Stamp Duty the most complex Tax? Is it killing the property market down

The changes to Stamp duty introduced initially by George Osborne and followed through by the current Chancellor seem to have achieved the aim of raising taxes but at the same time ated as a large negative for Buy to Let investors and First time buyers who have to buy in the South East and London.

The punitive rates for First Time buyers have become a negative that balances out any of the support to First Time buyers offered by Help to Buy schemes. It all means that if you are faced with London or South East first time buyer property prices then the Government has probably increased your costs considerably. This regional discrimination will no doubt affect the perception of the Government among the more youthful elements of the population.

It has become such a glaring issue that a daily newspaper ” The Daily Telegraph ” has started a campaign to influence the Chancellor in order to see reductions in Stamp Duty for First Time buyers and I guess we all would like to see this campaign succeed.

The newspaper has also highlighted how complicated the Stamp Duty regime has become, no doubt like others before him the Chancellor will say he aims to simplify the Tax system, then if this is true ( I suspect it is not ) then Stamp Duty would be a good place to start.


In fact the Telegraph has published an up to date calculator which is I have to say very useful, but also shows how complex this element of the Tax system has become.


Is this the new Buy to Let Opportunity?

During a busy three year period the Government seems to have tried with varying degrees of success to cool the Housing market by making it more difficult to be a successful Buy to Let investor. The simple idea ( from not so simple people I guess ) seems to have been that if fewer people became Landlords then less property would be sold and a reduction in demand for property would lead to lower property prices.( Fat chance)

So if you are a new Buy to Let investor, or a small existing investor who intends to raise hefty mortgages to build a property portfolio, then there is no doubt they have made it less attractive by reducing the returns you can make from a mortgaged property. In fact from making it more difficult to qualify for a buy to let mortgage, to increasing the amount of tax you pay, it has been a pretty full on attack on this part of the market and these individuals.

As always though, one persons misery becomes another persons opportunity.

The low borrowing rates and the post Brexit fall in the value of Sterling has meant for some investors a golden opportunity has arisen.

If you are a large company with a significant portfolio or a foreign investor benefiting from the exchange rate you probably believe this is a heaven sent opportunity.

As a result we have the Times newspaper highlighting the fact that an increasing proportion of British property is being bought by foreign investors, and that this movement in the property market is no longer just focused in the London area, it now is impacting in the larger cities across the country. They quote one Manchester development where 93% of the units have been purchased by overseas investors, when they say overseas investors of course they include offshore funds and companies and so the numbers may not be a true reflection of the situation. Large U.K. based investors may well own all or part of these offshore companies and so may have effectively benefited from the Governments actions. As often is the case its just the small investors that pay the price of the changes.

Due to the size of the opportunity on offer to these larger types of investors it should be no surprise therefore that the messages on House prices do not reflect a mission accomplished for the Government. After an initial cooling most forecasts now seem to point to a strong recovery in the market for mortgages and House prices. The Daily Express highlighted a report from the Centre for Economics and Business that predicts a 25% increase in house prices over the next 4 years.

Not good reading for the Government, unless of course, if you take a slightly more cynical view, their intention was just to raise more taxes and cooling the market was the excuse used to do this.

It just might be though that another group of potential Buy to Let investors might be facing a significant opportunity. This time a group of small investors may be looking at a golden window for investment that I am sure was not intentionally left open.

This is because the other area of feverish Government activity over the last few years has been pension deregulation. The annuity rates on offer have been stunningly low and given the economic uncertainties of the next few years look unlikely to change. So the new freedoms have meant that many pensioners have taken control of their own pension cash. The problem is though, where can you invest it to get a decent return.

The answer may well be that they should take a look at property and a serious look at the Buy to Let opportunity. These investors have cash, something that will erode as inflation steps up and they need an inflation proof investment that gives a moderate returns in the short term and potentially a sizeable return in the long term. Cash means the mortgage difficulties and the tax changes to interest relief are no longer part of the equation and if the 25% increase in property prices mentioned above comes to fruition it is very difficult to see where an investment would give a better return. All of the normal constraints  still apply of course, the need to research the market, surveying the property  etc. however for once the Government actions may have benefited one small group of small investors.

You can be sure though that having spotted the window of opportunity it will not be long before the government takes action to close it. So if you have the cash and need an investment then it may pay to act soon.

Landlords should not panic following Brexit

Landlords have no reason to panic following Britain’s decision to exit the European Union, that’s according to the National Landlords Association (NLA).

Following a referendum in which 52% of the country voted out – to leave the EU for good – the result has been panic in the financial markets as the FTSE was hit but has since recovered ground, and the pound continues to languish against other currencies, particularly the strong dollar.

Although it will not be clear for some time what the long-term effects of Brexit will have on the domestic property market, the NLA is calling for calm, suggesting the momentous decision may have little impact on the buy-to-let market.

Read more here

How to create a profitable HMO portfolio

Houses of Multiple Occupancy (HMO’s) as a Buy to Let Investment

Buying a property suitable for multiple occupancy or buying and converting a house to multiple occupancy can offer a great way to increase your rental yield and spread the risk across more tenants.

It is most suited to older properties that are generally larger (with larger rooms) and located in major towns and cities. Victorian semis or town houses often work best as they have at least two reception rooms and are spacious though conversion costs are likely to be higher for an HMO than a single household property. HMO’s are also a suitable investment for student letting (Student Accommodation).

This article from Just Landlords offers some useful advice – click here

Need a fixed cost conveyancing quote for your next HMO property? Whether it’s for an investment or you’re simply moving house, use our quick and simple Quote Engine.

Increase in Stamp Duty on second homes makes Landlords look for cheaper properties

Landlords in the UK are looking for cheaper properties in response to the new 3% stamp duty charge on additional homes, according to the latest lettings index to be published.

Average price paid by investors in April fell by 8.3% month on month, from £194,000 to 178,000 and London saw the biggest change in behaviour with landlords buying homes costing 16.4% less than the previous month.

Read the full article here.

Need a fixed cost conveyancing quote for your next property? Whether it’s for an investment or you’re simply moving house, use our quick and simple Quote Engine.

New Build

Average house prices in British seaside towns up over 30% in 10 years

House prices have increased by 32% across British seaside towns over the past decade, amounting to £440 per month, according to the latest research.
The annual Halifax Seaside Town Review revealed average house prices have grown from £166,565 in 2006 to £219,386 in 2016, equivalent to an average increase of £440 per month.