Currently viewing the tag: "Chancellor"
UK Residential Property Prices Continue To Increase

UK Residential Property Prices Continue To Increase

UK Residential Property Prices Up For Seventh Month In A Row

Residential property prices in the UK have continued to increase for a seventh straight month in August, according to the latest house price index released by mortgage lender Halifax.

The growth in property prices suggest that the government initiative designed to kick start the property market is indeed working, to support the demand from willing first-time and next time residential property buyers, although there are fears that the UK could see another property bubble emerging, because property prices are rising so quickly.

Halifax said that residential property prices increased by 0.4% from July 2013 and were 5.4% higher than 2012, providing the UK residential property market with the biggest annual price increase since June 2010.

In July, residential property prices increased 0.9% from June 2013, and were up 4.6% from July 2012.

Continue reading »

 

Top Economist Warns Of Fresh House Price Crash

Top Economist Warns Of Fresh House Price Crash

Disastrous House Price Crash Could Be Caused By
Government’s Funding for Lending Scheme

One of the UK’s leading economists has warned of a potentially disastrous house price crash and points the finger at the Government home buying scheme for being the cause of another unsustainable property bubble.

Chief Economist at the Institute of Directors (IoD), Graeme Leach, said the introduction of the new Help-To-Buy scheme, under which UK taxpayers are underwriting thousands of new mortgages for property purchases, means the world must have gone mad.

Mr Leach said “The Funding for Lending scheme is very dangerous because it will drive up property prices at a time when it seems likely that (property) prices are already over-valued.”

The scheme is one of Chancellor George Osborne’s financial initiatives where the Government will underwrite mortgage loans allowing new and first time borrowers up to 20% of a property’s value as part of their deposit, effectively giving the Government a proportionate stake in the value of the mortgaged property.

Continue reading »

Property industry reaction to 2013 budget

Property industry reaction to 2013 budget

George Osborne’s spring 2013 budget included new measures to help more people purchase their own homes and this news has been generally welcomed by property industry professionals.

The Chancellor of the Exchequer firmly believes that the measures announced in the spring budget will provide a major boost for the UK economy, despite calls for an economic U-turn from the Labour opposition.

Mr Osborne told the press that there were far more difficult decisions still to be made regarding the nation’s spending in order to get the overall deficit down, however, the government are taking measures to help people buy their own home.

The Chancellor announced that the FirstBuy scheme which was aimed at First-Time Buyers (FTB) on an income of up to £60,000 (GBP) per year, is being replaced with a ‘Help to Buy’ equity loan scheme available to all buyers looking to purchase a new build home up to a value of £600,000 (GBP), with a deposit of just 5%.

A new mortgage guarantee scheme was also announced during the spring budget, which extends the previous NewBuy Guarantee initiative to include older residential properties as well as new-build homes, which he hopes will result in a sharp rise in lending to potential homebuyers, thus kick starting an upturn in the UK property market. The new scheme will start in January 2014.

Buy to let mortgages are not going to be included under the new scheme, however it remains unclear if existing property owners will be able to purchase property without selling leaving them with an income producing property asset when they offer their old home for rental.

Continue reading »

Gross mortgage lending declined to an estimated £10.2 Billion (GBP) in April 2012.

Mortgage lending fell by 19% from £12.6 Billion (GBP) in March 2012 but was 2% higher than the total of £10.0 Billion (GBP) in April 2011, according to the Council of Mortgage Lenders.

CML chief economist Bob Pannell comments:“Mortgage lending activity has been relatively buoyant in recent months, with stronger lending for house purchase underpinning the more upbeat lending picture. The underlying picture is likely to be a bit stronger than the April figure suggests, because some first-time buyers are likely to have brought forward their transactions to March 2012 to take advantage of the stamp duty concession that was coming to an end in March 2012. Eurozone developments remain highly uncertain and have the potential to undermine UK economic prospects and conditions in our housing and mortgage markets. The underlying picture is likely to be one of easing momentum in the housing market, but with potential for a sharper downwards correction on bad Eurozone news.”

The Chancellor, George Osborne has used the budget to drop a huge bombshell on the UK mortgage industry.

Buying UK residential properties through a company or offshore trust has been actively promoted by intermediaries, as this helps their clients avoid large stamp duty bills, particularly when using bridging finance or making cash purchases. This practice has been perfectly legal and acceptable…until now!

During yesterday’s budget the chancellor announced a 15% rate of stamp duty applied to residential properties over £2 Million (GBP) bought under a corporate envelope ; a consultation on the introduction of a large annual charge on those £2 Million (GBP) residential properties which are already contained in corporate envelopes; and, to ensure that wealthy non-residents are also caught by these changes, a capital gains tax on residential property held in overseas envelopes.

Mr Osborne confirmed that the government will consult on the details of a general anti-avoidance rule and legislate for it in next year’s Finance Bill. Stating that he found “…tax evasion and aggressive tax avoidance…morally repugnant”.

The chancellor also signalled that the government may even act retrospectively on avoidance measures including the use of companies and offshore trusts to avoid stamp duty.

He said: “A major source of abuse – and one that rouses the anger of many of our citizens – is the way some people avoid the stamp duty that the rest of the population pays, including by using companies to buy expensive residential property. I have given plenty of public warnings that this abuse should stop. Now I’m taking action.”

The chancellor’s move is reported to have come about following a recommendation by Graham Aaronson QC that such a rule would improve the government’s ability to deal with tax avoidance without damaging the competitiveness of the UK as a place to do business.

Mr Osborne added: “I will not hesitate to move swiftly, without notice and retrospectively if inappropriate ways around these new rules are found. People have been warned.”

Director of the Association of Mortgage Intermediaries, Robert Sinclair, said: “I’ve been saying for a long time that those promoting this avoidance will get us into trouble. But most worrying is that this is the first time I’ve ever heard government say that they’ll come and do you for something retrospectively. I think the move from avoidance being acceptable to morally repugnant is probably the single biggest shift in the British tax system I’ve seen in my lifetime. The question will be where we draw the line given that there are schemes that actively promote avoidance such as the ISA.”

Miranda Cass, tax partner at Bristows, said the introduction of a general anti-avoidance rule should be welcomed by all but the most aggressive of tax planners provided that legitimate tax arrangements are not affected. The full implications of the rule have not been analysed yet but any risk that this rule will make transactions more difficult or more costly to plan for or to carry out will be a serious impediment to any growth in the economy. For the Chancellor to be introducing new and complex rules at the same time as drastically cutting the number of staff at HMRC does not make for a happy combination. Advisers are bound to be concerned that for every aggressive tax scheme this rule defeats, it will hinder or prevent two or three perfectly innocent transactions.”

ARLA calls for more investment in UK buy to let

ARLA Calls For More Investment In UK Buy-To-Let Property Rental Market

The Association of Residential Letting Agents, (ARLA), have urged the Chancellor of the Exchequer, George Osborne, to use the forthcoming Budget to encourage more investment into the UK’s Private Rented Sector, (PRS).

ARLA have called on the UK coalition Government to support the observed growth in the UK Buy-To-Let sector and remove many of the prohibitive barriers to further investment.

ARLA’s Budget submission calls for landlords to be treated as running businesses for Capital Gains Tax purposes, for the introduction of roll-over relief for landlords looking to reinvest, and for UK Stamp Duty to be made fairer.

UK landlords currently have to shop around for a wide range of landlord services in order to help them save money and operate as a business. The emergence of Tenant Referencing and Tenant Eviction services and the development of specialist Landlord Insurance products have ensured that there is still money to be made, by UK landlords, from the UK PRS rental market.

ARLA’s Operations Manager Ian Potter, said: “Buy To Let landlords must be treated as the entrepreneurial businesses they have now become. Supporting growth and encouraging greater investment into the private rented sector will help boost our economy and is an open goal for the Chancellor. Demand for private rented housing continues to grow, with 3.4 Million tenants living in the private rented sector – an increase of over 1 Million tenants since 2005. The tax system can be used by the Government to incentivise investment in housing stock in the PRS, and therefore improve the conditions in which those 3.4 Million tenants live. Some landlords face tax bills of up to 28% when selling a property, preventing them from reinvesting in the market.”

Tagged with:
 
Institutional Investment is needed in UK Buy To Let Sector

Institutional Investment is needed in UK Buy To Let Sector

The Council of Mortgage Lenders, (CML), think the coalition Government’s Chancellor of the Exchequer, George Osborne should be doing more to encourage institutional investors to take a stake in Buy To Let property in the upcoming Budget.

The Council of Mortgage Lenders are the trade body for all the UK’s major bank and building society residential mortgage lenders.

The CML claim encouraging pension funds and corporate investors is a neglected policy that could provide the cash for more UK homes that can be made available to rent.

The suggestion is part of a wide-ranging Budget review aimed at influencing the Chancellor to ease the mortgage market. The submission also criticises current housing policies, including:

• Stamp duty holidays for first time buyers, which the CML claims creates a boom and bust market around deadline dates
• Paying housing benefits direct to claimants may damage landlord cash flows and lead to unnecessary mortgage arrears and repossessions
• Making better use of housing stock as, the CML states, most of the homes available over the next 20 years have already been built

The CML has told the Chancellor that given the vulnerabilities and uncertainties, it is important to make sure that all avenues, for strengthening and diversifying funding structures, have been explored.

The CML have also noted that the government continues to explore the obstacles to greater institutional investment in the supply of private rental property, but, strangely, the further scope for promoting domestic institutional investor interest in mortgage assets seems to be a neglected area of policy.

The Budget report also points out that UK banks and building societies rely heavily on raising funds from wholesale markets which are currently challenged by the Eurozone debt problems.

“Funding costs remain higher than a year ago, and the UK remains vulnerable to future eurozone developments. Given that current market conditions are somewhat fragile, it is very important that other government policies do not undermine housing market sentiment more generally. We believe that there are a few areas where policies are not as well aligned as they could be.” says the CML.

The CML’s calls echo the sentiment of many existing UK landlords who have had to search for a variety of additional landlord services such as insurance, tenant referencing and tenant eviction services from private sector specialist suppliers, in order to remain in a profitable situation.

With institutional investment into the UK private rented sector (PRS) specialist products and services for landlords will be enhanced for the corporate market and derivatives would be more affordable and even more readily available.

UK Chancellor of the Exchequer George Osborne has decided not to extend the Stamp Duty holiday for First Time Buyers, (FTB)  provoking fury from critics with accusations of undermining the Government’s attempt to kick start the UK housing market.

The Government decision comes despite massive lobbying from the mortgage and estate agency industries and various organisations, including the Council of Mortgage Lenders, Nationwide, Legal & General.

The Government, however, says the Stamp Duty break has proved to be ineffective and it will end on March 24th 2012 as planned.

The Government has stated that they intend to produce proof of how the Stamp Duty holiday has not worked and will instead concentrate on other measures announced in its new housing strategy, notably its controversial mortgage indemnity scheme on which it has now unveiled a few more details.

The Chancellor revealed that the Government will underwrite the 95% mortgage scheme, which is available only for new-build purchases, by up to £1bn.

The Autumn Statement said: “The Government will take on a contingent liability which will build up in line with purchases under the scheme, to a maximum of £1bn.”

Under the scheme, taxpayers will be responsible for 5.5% of the value of each home purchased. Builders will put 3.5% of the value of each home sold under the scheme into a funding pot, which will be called upon by lenders if the properties are repossessed at a loss.

The initiative aims to help 100,000 households purchase a new-build home with a 5% deposit.

It is unclear how many first-time buyers have succeeded in getting on to the housing ladder because of the current Stamp Duty holiday, although evidence is that they have melted away.

The Royal Institute of Chartered Surveyors (RICS) warned that ending the Stamp Duty holiday could distort the market with a mini boom and bust.

A RICS spokesman said: “By choosing to end the relief in four months rather than immediately, there is a clear risk that there will be a spike followed by a dip in the housing market as buyers rush to take advantage of the relief before March. It was hardly surprising that the Stamp Duty break had failed to help first-time buyers, given the lack of affordable mortgages and homes on the market”.

Tagged with:
 

UK Households will be financially squeezed for the next decade according to a report by the Institute for Fiscal Studies (IFS)

UK households are already suffering one of the worst attacks on their finances since the Second World War and that the impact of the Great Recession is only now being felt.

The report warned householders that they will continue to suffer from the harsh spending cuts introduced by the UK’s Con-Dem Government for at least the next decade.

The IFS, which specialises in the UK’s public finances, said the cuts will result in greater inequality and rising child poverty, with those on lowest incomes to suffer the most. Families with children are being hit harder than others due to welfare changes – such as the freezing of child benefit.

 It highlighted that in the last year, earnings, state benefits and tax credits had all fallen in real terms.

Child poverty is measured by the percentage of children in households where income is less than 60% of the average for the UK. Child poverty fell from 25% in 2000 to 20% a decade later, according to the study.

The survey also points out that families have seen the biggest fall in living standards in 30 years in the last financial year.

Robert Joyce, a research economist at IFS and a contributor to the report, said: “The current economic downturn began more than three years ago, and may seem like old news. “But, as in other developed countries, the most severe consequences of the recession on UK living standards have only just begun to be felt, and will continue to be felt for years to come.”

Not only are the spending cuts having a massive impact on household budgets but many believe they could push the economy back into recession.

 However, Chancellor George Osborne continues to defend the cuts and he has deemed them necessary and fair in order to bring the budget deficit down.

Tagged with:
 

There Will Never Be A Better Time To Invest In Property

MyPropertyPowerTeam.co.uk helps property investors and landlords build their own property power team to enable them to profit from property - Visit our main site now!