Stock of homes on sale halves in 10 years according to NAEA

The supply of available housing on sale has almost halved in the past 10 years according to the National Association of Estate Agents.

The average number of properties available per member branch in December 2015 fell to 37 properties. This was one of the lowest monthly figures for 2015 and almost half the number available in December 2005 when there were an average 72 houses per branch. 

Even as recently as December 2014 there were 45 houses available.

While the number of house hunters registered per branch fell to 374 in December from 403 last month - an expected seasonal trend - the number of house hunters per branch has gradually increased year on year. 

In December 2014, there were 360 potential buyers registered at each branch, up from 302 in December 2005.

“Whilst we expect figures for supply and demand to be seasonally low in December, the year 2015 overall does not paint a positive picture for the housing market. Supply of housing is half of what it was 10 years ago, yet the number of home buyers on the books has been gradually increasing. When there is such a huge and widening gap between supply anddemand, a level playing field seems further out of reach for many would be house buyers” says NAEA managing director Mark Hayward.

He says government efforts to help first time buyers enter the property market via Help to Buy and plans to build new starter homes are yet to take effect. The number of sales to FTBs stands at 24 per cent, a two per cent drop from December 2014. 

Some 44 per cent of NAEA member agents canvassed have reported seeing buyers seeking to beat the April 1 additional homes stamp duty surcharge deadline. 

“The issue of lack of supply needs to be solved, but it isn’t going to be done anytime soon. We are still waiting to see new homes being built; and whilst we wait, house prices continue to rise.  There is some potential light for first time buyers however, once the new tax rate increase in April is in place we may see less investment from buy-to-let or second home investors, which may mean less competition for first time buyers” says Hayward.

Written by Estate Agent Today

10 March – Half Day CPD Legal Updates

RICS Exeter and Stephens Scown invite you to attend this afternoon CPD session which will be commencing with a buffet lunch and followed by speakers from Stephens Scown and from Exeter City Council covering topics including: Construction Disputes, Planning Law, Development/lease issues, the Bus Station Development.

http://www.rics.org/uk/training-events/conferences-seminars/half-day-cpd-legal-updates/exeter/

28 January - Drones & InfraRed Technology

Join RICS Exeter for this foray into the future with speakers from IRT Surveyors talking about drones and infra red technology. Stuart Macrostie and his colleague Stephen Carrington are presenting this interesting and informative presentation covering the use of infra-red for identifying building defects, Quantified energy loss and predictive maintenance and the also covering a whole range of uses of drones.The event includes refreshments and the opportunity to network

http://www.rics.org/uk/training-events/conferences-seminars/flying-saucers--infrared-technology/exeter/

The Buy-To-Let Landlord Loophole

Since George Osborne’s announcement that Stamp Duty is set to be increased for landlords buying second homes, the buy-to-let industry has reeled.

The industry expects many landlords to accelerate their deals to completion before the new tax surcharge goes live in April.

However, more pragmatic investors have scrutinised the legislation and found their silver lining – corporations are exempt from paying extra.

Landlords who are seriously considering further expansions to their property portfolios can look at flipping their properties into a privately owned business, therefore swapping landlord taxes for corporation taxes.

The number of mortgages approved for companies has gone up more than 200pc since the Chancellor’s first wave of tax relief changes in July 2015. This isn’t a coincidence.

The benefits are two-fold. Firstly, you get to avoid the disappointing Stamp Duty surcharge of 3pc on top of your current rate, making purchases cheaper. Secondly, landlords with corporations will be subject to corporation tax, which is set to reduce to 18pc (currently 20pc) by 2020. Meanwhile, landlord taxes will increase to over 100pc of profit for some.

Furthermore, and perhaps more importantly, landlords will get increased security against further legislative interference into the property sector in future budgets. The Chancellor has already made significant changes to property in the past two budgets, there’s no reason to believe he won’t target it again in 2016.

Turning your portfolio into a company may seem a no-brainer, but things aren’t as straightforward as that. Landlords will only be exempt from the surcharge if they have a portfolio of more than 15 properties, therefore incentivising only those who have smaller-scale portfolios.

Also, setting up as a corporation isn’t easy, there is no guarantee that flipping your portfolio into a business will make you significantly more money, especially given the cost of start-up. Moreover, the Chancellor’s recent trend of targeting the sector may result in a focused move to punish property corporations.

Nevertheless, smaller landlords will be enticed – especially if they have the means of going into business with other small landlords. By combining two or three portfolios into one larger one, landlords will mutually benefit from smaller surcharges and also be able to build a foundation for the future – removing themselves from the bracket of ‘small’ landlord which seem to be the main target in the Chancellor’s plans.

The logic behind the move is understandable – get the accidental landlords to sell up, while also giving first-time buyers the initiative to purchase the property; landlords will pay more tax on a property even if they’ve made an identical offer to a non-landlord!

Furthermore, flushing out one section of the landlord demographic will create a more centralised and balanced private rental sector, with substantially fewer players in the buy-to-let game.

The feasibility of buy-to-let was put into question by the Chancellor’s budgets this year, but there is no reason to think that the industry is on its knees. There is plenty of leeway for landlords to adapt their portfolios in the immediate and distant future, plus the long-term benefits of buy-to-let are the same as ever.

To find out more about how you can shift your portfolio to your advantage in the coming months and years, please contact our office on 01392 254488.

Legislation & Buy-to-let Review

So, 2015 is over and if the last year is anything to go by, we can all look forward to a prosperous and eventful 2016.  If you are an Exeter homeowner, you will be pleased to hear that property prices increased by £314.77 per week in 2015*.  I always find that satisfying to hear, knowing that while having a week holiday sitting on a beach or on the moors, my property is busy earning money.  On the flip side however, for the people not yet on the housing ladder, this is making their aspirations of homeownership a distant dream.

For landlords, 2016 is going to see some tough new changes.  We have already seen in 2015 the introduction of new section 21 notices, smoke & carbon monoxide regulations, ‘how to rent’ checklists and the Deregulation Act.  2016 is set to bring the ‘right to rent’ regulations, introduced in the Immigration Act, which will require all tenants to be checked for immigration status and hefty civil fines on landlords for non-compliance, this could even be increased to prison sentences under the Immigration Bill 2015. So called ‘revenge evictions’ are now a thing of the past and landlords will have to ensure they deal with maintenance issues quickly and efficiently if they wish to serve notice.

Currently, a wear and tear allowance is available to landlords who let furnished residential accommodation. The allowance is designed to cover the cost of replacing furniture and furnishings and is available regardless of whether the landlord has actually spent any money on replacements in the tax year.

However, in the summer 2015 Budget the Chancellor announced plans to replace the allowance with a deduction for the actual costs of replacement. The new rules will apply from 1 April 2016 for corporation tax purposes and 6 April 2016 for income tax purposes.

In the Autumn Statement, the Chancellor announced that buy-to-let landlords and people buying second homes will face an additional 3% surcharge on each band of their stamp duty land tax bill, commencing from April 2016. The rate of duty will be as follows: 

Property value	Standard rate(currently)	Buy-to-let/second home rate (from April 2016)
0 -£125,000	0%	3%
£125 – £250,000	2%	5%
£250 – £925,000	5%	8%
£925 – £1.5m	10%	13%
over £1.5m	12%	15%

If you are lucky enough to be in a position to own one or more investment properties, you will have benefitted from the property value increases and rising rents, which should more than cover the expense of the extra due diligence, loss of the wear and tear allowance and extra stamp duty.  

For tenants, it is likely that rents will rise as demand continues to outstrip supply, even with the many properties that are being built at Cranbrook and other new developments.  These rises will ensure that a higher standard of property is available however, as landlords will have to make sure their properties are safe, well maintained and only let to people who are allowed to live there.

Similarly for buyers, it is likely that prices will continue to rise throughout the year.  Like I mentioned in last months’ column, this is good if you are downsizing and maybe even if you are upsizing in certain circumstances, however first time buyers will need to save longer to build the required deposit and fees.

The Help to Buy ISA has been introduced by the government to help first time buyers put money aside for that all important first property purchase. They can save up to £200 a month, which the government will then top up by 25%, up to a maximum of £3,000. For couples, this could mean a considerable £6000 towards their first home together.  

Well, that’s a bit of a mixed bag, but in general I believe most of these points will be good for the property market and will raise the quality of accommodation.  The property market continues to throw curve balls so watch this space for what’s to come in 2016!

  

*Data taken from Zoopla on 09/12/2015

Winter Property Marketing

This time of year I get no end of owners telling me that they are waiting until the New Year to put their property on the market.  This may sound familiar and could work very well for you, however potentially you could miss out on over 60,000* property searches every week and that is just from one website!  Looking on the same website from which the above figure was taken, at the time of writing, in the last 7 days there have been 87 properties listed in Exeter, 34 of these were price reductions and 53 new to the market.  I know when I have looked myself for new property to buy  I have usually already trawled through all the properties on the market so just want to see the newest ones as these are the prime targets for me  to secure a good quality property. 

When it comes to marketing property, there are usually considerably fewer properties coming to the market at this time of year, so the chances of your property being seen are higher.  I find winter photographs taken in good weather with blue skies can help to enhance some of the best features.  Although gardens may not be at their prime, internal photographs of open fires and warm surroundings could be the catch for some eager buyers.  No one particularly likes traipsing around doing viewings in the rain so it is important to make the property as warm and inviting as possible.  Call me Scrooge but Christmas will eventually come and go very quickly so looking at it as a business transaction, I would personally not postpone marketing until after it, but of course everyone has their own views, including my wife.

If you would prefer to wait to market your property until after the New Year, it’s a good idea to have the photographs and details prepared beforehand so it can be immediately put onto the market when the time is right.

Due to the large supply and demand issue we are facing in the area, prices are set to go one way.  While this may be good news if you are thinking of waiting to sell and then downsizing when you do move; if you are looking to upsize or buy your first property, time is of the essence.  If your property increases in value by 1%, excellent, however if the more expensive property you want to buy also increases by 1%, that gap is getting larger and it may just be the difference between being affordable or out of reach. 

To try to reduce this effect, if you are planning to stay in the property over the winter and then sell, use these few months to carry out all those little jobs that you have been meaning to do.  I have inset halogen spotlights in my bathroom for example and although they look nice, they do tend to blow fairly frequently so I currently have two that are out.  This doesn’t particularly bother me, however if I was trying to sell my property and someone saw this, they may think there is an issue with the lighting system or have concerns about what else may not be working in the property.  Perhaps it would be worth getting a friend to have a look around the house and for them to suggest touch-ups?

I hope you all have a lovely Christmas & New Year and if you would like more inspiration or ideas on how to make the most of your property prior to selling or letting, please do call me on 01392 254488 (yes I am in the office between Christmas & New Year), Jon.

*Number of searches carried out on Rightmove in Exeter for week ending 09/11/2015

Government confirms Wear & Tear change after 170 consultation responses

HM Revenue and Customs has published the responses it has received to its 12 week consultation on changing the Wear and Tear Allowance for buy to let landlords - only 170 responses were received, 137 of those from individuals.

The government has formally said that, in the light of the consultation results, it is going ahead with replacing the current administration of the allowance with a system whereby only actual expenditure will be reimbursed.

The official HMRC summary of the responses admits that “many respondents expressed support for maintaining a Wear and Tear Allowance, principally because they saw it as simple” but that “a significant number of stakeholders agreed with the Government that the Wear and Tear Allowance was not fair, both as it only applies to landlords offully furnished properties and because itprovides relief where no expenses have been incurred.”

In the light of the consultations, HMRC says the government is keen on “”minimising complexity” in the way the allowance is administered in future. 

To that end, the HMRC summary says the government has ruled out extending the scope of the allowance, and has decided against any transitional arrangements. However, in future the allowance will “include the cost of disposing of old assets”.

The government is now publishing draft legislation for technical consultation on how the allowance will in future be implemented. There are now eight weeks of consultation on this draft legislation. 

Details of the responses and the further consultation are here.

Article courtesy of Letting Agent Today