Changes to Wear and Tear allowance in Oxford

Morning all,

All the latest right here for you. Some information relating to the latest on wear and tear which I thought might be of interest to you.

Who is likely to be affected

Companies, individuals and others, such as trusts or collective investment schemes that let residential properties.

General description of the measure

The Wear and Tear Allowance for fully furnished properties will be replaced with a relief that enables all landlords of residential dwelling houses to deduct the costs they actually incur on replacing furnishings, appliances and kitchenware in the property.
The relief given will be for the cost of a like-for-like, or nearest modern equivalent, replacement asset, plus any costs incurred in disposing of, or less any proceeds received for, the asset being replaced.

Policy objective

The measure will give relief for the cost of replacing furnishings and a fairer way of calculating taxable profits.

Operative date

The measure will have effect for expenditure incurred on or after 1 April 2016 for corporation tax payers and 6 April 2016 for Income Tax payers.

Proposed revisions

Legislation will be introduced in Finance Bill 2016 to repeal the Wear and Tear Allowance provisions and make new provision for a deduction for the replacement of furnishings.
The deduction will be available in calculating the profits of a property business which includes a dwelling-house. The deduction is available for capital expenditure on furniture, furnishings, appliances (including white goods) and kitchenware, where the expenditure is on a replacement item provided for use in the dwelling.

The amount of the deduction is:

• the cost of the new replacement item, limited to the cost of an equivalent item if it represents an improvement on the old item (beyond the reasonable modern equivalent) plus
• the incidental costs of disposing of the old item or acquiring the replacement less
• any amounts received on disposal of the old item

This deduction will not be available for furnished holiday lettings because capital allowances will continue to be available for them.

Impact on individuals, households and families

This change will create a small additional administrative burden for individual landlords who currently claim the wear and tear allowance as they will now need to keep a record of their actual expenditure and exclude any elements of improvement. This is estimated to be around 750,000 individuals (and households), and the impact on affected individuals (and households) is anticipated to be negligible given that they currently keep records of other expenses such as repair costs.
An estimated 1.4 million individual landlords of unfurnished or part furnished properties will have a new incentive to replace furnishings in their properties, which may lead to improved tenancy conditions.
The measure is not expected to impact on family formation, stability or breakdown.

Monitoring and evaluation

The measure will be monitored through information collected in tax returns.

Further advice

Call me :)

Homeowner confidence sets the scene for higher Oxford prices going into 2016

Afternoon folks,

I hope you are all well.

So with the run up to the festive period I thought I would share some interesting news with you regarding forecasts for Christmas and going into the New Year.

Sellers who come to market in the run-up to Christmas typically set lower asking prices as buyers are harder to attract at this time of year. However, this November’s price-dip of 1.3% (-£3,977) is much less marked than usual, and is the smallest seen at this time of year since 2011. This indicates a positive underlying outlook for the year ahead among home-owners, with research by Rightmove showing them to be in a confident mood and largely unfazed by the risk of higher interest rates in 2016. Given these findings, and the likelihood that demand will continue to outstrip supply, prices look set to increase again in many locations in 2016.

  New-to-the-market sellers have dropped their asking prices at this time of year for the last eight years, with an average drop of 1.9% over the last five years. Those looking to market their property as Christmas gets closer often have a greater sense of urgency to find a buyer and sensibly recognise that trimming their asking price will provide an incentive to potential buyers more focussed on seasonal Christmas trimmings. Buoyant market conditions and a confident outlook for 2016 mean that the reduction, while no-doubt welcome to hard-pressed buyers, is the most Scrooge-like since 2011! It’s likely to be a short-lived respite as the combination of high confidence and low interest rates is a recipe for higher prices next year.

High home-owner confidence is demonstrated by Rightmove research, with a sample size of over 23,000, which reveals that the majority (85%) don’t think their financial situation will worsen in the next year. Despite the possibility of a 2016 rate rise that could increase mortgage repayments for many, 41% of home-owners said they thought their household’s financial situation would get better over the next 12 months. Another 44% said things would stay the same, with only 15% forecasting they would get worse. The majority (69%) were also of the opinion that property would continue to rise in price over the next 12 months, with only 7% expecting prices to be lower.

While confidence can be fragile, it is currently riding high. It seems that most home-owners are not worried by the risk of 2016 rate rises, with only one in seven thinking their financial situation will deteriorate. Home-owners have had a smooth ride over the past six or so years with a half-a-percent base rate, so you would think that more might have concerns about the extra drain on their financial resources when the base rate inevitably goes up. Whether in 2016 or early 2017, a rise won’t come as a surprise as an increase has been well-trailed. Indeed, competitiveness among lenders means some of the possible effects of rate rises for both home-owners and movers will be softened, and buyers’ ability to afford higher interest rates is already built into the current tighter lending criteria. Many recent buyers will also be shielded as they are locked into fixed rates, so the shock of the first rise for over six years will be a delayed one.


Long-term low interest rates are typically a trigger for activity and price rises in the property market while other parts of the economy are less susceptible to such an incentive. The spur of cheap money (if you’ve got your credit rating in good order) helps buyers to pay the asking price or outbid the competition for their ideal home. It all fuels demand for property as evidenced by Rightmove traffic up in October by 23% year-on-year.

Some advice for bargain-hunting buyers and early-bird sellers
 
Buyers keen to find their ideal home and looking to negotiate a relative bargain are advised to keep shopping for houses in the days before Christmas, at a time when competition from other buyers is typically less. When other prospective buyers are taking a house-hunting break and are busy shopping for Christmas, a keen seller will be happy to see you and a lack of any other bids will make yours seem more appealing. With this year’s sellers’ market looking likely to continue into next year, there is a small window of opportunity to be ahead of some of your buyer competition. 

Home-owners looking to come to market soon after New Year’s Day should contemplate acting slightly earlier given that buyer searches on Rightmove ramp up from Christmas Day. There’s a huge peak in the number of people home-hunting on Rightmove on Boxing Day, and last year there were over 1 million visits on Christmas day itself. It’s highly unlikely you’ll want prospective buyers to come round to have a look while you’re tucking into turkey or leftovers between Christmas and New Year, but being earlier to market means you won’t get left out of this surge in buyer interest if being an early-moving bird is your New Year resolution.

 Food for thought folks (maybe turkey and stuffing)

Festive wishes

Richard

Buy to Let - New Stamp Duty Land Tax for Investors

Morning all,

What a nice day to deliver such indifferent news from the genius in Downing Street! 

The industry is trying to assimilate the changes announced in yesterday’s Budget Statement whereby buy-to-let investors and those purchasing second homes are to be hit with a 3% increase in Stamp Duty Land Tax.

The changes were yesterday described by ARLA as a catastrophe for the private rented sector while accountancy firm Smith & Williamson said they would be the “nail in the coffin” for the buy-to-let market.

Franchise chain Martin & Co (us!) last night said the changes were “absolutely not catastrophic”, but admitted they were an unwelcome surprise.

What it could mean to you

For an average buy-to-let purchase of £184,000, it will mean an extra Stamp Duty Land Tax bill of £5,520 from next April. For the buyer of a rental property or a second home priced at £300,000, it means an extra £9,000 – bringing the total SDLT bill to £14,000.

One immediate implication is that first-time buyers could have an advantage over investors.
A second is that buy-to-let properties changing hands between investors may reduce in price.
A third possibility is that landlords who pay extra Stamp Duty on their properties will simply pass the increase along to tenants. A fourth possibility is that the housing market will be “turbo-charged” in the short term as landlords and second home owners embark on a buying spree.

However, others think it more likely that buy-to-let landlords will start selling up now, in order to get out of an increasingly hostile market, including other Budget Statement announcements about speeded-up times to settle their tax bills.

The Chancellor’s changes mean that each SDLT band will go up by 3% for buy-to-let properties as follows from next April 1:

• Property purchase of £40,000 to £125,000 – Stamp Duty will be levied at 3% (currently 0%)
• Up to £250,000 – 5% (currently 2%)
• Up to £925,000 – 8% (currently 5%)
• Up to £1.5m – 13% (currently 10%)
• Over £1.5m – 15% (currently 12%).

In other changes announced by George Osborne, buy-to-let and second home purchasers will have less time to settle their Stamp Duty bill, reduced from 30 days to just 14 as from 2019.
At the same time, anyone selling a buy-to-let or second property will have to settle their Capital Gains Tax bill within 30 days, rather than anything up to 21 months after disposal, depending on when the sale occurs.

Notably, while going after private landlords, Osborne has so far protected corporate bodies or funds investing in the private rented sector. Larger firms owning 15 or more rental properties will not have to pay the higher rates, although this is subject to consultation.

I share the opinion of many as it appears that Mr Osbourne is intent on squeezing the life out of landlords in the private rented sector and his insistence on adding new rules and an increasing amount of red tape are only serving to frighten landlords out of the market in a time when they are sorely needed to continue to provide housing to people unable to buy. I would suggest the real solution to the problem would be to focus on the well documented lack of new property being built across the UK, but hey, what do I know?!

More to follow as it comes......................

Oxford Market Intelligence - How does your property rate?

Morning Folks,


I hope everyone is well.

Tis important to keep abreast of the rental market so I thought the latest national statistics may be of some interest to you.

https://drive.google.com/file/d/0BxT4ZuA72V-NcEplMzVPblVxdVk/view?usp=sharing

Feel free to call me for a chat about this or if you would like any advice regarding your property and where it sits in the Oxford food chain.

Happy Friday all.

Best regards

Right to Rent hits UK tenancies from 1st Feb 2016

Morning folks,

I hope you are all very well.

As suspected the government have now officially announced the inception of mandatory 'Right to Rent' checks in the UK from early next year. Highlights as follows:

Under the new rules, landlords who fail to check a potential tenant’s ‘Right to Rent’ will face penalties of up to £3,000 per tenant.

The new law will mean that private landlords, including those who sub-let or take in lodgers, must check the right of prospective tenants to be in the country to avoid being hit with a penalty.
Right to Rent was introduced in the Immigration Act 2014 as part of the government’s reforms to build a fairer and more effective immigration system.

The first phase was launched in parts of the West Midlands and caused controversy from many industry players who saw it as a move by the government to ask landlords and letting agents to act, effectively, as border control.

Immigration Minister James Brokenshire says the phased introduction of Right to Rent, starting in the West Midlands, was to allow time to assess how the measures work in practice and to carry out an evaluation, which has also been published today.

A panel including the Equality and Human Rights Commission as well as representatives of landlords and letting agents, local authorities, and homelessness charity Crisis, has worked with government on the evaluation.

Under Right to Rent, landlords should check identity documents for all new tenants and take copies. This includes checking a UK passport, a European Economic Area passport or identity card, a permanent residence card or travel document showing indefinite leave to remain, a Home Office immigration status document or a certificate of registration or naturalisation as a British citizen.

If you need any advice or guidance on what this means for you and your property please feel free to call your friendly neighbourhood letting agent (that will be me rather than Spiderman).

Best regards

Richard

Changes to section 21 notices from 1st October 2015

Morning folks,

Forever the changes to lettings legislation, so here is the latest and without doubt a significant shift that we will all need to be aware of.

Courtesy of The Deregulation Act.

The main changes are to the rules on serving a notice to quit under Section 21 of the Housing Act 1988, commonly known as a Section 21 Notice.

The changes come into force on October 1 and apply to tenancies entered into on or after that date.

The main changes to be aware of are:

• It will no longer be possible to serve a Section 21 Notice until the tenant has lived in the property for a minimum of four months. This is designed to stop landlords serving a Section 21 Notice as soon as a tenant moves in. As before, the notice can’t expire in any event before the end of any fixed term.
• A Section 21 Notice will only be valid for six months from the date it was given. This means that if the tenant doesn’t leave, possession proceedings must be commenced within six months of the service of the Section 21 Notice. Different rules apply where the notice period set out in the tenancy agreement is more than two months.
• A Section 21 Notice will no longer be invalid if the date of possession given on it is not the last day of a tenancy period. This has traditionally been one of the main reasons that a Section 21 Notice fails. As long as a full two months’ notice is given, then unless another unconnected error is made, the Section 21 Notice will be valid.
• Landlords will be unable to serve a Section 21 Notice in circumstances where it is in breach of its legal obligations to a tenant. This includes obligations as to the condition of the property, the health and safety of the occupants and failure to provide an Energy Performance Certificate or a valid gas certificate for the property.
• When a Section 21 Notice is served, all rent that has been paid for any period where the tenant ceases to lives in the property must be repaid to the tenant. This has implications where a tenant who has paid their rent decides to leave when they receive the Section 21 Notice rather than when the notice expires. Where a tenant pays a full month’s rent but then is required by the Section 21 Notice to vacate or voluntarily vacates mid-way through the month, the tenant is entitled to be reimbursed the overpayment of rent for that period.
• One change that is already in force relates to the protection of deposits. All deposits ever taken which are still being held must now be protected. Once complete the deposit protection certificate and all prescribed information must be served on the tenant. If any deposit has not been protected or returned to the tenant a Section 21 Notice cannot be served.”

Whatever next I here you say??! Agreed but with these changes imminent it is vitally important that we all take the correct decision when serving these notices otherwise you will find yourself on the wrong end of the ladder.

Call me if you need any advice or help understanding this.

Best regards

Richard
 

UK Budget Update

Hello all,

The first Conservative budget in 18 years has been delivered by the Chancellor George Osborne.

Figures from the Office for Budget Responsibility (OBR) provided a positive backdrop to the second Budget Statement in 4 months. Economic growth in 2014 was revised upwards from 2.6 percent to 3 percent and the OBR now predicts output to grow 2.4 percent in 2015 - the strongest growth among G7 economies.

However, the Chancellor warned that the UK is not immune to economic risk, with uncertainty over the Greek debt crisis and slowdowns in the US and Chinese markets weighing on the global economy.

Against this economic background, the Chancellor pledged to deliver a "budget that puts security first". Click below for more:

https://drive.google.com/file/d/0BxT4ZuA72V-NdXFVbURGaTJJaFE/view?usp=sharing

Market Overview - Oxfordshire

Evening all,

Staying in tap with our market is key, so I thought the following would make an interesting read for you all. 

https://drive.google.com/file/d/0BxT4ZuA72V-NYVE0VlZiOF85SXc/view?usp=sharing

Call me or pop in if you would like to discuss.

Happy weekend!

Richard

Oxford landlord licensing scheme update

Just over a week after David Cameron’s announcement of a national mandatory licensing scheme for private landlords, there has now been some further clarification.

It will apply to Houses in Multiple Occupation or “shared housing” only. However, there is to be a new definition of HMO.

The new licensing regime will extend the existing statutory licensing regime for HMOs – currently this applies to properties of three or more storeys high, lived in by five individuals making up two or more households.

The Government will consult on the amendment of the definition of a mandatory licensable HMO.
For example, it could propose lowering the three storeys down to one, to include “beds in sheds”, and it might propose removing the “more than one household” test or reducing the number of sharers. It could mean that landlords who believe they have fairly ordinary rental properties find they have licensable HMOs. A new HMO definition could also run the risk of  some rental properties at times being licensable HMOs and at other times not – depending on who was living there.
There is no guidance yet on the proposed timetable for the consultation, so at this moment it is very much a case of 'as you were', but there will undoubtedly be more to follow.

While landlords and agents will widely welcome the clarification, after concern that mandatory licensing would apply to landlords of all types of rental property, there is nevertheless concern.
Many properties and landlords are not currently covered by additional licensing schemes, since a number of local authorities do not operate these. If a large tranche of properties now have to be mandatorily licensed, this raises enforcement issues given how under-resourced most councils already are. More importantly for landlords there will be great concern at the ongoing cost of such changes should they be implemented.

As mentioned in my previous post and of further concern is the ‘small print’ to the Queen’s Speech, which has now been published.

This makes it clear that the Government “will build on the national roll-out of the landlord scheme established in the Immigration Act 2014 and make it easier to evict illegal migrants”. Again, there is no timetable for the national roll-out of the Right to Rent scheme currently being tested in the west midlands. Nor is there yet any official assessment of how this pilot has gone. However, it would appear that landlords and agents will have to bring themselves quickly up to speed on the duty to check the immigration status of prospective tenants if this moves forward as I expect.

It is also not clear how the Government plans to make it easier to evict illegal migrants, with lawyers warning this could be a legal minefield.

This is the word as I know it currently. I will keep you posted.

Richard

We shouldn't rush ahead with immigration checks just yet.

You will undoubtedly be aware of the governments plan to roll out immigration checks across the UK to all landlords and agencies when vetting overseas tenants. The plan has been to do this ASAP now that the Conservatives hold a majority government,  yet my advice is to hold that thought until the results of the pilot scheme, currently being run in the West Midlands has been complied and considered.

Only last week a reminder was sent out for landlords and agents in this region to complete the official survey which suggests that we will not see any concrete findings until later this year.

It seems illogical to roll out a scheme without firstly considering the results of this pilot and all affected parties and representatives having had the right to discuss before any decision is taken on who has the 'right to rent'.

There clearly is alot that needs considering before simply rolling this out. There must be consideration on agent and landlord workload in addition to how effective the checks will be, not to mention whether there will be robust Home Office support for all parties concerned. It would also be interesting to note exactly what the associated costs for these sort of checks will be when you consider that landlord, and certainly agencies, are under intense scrutiny regarding the fees they already charge tenants.

All in all I am hoping that we achieve a considered approach to this proposed legislation rather than going in feet first without a thought for the people it will really affect. Time will tell whether this government will firstly consider the opinions of those that matter before introducing anything.

More to follow....

Regards

Richard

Is Kidlington, Oxford's dark horse?

Afternoon all,

For all my die hard blog followers out there ( he says in non delusional fashion!) you will have no doubt noted in recent months that I have posted alot of available property to purchase in the Kidlington area. Why you may ask? Well a landlord popped in to see me a couple of months back about a property he went to view for sale in The Phelps, Kidlington. It was an open house from 11am and he reported in excess of 15 viewers of which most were there for investment, so he wondered why the mad rush for this location?  I decided to look into this further.........

Keeping it relevant I decided to pick on two locations - The Phelps, Kidlington and Wilsdon Way, Kidlington.

A 2 bedroom house in The Phelps recently sold for £205,000 on the 17th May 2013. It then sold again just 18 months later on the28th November 2014 for £250,000. Another 2 bedroom house in this location went for £159,950 in April 2004 and resold on 5th September 2014 for £250,000. Not bad on the CA front you will agree.

2 properties have recently sold in Wilsdon Way both of which were 1 bedrooms properties. Both of which sold for £172,500 in March 2015. If you compare this with purchase in August 2013 it shows a £33k appreciation.

Equally both locations show decent rental movement as well. A 2 bedroom property in The Phelps was renting for £750 in 2010. You can now pick one up for £1000 per calendar month in 2015.

So why Kidlington I hear you ask and why all of this activity from investors recently? Well Kidlington is no great secret. It is close to Oxford, yet cheaper. The returns for these properties are very healthy at 5% + which is becoming very difficult to achieve in certain parts of the city centre. And the pierce de resistance is the rail line going through shortly which will only further the appeal for commuters and people visiting the great city.

Kidlington wont remain a secret for long though folks. Prices are already beginning to climb as the word catches on.

For investment advice on this location or anywhere in Oxford please feel free to call me.

Richard

Landlord and agents may be hit by new heating regulations

Oh what great news for us all. More suggestive legislation! Here is the word with more to follow.....


The Residential Landlords Association says some agents and landlords may be required to notify the National Measurement and Regulation Office regarding their property heating systems by the end of this calendar year.

Typically, anything regarded as a communal heating system will typically trigger a need for landlords to provide details to the NMRO, it says.

The RLA hoped these notification responsibilities would only impact institutional landlords, such as university halls and nursing homes. However, it appears they may affect HMO and bedsit property landlords and agents acting on their behalf, who could be required to send notification of their ‘heating network’ to the relevant authorities.

A landlord must submit notification to the NMRO regarding details about the heating system of the property by December 31 this year and, if required, install individual meters by the start of next April. There will be ongoing duties regarding maintenance and billing.

The RLA advises that an agent or landlord is a heat supplier if all of the following apply:

- there is distribution of thermal energy in the form of steam, hot water, or chilled liquids from a central source in a building (eg a gas boiler);

- the thermal energy is used to provide heating, hot water or cooling;

- the building is occupied by more than one final customer;

- the landlord bills more than one occupier for the heat or hot water that that person has used (or a proportion thereof).

Call me if in doubt peeps.

Investment in OX3 - a beauty!

Back after the break folks with another cracking investment opportunity.

A 1 bedroom second floor apartment on with yours truly at £195,000 offering £900 per calendar month which gives you a 5.5% yield straight out. this is based on the terrible scenario where you have to purchase at asking price and I dont get the £925 per calendar month I would actually be asking for of course!

This let in 2014 within 4 days of it coming on and another 1 bedroom 2nd floor apartment I look after went within the same time frame. They are stick on lets these ones and show positive capital value from purchase history. This one shows a £50k rise from 2008 based on asking price and as I keep saying folks, I dont know any savings account that offers that sort of return!

Call me for more.

Best regards

Oxford heading the list outside the capital

Rising demand from international buyers and others from London relocating to Oxford has contributed to price growth in the city’s prime property market, new research shows.
 
Oxford is a key city outside of London and attracts people because of its internationally renowned university and research shows that last year it outperformed both the wider prime property market in the UK and in the South East.

Prices increased by 1.8% between October and December 2014, taking the annual rise in values in the city to 6.1%. Demand for homes valued between £1 million and £2 million was especially strong.

A key driver of Oxford’s property market performance has been demand for homes from buyers from outside of the city. Indeed, the proportion of property buyers from outside Oxford more than doubled in 2014 compared to the previous year, accounting for 52% of all Knight Frank sales in the city last year, compared to just 24% in 2013.

Demand from Londoners relocating to Oxford rose significantly year on year, from 3% to 18%, with many such buyers looking to take advantage of the relative price difference that currently exists between house prices in the capital and in Oxford. The proportion of international buyers in the city also rose to 17% in 2014, up from 11% the previous year.

Access to top performing schools, strong local employment, as well as improving transport links into London, including a new rail line between Oxford and London Marylebone which is due to open this summer , have helped boost high levels of demand in Oxford, according to the report.

The number of potential new buyers registering their interest in purchasing a new home was 18% higher last year than 2013 and the number of property viewings in the city was 8% higher over the same time.

For more on this a how the lettings market compares please call me.

Best regards