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New property tax rates for Scotland announced
A new Land and Buildings Transaction Tax (LBTT) is set to replace Stamp Duty (SDLT) for Scottish residential and non-residential property sales in April of next year. LBTT, which received Royal Assent in the summer of 2013, is part of the Scottish Government’s devolved tax raising powers and was not dependent on the outcome of the referendum and applies to Scotland only. The rates announced by the Cabinet Secretary for Finance, John Swinney, mean that many home owners at the lower end of the property market in Scotland will be better off when the progressive tax replaces the much criticised Stamp Duty which is a slab tax. In a move designed to help first time buyers, the threshold for LBTT is set at £135,000, up from the stamp duty threshold of £125,000. A marginal tax of 2% would apply to the proportion of a transaction between £135,000 and £250,000, while a 10% rate will apply to those between £250,000 and £1 million. There will be a new 12% tax on properties costing more than £1 million. ‘As a result of the rates I have announced today, nobody will pay tax on the first £135,000 of their house purchase. Some 5,000 more transactions will be taken out of tax, supporting first-time buyers and those buying properties in the affordable market,’ said Swinney. But others will pay more. According to Savills Research, buyers in Edinburgh, where an average family house costs around £363,000, will be paying £13,600 in tax under the new system, which is 25% more than they would have paid in Stamp Duty. Buyers of properties of £450,000, will now pay 65% more at £22,300. Taking all properties into consideration across Scotland from above £125,000, the new LBTT payments on residential property transactions will be on average 56% more than the existing stamp duty. ‘We welcome a progressive new system and the fact that the majority of home owners will be better off. When compared with other parts of the UK house prices in Scotland remain comparatively low. However for some sections of the market the new rates are not good news, and it comes at a time when the Prime Scottish market is only just beginning to recover,’ said Savills head of residential in Scotland Andrew Perratt. ‘Young families who need to live in the prime hubs of Edinburgh, Aberdeenshire and Glasgow’s west end, where average house prices are considerably higher, the proposed increases are so punitive they may discourage many buyers from moving. In view of this, we anticipate increased market activity between now and the spring, whereby buyers are likely to make quick and committed decisions before the new tax comes into force in April,’ he explained. ‘With the referendum now behind us, the Scottish market has been poised for a healthy recovery. However this relies on activity at both ends of the market, not just from first time buyers, and the new tax will… Continue reading
Property prices in England and Wales up just 0.5% in September
In many regions in England and Wales average property prices have yet to reach levels before the economic downturn and price growth is slowing, the latest index shows. House prices increased by just 0.5% in September, taking the average price to £275,820, the smallest monthly increase this year, according to the LSL house price index. On an annual basis prices are up 10.6% but when London and the South East is excluded from the calculation prices are up just 4.5% and overall prices are up just 2% a year since the crisis. For six regions of the UK, average property prices achieved on completion are yet to match their pre-crisis score and a North/South divide in the remains evident. The North has the furthest ground to travel, with average prices still 8.3%, or £13,400, below their housing boom high in March 2008. However, average house prices on sales completion in the South West set a new record in August, surpassing their October 2007 peak for the first time. This makes it the fourth region after London, the South East and East Anglia to scramble out from under the shadow of the financial crisis. Areas further afield like Warwickshire, Northamptonshire, and York are breaking cover too, with prices also towering to new heights. David Newnes, director of Reeds Rains and Your Move estate agents, pointed out that the London property scene is on a different scale to the rest of the country. Overall, the capital has seen the strongest housing market recovery, with prices having now grown 47.3% from their previous peak in February 2008. However, the rate of annual house price inflation in the capital eased off by 0.1% in August, as we see growth relaxing into a slower tempo from the heady pulse earlier this year. ‘Across all of England and Wales, house prices have risen on average by 2% every year in the aftermath of 2007/2008 housing boom and bust. But this growth falls short of the 2.8% annual increase in CPIH over the same period meaning it is only home owners in London who have seen their properties climb in value in real tangible terms,’ said Newnes. ‘September saw the lowest monthly increase in property prices in 2014 so far, as a new spell of market adjustment sets in for the autumn. But while price growth dulls, activity in the market is still vibrant, and total house sales completions are up 16% year on year in September,’ he explained. ‘First time buyers have been bringing much of the vitality and optimism to the party. Over the three months from June to August, the sale of flats, typically the preserve of new buyers making their inaugural property purchase, has risen 26% when compared to the same period in 2013,’ he pointed out. ‘While the market adapts to a mellower beat, schemes like Help to Buy and an accessible lending environment are essential to ensure that confidence isn’t silenced, and activity continues to sing,’ he added. Continue reading
Foreclosure and distressed property sales in the US fall considerably year on year
There are fewer homes in the United States being sold which are in foreclosure as the real estate market continues its recovery. The national foreclosure inventory fell by 33% year on year in August 2014 to approximately 629,000 properties, or 1.6% of all homes with a mortgage, down from 936,000, or 2.4% in August 2013. According to the data from CoreLogic this marks 34 months of continuous year on year declines in the inventory of foreclosed homes, including 19 straight months of declines greater than 20%. Also in August, the 12 month sum of completed foreclosures continued to decline, dropping 20% from a year ago to 576,000. The seriously delinquent inventory fell to 1.6 million loans, a 21.7% decline from August 2013. The five states with the largest year on year drop in the foreclosure inventory were Utah which was down 46%, Idaho down 45.6%, Arizona down 44.5%, Florida down 43.6% and Iowa down 42.6. The data also shows that 49 states posted declines in the foreclosure inventory from a year ago, with 44 states showing decreases of more than 20%. Only the District of Columbia and Wyoming saw year on year increases in foreclosure inventory. Florida has seen the biggest improvement, falling 7.3% from its February 2011 peak level of 12.5% to its August rate of 5.2%. The foreclosure rate in New Jersey peaked in March 2013, much later than in Florida and the state has a 1.6% improvement in the foreclosure rate from its peak rate. Both New York and Hawaii experienced peak foreclosure rates in September 2012, and have experienced similar declines in foreclosure rates, with New York falling 0.9% from its peak and Hawaii falling 1.1% from its peak. Distressed sales (Real Estate Owned and short sales) accounted for 11.1% of total home sales in July 2014, the lowest share since December 2007 and a strong improvement from the same time a year ago when this category made up 15.5% of total sales. Within this category, REO sales made up 7.1% of total home sales, and short sales made up 4% of total sales in July. At its peak, the distressed sales share totalled 32.5% of all sales in January 2009, with REO sales making up 28% of that share. CoreLogic says in its report that the ongoing shift away from REO sales is a driver of improving home prices, as REOs typically sell at a larger discount than do short sales. There will always be some amount of distress in the housing market, so one would never expect a 0% distressed sales share, and by comparison, the pre-crisis share of distressed sales was traditionally about 2%. Michigan had the largest share of distressed sales of any state at 26.3% in July, followed by Florida at 23.3%, Illinois at 23.3%, Nevada at 21.9% and Georgia at 19.8%. California experienced a 13.7% drop in the distressed sales share from a year earlier, the largest of any state. California also saw the largest improvement from peak distressed… Continue reading
