Investment
UK home values rose almost £1.4 billion per day in 2015
The UK’s 28.6 million homes grew in value by almost £1.4 billion per day in 2015 with Brentford, West Drayton and Thame seeing the largest increases, new research shows. Brentford in London saw prices increase by 24% and West Drayton and Thame both by 17%, according to the data from property website Zoopla, while Wales saw the lowest prices gains at 2.2% over the last 12 months. The figures show that homes are now worth a combined £7.76 trillion with the total value of residential properties up by 7.2% or £519 billion in 2015. This means that the average British property is now worth £290,827. Home owners in London have seen the highest price growth in 2015 of any region, with an 11.8% annual uplift. The East of England follows closely with an 11.6% rise, up from 9.6% during 2014. However, property owners in Wales and Scotland saw the lowest growth in house prices in the last 12 months, with values rising just 2.2% and 2.7% respectively. London, Edinburgh, and Bristol were the top three most searched for locations by British house hunters on Zoopla in 2015. Northern areas also performed well, with Glasgow rising in the rankings, moving from sixth place in 2014 to fourth place this year, while Leeds broke into the top 10, coming in eighth. Amongst the most popular keyword searches over the past year were ‘bungalow’, ‘cottage’ and ‘village’, with aspirational property also searchers for homes offering a ‘pool’ and a ‘sea view.’ ‘Whilst the property market typically slows at this time of the year, prices have performed well in 2015, with some standout towns such as Brentford faring particularly well. Regions like East Anglia continue to boom as professionals and families seek out properties beyond the London commuter belt,’ said Lawrence Hall of Zoopla. ‘Even regions like Wales, where growth has typically been very incremental, have totalled respectable annual growth rates. Of course, to every silver lining there must be a cloud and the price rises we’re seeing do make it harder for those looking to take their first step onto the ladder,’ he pointed out. ‘But with Government Help to Buy schemes still in place and the promise of new homes to ease demand both buyers and sellers should have at least some reason to be upbeat as we go into 2016,’ he added. Continue reading
New tax on property in New Zealand owned by non-citizens from April 2016
A new withholding tax on sales of residential property in New Zealand by people who live overseas and go on to sell the property within two years of purchase will be introduced in 2016. The Residential Land Withholding Tax (RLWT) is the third part of the Government’s investment property tax reforms announced as part of its Budget 2015. It will come into force on 01 July 2016 under a new Bill before Parliament. Revenue Minister Todd McClay said that the RLWT will act as a collection mechanism for the new bright-line test, which applies to gains from the sale of residential property purchased on or after 01 October 2015 and sold within two years. ‘The proposed RLWT will ensure the integrity of the tax system and will bring the collection of bright-line tax into line with other withholding taxes, which generally apply when there is likely to be a tax liability and collection may be difficult,’ he explained. RLWT will apply when the property being sold is located in New Zealand and defined as residential land under the bright-line test provisions; when the seller acquired the property on or after 01 October 2015 and has owned the property for less than two years before selling it; and the seller is an offshore person. An offshore person would include people who are not New Zealand citizens, people who do not hold residence class visas and New Zealand citizens and residence class visa holders who have been away from New Zealand for a significant period of time, three years in the case of New Zealand citizens. New Zealand trusts and companies may also be considered offshore persons if they have significant offshore interests in them. ‘Unlike the bright-line test there is no exception for the seller’s main home under the proposed new RLWT rules. As the withholding tax would only apply to a person living overseas, it is unlikely that the New Zealand property being sold would be the person’s main home,’ said McClay. The Bill does, however, propose an exemption from RLWT for transfers upon death, and for transfers made in relation to a property relationship agreement, in keeping with the bright-line test. The Bill also proposes that the obligation to pay the RLWT will primarily be the responsibility of seller’s conveyancing agent or in their absence, the purchaser’s conveyancing agent and in the absence of both, directly by the purchaser. ‘The RLWT proposal in the bill, together with the new bright-line test and changes to collect better tax information about buyers and sellers of residential property will help to ensure that everyone pays their fair share of tax on gains from property sales,’ added McClay. Continue reading
Commercial property debt in UK set to fall to 10 year low
Outstanding commercial property debt in the UK is on course to fall to a 10 year low during 2015, declining by 1% in the first half of 2015 to £163.7 billion, according to a new report. However, strong levels of new loan origination in 2015 mean that the total amount outstanding may actually increase for the first time since the recession, the report from academics at De Montfort University also says. The half year edition of the De Montfort Commercial Property Lending Report, the most comprehensive study of the UK’s commercial property lending market, concludes that the continuous decline in total real estate debt since 2008 appears to have almost halted and may subsequently be reversed by the end of the year. The value of new loan originations in the first half of 2015 was £24.7 billion, the highest half year value reported to the research since £49.2 billion recorded for the first half of 2007. In a further sign of commercial property market health, the value of distressed loans fell from £23.2 billion at the end of 2014 to £15.7 billion by the middle of 2015. The report also show that the proportion of loans with a loan to value (LTV) ratio of less than 70% has continued to grow in the first half of 2015, representing 80.5%, or £135.5 billion of outstanding debt of the traditional lenders and allocated to investment projects. Outstanding debt with a LTV ratio of between 71% and 100% fell from 14.3% of the total of £20 billion at the end of 2014 to 12% or £16 billon by the middle of 2015. The first half of the year also showed an encouraging pick-up in development finance, particularly for speculative or partly pre-let projects, where more non-traditional lenders now feel comfortable providing finance against such schemes. At the same time, the research suggests that banking regulation may be having an adverse impact on development finance by the traditional lenders. At the middle of 2015, only 2.8% of debt was allocated to commercial development projects by these lenders. Interest rate margins for senior debt continued their three-year long decline but the pace of decline has moderated considerably. By the middle of 2015, the average margin for senior loans secured by prime office property was recorded at 214bps, down from 218.7bps recorded at the end of 2014. The report suggests that that the floor in interest-rate margins may have been reached. Following a surge in non-traditional lenders in 2014, Banks and Building Societies remained the dominant lenders in the market, holding 76% of all loan originations at the middle year point compared to 75% at the end of 2014. The level of new lending by UK Banks and Building Societies remained stable at 39% of all loan originations. ‘We seem to have reached a turning point in the amount of commercial property debt in the market, with the impact of post-crisis deleveraging almost totally… Continue reading
