Tag Archives: finance
Property tax having a detrimental effect in Australia, says analysis report
Few things have as detrimental an impact as property stamp duty on household finances in Australia, according to the Housing Industry Association, the voice of Australia’s residential building industry. The HIA’s Summer 2015 Stamp Duty Watch report shows that during November 2015, the typical stamp duty bill nationally rose to $19,045 from $17,653 in June, an increase of 7.9%. The cost of stamp duty is equivalent to almost four months’ worth of earnings, with stamp duty causing mortgage repayments to increase by $1,165 per year, or $34,955 over a 30year loan term. ‘The cost of stamp duty has a significant negative multiplier effect causing a downward financial spiral for households. Apart from the immediate effect of being over $19,000 worse off, stamp duty results in mortgage interest payments increasing by about $15,900,’ said HIA senior economist, Shane Garrett. ‘Damage from the tide of stamp duty doesn’t stop there. Home buyers have smaller deposits after stamp duty is paid and must bear larger mortgage debt. As a result, significantly higher LMI charges must then be paid,’ he explained. Garrett pointed out that on a standard home purchase of $527,000, stamp duty can push the LMI premium up by another $7,855. If that’s not bad enough, a further layer of mortgage interest is added on top of the LMI premium if it is capitalised. ‘The end result is that the typical stamp duty bill of $19,045 can snowball up to about $50,000 once LMI and mortgage interest are factored in. This is an unacceptable burden to place on ordinary home buyers,’ he added. Garrett also pointed out that as state governments rely more and more on revenue from stamp duty, they have been blinded to the obvious consequences of these costs have on prospective first home buyers. Indeed, the most recent Productivity Commission report also noted the huge disincentive that stamp duty places on older households wishing to downsize. A breakdown of the figures show that in November 2015, Northern Territory home buyers continued to suffer the highest stamp duty bills at $25,600, followed by Victoria at $24,700 and New South Wales at $23,600. Queensland continued to offer the lowest stamp duty bills by a comfortable margin at $6,300 followed by Tasmania at $9,300. Stamp duty bills are the fourth highest in the ACT at $18,400, with Western Australia in fifth place at $16,300 and South Australia in sixth at $15,400. Continue reading
Private sector housing rent arrears up in UK
Cases of private rented sector tenants in the UK seriously behind on rent are rising once more, up 13.8% between the second and third quarters of 2015, new research shows. Those more than two months behind on rent now number 84,200, the most households since the second quarter of 2013, according to the latest Tenant Arrears tracker report from estate agency chains Your Move and Reeds Rains. In absolute terms this represents a quarterly increase of 10,200 additional households in potentially serious financial difficulties. On an annual basis, this means 13,200 more households are in significant arrears than a year ago, or an annual increase of 18.6% since the third quarter of 2014, when this figure previously stood at 71,000 across the UK. On a historical basis, the latest deterioration in serious tenant arrears remains relatively mild, remaining considerably below the record 116,600 such cases seen in the third quarter of 2012. However the latest figures for the third quarter of 2015 represent the highest levels in more than two years. The report points out that in part, the increase in absolute numbers of serious arrears due to the overall growth in the size of the UK private rented sector. As a proportion of all private tenancies, just 1.6% are in serious arrears of more than two months. This compares to a peak proportion of 2.9% of tenants in the first quarter of 2008. ‘The chance of an individual tenant falling into serious arrears remains very low. In general, renting works for most people. Over the last decade the private rented sector has expanded at an unprecedented pace, providing homes for millions of households at the same time as absorbing the worst financial crisis in living memory,’ said Adrian Gill, director of estate agents Your Move and Reeds Rains . ‘In the current climate, optimism feels increasingly reasonable. Most households are beginning to earn more, the cost of living is stable and the chance of falling into unemployment is diminishing. For the majority of tenants, paying the rent is becoming easier rather than harder,’ he pointed out. ‘But beneath this rising tide there are inevitably some households and individuals who are not yet feeling any new economic buoyancy. As others bid rents higher there will be a minority who are still struggling to keep up. Landlords and tenants have a mutual responsibility to be aware of this small but significant risk,’ he added. In quarter three of 2015 there were a total of 26,712 court orders for the eviction of tenants, on a seasonally adjusted basis. This is 4.3% lower than was seen in the second quarter when seasonally adjusted eviction orders stood at 27,909, and 7.8% fewer evictions than 28,959 a year before in the third quarter of 2014. Breaking 11 previous consecutive quarters of improvement, landlords’ own finances have remained in stable health between the second and third quarter of 2015. In the latest figures there are currently 5,700 cases of buy… Continue reading
Dubai to get more affordable homes
Dubai is usually associated with luxury property that fits with the glitz associated with the celebrities and wealthy property owners in the emirate but several new announcements now suggest otherwise. One developer is to build a series of affordable homes in Dubai while over 200 dilapidated villas that were lying empty are to be demolished. The moves show a different side to the emirate’s real estate market and is a reminder that not all properties are luxury apartments for the well off. Danube Properties has unveiled an affordable housing project that will allow home owners to turn one room into two. The Ritz Project at Al Furjan includes 452 fully furnished apartments, comprising of studios, and one a d two bedroom units. The rooms features a bed which can be tucked into the wall during the day, thus creating a larger living room space. At night it can be lowered to transform the accommodation into a bedroom. The Ritz also includes retail space and a gym, together with an outdoor running track and swimming pool, tennis and badminton courts and a basketball area. ‘We are bringing the latest home technology to our customers at a time when consumers are looking for more with less,’ said Rizwan Sajan, founder and chairman of Danube Group, who added that the homes are aimed at new couples and small families. The launch comes at a time when the luxury part of the property market is experiencing a softening, but Sajan pointed out that some 18,000 new homes are needed in the emirate over the next five years. ‘Real estate is a long term business and I am a firm believer in the long term sustainability of Dubai’s economy, which is very resilient. The current supply of 12,000 to 13,000 homes per annum falls well below the anticipated demand. Besides more than 80% of Dubai’s population live in rented homes,’ he explained. ‘With property prices coming down to a more realistic level we see the possibility of a large scale migration to home ownership from rental homes,’ Sajan added. Meanwhile, around 250 dilapidated villas across Dubai which are regarded as posing a public health risk are to be demolished. According to Dubai Municipality many of the properties are caught up in inheritance disputes between family members and the rightful owner has neglected them, making them a threat to security and public health. ‘There is a possibility that these houses are used as a den for crimes and as a hiding place for illegals and fugitives,’ said Khaled Mohammed Saleh, head of the buildings department at Dubai Municipality. It is estimated that there are 713 abandoned houses across Dubai of which 303 have already been demolished and a further 154 have been renovated by their owners. The Municipality will now issue orders to the owners for the houses to be demolished and if they fail to comply the properties will be taken down and the owners charged. Continue reading
