Tag Archives: british
UK’s fledgling Build to Rent sector dealt stamp duty blow
The UK’s fledgling Build to Rent sector has been dealt a blow with the announcement that large investors will not be exempt from a new extra stamp duty surcharge that is introduced in a few weeks’ time. From 01 April there will be an extra 3% stamp duty payable on additional homes and it has been hoped that those investing in more than 15 properties would be exempt, and Chancellor George Osborne had indeed hinted at this. However, in his Budget announcement he confirmed that large scale investors in buy to let properties will pay the extra 3% which will apply equally to purchases by individuals and corporate investors. Melanie Leech, chief executive of the British Property Federation, said the move would hit the private rented sector. ‘The government’s decision to not include an exemption for investors who are purchasing large portfolios of properties for rent is extremely disappointing, and deals a huge blow to the build to rent sector,’ she pointed out. ‘This is going to be a significant deterrent to the institutional investment currently poised to settle in the purpose-built rented sector, which has the opportunity to deliver a significant number of new, quality affordable homes,’ she added. The failure to give relief from the additional stamp duty levy for large investors could inhibit the development of a much needed institutional private rented sector, according to Lucian Cook, Savills UK head of residential research. ‘While purchases of six or more residential properties can be treated as a non-residential transaction, the reform of stamp duty on commercial properties is likely mean greater entry costs for large scale residential investors one way or another. Our recent analysis suggests there will be demand for another one million private rented households in the next five years despite policies to boost home ownership,’ he explained. Investors could be put off, according to several experts, including Steve Sanham, development director at HUB. ‘A threshold on how many homes the stamp duty surcharge applies to is also crucial for institutional landlords and investors. The aim of delivering more homes will not be achieved if investors are put off from creating large developments of new homes to begin with,’ he said. Elizabeth Bradley, head of the corporate tax team at international law firm Berwin Leighton Paisner, also believes investors will be discouraged. ‘Much of the British property industry will be very disappointed with the Budget changes,’ she said. ‘The Chancellor has acknowledged the need to build more homes but the extension of the extra SDLT rate on buy to let to large investors will discourage investment in the private rented sector,’ she added. Continue reading
New stamp duty rates for commercial property in the UK announced
Investors in larger commercial property in the UK see a rise in stamp duty rates but buyers of smaller properties will benefit from a reduction in the tax payable. The way stamp duty on freehold commercial property and leasehold premium transactions is calculated has changed. The rates used to apply to the whole transaction value but from today (17 March) new tax rates and bands come into force. The new rates and tax bands are 0% for the portion of the transaction value up to £150,000, 2% between £150,001 and £250,000, and 5% above £250,000. It means that buyers of commercial property worth up to £1.05 million will pay less in stamp duty. Stamp duty rates for leasehold rent transactions will also change, with a new 2% stamp duty rate on leases with a net present value over £5 million. Opinion over the effect of the change is divided. According to the British Property Federation (BPF) it is not all good news. ‘Commercial property investment can often act as the catalyst for regional growth and as the economy has recovered investment has been spreading out from London to the UK’s regions, but will now undoubtedly slow,’ said Melanie Leech, BPF chief executive. ‘The real set back is that development in places like the Northern Powerhouse and Midlands’ Engine will now be held back as a result of this out of the blue raid on commercial property transactions,’ she explained. ‘Over a decade ago, the Government of that time decided to decouple the commercial and residential rates of SDLT recognising that the sectors were driven by very different factors and there was no logic in charging the same rates of SDLT on commercial and residential property. We can only hope that today’s announcement isn’t any unravelling of that logic,’ she added. However, Mark Tighe, managing director of capital allowances tax specialists Catax Solutions, believes that the reduced stamp duty payable will drive demand in this key asset class in the months and years ahead. But he warned that the resultant increase in transactions, among both businesses and private individuals buying commercial property, will potentially cost billions as a largely unused tax relief is lost forever. ‘Capital allowances are a highly valuable tax relief available to owners of commercial property but under current legislation they are irrecoverable if they are not identified and realised at the point of sale,’ he explained. ‘Currently, very few commercial property owners, along with their accountants and lawyers, are aware of unused capital allowances tax reliefs. Therefore as transaction levels increase in volume and momentum, commercial property owners are set to lose significant tax rebates to the tune of thousands, tens of thousands or even hundreds of thousands of pounds,’ he added. Continue reading
Home sales in Canada up 0.8% in first weeks of 2016
National home sales in Canada rose by 0.8% from January to February while average prices were up by 16.4% year on year, the latest index shows. But prices fell in some regions, most notably British Columbia and Ontario with a fall of 1.4%, according to the data from the Canadian Real Estate Association also shows. The number of newly listed homes edged up by 0.5% from January to February and the CREA report says that the Canadian housing market has tightened but remains balanced overall. The monthly increase lifted national sales activity to the highest level since June 2007 but a greater number of local housing markets posted a monthly decline in sales activity than posted a monthly increase. However, the latter accounted for a larger share of national transactions. The Greater Toronto Area (GTA), Okanagan Region and Fraser Valley made the largest contribution to the monthly increase in national sales activity, offsetting monthly sales declines in Edmonton, Greater Moncton and Montreal. ‘Two of Canada’s hottest housing markets look set to stay that way heading into the spring home buying season. Meanwhile, other major urban markets elsewhere in Canada are well balanced or have ample supply,’ said CREA president Pauline Aunger. Actual, not seasonally adjusted, sales activity rose 18.7% year on year in February, some 12.7% above the 10 year average for the month. Activity increased above year ago levels in about three quarters of all local markets. BC’s Lower Mainland, the GTA and Montreal contributed most to the year on year increase in national activity. Gregory Klump, CREA chief economist pointed out that the number of single family home sales above one million dollars is rising in Greater Vancouver and the GTA. ‘Tightened mortgage regulations apply to homes selling above $500,000 and below a million dollars. The tighter regulations combined with a short supply of single family homes will restrain transactions below one million dollars,’ he explained. ‘If recent trends continue, home sales above one million dollars will account for a greater share of activity and will further fuel year on year average price increases in these markets. Meanwhile, price growth will remain more modest in other housing markets that don’t have an ongoing or developing supply shortage like the kind we’re seeing in the Lower Mainland of British Columbia or around the GTA,’ Klump added. The number of newly listed homes edged up 0.5% in February 2016 compared to January. The rise in new listings in the Lower Mainland of British Columbia, York and Mississauga Regions of the GTA and Hamilton-Burlington helped to push the national figure higher. Monthly increases in new listings in these housing markets were offset by monthly declines in Central Toronto, Calgary and Montreal. The national sales to new listings ratio rose to 59.5% in February 2016 versus 59.3% the previous month. This marks the ratio’s highest reading since November 2009. A sales to new listings ratio between 40% and 60% is generally consistent with balanced housing market… Continue reading
