Oxford Landlords under attack!

Morning all,

I hope you are well.

And so it goes on....................

The government's attack on landlords is unlikely to end anytime soon despite widespread criticisms.  Details are now emerging to confirm how the new policy on interest rate relief will be implemented.

Landlords are now being urged to pay close attention to the new tax rules for residential property from April 2017.  Whilst the additional 3% SDLT has created anxiety amongst buy-to-let investors, the restriction to interest relief is likely to have greater longer-term effect on after tax returns."

Yesterday, HMRC finally issued their guidance on these changes, which include some worked examples to illustrate how landlords will be affected.

All residential landlords with finance costs will be affected, but only some will pay more tax.  

It is inaccurate for HMRC to say 'only some will pay more tax'.  When the announcement was made at the Summer Budget, the measure was described as restricting interest relief at the 20% basic rate, however the actual mechanism of how the restriction works has wider impact. Currently, buy-to-let landlords can deduct all their interest cost to calculate rental profits.  When the new measure takes effect, the interest cost will be completely disallowed in computing rental profits and instead a tax credit equal to 20% of the interest will be given against the person's income tax liability, meaning that the individual will have higher overall taxable income.  For some this could push an individual into a higher rate of income tax and start to reduce their personal allowance (if their income now starts to exceed £100,000), for others it could affect their entitlement to child benefit and restrict the amount on which they can claim tax relief for pensions.

But, the landlords are not to blame

The current attack on landlords fails to recognise that successive governments have failed to tackle supply Vs demand, and renting has become a lifestyle for more and more people (you may recall my previous post touching on this subject) In 2007, home ownership in the 30-34yr old demographic dropped to 65.8pc and renting rose to 18.7pc.  In the latest figures, for 2014, home ownership had dropped to 47.2pc and renting had risen to 33.4pc. Some thirty-somethings may blame landlords for owning 'their' houses, but the fact is that the properties they would ordinarily be buying are the council houses that were sold off for huge discounts during Thatcher's ill-fated Right-to-Buy scheme - and not replaced.

The selling of council housing in the 80s artificially grew home ownership but, as these people have become older, the following generations have not had the same opportunity to buy those council houses, purely because the older generation are still living in them. Thus, in the 90s, Noughties and going into the prestn we have seen increasingly mature adults being funneled into a growing private rented sector so unless local councils start building council houses by the acre (and hundreds more acres!), private renting is in the UK is destined to grow, and grow, and grow.  It seems a perverse response by Government to punish landlords and discourage their continued investment in private rented provision.

That said, buy to let lending in Oxford still looks set to fall......

Richard Sharp, an external member of the Bank of England's financial policy committee, told MPs on the Treasury select committee last week that buy-to-let lending would probably "cool significantly" in the coming months. Something we also anticipated would happen in March this year.  Mr Sharp said that he suspects the banks will want to see what regime we're in terms of house prices before they go back to aggressive lending.

Under new recommendations from the financial policy committee, prospective landlords will have to ensure their rental income offers greater cover on the costs of their borrowing. For example Barclays, TSB and Nationwide have already implemented a proposal for rental income to provide 145% mortgage cover vs the conventional 130%.

Buy-to-let landlords could be forced to stump up more than 60% deposits in some locations and there are signs that the number of new buy-to-let acquisitions has fallen sharply over the past couple of months following the introduction of the stamp duty surcharge on second homes from April, but as you all may recall I see this downturn as a temporary measure and remain confident in the knowledge that the worth of private landlords will become even more apparent in the next year whilst the demand for rented accommodating in Oxford remains so high whilst not tackling the real issue of supplying more houses.

Have a great weekend folks.

70% of Oxford landlords vote to remain in EU - So what now for Oxford landlords?

Afternoon all,

Well, well, well who was expecting that? Not I for one which has cost me a considerable amount of credibility as a know all!

It’s 5.50am as I start to type this article and David Dimbleby has just announced the UK will be leaving the EU as the final votes are counted. As most of the polls suggested a Remain Vote, and with Oxford voting overwhelmingly for Remain, it has come as a surprise particularly in the City of London Sterling has dropped 8% this morning after City analysts got their predictions wrong and MP’s from the Remain camp are using words like “challenging times ahead”. 

Now that the vote has been made, what next for Oxford homeowners, and especially the 13837 of Oxford homeowners with a mortgage?

 

Oxford Property Values

Since 2006 the price of a 1 bedroom apartment in Oxford has doubled in value, despite the longest and deepest recession in living memory.  That’s a compound annual growth rate (CAGR) of 7.18% at a time when Bank of England base rate has been at 0.5%.  Since the last In/Out EU Referendum in June 1975, property values in Oxford have risen by 2132.8% (that isn’t a typo).

Another Credit Crunch?

The same Credit Crunch doom-mongers and Sooth-Sayers that predicted soup kitchens in 2008/9 are predicting Brexit meltdown. Bad news after all does sell newspapers. Stock markets may rise, stock markets may fall, yet the British public have always continued to buy property. Aspiring first time buyers and buy to let landlords dust themselves down, take a deep breath and carry on buying.  Why? because us Brit’s love our Bricks and Mortar, we like to own the roof over our head, and property has rivalled all other investments over the last 20 years offering stability during difficult times and capital growth over the longer-term.

Interest rates 

Since 2009, interest rates have been at 0.5% and lots of people have become accustomed to those sorts of levels. Interest rates in the 1986/88 property boom were on average 9.25%, the 1990’s they were on average around 6.5% and uber-boom years (when UK property values were rising by 20% a year for three or four straight years across the UK) rates were on average 4.5%. Many of you reading this who are in their 50’s and older will remember interest rates at 15%.  But I suspect interest rates won’t rise in response to the leave vote, as Mark Carney (Chief of the Bank of England) knows, raising interest rates risks deflation – which is not what the British economy needs at the moment. It seems more likely that The Bank of England MPC will look to preserve confidence, ensure the banks have the liquid capital they need to support business and as a result it seems just as likely that interests could be reduced extending the Bank’s policy of the last 5 years.

Whilst property values might drop across the country, strong local markets such as Oxford may well benefit from investment as the low value of sterling enhances the value of property to foreign investors. 

Oxford landlords

The 4,701 Oxford buy to let landlords have little to fear nor do the 11,612 tenants living in their properties. Buy to let is a long term investment. There might well be some buy to let bargains in the coming months as some people, irrespective of the evidence, panic and sell their property.  Even if we pull up the drawbridge at Dover and immigration stopped today, the British population will still increase at a rate that will exceed the current property building level. Britain is building 139,600 properties a year, but according to the eminent ‘Barker Review of Housing Supply Report’, the country needs to build about 250,000 properties a year just to stand still.  The UK birth rate is increasing, the population is living longer with just under a quarter of all UK households being occupied by a single person demand is only going up whilst supply is stifled. Greater demand than supply equals higher prices over the medium to long-term irrespective of any short-term blip.

Oxford’s population is growing with one-third of the population being aged between 18 and 39 years and some 30% of the total population living in privately rented accommodation.  These demographic trends will continue to drive demand for property by investor landlords, first time buyers and growing families who need more space.  Many regard Oxford’s property market to operate in a ‘bubble’, whilst it would be foolish to believe Oxford will avoid any impact from the leave vote, it is not fanciful to believe that the impact will be less than for many other UK cities, and that demand for property is sufficiently robust to ensure investment return and rental yields will remain attractive. 

So, what will happen next?

Well, first and foremost Oxford needs to get over the shell-shock of a National vote result that is so at odds with the local preferences.  The remain vote in Oxford was larger than that of Scotland, and we will all need to take a little time to get used to the implications that will result.   It seems unlikely that Oxford will initiate an independence vote, and whilst there are many challenges ahead, the Oxford property market, which is supported by demographic and local economic fundamentals that will help it to resist the worst of the turmoil, and continue to offer investors a healthy return

Feel free to call me all. Happy weekend to you. 

Richard

What will the Oxford rental market do in 2016?

Hmmm, yes, what will it do? So many changes to legislation, stamp duty land tax changes and yet more and more red tape thrown in front of landlords yet the private rented sector is a two way street and whilst the landlords are key to the market so is the demand and demand remains aplenty in Oxford.

The rental market has once again demonstrated consistent growth across 2015, paving the way for a solid 2016, despite a number of changes set to be introduced in the coming twelve months.

Homelet's November Rental Index showed the market has experienced significant annual growth in 2015. As of November 2015, the average UK rental value – excluding London – stood at £743, an increase of 3.8% compared against last November's figure of £718. This growth is consistent across the country, with nine out of twelve regions demonstrating an increase in rental prices on an annual basis.

Demand for rental property continues to grow, and looks as if it won’t falter any time soon. In the past year, house prices have risen by £20,000 on average, tipping the house value scale to an average of £287,000, according to Rightmove that is.

Rightmove has also predicted that during 2016, house prices will increase by a further £17,000; possibly making it increasingly more challenging for first-time buyers to save a sufficient deposit, meaning they could be likely to remain tenants or, if they aren't already, turn to renting instead.

This shift of potential home owners into the Private Rented Sector (PRS) has increased the size of the rental market exponentially in the past decade or so. Back in 2001 there were 2.3 million private renters in the UK, increasing to 5.4 million in 2014. Growth doesn't look like it’ll stop there, either. In the next ten years, it is estimated that a further 1.8 million people will rent privately, meaning that half of all UK residents will form part of the PRS.

Looking again to 2016, tenant demand doesn’t look as if it is going to subside anytime soon. You may recall my recent suggestion that landlords will move past the recent changes and soldier on and part of my reason for thinking this is because of tenant demand Vs supply especially in Oxford.

The general trend in the rental market is that prices will continue to increase in the New Year, although growth may not be recorded at quite the same pace. Global property firm Jones Llang Lasaalle has estimated that across 2016, the average UK rent is set to rise by 4.5% and an additional 4% in 2017.

This steady yet continuing growth is evident in many of the UK's high-end estate agents' predictions, too. Savills has predicted a similar rental growth, estimating that between now and 2020; rental values will increase by 16.5% They have also warned that it would be wise to be aware of the shift in demand for certain types of rental property too saying that in areas where the demand and supply imbalance is most concentrated, the demand for larger properties will be maximised next year.

Despite these figures forecasting further rental rises ahead in 2016, Homelet's latest stats have unearthed some interesting findings. An overwhelming majority (91%) of landlords we surveyed revealed that they don't intend on increasing rents in the first 6 months of 2016 (not too sure about that. I wont be following suit!)

Contrastingly, 34% of landlords claimed that they would increase their rents over the next year, this perhaps indicates that the stamp duty tax implementation, as well as the scrapping of the formal Wear and Tear Allowance, are forcing some landlords to charge a higher rent.

The majority of landlords we surveyed claimed that being able to retain good tenants was their biggest concern, this is why many are likely to incur just a marginal rent increase in order to increase the chances of keeping hold of their current tenants. After all a good tenant is more than half the battle.

House Price Index 2016 - A winning start for Oxford

You may recall my recent post with regards to projections for the housing market in 2016, and in particular how the recent changes to the PRS (private rented sector) would shape the buy to let market and in turn the market in general in both the long and short term.

Please see enclosed the short term results from 2016

https://drive.google.com/file/d/0BxT4ZuA72V-NeVlnZGxaZ3NOMzg/view?usp=sharing


Richard

The cost of DIY for landlords

Morning folks,

It is clear that changes to S21 eviction procedures introduced back in October 2015 are not being adhered to by some letting agents and landlords.

The increase in demand for buy to let investments since pension reforms were introduced last year, coupled with the rush to buy investment properties ahead of the April 1 stamp duty surcharge deadline, means some less experienced purchasers are failing to check their compliance with the Deregulation Act. http://www.legislation.gov.uk/ukpga/2015/20/crossheading/housing-and-development/enacted

This legislation outlines the areas that landlords need to ensure compliance of when dealing with new Assured Shorthold Tenancies after October 2015.

These were that a landlord or agent acting on their behalf must provide (before the start of a tenancy) copies of the energy efficiency certificate and gas safety certificate and a copy of the government’s How To Rent booklet. They must also provide evidence that the tenant’s deposit has been protected in a recognised scheme.

Failure to comply with these elements can impact on the landlord’s ability to serve a S21 notice in order to evict tenants; in addition, the act also puts restrictions on an agent or landlord servicing S21 notices where they haven’t responded appropriately to disrepair complaints from the tenant. In spite of the Deregulation Act being introduced almost a year ago and being enforceable against new ASTs since October, there are a worrying number of landlords who wish to evict their tenants but can’t due to their own mismanagement of the tenancy agreement. Perhaps of even more concern is that there are also otherwise 'reputable' lettings agents who are similarly not as compliant as they need to be or as not as legally tuned up as they suggest.

Most commonly landlords are failing to secure the tenant’s deposit in the stated timeframe or neglecting to ensure that the property is fitted with the necessary number of smoke and carbon monoxide alarms and checking them prior to the start of a new tenancy.  Agents, meanwhile, can slip up simply by not providing the tenant with a copy of the government’s prescribed information booklet.

In review it is therefore even more important to do one of two things as a landlord:

1. If you are to manage your property or portfolio yourself you need to ensure you are absolutely aware of your obligations and ensure you keep in tune with changes affecting the PRS (private rented sector) Legislation will not tolerate 'not being aware' of changes. 
2. Look very closely when appointing your letting agent. Resist the ever growing temptation to instruct them based purely on fees. It can and has been a very, very costly mistake for some.

 Free as ever if you want a chat people.

New licensing proposals for Oxford landlords

Afternoon all,

So here is the latest from the OCC on licensing for landlords:

LANDLORDS across the city could face new restrictions under plans to require licenses for thousands of homes in Oxford according to  reports in the Oxford Mail today.

Oxford City Council says it wants to extend its houses in multiple occupation (HMOs) licensing scheme to include all types of rented properties.

It requires landlords to make sure their properties meet fire, electric and gas safety standards and be in a good state of repair, with the council able to require them to make improvements after inspections.

The new scheme would apply to all rented properties in just 20 per cent of the city at first but the local authority could apply to the Government to extend it further.

It is estimated there are about 15,000 rented properties in the city, with about 10,000 not covered by a licensing scheme.

The council said it already carried out about 250 inspections of private rented properties each year, but had not decided yet whether it would require inspections of all properties before licensing them.

It is reported that landlords supported higher standards but warned extra costs would be passed on to tenants.

Since the HMO licensing scheme was introduced in 2011, inspectors have carried out almost 20,000 visits to properties and responded to about 3,000 complaints.

They have also placed 80,000 requirements for improvements on landlords, which the council estimates has led to more than £3.2m being spent. The council says it recognizes ‘good’ landlords and rewards them with lower fees, as well as five-year licenses. 

The meat of these proposals is, as of yet, unknown so no doubt there is more to follow on this and I will keep you posted as I hear more.

 

Landlord housing takes over mortgage owner occupiers

Hello all,


The total value of UK landlord owned housing has now overtaken that held by mortgaged owner-occupiers, that’s according to a recent survey carried out by international property consultants Savills.
Savills calculations show that around £1,077bn of net equity, that is the proportion of the home owned as opposed to mortgaged, is held in those homes owned by private landlords.

This compares with just under that figure; £1,067bn in mortgage owned owner-occupied homes, according to a recent report published in the Financial Times. It shows the true scale of the problem facing the government with its priority home ownership policy.

The “Baby Boom” generation of owner-occupiers, those born just after WW2 and either retired our retiring now, are the real beneficiaries of the housing boom, with around £2,097bn of equity held mortgage-free. They are the real winners in what Savills claims is a 300% increase in average property values over 20 years, while the younger “Generation Rent” is struggling to get onto the housing ladder.

It is no secret that the government's key initiative is to boost housing ownership but in light of these figures it may prove to be a tough nut to crack even with recent incentives such as 'Help to Buy'.

The shift in housing ownership is also reflected in how money is now spent on housing, with more spent on rents that on mortgage payments by home-owners. £74.8bn combined is...

now spent on private and social rents, which just exceeds that spent on mortgage payments at 73.2bn. An interest rate rise could easily alter that balance though.

With housing shortages, rising rents and home ownership declining in most Western economies, the trend really does seem structural and the various UK government schemes, such as “Help-to-buy”, could struggle against this.

I would think that the various government initiatives will help the buyer market to a certain extent but whilst the Bank of England continues to guard against a debt ridden housing market I am not sure we will see an about turn in the short term. No doubt you will recall my most recent comments regarding 2016 forecasts for investor buyers in light of the recent Autumn announcements and these figures support the theory entirely.

Best regards

Strong sales activity in January 2016

On the back of my recent post regarding proposed activity in the market for 2016 this year is commencing with significant optimism, as prices have risen 0.3% across England and Wales in the last month; the highest rise observed for January since the onset of the financial crisis.

Housing activity has been unseasonably buoyant, according to the latest Home.co.uk asking price index. Greater London house prices have jumped 0.9% since December, meaning the average property price in this area has increased by around £15,000.

This is primarily due to low housing stock, with just over 386,000 properties are currently on the market; 47% less than in 2008. 

Price rises have been recorded by the index in every location beside the East, Scotland, Wales and Yorkshire in the last month.

The UK’s supply-demand crisis has meant that properties are also spending less time on the market. The average time recorded was 117 days, nine days less than a year ago; which only looks to become shorter across 2016. Whilst a significant long term spike is not anticipated (at least by me) due to the recent stamp duty announcement I imagine this will contribute to a spike in Oxford in the short term, but time will tell.

If you are interested in what your options are or what your property might be worth or you would simply like some advice please feel free to contact me.

Best regards

Richard

Investment opportunity in Oxford

Well folks I will admit that nowadays it is a little harder to find a property that stacks up against both yield and a positive history of capital appreciation but you can still find 'em.

Demesne Furze, Oxford

I found this little beauty and it does the numbers nicely. On with Chancellors for £280,000 you can expect to see a rent in the region of £1050 - £1075 per calendar month. That would give you a 4.5% return for starters and in the Oxford market this represents a cracking yield.

Turning my attention to purchase history the most recent property sold on this development fetched £271,000 on the 24th September 2015. This property was previously purchased for £170,000 on the 1st August 2006. More interestingly and an even better indication of the capital appreciation potential is the property sale prior to this which sold on the 9th September 2015 for £220,000 (smaller one bedroom property in need of work) which was previously sold for £175,000 on 17th December 2010. In this 5 year period its growth stood at 2.5%. Interestingly over the 10 year period of the most recent purchase it shows a 7% return against its sold price.

This property is good to rent in its current condition as well. It screams of being low maintenance with nice laminate wood flooring and it also has nice furnishings. The demand for one bedroom property is huge and this will attract tenants in big numbers which would make the risk of void non existent (assuming you use a good agency of course ;)

If you would like more information on this or investment in general please call me.

Good day people.

Reasons to be cheerful (even if you're involved in buy to let)

It is fair to say that at the back end of 2015 property investors and landlords could have been forgiven for going a little off radar after the Chancellor took a sizable swipe at the private rented sector. The reasons for being a little disillusioned have been plain and simple - We have had the Right to Rent proposals, the ongoing saga with HMO and additional licensing for landlords, the likelihood of mortgage constraints and the removal of tax breaks. And then just as you thought it couldn't get any worse good old George throws the increase in Stamp Duty Land Tax at us. It is enough to make even the most experienced landlord down tools and walk away.

But the way I see it there are at least a few reasons to feel optimistic and hopefully enough to ensure the majority of landlords continue to keep the faith:

Firstly the Office National Statistics (ONS) are forecasting significant growth in the UK population and that it is to go beyond 70 million in the next 12 years. This growth is both direct and indirect based on migration and procreation.

How might this be of benefit to landlords I hear you ask?

Well statistics show that the migrant population are heavily into the rented sector rather than purchasing property. This would mean a surge in the rented market and certainly in areas of high employment.

On another note recent research shows that the renting population has become very diverse in recent years, so no longer are you just seeing 20 somethings taking up rented property. Increasingly it is stretching across the entire spectrum from 40 and 50 years olds to couples and families alike. 

Thirdly—as has been explored before – the swelling population of the UK will easily outpace the supply of purpose-built institutionally-funded homes, thus confirming that there is room for Build To Let without damaging Buy To Let. They can operate side-by-side.

All of this suggests what I and we all know already - that the private rented sector provides an invaluable service to the public and as our population grows I expect this to become more and more apparent. If I am right then hopefully in time Mr Osbourne may reflect on his recent announcement as a job not very well done. Either way I still think there is cause for optimism amongst landlords and I don't necessarily share the notion that selling prior to April 2016 will spike on a consistent level nor do I think the majority of landlords will be discouraged from purchasing for investment either.

Only my opinion of course.

Average rental prices rise again in Oxford

Morning all,

You may recall that last year I ran my eyes over the statistical differences in the average rents across the UK and in particular my interest was naturally drawn to the South East to see how we stack up against the rest. Well, fast forwarding to the latest annual figures from the Homelet Rental price index I found as follows:

HomeLet data shows that on average, rental prices are 7.0% higher in the South East compared with a 4.2% rise from the year previous.

Once again nine out of 12 UK regions have recorded higher rental prices in December 2015 compared to the same month last year, and in the 3 months to December 2015 the UK (minus London) showed a 5% increase in average rents compared with a 0.6 per cent decrease in UK average rental prices since October 2014.

Regions that have experienced the highest growth compared to this time last year include us and Greater London, with rental prices 7% and 8% respectively on the year previous. Not surprisingly we saw the biggest upturn across the UK during the spring and summer periods.

The increase in average rental prices in Oxford in hardly surprising given the very well documented supply and demand issue, which is very good news for Oxford landlords, and giving consideration to Oxford's continued popularity in addition to the continued development of the city centre and surrounding areas I am sticking my neck out for an even better 2016. 

(Naturally if I am wrong I am hoping that people will forget they ever read this)!

Best regards

Richard

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