News

Our Christmas Period Opening Times 2017

The holiday season is finally upon us, in case you need reminding!

Here's a quick notification of our Christmas opening times:

Saturday 23rd December 2017 - Closed

Sunday 24th December 2017 (Christmas Eve) - Closed

Monday 25th December 2017 (Christmas Day) - Closed

Tuesday 26th December 2017 (Boxing Day) - Closed

Wednesday 27th December 2017 - 9:00am to 5:30pm

Thursday 28th December 2017 - 9:00am to 5:30pm

Friday 29th December 2017 - Closed

Saturday 30th December 2017 - Closed

Sunday 31st December 2017 (New Years Eve) - Closed

Monday 1st January 2018 (New Years Day) - Closed

Remember, if you're a tenant of one of our managed properties and have a maintenance issue you need to report, this can still be reported 24/7 right here on the website. Simply click 'services', then 'report a maintenance issue'. We'll be able to respond accordingly. 

Number of First Time Buyers On The Rise

First time buyers are on the rise in the UK according to new data, a development that is causing commentators to be cautiously optimistic about where the housing market is heading. 

The Numbers

A monthly report released by Connells Survey & Valuation in July found that first-time buyers were behind roughly 50 per cent of all purchase valuations on properties in the UK. That's a 6% rise over the five-year average. 

The news followed directly on reports from UK Finance that in June the first-time buyers market was "soaring", having risen 26% on the previous month and 9% on the figures for the same month a year earlier. It was the highest rate in over ten years.

All this points to a steady uptick in the numbers of families, couples and individuals who are taking real steps towards becoming property owners for the first time.

Cautious Optimism

Despite what sounds like a promising trend in what has been a relatively troubled UK housing market for the past few years, the experts are not completely ready to celebrate just yet.

John Bagshaw, Connells Survey & Valuation’s corporate services director, points out that when prospective property owners show interest in purchasing a home by getting a valuation carried out, it does not automatically indicate that they have the means to do so. He explained that, while the market has had a significant boost in demand from those eager to become homeowners, encouraged by a solid employment situation and low mortgage rates, purchasing a home may not actually be feasible at this point for many would-be buyers.

 "Economic conditions are still tough," Bagshaw said. He added that the problems that have plagued the UK housing market in recent years – including skyrocketing property values and ballooning general cost of living – still make it difficult for the average person to save for a deposit.

Bagshaw pointed to the fact that house prices are roughly eight times higher than average earnings, and going up nearly twice as fast, at a rate of about £10,000 a year. He indicated that first-time buyers could use some help achieving their dream of becoming property owners, and suggested that they might be given a pass when it comes to stamp duty. 

What this means for the buy-the-let market

The seemingly healthy signs in the private market are also hiding some not so healthy figures when it comes to commercial real estate. The number of new buy-to-let landlords entering the market has declined. 

The Connells Survey & Valuation report points to recent government policies that have dealt a blow to incentives for entering the rental market. These policies include the increases in stamp duty and the reduction in mortgage relief for buy-to-let landlords.

Bagshaw said that the trend does not mean that the buy-to-let sector has collapsed, but that it is increasingly dominated by existing landlords rather than new ones. He pointed to the stamp duty surcharge, as well as the recent policy blows to tax relief on mortgages for buy-to-let investors as the main culprits that could be preventing new landlords from setting up shop.

Banned 'Tenant Fees' Part 2

More doom and gloom and yet another own goal for the government  

We were told this would be happening in November last year (see Banned 'Tenant Fees' good for tenants?) but that there would be consultation with the industry into what the impact such a ban would have. Research conducted by Capital Economics for ARLA Propertymark earlier this year carried out surveys with agents across the country to determine what impact the ban would have on a range of aspects, from jobs, to rent prices, to property availability.

The report produced showed a ban on letting agent fees will cost the sector jobs, make buy-to-let investment even less attractive, and ultimately result in the costs being passed on to tenants. The Research shows that referencing checks undertaken by agents take, on average, eight hours to complete. It is therefore right and proportionate that the industry is recompensed for this work, which benefits tenants. The research also showed that letting agents stand to lose around £200 million in turnover, costing the sector 4,000 jobs. Landlords themselves would lose £300 million, meaning they may seek to cover their losses by increasing rents to tenants.

On average, rent costs will go up by £103 per tenant, per year, ultimately meaning tenants who move more frequently will reap savings on their overall costs but longer term tenants, who are usually lower-income families, will see a loss as their rents rise year-on-year.

The ban, therefore, contradicts the Government’s stated aim to encourage longer term tenancies, as tenants who stay in their homes for the long-term will end up shouldering the costs of those who move more frequently.

The impact of recent events

During the time period this report was being conducted, Teressa May decided to call a snap election resulting in a hung parliament with a majority government still to be had. In addition, there have been three terrorist attacks in the UK, the tragic fire in Grenfell Tower and negotiations have started on Brexit.

Therefore it's unlikely the Government had enough time to analyse all of the responses from the consultation, as it only closed 12 working days ago, on the 2nd June. It appears they had already made their decision and therefore the consultation was no more than a ‘tick box’ exercise and they haven’t appropriately taken the industry’s views into account. A bit like the general public's attitude to the Tory manifesto!

Queen's Speech announcement

The Queen's Speech states:

Tackling unfair fees on tenants will make the private rental market more affordable and competitive. The draft Bill will bring forward proposals to: ban landlords and agents from requiring tenants to make any payments as a condition of their tenancy with the exception of the rent, a capped refundable security deposit, a capped refundable holding deposit and tenant default fees cap holding deposits at no more than one week’s rent and security deposits at no more than one month’s rent

Security deposits

In response to the consultation document, it made clear that security deposits should be set at a level that ensures that tenants have a meaningful stake in paying the rent and maintaining the condition of the property. In setting the figure at no more than one month's rent, the Government are failing to take into account any damage that can be incurred while a tenant is simultaneously defaulting on the rent. Experience has shown that for agents and landlords that have asked for a deposit equal to a month's rent in the past, some unscrupulous tenants default on the last month's rent and simply forfeit their deposit. With no additional funds to cover any cleaning or delapidations that may inevitably arise (especially likely if they are the sort of person to default on rent), the landlord is left out of pocket, paying for cleaning or damages caused by the tenant.

Landlords and letting agents throughout the country will inevitably have to work out how to manage the risks involved and recover the difference in costs, the most obvious being, agents increase fees to landlords, and landlords increase the rent to cover extra costs and damages which a deposit otherwise would have satisfied. 

Final Word

It would have been great if the Government had scrapped this, like they have done with the Dementia Tax, like they have done with the scrapping school meals, like they have done with potentially bringing back fox hunting, like they have done with grammar schools, but sadly no, this piece of legislation has stayed, from a consultation that was ignored. Legislation that is going to have the exact opposite of what it set out to do.

Good job! 

 

 

Changes to Capital Gains Tax — How are Landlords Affected?

The 2016 budget inaugurated some major changes to the capital gains tax, which could have some major implications for buy-to-let landlords – especially those with diversified investment portfolios, and other companies.

 

What are the changes?

Effectively, there has been a decrease in the capital gains tax on most "chargeable gains": The 18% rate became 10%, and the 28% rate became 20%. One exception, however, is those chargeable gains that accrue on residential properties that do not fall under the relief umbrella for private residences.

The former 28% rate was generally applied to higher-rate taxpayers, trustees and companies, whereas the 18% rate covered anyone not in those categories (generally lower rate tax payers).

The residential property exception under the new law is pretty stringent. Under the banner of "residential property", the measure includes any land that has had a dwelling on it at any point during the current ownership.

 

Why were they implemented?

The idea behind these policy changes is to promote business growth and investment activity. The general wisdom is that low capital gains rates mean companies are freed up to do what they need to; essentially, to expand their capacities and create jobs. The idea behind the exception with regard to residential property is to encourage investment in companies, rather than properties. The new rates will be affecting all relevant gains realised since 6 April 2016.

 

What will the impact on the economy be?

The changes will significantly decrease the amount flowing into the Exchequer coffers, to the tune of £600-700 million per year over the next five years, according to the Office for Budget Responsibility. On the other hand, it will significantly bolster company coffers, giving businesses the capital they require to grow and open up new jobs.

It will also have a major effect on those individuals and families with significant capital holdings, and those who make multiple investment transactions throughout the year. With new lower capital gains tax liability, they will now have more room to play with when it comes to managing and growing their investments.

Of course, things will not change quite so much for those holding residential properties, unless of course they opt to switch some of their investments from properties to enterprises. However, the changes are designed so that they do not disproportionately affect any particular income group.

The government holds, in addition, that there will be no negative impact on businesses or other organisations, as the changes are aimed primarily at individuals with capital gains tax liabilities, personally or professionally.

 

What should I do if I am an unincorporated buy-to-let landlord?

This is the question many people are asking, and unfortunately there’s not a perfectly clear answer.

One possible option is to incorporate, which also allows you to avoid private income tax rates, and take advantage of corporation profits taxes, which decreased in April 2017. However, there are of course other costs to consider involved in running a business, including administrative costs and those related to renegotiating mortgages.