Uk
Tax change boosts home sales in Scotland
Property tax change had boosted Scottish home sales with a rise in transactions of 11% year on year but prices are down 7.8% compared to 12 months ago, the latest index shows. The index report from estate agents Your Move suggests that prices are down due to a lack of higher value homes on the market with the average house price now £170,667. Prices have increased in Edinburgh and Clackmannanshire but have fallen in the majority of areas throughout Scotland. The index also shows that month on month prices are unchanged despite the new 3% surcharge on additional home sales. ‘After a year of the Land and Buildings Transaction Tax (LBTT), it’s now possible to see its impact across the Scottish housing market. By cutting the cost of purchasing cheaper homes, LBTT has led to an 11% increase in sales over the last year,’ said Christine Campbell, Your Move managing director in Scotland. She pointed out that with 104,344 home sales in the last 12 months, the market has outdone the previous year’s 93,601 sales. ‘These figures confirm that lower purchase taxes for property can significantly boost activity in the housing market, while also making it more affordable for first time buyers to get a foot on the ladder,’ Campbell explained. Indeed, she believes that the Scottish Government should consider lifting the LBTT bands higher, if they want to build on the foundations of this policy, in order to support Scotland’s fragile property and construction sector. She also pointed out that the drop in property values was caused by a spike in high value home sales last year, before the LBTT was introduced, but today’s market hasn’t regained those losses yet. ‘The facts show that since the introduction of LBTT, growth in house prices has been subdued. The average property value in Scotland has only grown 1.74% in the last six months, compared to 3.19% for England and Wales over the same period,’ Campbell explained. ‘The tax has particularly hit homes at the top of the market, as these properties have become more expensive to buy after the introduction of LBTT. So while there has been an upswing in sales, it has come at a cost for some,’ she added. And she said that while sales in March were almost double those in February, sales in April are 66% down on the previous month. However, home sales for the first four months of the year are still well ahead on the same point in 2015, with 4,751 additional property purchases so far in 2016. However, when you look at the local picture, the negative effects of the new surcharge are more obvious, as average house prices have dropped in 20 of Scotland’s 32 local authority areas from the previous month. Moray has felt the worst of the tax hike in April, with property values in the area declining by 4.6% month on month. Edinburgh has seen house prices rise by… Continue reading
Fewer arrears for tenants in UK as jobs market improves
Fewer tenants in the UK are falling into serious rent arrears thanks to the improving employment market and landlords are benefitting from healthier tenant finances, according to the latest lettings agents report. In absolute terms, just 86,200 tenants across the UK are more than two months behind in their rent in the first quarter of 2016 compared to 89,300 in the previous quarter, a fall of 4%. The data from the report from Your Move and Reeds Rains also shows that just 1% face serious arrears and for landlords there are the fewest buy to let mortgage arrears since 2007. Since 2008, there have been on average 92,600 tenants in serious arrears in the first quarter of each year meaning that the first quarter of 2016 is also substantially lower than the long term average. ‘Fewer tenants in serious arrears reflect the health of the jobs market. With an extra 44,000 jobs created in the first quarter of this year, thousands of tenants have been able to get their finances back on track and pay down late rent,’ said Adrian Gill, director of estate agents Your Move and Reeds Rains. He explained that serious rent arrears peaked in the third quarter of 2012 when 124,800 households owed more than two months’ rent and when unemployment in the UK stood at 7.9%. Since then a boom in employment has been responsible for lifting many of the most precarious tenant households out of serious rent arrears and onto a more sustainable course. The direction of travel looks very positive. ‘A reduced risk of serious rent arrears will be welcome news for existing landlords, facing so many artificial challenges posed by government meddling. But no one should be complacent as managing a property is never simple. Some landlords are being held back from buying property by the Stamp Duty Surcharge. If this stems the flow of new homes into the rental market, then shortages in some areas could push up rents and hitting affordability,’ Gill pointed out. The number of tenants more than two months behind with rent has fallen by 16% since the eve of the financial crisis and recession in the second quarter of 2008 from 102,900 to today’s total of 86,200. This is despite the expansion, over exactly the same period. At the start of this period, there were 3.6 million households living in the UK private rented sector. Now, after just eight years, this has grown by 62% to reach a total of 5.8 million households as of the first quarter of 2016. ‘The massive growth in the number of homes available to rent, driven by both deliberate landlords and accidental landlords coming into the market, has ensured that rents have not outpaced the ability of tenants to pay. The affordability of renting and the number of tenants falling behind on rent also needs to be seen within the context of… Continue reading
New research shows the worst rates of negative equity in the US
As the housing market continues to recover in the United States, home owners who are underwater on their mortgages are increasingly concentrated in the Rust Belt, according to the latest real estate report. The data from the Negative Equity Report from real estate firm Zillow also shows that West Coast home owners are less likely to be in negative equity. Nationally, 12.7% of home owners with a mortgage were in negative equity, meaning they owed more on their mortgage than their homes were worth. However, negative equity is down from a peak level of 31.4% in the first quarter of 2012. For years, Las Vegas has been the prime example of the housing bubble and bust, with nearly three quarters of mortgaged home owners underwater when the market bottomed out in in the first quarter of 2012. But Chicago now has the highest negative equity rate among large US markets, surpassing Las Vegas in the first quarter of 2016. At its worst, Chicago had a 41.1% rate of negative equity, but its recovery has been sluggish and the negative equity rate has declined more slowly than elsewhere. As the housing market recovered, the distribution of underwater home owners across the country has shifted. In the first quarter of 2012, the West Coast, Southeast, and Rust Belt regions had a disproportionately greater share of underwater home owners. For example, the Southeast had 20.4% of homes with a mortgage, but 24.9% of homes in negative equity. Four years later, the West Coast, home to hot markets like the Bay Area, Portland, and Seattle, has only 10.2% of home owners with negative equity, but 15.2% of all mortgaged home owners. The imbalance was worst in the Rust Belt region, which includes Wisconsin, Illinois, Indiana, Michigan and Ohio, and which had an unevenly large share of underwater home owners. ‘When the housing bubble burst, the West Coast had more than its fair share of underwater homeowners. But the strong local economy and job markets have significantly helped these housing markets recover, and several are now more expensive than they were during the housing bubble,’ said Zillow chief economist Svenja Gudell. ‘Other parts of the country didn't get those same benefits, and until market fundamentals improve, home owners and buyers in these areas will be facing disproportionately higher levels of negative equity as they navigate the housing market,’ she added. The data also shows that four of the 10 metros with the highest rates of negative equity are in the Rust Belt. Meanwhile, the West Coast is home to five of the 10 metros with the lowest levels of negative equity. Continue reading
