWS1 form is part of new government regulations introduced following the Grenfell Fire Tragedy in 2017.

Freehold scandal of developers is binding

And what of the unfortunate leaseholders who don’t own the land on which their property is built? It’s reckoned there are around 100,000 such homeowners – most of whom bought a New Build from either Barratt Developments, Countryside Properties, Persimmon and Taylor Wimpey. Their ground rents double every 10 years or so. To buy the freehold themselves costs thousands and, understandably, deters potential buyers.

An article in the Telegraph newspaper points out that if these two million “mortgage prisoners” were added to the sales figures, with a selling price of £000, then the average property valuation would be down. Not only that, but instead of a 4.9% increase, it would be a 7.4% fall year-on-year. Not such a ‘buoyant’ property market now. Will it all unravel when the Stamp Duty Holiday comes to an end? There are increasing calls for Rishi Sunak to extend this beyond the March 31 deadline. Watch this space…

Jill Stevenson

General, Market Pulse, November 2020

25 November 2020

House Flipping is Fashionable Again

There was a time when we couldn’t get enough of all those property renovation shows. Sarah Beeney’s home make-over series and Homes under the Hammer brought out the interior designer and ‘would-be’ builder in all of us.

But then refurbs went out of fashion for a while. Now, it appears the love of buying old properties and ‘doing them up’ then selling on for a profit, is well and truly back. But if that’s you, beware of investing in a dilapidated flat.

That’s because most of the profit this year has been made renovating houses. Only 5% of property sold in the UK since May has been flats.

A total 23,000 properties ‘flipped’ this year

According to a recent report by estate agents Hamptons International an astonishing one in 40 homes in England and Wales this year have been bought, done up, and sold within 12 months.

The report’s analysts reckon it will bring the total number of refurbs sold this year to around 23,000 properties. And so far, the national average profit for investors per refurb is £40,995. That’s £10,000 more than the figure for 2019. Rolling up our sleeves to update kitchens, bathrooms and whip out paint brushes, it appears, is well worth the hassle.

Hamptons based the data for its report on none other than the government’s Land Registry figures – a list of properties sold. So popular is the practice becoming, that more refurbs have been bought and sold this year than in more than a decade. It’s the highest number for 12 years, in fact. And this is despite the shutdown back in March due to coronavirus.

Then again, Chancellor Rishi Sunak’s Stamp Duty Holiday will no doubt have played a part, especially when buyers could instantly save up to £15,000 on a £500,000 property.

North and Midlands top the ‘refurb’ league

Also referred to as ‘flipping’ the practice of renovating run-down properties and selling on is most common in the North of England – and Burnley, in particular (where property is more affordable than in the South). There, one in 12 properties snapped up by keen buyers were, in fact, terraced refurbs. That was 8.2% of all properties sold and with an average profit of £20,643.

Next most popular location for flipping was a tie between County Durham in the North East and Rutland in the East Midlands. In both places 5.8% of properties were refurbs. In County Durham average profits per property were only £6,780, but in Rutland it was a much more impressive £45,269 per property.

Investors in Rutland, Walsall and Hyndburn profit most

Other areas where the property market also showed a high prevalence of flipping were (in order) Middlesbrough, Stockton-on-Tees, Wolverhampton, Hyndburn in Lancashire, Merthyr Tydfil (the only Welsh town mentioned), Darlington and Walsall in the West Midlands. Of all these places, the biggest profit on refurbs was in Rutland, with Walsall and Hyndburn next. There investors pocketed £27,536 and £26,410 per property, respectively.

Jill Stevenson

General, Market Pulse, November 2020

3 November 2020

Property Market Propels Forward Despite Lockdown 2

Confused over what Lockdown 2 means for the property market in England? We’re not surprised. But, the good news is – it’s still ‘open for business’ – albeit with strict social distancing rules in mind.

According to Secretary of State for Housing Robert Jenrick, viewings and valuations can still take place when Lockdown 2 kicks in on Thursday, November 5. At the same time, house moves with hire vans and removal firms and can also go ahead, so long as all parties involved wear masks. This includes renters as well as property owners.

Rush to beat stamp duty deadline

This means that buyers keen to save thousands by getting the keys to their new home before the end of March 31, will still be in with a chance since surveyors and conveyancers will still be working (albeit from home). Many are speculating too that because of Lockdown 2 the Stamp Duty Holiday may be extended.

It’s not yet known, however, whether those who already have most of the sale in progress can still go ahead with completion or have to wait until December 2 when Lockdown 2 is due to end. During the last lockdown they were advised to put it on hold until the market opened again. A ruling over this is expected from the government later this week.

It may simply be academic though since its unlikely completions would go ahead within a reasonable timescale anyway. This week, a Rightmove report shows a huge backlog of UK property completions. In Glasgow, 71% of sold properties still have to be completed. Sheffield is next highest with 67% of sold properties waiting to complete. Bristol, Plymouth, Leeds and Nottingham also have big backlogs, according to the number of properties sold on the site.

Physical viewings may still be available

Similarly, we will hear in the next couple of days whether or not estate agents will be able to conduct physical viewings with prospective buyers (otherwise, legally an offer can’t be put in). Just like the first lockdown though, most viewings will be virtual. If it’s allowed then a physical viewing will be merely for ‘finalising’ a prospective buyer’s decision.

Many agents are using their smart phones to talk potential buyers through a property using video, similar to them being there in person. Others have 3D cameras, allowing viewers to conduct their own online tour through a property.

New property continues to be built

There will be no change to the construction industry. Employees can still go on site, builders’ merchants will remain open and tradesmen can enter homes. Jenrick confirmed this week that the government’s plan to build 300,000 homes a year was still “very much on.”

Mortgage holiday extended

House owners who haven’t applied previously for a mortgage holiday from their lender can now do so, for up to six months. Those who have already deferred can continue until they reach the six-month limit. Interest will still accrue over this time.

Landlords given blanket eviction ban over Christmas

Tenants can’t lose their rental property over the Christmas season from December 11 to January 11. At present they must be given six months notice of an eviction – unless particular circumstances prevail ie anti-social behaviour, domestic abuse etc. Tenants living in high-risk coronavirus locations ie those in Tier 2 and Tier 3 can’t be evicted at the moment.

Jill Stevenson

General, Market Pulse, October 2020

26 October 2020

Airbnb Gives Landlord Details to HMRC

It was only ever going to be a matter of time before the taxman got his claws into Airbnb. After all, eBay sellers have been on his radar for years. Well, now it’s time for professional and ad hoc Airbnb hosts to cough up too.

That’s because, as part of a deal with the online letting giant, the UK Treasury was given the names of 225,000 Airbnb hosts. The company itself was also forced to hand over £1.8m in tax fees. That’s in addition to the £5.6m it declared as tax for 2019.

Many Airbnb landlords won’t have to pay tax

Not all Airbnb hosts will be due to pay tax on their earnings. Some may fall within the Rent a Room category, for instance, and where it’s possible to earn up to £7,500 without having to be pay tax. Airbnb itself says the majority of its users earn around just £3,100 a year.

For those that may exceed the threshold, HMRC say they will go back at least a couple of years. That means looking through the records for the tax years 2017-18 and 2018-2019.

Many tax analysts are recommending hosts eligible for tax ‘own up now.’ That way they could avoid further fees, such as interest and penalties for late payment since HMRC may possibly take this ‘quick rectification’ into account.

HMRC can investigate up to two decades of accounts

HMRC can, in fact, investigate tan individual’s tax/business accounts for the past four years if it believes an ‘innocent error’ was made. For a ‘careless’ declaration’ it will go back six years. For international affairs it can be 12 years for an ‘innocent mistake’ and 20 years for ‘failure to notify.’ Deliberate acts of underpayment can result in criminal action being taken.

A spokesman for HMRC said: “People with additional income streams may not be fully aware of their tax obligations and so we have taken steps in HMRC to consider sectors, such as short-term property letting, where we may not be collecting the full amount of tax owed.”

He added: “We would encourage customers to check their tax affairs, seeking advice where necessary, in order to put right any honest mistakes or omissions.”

Airbnb landlords may be charged business rates

Those that don’t have to pay tax on their Airbnb earnings may have to look out for being charged Business Rates, however. These apply in England, Scotland and Wales if property is rented out for at least 140 days a year. These are based on number of beds available and overall size of the property, as well as its location.

Other exemptions for Airbnb tax include:

Rental income for the year is less than £1000
Total income for the year – including employment – falling below the Personal Allowance (£12,500 for 2020/21)

Airbnb and other ad hoc landlords not familiar with the tax structure of property are always advised to contact an accountant specialising in the subject for further clarification.

Jill Stevenson

General, Market Pulse, October 2020

19 October 2020

Property Market Continues to Smash Records

UK House prices hit a record high last month as the move by inner city dwellers to get to greener pastures continues.

Property portal Rightmove’s latest House Price Index recorded a national average asking price of £323,530 per property. That’s a 5.5% increase (£16,818) on the figure for the same time last year.

The stunning statistics, considering the current circumstances surrounding the coronavirus pandemic, has prompted Rightmove forecasters to predict a 7% rise in property values for 2020. They had previously put the figure at 2%.

A number of property records ‘smashed’

But it’s not just property prices that are ‘up’ – the number of properties sold per estate agent is also impressive. To the extent that last month 70% more houses sold than in September 2019.

And property is selling faster too. The average house or apartment is now taking just 50 days to swap hands – compared to 62 days.

It doesn’t look as if the situation is going to quieten down any time soon either, despite the run-up to the winter months. The number of active buyers compared to last year is down only 1% to 66% from its peak in July of 67%.

Even Rightmove are declaring records of their own for the portal – with a huge surge in traffic. They say the number of online visitors to their site was 50% higher than September last year. That’s the highest annual jump since way back in 2006.

But, Property Data Director of Rightmove Tim Bannister warned house sellers not to get too carried away with their asking price. That’s because the sheer volume of house sales has created a backlog and that may mean many transactions not going through before the end of the Stamp Duty Holiday deadline. As a result, some sales may fall through as buyers, losing thousands of pounds, may refuse to pay the higher property prices being asked.

The number of buyers potentially trapped in this property bottleneck could be as high as 200,000 according to online property consultancy TwentyCi.

Bannister added: “Whilst activity levels continue to amaze there are some signs of momentum easing off from these unprecedented levels.”

Estate agents say low mortgage interest rates has also helped fuel demand – to the extent there are currently more buyers than sellers.

Most sales have taken place in what Rightmove refers to as ‘top of the ladder’ properties. These are homes worth more than £500,000 with a minimum three to four bedrooms and where buyers will benefit from up to £15,000 in Stamp Duty savings.

Upmarket estate agency Savills say sales for around 868 properties worth £1 million upwards, have gone through on a weekly basis since June 1. These are mostly for rural areas, with the Cotswolds recording a 94% increase in sales since June this year.

London though is losing out on interest from foreign buyers. Interest in the city centre and other expensive areas has fallen since travel restrictions were introduced during the summer months. And yet, the capital has sold 4% more upmarket properties than at this point the previous year.

Jill Stevenson

General, October 2020

6 October 2020

Property rose by 5% in September says Nationwide

Another month in the property market and another house price index citing further property rises… but for how much longer?

Nationwide is the latest lender to record impressive figures. UK Property, according to the building society’s survey, rose by 5% in September compared with the previous year. That’s the highest for four years. Only last month the Halifax recorded the cost of the average property at more than £245,000.

Nationwide’s monthly rise was 0.9% from August – and it’s pretty much throughout the UK. Only the London market remained subdued.

The house price rise for the year as a whole is expected to be around 2% – that’s according to a specialist survey published by news agency Reuters this month.

Some property analysts are warning caution though saying this month’s rise was likely to be the highest this year. That’s because the furlough scheme ends next month and, although it will be replaced with the Job Retention Scheme, the latter isn’t as generous. The result is likely to be large-scale unemployment, according to economists.

Still, low interest rates and the Stamp Duty holiday for buyers of properties of up to £500,000 in England will keep house hunters keen. At least until the first few months of next year. The scheme is due to finish at the end of March 2021.

The signs of a slowing market are already there though. Visitor numbers to property portals are reducing. The three biggest UK property for sale sites all saw a fall of 5% in visitor numbers in September compared to August, according to consultants Pantheon Macroeconomics.

Mortgage approvals highest for more than a decade

It was good news for mortgage approvals last month too. More mortgages were granted to UK buyers than in 13 years. A total of 84,700 went through in August. That compares to 66,300 in July. However, despite the big monthly jump, there are still fewer mortgage approvals this year than in 2019 at this rate (418,000 compared to 524,000 last year).

But is it only the wealthy who are buying? Figures revealed by the BoE seems to imply this. Consumer credit, for instance, didn’t rise very much – by £0.3bn when the prediction was for a rise of £1.5bn.

And certainly, first time buyers are taking the brunt of lenders’ reluctance to offer high loan to value deals (ie 80% and 85% mortgages).

Property market not as badly hit as predicted?

The upshot is that with home ownership having narrowed to those wealthier sectors of the population, the property market may not be as badly affected as many people fear come the end of the furlough scheme. That’s because they are less likely to be impacted by job losses.

Of those home owners who have already lost their jobs and moved on to University Credit, half of them have continued to pay their mortgages. The other 50% opted for the government’s Mortgage Holiday Scheme, which is due to end at the end of October, along with the current furlough scheme.

Jill Stevenson

General, September 2020

16 September 2020

Buyers told to ‘Hurry Up’ or miss out on holiday

Potential house buyers keen to take advantage of the Chancellor’s Stamp Duty holiday better ‘get their skates on’, according to one property regulatory body.

That’s because a lack of conveyancers due to furloughing and lockdown measures is causing completion delays, says estate agent overseer NAEA Propertymark. And, nor are backlogs in mortgage applications helping (for similar poor staffing reasons). The upshot is that it could take far longer than three months to buy and sell a property.

As a result, those looking to move and save thousands of pounds in Stamp Duty costs, should start viewing by the beginning of October at the very latest. Rishi Sunak’s Stamp Duty ‘holiday’ where buyers pay no Stamp Duty on property valued at up to £500,000, is due to come to an end on March 31, 2021.

Back in July – just weeks after lockdown ended – estate agents in England were selling an average of 13 properties per month. That was the largest number of sales recorded by NAEA Propertymark since June 2007.

Homes in Yorkshire top year-on-year values

Meanwhile, the exodus from busy London continues, with many residents fleeing the capital for bigger homes in quieter towns and villages. One region that is benefitting hugely from the city to country switch is Yorkshire. Property prices here grew 8.8% cent between September this year and last, bringing the value of the average house to £220,099. That’s according to property analysis site, Home.co.uk. From July to August the jump in property values in Yorkshire of 0.9% was twice the UK national average.

The neighbouring North West region has also done well in the property stakes over the past 12 months, where homeowners say the value of their property jump by 7.4%. But homeowners in the North East haven’t exactly been feeling left out either, with an increase of 4.9%. The monthly growth for here was even better than Yorkshire, with house price increases of 1.1%.

Property in the south under-performing

Further south though it is a different picture. And it isn’t just homeowners in London that are seeing price falls. The South West, South East and the East of England are all experiencing property growth below the national average. In Greater London supply of properties has grown exponentially by 71% over the past 12 months. In the East of England region housing supply is up by 34%. In Yorkshire the supply figure was a mere 9%.

A spokesman for Home.co.uk added Scotland into the mix of good-performing regions ‘up north.’ In fact, from Yorkshire upwards the price of housing was the best yet since the financial crisis of 2008.

He added: “It is quite remarkable that, after nearly a decade of price stagnation, the North East property market finally takes off post pandemic… [the aforementioned regions’] performance is compensating for the lacklustre activity in London and adjacent regions.”

Not everything in the garden is rosy… But, with the prospect of a No Deal Brexit, furloughing finishing and the end of the Stamp Duty holiday in March next year, house prices will plummet say property analysts. Think tank, The Centre for Economic and Business Research, reckon it could be by as much as 13.8%.

Jill Stevenson

Business, Finance, General, July 2020

2 July 2020

Business Protection: Key Person Cover

What is the most common, and single-most important thing when it comes to your business? – I think most will agree that it is: people! That’s right folks, whether you are a Richard Branson-level entrepreneur with big, multiple businesses, or a small sole-trading company, the most important aspect of your business is YOU and the […]

To access this post, you must purchase Subscription, Subscription (Annual), Print magazine subscription, Digital Subscription, HMO £3.95 Magazine subscription, APP £3.95 Magazine subscription, Early Bird Tickets - £200 or Awards Tickets - £250.

Will Norrington

« First ‹ Prev 5 6 78