Investment
Survey reveals many home owners support additional home stamp duty charge
Twice as many home owners in the UK support the new 3% stamp duty surcharge on additional homes as oppose it, despite loud opposition from landlord groups, new research shows. Some 47% support the extra charge which was introduced on second homes and buy to let properties on 01 April while 18% are against it and believe that it supports first time buyers. The results of the poll, conducted by YouGov for the HomeOwners Alliance and BLP Insurance shows that overall concerns about stamp duty have fallen dramatically since the reforms in 2014. In 2014, some 64% of UK adults believed that stamp duty was a serious problem but in 2016 that has fallen to 52%. Supporters of the stamp duty surcharge on second homes believe the measures are a good way to level the playing field between those buying a home to live in and those making an investment purchase. ‘The buy to let market is slowly destroying the overall housing market and making affordable properties less available for those wanting to own a home as their principal place of residence,’ said one survey respondent. The research also found that some feel there has been a shortage of homes available for first time buyers and this will make it harder for buy to let investors competing to purchase similar properties. Indeed it found that there are some anti buy to let feelings, a sense that buy to let may have been inflating house prices and pricing out local residents in some areas. Some also feel that those able to afford to buy a second home or to buy a property for the purpose of letting it out and making profit should be able to afford to pay higher stamp duty on their purchase. Those who oppose the stamp duty surcharge on second homes suggest the policy could have unintended consequences such as the surcharge being passed on to tenants in the form of higher rent. Comments also indicate that they feel the government is making another tax grab or that the policy is anti-enterprise. ‘I have been saving for five years to be able to afford to purchase an investment property. This change has now meant that it is not feasible for me to do so. It is unfair to penalise people who work hard and save,’ said another respondent. Paula Higgins, chief executive of the HomeOwners Alliance, thinks that the British public believe that homes are for living in and not speculating with. ‘The stamp duty surcharge might be bad for landlords but it will allow more young people to realise their dream of owning the roof over their head,’ she said. ‘This is why we initially called for the tax system to differentiate between aspiring homeowners and property investors. However, we must see the money raised ploughed back into building more affordable housing,’ she added. According to Kim Vernau, chief… Continue reading
Rents up by an average of 3% across England and Wales year on year
Rents in England and Wales have increased by an average of 3% over the last year to £791 per month, according to the latest buy to let index. Record rents were recorded in the Midlands while rents fell in Wales and the North East, the data from the Your Move and Reeds Rains index also shows. On a monthly basis March was a relatively subdued month, with the level of average rents the same as was seen in February. Month on month rent growth has dipped marginally from 0.1% between January and February 2016 to a flat 0% between February and March 2016. Leading the whole of England & Wales, rents in the East Midlands now stand 8.5% higher than in March last year, at an all-time record high of £613 per month. This is followed closely by the West Midlands with 6.7% annual rent rises, taking the average rent in the West Midlands region to a separate all-time record of £597 per month. London is in third place in terms of annual rent rises, up 4.6% from the same point last year. However at £1,231 the capital’s average monthly rent remains below the all-time record of £1,301 set six months ago in September 2015. At the other end of the spectrum Wales and the North East are host to annual rent falls, both dropping by 2.2% since March last year. This takes rents in Wales to £551 per month and rents in the North East to £507 per month in March 2016. On a monthly basis the East Midlands matches the South East with a 0.7% month-on-month rise in rents, followed by the East of England where rents have risen by 0.6% between February and March. Meanwhile, taking into account both rental income and capital growth, but before property specific costs such as maintenance, the average existing landlord in England and Wales has seen total returns rise to 12.2% over the 12 months to March. The index points out that this is a clear jump from 10.7% seen a month before, over the 12 months to February, and is also the fastest annual rate of return for existing landlords seen since November 2014, when the same measure last reached 12.3%. In absolute terms this means that the average landlord in England and Wales has seen a return of £22,135 over the last year before any deductions such as property maintenance and mortgage payments. Of this, the average capital gain contributed £13,494 while rental income made up £8,641 over the 12 months to March. While a recent surge in capital values has boosted total returns for existing landlords, the same trend has suppressed rental yields for those aspiring to become landlords, or looking to grow their property portfolio,’ the report points out. As rents rise alongside property prices, rental yields are proving relatively resistant to rising purchase prices. However the gross yield on a typical rental property in England and Wales, before taking into account factors… Continue reading
UK equity release market sees record start to the year
The equity release market in the UK has seen a record start to 2016 with lending reaching £393.9 million, the highest for a first quarter on record. This kind of lending is now up 21% compared with last year and new equity release plans have reached over 5,000 for the first time since 2009, the data from the Equity Release Council also shows. This year is the 25th anniversary of the first industry standards being developed for equity release and now drawdown popularity is continuing to increase its market share. With new loans rising, they have now reached the highest amount ever recorded as home owners make use of their housing wealth to supplement their monthly income, make home improvements, support younger family members with buying a property or pay for the trip of a lifetime. The data also shows that the market share of drawdown lifetime mortgages products has increased slightly year on year and it remains the most popular product. The value of drawdown products accounted for 60% of all loans, while the volume of loans was 67%, up 1% and 2% respectively from the first quarter of 2015. There were 3,450 drawdown loans agreed in the first three months of 2016, up 9% on the same period in 2015. Their value was £234.5 million, up by 22% in the same period. The value of lump sum mortgages accounted for 40% of total lending in the first quarter and 33% of the total volume of loans. The value of lump sum mortgages was £158.8 million, up 19% from the first quarter of 2015 and the value of home reversion plans sold remains less than 1% of the market. ‘These latest figures represent a strong start to the year for the equity release market, and place housing wealth centre stage in financial planning for later life. In a year that marks the milestone of 25 years of safe equity release, the market is continuing to build on the momentum of recent years,’ said Nigel Waterson, chairman of the Equity Release Council. ‘The recent decision from the Financial Conduct Authority to reduce affordability assessments for Lifetime Mortgages is a positive development that will help more people benefit from all that equity release has to offer. For a generation that are often asset rich and cash poor, their home is likely to be their greatest asset and should form part of everyone's planning for retirement,’ he pointed out. ‘As we look forward to the next 25 years, it is important now to maintain expert adviser support for customers as the sector grows, as well as continuing to innovate to satisfy customer demand, all the while preserving standards and consumer protections,’ he added. According to Alice Watson, product and communications manager at Retirement Advantage Equity Release, the figures highlight more clearly than ever how equity release is now an integral part of financial planning for retirees across the UK. 'The sector is… Continue reading
