Uk
Downsizing in UK could bring windfall of up to £200,000 on average
Nearly half of home movers in the UK plan to downsize in the next three years and on average realise up to £200,000 by doing so, according to new research. Some 46% plan to sell and buy a smaller property and by downsizing from a detached to a semi-detached home they could realise a windfall of £117,230 of £200,000 in London. Downsizing was cited as the single most popular factor for moving, according to data provided by Lloyds Bank with research showing that the popularity of downsizing has grown in recent years, buoyed by the anticipated returns. The figures show that average age for a downsizer is 53, at which point the greatest number, 37%, of downsizers had lived in their home between 11 and 20 years. The main reason people cite for downsizing is to move somewhere which better served their circumstances with 53% wishing to do so while 39% want to reduce bills or free up equity and 31% to provide extra cash for retirement. A fifth say that they are downsizing earlier than they had anticipated, citing reasons such as health, changes in relationship status and a need to be closer to better local amenities. A third also say that they are planning to move to a more affordable area. Some 72% of those downsizing said they expected to profit from their move, with 35% saying that they planned to reinvest their additional capital in a new property, 29% said that they would invest in other financial products, whilst 21% planned to invest in their pension or pass the earnings on to their family. ‘People may consider moving home for a variety of reasons, often tied to their next big step in life whether that’s getting married, starting a family or children growing up and flying the nest,’ said Mike Songer, mortgage director with Lloyds Bank. ‘We typically think of people moving to bigger houses as they move up the housing ladder, but people are increasingly looking to downsize their home because their circumstances or priorities have changed. Whilst financial gain may not be the main driver for those looking to trade down their property it is clearly a factor, with three quarters of downsizers expecting to profit from such a move,’ he explained. ‘There are definitely financial benefits to be gained from trading down, with an average potential windfall of £117,230 when moving from a detached home to a semi-detached house. Downsizing is also healthy for the market, as it helps keep it moving and frees up larger properties which could be perfect for young families about to take their next step up the property ladder,’ he added. A breakdown of the figures show that house prices in the capital mean that London home owners could make the most from downsizing, as they stand to free up an average of £201,052 from trading down from a detached to a semi-detached home. Downsizers from the South West saw the highest rise over… Continue reading
Cost of getting on the rental property ladder in UK set to soar, research suggests
With many private rental sector landlords in the UK requiring a deposit of four weeks’ rent getting on the rental ladder could present similar challenges in terms of cost as buying a home, new research suggests. It says that the cost of the average rental deposit is estimated to grow by 40% by 2026 to £1,111, more than the growth of the average monthly rent which is estimated to increase by 28% over the same period. This will mean that the average monthly rental deposit will be 70% of the average monthly salary, however there will be considerable regional variations, according to the research carried out on behalf of financial comparison website money.co.uk by the Cebr (Centre for Economics and Business Research). In London for example, the average rental deposit is predicted to rise to £2,733 by 2026, amounting to 120% of the average monthly salary, up from 99% in 2015. Deposits are predicted to rise sharply across the whole of the South of England. In the South East the average deposit is estimated to hit £1,469 in 2026, representing 83% of the average monthly salary at £1,761, up from 72% in 2015. In the South West the average deposit is estimated to represent 80% of median monthly earnings at £1,437 by 2026, up 14% from 66% of the average salary in the region in 2015. The research also suggests that based on recent trends, by 2026 an estimated 68% of all deposits requested will be at least six weeks’ rent. This means landlords will be demanding a lot more money from tenants before they sign a tenancy agreement. Average monthly rent is due to increase by 28% by 2026, some 8% higher than the increase in average salaries over the same period which are set to grow by 20% by 2026. The largest increase in rents between 2015 and 2026 is estimated to occur in London with close to 39% growth. Other regions with high estimated growth are the South West and South East where rents are predicted to grow by 32% and 34% respectively over the same period. The lowest increase in average rent is estimated to be in Yorkshire and the Humber with a 17% price rise between 2015 and 2026 and overall monthly salary growth is not expected to keep pace with the rental market Between 2015 and 2026, the average monthly salary is predicted to rise by an average of 20% or £267 to £1,576. This increase is lower than the estimated increase in both monthly rental costs and rental deposits which could mean many individuals will find the cost of renting just as unaffordable as buying. This is despite the fact the financial outlay required to rent is significantly lower than getting on the property ladder. ‘The rapid rise in deposits as well as rents is a double blow for everyone on the rental ladder. With the forthcoming changes to tax legislation and crackdown on… Continue reading
Budget announcements set to boost India’s residential property market
India’s residential real estate market is set to see a boost with moves that will increase the supply of properties for sale and demand. Experts point out that change announced in the 2016/2017 Union Budget will see a reduction for first time buyers of INR 50,000 on interest repayment for loans up to INR 35 lakh where the cost of a house is INR 50 lakh and this will boost the demand for housing at the lower end of the market. This move is also likely to benefit purchasers in tier II and tier III towns such as Surat, Nagpur, Lucknow, Vadodara, Jaipur, Pimpri-Chinchwad, Indore, Chandigarh, Gurgaon, Rajkot, Bhopal, Kanpur, and Thane, according to Shishir Baijal, chairman and managing director of Knight Frank India. On the supply side, a 100% tax exemption on profit for developers and an exemption from service tax for the construction of houses up to 325 square feet in metro areas and 650 square feet in other cities will encourage supply in the affordable housing segment. The budget has also increased the limit of deduction of rent paid under section 80GG which provides for deduction of house rent paid, provided that a deduction for payment of House Rent has not been claimed under any other section of the Income Tax Act, from INR 24,000 per annum to INR 60,000 per annum, thus providing relief to those who live in rented houses. For investors, the abolition of the dividend tax (DDT) means that there will be no barrier to launching REIT schemes. ‘Removal of REITs from DDT will also make this type of investment more appealing to retail investors. In the long run higher transparency levels will ensure that the cash strapped real estate sector will get easier access to funds at a reasonable cost,’ said Baijal. A focus on improving infrastructure and rural development is also expected to give a much needed fillip to the real estate sector. This includes a significant outlay on improving roads, railways and developing smaller airports to improve regional connectivity. Additionally, incentives to MSME, Make-in-India will get a further boost that will benefit the real estate sector in the long run. ‘Additionally, the government’s focus on digitization of land records is a step in the right direction, especially in more rural areas. The move will also lead to higher transparency levels in the real estate sector,’ Baijal added. There is also likely to be more demand from overseas investors with the forthcoming Indian Property Show in London in April expected to be well attended by Indian expats seeking to invest in real estate. They are expected to be interested in smart gated communities which are being developed in major cities such as Delhi NCR, Mumbai, Hyderabad, Chennai, Bangalore, Pune and Kolkata. According to Srividya Rajan, general manager for sales and brand engagement at Sumansa Exhibitions, the Indian Property Market is affordable compared to other international investment destinations and capital appreciation on real estate in India… Continue reading
