Uk
UK buy to let landlords could face tougher lending conditions, it is suggested
There is concern that buy to let landlords in the UK will face tougher lending conditions on top of tax relief changes already scheduled for next year. One lender, the Nationwide Building Society is already cracking down on rental calculations and cutting back its maximum loan to value for landlords over worries about the tax relief changes next year.~ Nationwide's Mortgage Works, the mutual's buy to let arm, which provides one in seven loans to landlords, is increasing rental cover requirements from 125% to 145% and cutting its maximum LTV from 80% to 75% from 11 May 2016. According to Armistead Property more lenders may follow suit and while the changes facing buy to let landlords, on top of the recent extra stamp duty payable on additional homes, can be taken into account landlords need to plan ahead. Currently, landlords can claim tax relief on monthly interest repayments at the top level of tax they pay of up to 45%. However, the Chancellor’s new tax rules could mean that thousands of buy to let landlords will see their profits hit as the amount they can claim as relief will be set at the basic rate of tax which is currently 20%. Some current basic rate taxpayers will also be hit, because the change will push them into the higher rate tax bracket. It will be phased in over a four year period from April 2017. However, the firm believes that the tougher lending criteria and recent tax hikes, will not have a major impact on the property market as a whole. ‘This move by Nationwide could trigger other big lenders to follow suit. The banks seem to believe that the Chancellor’s tax crackdown on mortgage tax relief will could cause difficulties for landlords. Though the new tax rules are challenging for most landlords, rising asset values and rental income will go a long way to protect profits,’ said Peter Armistead. ‘Landlords have plenty of options available that will help offset the increased taxation. The first thing landlords should do is carry out a serious portfolio review and work out how the tax changes and tougher mortgage lending will affect them and what options there are to save, or make more money. For example, mortgaging to get a better deal, renovating some old stock as these costs will be tax deductible, selling some properties or increasing the rent,’ said Peter Armistead. ‘Landlords need to think outside the box and ask themselves questions like can I buy with cash or with far less leverage, should I incorporate, can I change a house into an HMO and increase the rental income, can I get planning on an existing property to increase its value or can I add an extension, or convert the cellar?’ he pointed out. ‘Although the government is trying to curb the buy to let market, property investment is robust in the long term. It is estimated that two million Britons are now private landlords… Continue reading
UK’s South East office market makes strong start to 2016
Office market in the South East of the UK has seen the strongest start to a year since 2008, according to new research. Overall take-up in the South East Office market increased by 30% in the first quarter of 2016, according to the latest M25 Offices report from Knight Frank. A total of 973,000 square feet of space was let or acquired during the quarter, 10% above the 10 year average. The high level of take-up ensured that overall supply remains historically low with availability across the South East markets 25% to 30% below the long term trend. The report says that following record investment volumes in 2015, the first quarter of this year has recorded £494 million of investment, which is consistent with the 10 year average. It points out that the £325 million acquisition of SEGRO’s 972,000 square foot office portfolio in Slough by AEW was significant representing, not only the largest transaction in the South East market for two years, but also further evidence of overseas purchasers becoming more active and widening their UK focus beyond Central London. With stock levels improving in the second quarter of 2016 Knight Frank predict an increase in transaction volumes from the middle of the year and expect investment volumes to be close to £2 billion by the end of the year. Emma Goodford, head of National Offices at Knight Frank, said that overall take-up in the first quarter has been encouraging, particularly set against increased market anxiety relating to the forthcoming referendum on the future of the UK in the European Union. ‘Although, some decision making will clearly be deferred until after the vote, we continue to see interest rise from diverse array of occupiers with active named demand topping 6.6 million square feet. With this in mind, we are predicting strong rental growth in key locations, particularly where new development is accompanied by infrastructure and amenity improvements,’ she explained. According to Tim Smither, head of National Offices Investment at Knight Frank, the weight of capital targeting opportunities in the South East remains robust. ‘Whilst some investors pause to await the outcome of the EU referendum, others are seeing opportunity. In particular, high yielding, asset management opportunities remain keenly sought after, supported by a strong rental growth outlook for the region,’ he said. Continue reading
More people in UK want to buy a home but are concerned about rising prices
More people dream of becoming home owners in the UK with new research showing 73% aspire to owning a property, up from 65% four years ago. However some 78% of aspiring home owners are concerned about the availability and quality of homes, up 6% from last year, and house prices, the ability to get on the property ladder and saving for a deposit continue to top the nation’s list of housing concerns Overall the 2016 home owner survey conducted by YouGov for the HomeOwners Alliance and BLP Insurance suggests that the housing crisis is deepening as concerns mount about the availability and quality of homes. While the desire to own is rising, the ability of first time buyers to get on the housing ladder and saving for a deposit remains the top concerns nationally, at 82% and 80% respectively. On top of this, the proportion of aspiring homeowners who say that the availability of housing is a serious problem has increased to 78%, up from 72% last year. Aspiring home owners are also increasingly concerned about the quality of housing, with 60% saying it is a serious problem. The survey shows that the housing crisis is most acute in the capital, as Londoners head to the polls to elect a new mayor. However, there is a noticeable drop in concern about the rates of stamp duty, in the wake of the government’s reforms of the stamp duty system. Concern about negative equity has slumped among the UK overall to 44% from 64% two years ago, as house prices have continued to rise. ‘Despite government initiatives aimed at helping home owners, the housing crisis is deepening across the country, with ever more non-home owners wanting their own home, and ever greater concern about the lack of housing,’ said Paula Higgins, chief executive of the HomeOwners Alliance. ‘Many government policies have boosted demand for homes, but what this survey shows is that the real problem is the desperate shortage of houses. Until the government tackles the fundamental issue that we just don’t have enough good quality homes, the housing crisis will continue to deepen and a generation will continue to have their dreams of homeownership crushed,’ she added. According to Kim Vernau, chief executive of BLP Insurance, the current situation is a critical juncture for the construction industry and housing market. ‘The government urgently needs to speed up the delivery of new homes for aspiring first time buyers. Tenures of all types are required across the country and affordable housing and social housing should also be a priority,’ he said. ‘Balancing these competing demands is a challenging task, particularly given the shortage of labour skills that we are currently witnessing in the construction industry. This is likely to get worse in the absence of key initiatives to help address this critical issue and the new Housing and Planning Bill and threat of… Continue reading
