Tag Archives: housing
Tax change could result in higher residential rents in the UK
Landlords in the UK’s private rented sector could be forced to put up rents if their buy to let mortgage interest payments are made non tax deductible, it is claimed. The National Landlords Association (NLA) is warning that costs in the UK private rented sector (PRS) could rise by up to £2.6 billion if tax changes are made, as has been hinted. In a letter to the Chancellor ahead of Wednesday’s Budget, the NLA’s chief executive officer Richard Lambert says that making mortgage interest payments non tax deductible would be the last thing the UK economy needs and would only put greater pressure on the cost of housing. The letter also outlines the contributions that landlords make to the UK economy by means of their support for the housing industry and through direct contributions in the form of tax. ‘It has been suggested that private landlords receive too many perks or reliefs which give them an unfair advantage compared to owner occupiers, but this ignores the fact that letting residential property for profit is a business,’ said Lambert. ‘No business pays tax on their gross turnover alone so why should landlords be treated any differently. Removing their ability to deduct legitimate costs before declaring their taxable profit would essentially force them to suck up one of the most significant expenses they face in being able to provide homes for others,’ he added. Using figures from the Council of Mortgage Lenders reported at the end of 2014, the NLA estimates that costs in the PRS could rise by as much as £2.6 billion if mortgage interest payments were to be reclassified as non-deductible, a move it warns would leave landlords with no other option than to raise rents. Lambert concluded the letter by seeking ‘an unequivocal reassurance that the Government will continue to regard buy to let mortgage interest payments as a legitimate business cost, and give landlords the confidence and certainty to invest for the future’. Continue reading
UK small home builders get finance boost
Small house builders in the UK are to benefit from a £100 million cash boost to recognise and support their important role in keeping the country building. Housing Minister Brandon Lewis said that The Housing Growth Partnership will act as a dedicated initiative that will invest alongside smaller builders in new developments, providing money to support their businesses, helping get workers onto sites and increasing housing supply. The Partnership will also establish a network of builders, including experienced developers, who will act as mentors and advisers to those looking to expand and grow their businesses. The latest figures show that in the last 25 years, the number of firms building between one and 100 units a year has fallen from over 12,000 to fewer than 3,000 but house building figures show starts have more than doubled since those seen during the same period in 2009 and Lewis said he wants smaller firms to be involved in this growth. The government has matched a £50 million investment from Lloyds Banking Group to create the £100 million Housing Growth Partnership, which will be used to help smaller builders to invest in new projects and develop their businesses, allowing them to recruit and train skilled workers and become more competitive in their local area. The partnership expects to make around 50 investments, with the aim to provide an additional 2,000 homes. ‘The 2008 economic crash devastated our army of small builders, with delivery falling from 44,000 homes to just 18,000 and now seven years on companies are getting back on their feet but we’re determined to give them all the help they need,’ said Lewis. ‘Access to finance is one of the biggest challenges they face so this £100 million commitment will help our smaller builders fund new projects, expand their businesses, create more jobs and build more homes,’ he pointed out. ‘With housing starts at a seven year high and climbing and homes granted planning permission at 261,000, the highest since 2007, this work will ensure we maintain this momentum and keep the country building,’ he added. According to Andrew Bester, group director and chief executive of commercial banking at Lloyds Banking Group, it will help address the challenge of housing supply and affordability in the UK’s housing market. ‘It will provide SME house builders with much needed equity to support residential development projects, to stimulate growth in their businesses and facilitate access to conventional property development finance. We believe building both a greater quantity and mix of homes will help Britain prosper,’ he added. Brian Berry, chief executive of the Federation of Master Builders, confirmed that one of the biggest obstacles these firms have faced is a severe difficulty in accessing finance. ‘Without adequate access to finance they cannot bring forward the number of new homes they would otherwise,’ he said. ‘The new Housing Growth Partnership will directly help to address this issue and the additional £50 million greatly increases the scale of what can be achieved. We… Continue reading
Australian city property prices up almost 10% year on year
Property prices in Australian cities increased by 2% in the second quarter of 2015 and are now 9.8% higher compared to a year ago, the latest index data shows. The figures from CoreLogic RP Data reveal that the growth has gained momentum as the year has progressed and the firm’s head of research, Tim Lawless, believes interest rates cuts in February and May have contributed in pushing capital gains higher. ‘Growth conditions had been moderating from April last year through to the end of January 2015. With the RBA cutting the cash rate in February, there was an instant buyer reaction across the Sydney and Melbourne housing markets where auction clearance rates surged back to levels not seen since 2009, capital gains once again accelerated,’ he explained. He pointed out that Sydney and Melbourne homes are selling in record time, some 26 days and 32 days respectively. But growth is not even. While Sydney and Melbourne have seen dwelling values increase by 16.2% and 10.2% over the financial year respectively, every other capital city has seen growth of less than 5% and values are down over the year in Darwin by 2.9% and Perth by 0.9%. According to Lawless, the current housing growth cycle clearly highlights a divergence in capital gains across the capital cities. Since values started rising in May 2012, Sydney homes have seen a 43.1% surge in values and Melbourne values are up by 25.9%. Despite softer market conditions in Perth, property values are currently up 12.8%, the third highest growth rate across the capitals. Simultaneously, Brisbane's property market has shown the fourth highest rate of growth at 12.4% followed by Adelaide at 10.4%, Hobart at 9.6%, Darwin at 8.9% and Canberra at 8.8%. ‘The three tiers of housing market performance can be best explained by economic and demographic factors where it's no coincidence that New South Wales and Victoria are recording the strongest economic conditions coupled with the strongest rates of migration which is fuelling housing demand. These states are more sheltered from the mining sector downturn and have benefited from the strong multiplier effect of housing construction as well as a vibrant financial services sector,’ said Lawless. ‘The Perth and Darwin markets are weakening in line with the downturn in the resources sector and an associated weakening in infrastructure investment and a marked slowdown in migration. Brisbane, Adelaide, Canberra and Hobart are seeing softer economic conditions and population growth compared with Sydney and Melbourne, however housing markets have shown some level of growth over the year,’ he added. Looking at the performance of detached housing versus apartments over the financial year, houses are clearly outperforming units in the capital gains stakes. Over the financial year, house values were 10.4% higher across the combined capitals index while unit values increased by a much lower 5.6%. The same trend where houses are showing a higher capital gain than units is evident across each of the capital cities except Hobart… Continue reading
