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Number of Scottish households facing higher moving costs set to rise
More households in Scotland could potentially see the upfront cost of moving rise when the new Land and Building Transaction Tax rates come into force in April 2015, a new analysis suggests. In October, during the draft Scottish Budget, John Swinney, the finance secretary, announced that from April next year Scotland would be scrapping the current stamp duty system and replacing it with a LBTT. At the time the Scottish government said that up to 90% of home buyers would be better off under the new regime but this was before Chancellor George Osborne announced stamp duty reforms last week. Following the LBTT announcement real estate firm Knight Frank looked at the numbers and found that, based on the rates announced and compared to the stamp duty system that was in place across the UK at that time, the new LBTT would favour buyers of properties at £325,000 or less, where less tax would be payable. Sales above £325,000 would incur a higher rate of tax. However, the firm has now re-done the calculations based on the stamp duty changes which will apply in Scotland until the change and the point at which it now becomes more expensive to buy a property under the new LBTT system has fallen from £325,000 to £254,000. Knight Frank says that this means that a lot more households could potentially see the upfront cost of moving rise when the LBTT rates come into force in April. According to figures from the Registers of Scotland, the average price of a detached property is higher than £254,000 in nearly a third of all the local authorities in the country. Under the current system, a house costing £390,000 will incur a stamp duty payment of £9,500, whereas the upfront costs under the new LBTT system for the same property will be 72% higher at £16,300. ‘Prior to the introduction of the new levy in four months’ time, we expect to see an increase in the number of prime sales and homes coming to the market as both buyers and vendors look to move before costs rise,’ said Oliver Knight. ‘Homes worth £250,000 plus accounted for 72% of the total £215 million stamp duty take in Scotland last year. The new regime could hit receipts at this end of the market if there is a slowdown in transactions, and perhaps raise questions among policy makers about the rate structure,’ he added. Continue reading
UK house price growth falls in UK for sixth month in a row
UK house price growth in November dipped for the sixth consecutive month but changes to the Stamp Duty property tax is expected to boost sales, according to the latest report from the Royal Institution of Chartered Surveyors (RICS). The tax changes announced last week in the Chancellor’s Autumn Statement could result in a sales boost of between 2% and 5%, according to the RICS Residential Market Survey. Despite 15% more surveyors reporting a decline in new buyer enquiries and a fourth consecutive fall in supply to the market, surveyors are expecting more house sales in response to the reforms, although expectations in the capital were more muted. As speculation continues over how much the new changes will encourage existing property owners to put properties on the market, the reforms come in a month that saw house price growth fall to its slowest pace since May 2013, a 13% net balance, and the number of houses for sale per branch fall back to its second lowest reading of 56. It was also clear from member comments that uncertainty surrounding the outcome of the forthcoming general election is providing potential purchasers with a reason to sit on their hands and new buyer enquiries have now declined for five consecutive months. Across the UK, price growth was strongest in Scotland and the South West, both with a net balance of 37%, and weakest in the North of England and London. Meanwhile in the rental market, tenant demand was steady in November, but landlord instructions declined for the eighth successive month and member' forecasts for rent over the next 12 months now stand at 2%. ‘The Stamp Duty reform could reverse the softer trend in buyer enquiries that has been visible in recent months but a critical issue in terms of how it plays out with prices is whether it also encourages more vendors to consider putting their properties back onto the market,’ said Simon Rubinsohn, RICS chief economist. ‘The expectation from members that transactions could increase by up to 5% over the next year on the back of this measure suggests that there is a belief that supply will indeed respond to the tax change. This is all the more important given that the latest RICS data suggests that the average level of inventory on surveyors' books is close to a historic low,’ he added. According to Jeremy Blackburn, head of policy at RICS, it is no surprise that surveyors are expecting an uplift in the market in response to the long overdue reforms to the stamp duty tax system. ‘Removing the dead zones will reduce the distortion in the market and ensure that those at the top end of the market will now contribute fairly, while those at the bottom will be given a fairer chance to get on the ladder,’ he explained. Continue reading
House developers looking outside London for land
Over the last six months, there has been a shift in direction of the residential development land market in the UK and urban locations with London links are increasingly being sought by developers, new research suggests. Developers are looking for opportunities beyond London as the capital city has seen much slower growth in land prices over the six months to September than the previous half year, according to the research from real estate firm Savills. Values for residential land in London rose by 4.1% from the first quarter to the third quarter of this year compared to 15.2% in the six months to March 2014. The slower increase in the value of residential land follows the cooling housing market in the capital over the same period. Sites with good transport links across all zones however are still highly sought after. The main flow of this movement is the south western corridor from London out to commuter hotspots, Guildford, Woking and Farnborough, according to the report. London based developers as well as those from other regions are interested in investing in the area. Values for urban land in Guildford and Woking are amongst the highest outside London, but despite this they have seen steady growth of 2.4% over the last quarter and 5.5% in the last year. Other cities have seen the influence of developers investing in land from London. An example is Manchester which two years ago only saw regional interest. Development land in Manchester has seen growth for the second quarter in a row after six years of stagnation. Many parties are now interested in land in and around the city although access to finance remains a potential barrier to delivery of homes. Urban land has seen stronger growth in the last quarter having previously lagged behind the growth seen for green field development land since the downturn. Along with Manchester, places in the Midlands, such as Northampton, Nottingham, Leicester and Derby, have stood out as having seen strong growth in urban values, into double digit percentage figures in some cases, indicating that the market has picked up again. Further south, Cambridge has seen increased growth in urban land values along with a large volume of development in recent years. The report points out that here development is supported by a strong and growing local economy, a significant London commuter base and its vibrant historic centre. Construction on urban extensions in Cambridge began at the end of 2011, and an additional 5,000 units will be built in and around the city in the next five years. Sales rates here have been the highest in the country outside London, indicating a strong demand for property. However, not all of the UK is seeing land value increase and in many places land values have remained stable, particularly where there has been high supply of consented land. One example is Telford, where there has been a high supply of sites controlled by the HCA. Continue reading
