Tag Archives: investment
Many buy to let property investors not put off by UK tax changes
Most property investors in the UK are undeterred from buy to let despite 2016 tax changes and 56% are planning on purchasing within the next 12 months, new research shows. With changes in tax approaching some 40% plan to set up a limited company for their properties to counter the impact of tax changes, whilst 33% plan to raise rents, according to the latest client barometer survey from specialist lender Shawbrook. However, while the outlook for investors remains positive, new changes to tax relief and stamp duty have caused some investors to check their ambitions. Of the 44% who are not planning on purchasing a new buy to let property this year 37% said it was due to the 20% cap on tax relief for buy to let properties making the proposition unattractive and 16% said the 3% extra stamp duty levy on additional homes was putting them off. The latest figures also revealed that 49% of clients said they considered regulation to be the biggest challenge facing property investors over the next six months, a significant increase on last year’s barometer results, which found that regulation was something only 23% of investors considered to be the biggest challenge they faced. Despite these challenges 61% have a positive outlook for the upcoming 12 months, predicting either a large or small increase in property value. In total 43% of landlords saw an increase in tenant demand in 2015 and 61% saw an increase in their rental income. A further 44% are confident that their business will grow in 2016. ‘As a lender it is always great to see such positivity in the market, and as with our Broker Barometer conducted in late 2015, it seems that there is a lot of optimism amongst property professionals also,’ said Karen Bennett, the firm’s sales and marketing director of commercial mortgages. ‘Obviously the new changes will have an effect and may instil more caution across the market, however, Shawbrook is well placed to adapt to change, and we are expecting the market to remain buoyant,’ she added. Continue reading
Property lenders in UK ready for new European wide mortgage directive later this month
UK lenders are ahead of most of their European counterparts in implementing the mortgage credit directive (MCD), a process that is due to be formally completed on 21 March. With UK firms having been given the opportunity to adopt the revised rules up to six months early, many have chosen this option and are therefore already complying with the directive’s requirements. In practice, borrowers will notice few changes in the process of taking out a mortgage as we pass the MCD implementation date, according to the Council of Mortgage Lenders (CML) which does not expect the move to have any significant effects on the market or on the availability of mortgages. However, in a report, the CML says that over time, borrowers may notice changes in the disclosure documents presented to them by lenders when they are considering taking out a new mortgage. Other changes as a result of the directive include the creation of a new class of consumer buy to let borrowing, sometimes abbreviated to CBTL, as well as modifications affecting foreign currency loans and second charge lending. It points out that in many ways, implementation of the directive in other European countries will align them with standards already applying in the UK, where the mortgage industry has been operating for the last two years under a system of enhanced consumer protection following the mortgage market review (MMR). Nonetheless, the UK, like other EU countries, is required to implement the MCD, which is intended to set minimum regulatory requirements across Europe. An assessment from the European Mortgage Federation (EMF) of how different countries were working towards implementation the directive said that the MMR in the UK already went beyond the core provisions of the MCD. The EMF also estimated that many firms in the UK were six months ahead of most of their European counterparts on implementation. Firms in Belgium and Denmark had also made rapid progress, and had almost completed the process of adopting the directive by last autumn. At that stage, the EMF was predicting that a handful of European states, including Finland, Latvia, Portugal, Slovenia and Malta, might not meet the 21 March deadline. But all of those countries were expected to have adopted the directive within four to eight weeks thereafter. Government, regulators and firms in the UK have all supported the adoption of the MCD, even though consumer protection in this country has already been comprehensively re-appraised and reinforced through the MMR and the directive does little in practice to extend protection for UK borrowers. The process of implementing the MCD has been overseen by HM Treasury, although the rules will be supervised by the Financial Conduct Authority (FCA). The CML report also points out that the transition towards implementation of the MCD has been smoothed by the decision to give lenders a six month window, within which they have been able to adopt the directive’s measures to their own timetable. This means that firms have,… Continue reading
House price growth slows in Auckland
Residential house price growth in Auckland, New Zealand, slowed in the second half of 2015 but are still higher than where they were at the same time last year. The latest data show that average price at $822,024 in February was up 1.3% on the average price for January and up 10% year on year while the median price at $738,000 was down 2.9% on January but up 7.5% on last February. ‘While prices are down from their record highs, based on past trends, prices in coming months are most likely to build modestly,’ said Peter Thompson, managing director of agents Barfoot & Thompson. ‘This trend has occurred over the past nine years where Auckland house prices have followed a cycle of falling in the first quarter of the year and then rising from autumn on. We have now had two months of trading where prices have been higher than they were in their equivalent months last year, and in the past that has meant prices have risen throughout the year,’ he explained. He added that the most significant figures in February’s data were that sales numbers stalled and new listings doubled while the number of properties sold at 698 was the lowest in any month for three years. ‘The reason was that at the start of February the number of properties on the market was at its lowest number for 20 years, and buyers had limited choice. However, as the month progressed more properties were listed, and we finished the month with 2,060 new listings, the highest number in the past six months. There are currently an extremely high number of properties in the pipeline for settlement in March and April,’ Thompson pointed out. ‘At month end, we had 3,318 properties on our books, the highest since March last year, and we anticipate an extremely busy period through autumn. Another factor that affects the average and median sales price in the early part of the year, is the summer break results in a relatively low number of sales in the $1 million plus price category,’ he added. The data shows that throughout last year, on average, some 332 properties a month were sold in the $1 million plus price category, but in February the sales in this price category was just 187. Sales of properties for under $500,000 in February made up 20.6% of all sales, whereas throughout last year they averaged 14.9% of sales. Meanwhile, the latest data from Statistics New Zealand show that building activity reached a record high in the last quarter of 2015, with an increase from the previous quarter in Auckland but a decrease in Canterbury. The total volume of building work rose 2.5% from the previous quarter, with rises of 2.8% for residential buildings and 2.3% for non-residential buildings. ‘This is the most building activity we’ve seen since the series began 26 years ago, with total activity slightly higher than the previous record,’ said Statistics New Zealand… Continue reading
