TSI
Half of UK landlords set to be affected by wear and tear tax change
Almost half of landlords in the UK will be affected by the removal of the annual wear and tear allowance announced recently in the summer Budget, research has found. According to new findings from the National Landlords Association (NLA) the change which is due to take effect in April 2016 will affect 47% of landlords. It says that 24% of landlords let their properties fully furnished, 22% are letting a mixture of furnished and unfurnished properties and 53% let their properties on an unfurnished basis. The annual wear and tear allowance is currently available for furnished properties and it will be replaced with a tax relief system that enables all landlords to deduct the costs they actually incur on replacing furnishings in the property. The new system, currently under consultation until the 09 October 2015, will apply from 06 April 2016 for Income Tax purposes and 01 April 2016 for Corporation Tax, and will cover the cost of replacement furniture, furnishings, appliances and kitchenware provided for tenants. This will include movable furniture and furnishings, televisions, fridges and freezers, carpets and flooring, curtains, linen, crockery and cutlery. ‘We fully understand the frustration of those landlords who let exclusively on a furnished basis as the removal of this allowance will very likely represent a reduction in the relief they can claim,’ said Chris Norris, NLA head of policy. ‘However, it will come as a welcome revision for those letting a mixed portfolio, unfurnished, or part furnished property as the replacement system will allow them to deduct legitimate revenue expenses in the future,’ he pointed out. ‘The NLA has broadly welcomed these proposals as it should lead to a fairer system for more landlords. However, as we transition from one system to another, we will push to make sure that any landlords who’ve made recent investments with the expectation of offsetting the cost over a number of years using the current allowance, will not be disadvantaged,’ he added. Continue reading
Growing demand and short supply is pushing up house prices, says RICS
House prices in the UK continue to be squeezed higher by growing demand and contracting supply, according to the latest residential market survey from the Royal Institution of Chartered Surveyors (RICS). The report shows that while 44% more chartered surveyors saw prices rise in July, supply to the market continued the decline with 22% more surveyors reporting a drop in new instructions. Additionally, the shortage of housing inventory worsened further during July, with the average number of properties for sale per surveyor slipping to a record low. Consequently, all areas of the UK are projected to see sizeable house price gains over the next 12 months, with confidence most elevated in East Anglia and Northern Ireland. The report also says that near term expectations for prices also continue to reflect the imbalance between demand and supply with 41% of members expecting prices to continue to rise over the next three months. However, rising prices have not dampened interest as new buyer enquiries rose for the fourth month in succession, with 25% of respondents reporting a rise in demand. Despite this steady and sustained improvement in demand, newly agreed sales were more or less unchanged at the national level in July. Going forward, there is a little more optimism regarding the prospects for activity with 37% more respondents expecting sales to gain momentum over the next three months and 40% more taking the same view on a one year perspective. ‘This government has put home ownership at the very heart of its agenda, with Starter Homes and extending Right to Buy the strongest evidence of that ambition. However, this continues to be demand driven and fails to address the real issue of supply,’ said Jeremy Blackburn, RICS Head of Policy ‘A coherent and coordinated house building strategy is required across all tenures. This should include measures that will kick start the supply side, such as mapping brownfield, addressing planning restrictions and creating a housing observatory to assess the underlying economic and social drivers of housing and provide the impetus for solutions,’ he explained. ‘The changes brought in through Fixing the Foundations, the Chancellor’s productivity plan, were welcome and refreshingly on the supply side, such as zonal planning, dispute resolution for S106 and local plan enforcement. But these alone are not a strategy for increasing housing supply across all tenures,’ he added. Blackburn also pointed out that in the lettings market, tenant demand continued to rise while landlord instructions, despite increasing slightly, failed to keep pace once more. As a result 34 % of respondents expect rents to increase right across the UK with members in the West Midlands expecting 4% growth over the next year and in the South East 3.3% growth. The housing market is facing some very real challenges, according to Simon Rubinsohn, RICS chief economist, but more worrying still is the suspicion that the imbalance between supply and demand will lead to even strong price gains over the next 12 months. ‘This… Continue reading
Home sales in England and Wales up 13% month on month in July
Monthly home sales in England and Wales increased by 13% in July with growth driven by transactions in the North, the latest housing index shows. House prices increased by 0.3% compared to the previous month, taking the average price of a home to £279,515, according to the LSL house price index. On an annual basis the index shows an increase of 3.7%, rising to 4% if London and the South East data is excluded. The data also shows that house prices increased across six regions, led by East Anglia which saw an annual increase of 6.3%. While in Reading prices have risen by 15.2% in the last year which the firm believes is due to it being on the route of the new London Cross Rail project. And in 27% of local authority areas in England prices have reached new peak levels, including Warrington, the West Midlands, Milton Keynes, Bristol, and Devon. It means that England and Wales have experienced their strongest July for home sales since 2007 monthly sales surpassed 2014 levels for first time this year. According to Richard Sexton, director of e.surv chartered surveyors, the housing market recovery is well established although London is no longer leading the growth. Indeed, London is eighth out of the 10 regions in England and Wales in terms of annual rises. London ranks only above the North and Wales with 1.8% price growth year on year in June 2015, which has halved from 3.6% in May. Sexton said that this downtrend in London is now lowering the average growth for England and Wales as a whole. ‘London has been stalled by more aggressive graduated Stamp Duty and taxation levied at the highest rungs of the property market, plus the rising value of Sterling compared to the Euro,’ he explained. The data shows that in the most expensive boroughs of Kensington and Chelsea and Westminster sales during the second quarter of 2015 were down 33% and 31% respectively year on year. But there are signs of the market bouncing back with property values recording healthy monthly rises of 2.3% and 2.1% in Kensington and Chelsea, and Westminster. ‘Overall homes sales reached 90,000 in July, a boost of 13% from the previous month. This marks the first time this year that sales levels have overtaken the equivalent month in 2014 and is actually the strongest July since 2007, when the market was building up to its pre-crisis peak. Sales were 35% higher then, standing at 120,845 in July 2007,’ Sexton pointed out. The North and Yorkshire and Humberside have seen the fastest sales growth, with transactions in the second quarter of the year up 29% and 25% respectively on the previous quarter. It is purchases of detached properties which have seen the biggest quarterly boost and in the North sales of this type of home increased by 41%. However, first time buyer sales have slowed since the start of 2015, and sales of… Continue reading
