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