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Larger number of UK landlords now considering setting up limited companies
With buy to let landlords in the UK now facing paying more property tax and facing cuts to mortgage tax relief, increasing numbers are considering moving their property investments into limited company vehicles. Some 41% of 1,400 landlords taking part in a survey commissioned by Paragon Mortgages indicated that they are considering moving their portfolio into a limited company following the Chancellor’s decision to limit tax relief available to landlords last year. A further 5% have already established limited companies. For larger landlords with 20 or more properties, 14% are already operating as limited companies, while 63% are considering it. In terms of portfolio growth, 43% of landlords surveyed agreed that the stamp duty increase will affect their buy to let purchasing plans over the next couple of years. This figure rises to 63% for larger landlords with 20 or more properties. Despite uncertainty about what impact the changes to tax relief and stamp duty might have however, tenant demand amongst landlords is still perceived as being high. Demand for rented property in the fourth quarter of 2015 was strongest in the South West where 40% of landlords reported demand to be rising. Landlords in the North East experienced the weakest demand, with just 24% of landlords reporting increased demand. Reflecting this demand, average yields have also remained stable and averaged 5.6% across the country, unchanged on the previous quarter. The North West saw the highest yields, at 6.2%, while outer London had the lowest, at 5.1%. ‘Recent government interventions into the buy to let market are now beginning to impact landlord sentiment and plans. The fundamental drivers of the market however, tenant demand and yields, remain strong so there are competing dynamics at play,’ said John Heron, director of mortgages at Paragon. ‘It is interesting to see that concern about the impact of changes to stamp-duty and tax relief is greatest among larger landlords. This concern is likely to grow now that the government have confirmed that landlords with larger portfolios will have to pay the increased rate of stamp-duty on buy to let purchases,’ he added. Continue reading
Housing market cooling in Sydney and Melbourne, latest index data shows
House price growth in Australian capital cities moderated in March with market conditions slowing in Sydney and Melbourne, according to the latest index. The remaining capital cities recorded a range of outcomes from small value increases to moderate declines, the data from the CoreLogic RP index shows. Overall prices increased by 0.2% to take capital city home values 1.6% higher over the first quarter of 2016. The quarterly increase in home values was broad based across the nation’s capitals, with Perth seeing a fall of 0.9% and Brisbane a fall of 0.1%. They were the only two cities to record negative movements in dwelling values over the past three months. ‘The March quarter rise in capital city dwelling values is in stark contrast to the first quarter of 2015, when values increased by 3% which is almost double the current pace of quarterly growth,’ said CoreLogic RP Data head of research Tim Lawless. ‘However, compared with the final quarter of 2015 when capital city dwelling values were down 1.4% the housing market has shown a modest rebound in growth which is well below the strong capital gains recorded over the first half of 2015,’ he explained. But he added that the annual pace of home value appreciation across Australia’s capital cities highlights the slowing growth trend and year on year growth across the capital cities has now reached its lowest point in 31 months, with values up by 6.4% over the past 12 months. Furthermore, no Australian capital city has recorded an annual growth rate in the double digits over the past year. Melbourne has seen the strongest annual growth, with values up by 9.8% over the past 12 months. ‘The housing market has been losing momentum since July last year, when capital city dwelling values were increasing at the annual rate of 11.1%,’ Lawless pointed out. Overall the median price across the capital cities is now $550,000, a rise of 0.2% month on month, up 1.6% quarter on quarter and 6.4% year on year. A breakdown of the data shows that the median price in Sydney is $730,000, up 1% month on month, 2% quarter on quarter and 7.4% year on year while in Melbourne it is $560,000, down 0.6% month on month, up 2.2% quarter on quarter and 9.8% year on year. In Brisbane the median price is $470,000, down 1.2% on a monthly basis, down 0.1% quarter on quarter but up 4.5% year on year while in Adelaide the median is $415,000 with a 0.5% monthly rise, 2.4% growth quarter on quarter and up 3.2% year on year. In Perth the market is actually recovering with a median price of $495,000 which is up 1.2% month on month but down 0.9% quarter on quarter and own 2% year on year with Darwin seeing a similar picture with a median price of $505,000 which is up 2.1% month on month and 2.4% quarter on quarter but down 1.8% year on year. In Hobart the… Continue reading
First time buyers in the UK are failing to count the cost of home ownership
First time buyers in the UK are failing to count the true cost of purchasing a home with legal fees and insurance catching them off guard, new research suggests. Some 40.6% of new home owners don’t take unexpected fees into account and bank transfers, searches and mortgage set up costs were among the biggest shocks for one on four buyers. The research from Pegasus Personal Finance also found that 24.3% weren’t aware of land registry fees, 16.7% unaware of stamp duty and 14.7% not knowledgeable on solicitors’ fees while one in 10 admitted a lack of knowledge on interest rates. Some 13.5% of home owners, assumed to be those with variable rate mortgages, admitted they haven’t prepared for an increase in interest rates should they unexpectedly climb from a seven year low of 0.5%. The firm points out that excluding stamp duty, unforeseen fees could amount to a sizeable £1,850 according to recent data from the Money Advice Service. On top of this one in five did not account for an increase in utility bills as a result of moving to a larger property, while the same number were surprised to see their car insurance costs increase. And 24.6% underestimated removal charges while 13.9% viewed furniture and decor as a surprise expense. ‘The results of this study showed some real eye opening insights and surprisingly displayed a lack of thorough understanding when it comes to the cost of buying a property,’ said Jonathan Le Roux, director of Pegasus Personal Finance. ‘When buyers are working out their budget for a future home move, forgetting the significant costs associated with stamp duty, solicitors fees or similar can really put a spanner in the works at the last minute,’ he explained. ‘Our advice is to do your research and carefully list all the associated costs so you go into home ownership with your eyes wide open. It may be tedious but completing this homework is essential to everything going smoothly,’ he added. Continue reading
