Property Gives UK Tax Take A Huge Boost

This article by The Economic Voice on October 22nd, 20113 tells us that Land tax receipts up 30% over the last quarter.

Residential property transactions are fuelling a higher increase in tax revenues for the government, said London Chartered Accountants Blick Rothenberg LLP.

Monthly figures released today by HMRC show that the government’s tax take is up for yet another month and that residential property transactions are showing the largest rate of increase.

Frank Nash, a senior partner with the firm, said: “Stamp Duty is consistently pulling in over £800m a month for the last quarter. This is a watershed figure because it has never gone above this since 2008. This is as a direct result of residential property transactions.”

He added: “There have been over 200,000 residential property transactions alone in the last two months and a million in the last 12 months. There have been half a million transactions since the Governments Help to Buy Scheme (HTB) was put in place in (April). The last quarter’s home transactions are the largest for the last 5 years.”

Frank Nash said that the increase in tax take was being fuelled by an increased demand for property which combined with low interest rates, and on the supply side government incentives through the HTB scheme and de-regulation was boosting the residential property arena.

Frank Nash said: “The Government is lending new buyers a 20 percent deposit. This could fuel growth, inflation and house prices. It needs to be tempered and perhaps be a long-term rather than a short-term scheme. New buyers should have the same opportunities over a longer time scale.”

Nash said that there was was further good news because this probably means that consumer spending will increase (on ancillary housing items), and therefore increase the VAT take.

He added: “This highlights the importance of the property market for the UK economy in terms of its overall health.”


Article Source: http://www.economicvoice.com/property-gives-uk-tax-take-a-huge-boost/

Help to Buy: Let the Property Scramble Begin

This article by Rupert Jones of theguardian on October 5th, 2013 tells us the criticism from experts regarding the second part of the government's help to buy scheme.

A range of government-backed 95% mortgages are set to go on sale next week after ministers fired the starting gun on a new property scramble.

Two partially state-owned banks, Royal Bank of Scotland and the Lloyds Banking Group, will offer the loans initially, and millions of people will potentially be eligible to sign up.

Under the controversial Help to Buy scheme, homebuyers will only need to put down a 5% deposit – and it is open to existing owners as well as first-time buyers. What is more, there are no limits on how much you can earn and it applies to both old and new-build properties costing up to a generous £600,000.

RBS and its NatWest arm seem to think this second part of the Help to Buy scheme, which is being launched three months earlier than planned, has the potential to be the financial equivalent of the Harrods sale. They say customers will be able to visit any of their 2,000 branches or ring up, and add that opening hours will be extended at peak times "to help with customer demand".

Homebuyers were this week awaiting details of the deals – in particular, how attractive the pricing will be – amid speculation that the scheme could push down rates on 95% mortgages from their current levels of between 5% and 6% to perhaps as low as 4.5%, as well as increasing the choice of products available. That could lop almost £100 a month off the typical payments of someone taking out a £160,000 mortgage.

RBS and NatWest say they will offer "a range of competitive 95% mortgages" to first- and next-time buyers. These will initially be available in branches and over the telephone, and later via mortgage brokers. Halifax, part of the Lloyds group, will also be offering deals from launch; these will be available via branches and brokers. Lloyds Bank will participate from January, while other lenders such as Santander and Nationwide have yet to confirm whether they will take part.

While the scheme won't become fully operational until January, people will be able to start applying from next week, and once their mortgage is approved the funds will be available straightaway – they won't have to wait until the new year to complete on their home purchase.

There has been fierce debate about whether the scheme will hand a vital lifeline to homebuyers or simply drive house prices even higher, but what is undeniable is that this is a huge and potentially risky venture for the government. It is partially guaranteeing £130bn of low-deposit mortgages, which ministers have claimed could translate into assistance for well in excess of 500,000 homebuyers over three years.

That is a lot of people potentially being helped but, even so, there are fears demand could massively exceed supply. Santander issued research yesterday claiming 10% of Britons – equivalent to 5.1 million people – believe they are likely to buy a property in the next 12 months. A third of these, 1.7 million, said they planned to use Help to Buy.

In reality, some of these people would be locked out of the scheme because, for example, they are buying a property to rent out, or a second home, both of which are excluded from Help to Buy, or they don't meet the requirements on income and past credit history – but this still suggests that fears of a stampede of applicants may not be misplaced.

Phase two of Help to Buy is about encouraging banks and building societies to offer more mortgages that only require a small deposit (at least 5%) by giving them the opportunity to buy a guarantee on the "top slice" of the home loan – the bit between 80% and 95%. If a borrower gets into financial difficulty and their property is repossessed, the government will cover a chunk of the lender's losses.

Ministers are making available £12bn of guarantees to lenders, but the latter will have to pay a fee for each mortgage underwritten.

The scheme has come in for harsh criticism from some commentators. On Thursday, Howard Archer, chief UK economist at IHS Global Insight, warned: "There is a mounting danger that house prices could really take off over the coming months." He was speaking after figures from Halifax revealed that house prices are rising at their fastest annual pace for more than three years.

• A free Help to Buy show is taking place today (5 October) at the Glow events venue at the Bluewater shopping centre, Kent, between 10am and 4pm. The event is aimed at people in Essex, Kent, Sussex and south London. Go to glowbluewater.co.uk for more.

Article Source: http://www.theguardian.com/money/2013/oct/05/help-to-buy-property-scramble

The Cost of Renting in the UK is Nearly at a Record High

This article by the Landlord Expert on October 4th, 2013 tells us that private rents are just £1 short of record highs as an effect of rising house prices on rental market.

The lettings network LSL Property Services said rents had reached their second highest level since 2008 - largely because of a shortage of property to buy as Government schemes help people onto the ladder.

LSL, which owns the Your Move and Reeds Rains chains, reported that at £743 on average, monthly rents in August were just £1 less than the all-time high recorded in October 2012.

The pace of rent increases stepped up to 0.7% month-on-month in August.

It said rents were 1.3% higher across England and Wales than a year ago - less than half the rate of inflation - but London's rental market was soaring.

At £1,126 typically, rents in the capital have risen at a much faster rate than inflation and are up by 4.8% year-on-year.

Earlier this week, official figures showed that house prices in London were up by nearly 10% year-on-year , indicating the strength of demand.

Wales saw the second biggest annual increase in rents, with a 2.3% uplift taking average rents to £561.

The South East recorded the strongest month-on-month growth, with a 2% rise pushing monthly rents to £762.

By contrast, rents in Yorkshire and the Humber are 1.6% lower than last year, at £536 typically, followed closely by a 1.5% annual fall in the North West, taking average rents to £582.

The North East saw the biggest month-on-month drop in rents, with a 0.8% fall taking average rents to £523.

Across the country, rental inflation had been cooling off for much of this year following the launch of Government schemes to give people with low deposits a chance to buy.

First-time buyer numbers have reached their highest levels in more than five years following the initiatives such as Funding for Lending and Help to Buy, which have widened access to mortgages and allowed some people who were previously trapped in renting to break free.

But David Newnes, director of LSL Property Services, said that weak income growth, which has an impact on households' ability to borrow, and a lack of housing supply meant that the private rental sector was continuing to see strong demand from new tenants.

Mr Newnes said: "Better availability of finance has allowed some households to leave the rental market. And rents certainly felt the short-term impact of that.

"But releasing a blast of pent-up pressure to buy a home is unlikely to change the long-term trend in renting.

"Although Government schemes are helping, buying a first home is still extremely hard on the back of low salary growth."

 Article Source: http://www.landlordexpert.co.uk/index.php/news-centre/6222.html

House Prices Up 6.2% in a Year as Demand Strengthens

This article by Michelle McGagh of citywire money on October 3rd, 2013 reveals the continued and steady rise upwards of house prices according to the figures from Halifax.

More sellers might be putting their houses on the market but the continued disparity between supply and demand means that house prices have increased another 2% in the past three months.

Halifax's house price index shows a 6.2% increase in UK property prices in the past year, pushing the average price of a home to £170,733.

Prices in September were up 0.3% on the previous month, the eight successive monthly price rise, although prices are still 14% off their 2007 peak.

The demand for property has been fuelled by the government’s Funding for Lending scheme and the successful implementation of the first part of the Help to Buy scheme.

Supply has lagged behind, meaning prices have ticked upwards, but it now looks like more homes are coming on to the market. According to the Royal Institution of Chartered Surveyors the number of people putting their property up for sale increased successively in the seven months to August.

The number of new homes being built has also increased and in the first six months of 2013 new building starts were 22% higher than the same period last year.

Martin Ellis, Halifax housing economist, said: ‘House demand has risen more quickly than supply in recent months, putting upward pressure on prices. Demand has increased against a background of low interest rates and higher consumer confidence underpinned by signs that the economy has begun a sustainable recovery.’

He added that ‘supply is beginning to respond to the pick up in demand’ which should help to ‘constrain prices’.

‘The recent strengthening in house prices is increasing the amount of equity that many homeowners have in their home, enabling more to put their property on the market for sale.’

The figures come days after the prime minister announced the government was fast-tracking the second part of its Help to Buy scheme. The first part sees the government offer a five-year interest–free loan up to 20% of a new build property’s price if a buyer has a 5% deposit.

In the second part the government will guarantee 15% of the mortgage taken out on any property up to a total property price of £600,000. Again the buyer must have a 5% deposit.

The second part was not supposed to come into force until January but will now be up and running next week. Critics, including business secretary Vince Cable, have said the mortgage guarantees are not needed and will further fuel house price rises.

Article Source: http://www.citywire.co.uk/money/house-prices-up-6-2-in-a-year-as-demand-strengthens/a707015?ref=citywire-money-latest-news-list

House Prices Rise Again Fuelling Fears of a 'Bubble'

Another house prices increase in addition to low mortgage interest rates could be mean economic crisis for the country according to this article by Eileen Kersey of Digital Journal on September 16th, 2013.

London - When the economic crisis hit in 2008 it had direct links to the housing market. The UK has experienced inflated house prices in the past and the "bubble" subsequently bursting. Could the introduction of a Government scheme to help buy homes be bad news? 

 

People buy homes for many reasons -- to get a step on the housing ladder, investment, to get a family home or as there is little alternative available. 

 

News that house prices in parts of the UK are rapidly increasing, added to low mortgage interest rates, may be a winner for householders but it could be bad economic news for the country. 

 

The UK is suffering a housing shortage. The ill-thought out "bedroom tax" was allegedly created to ease this shortage, but to date has failed. Householders faced with a reduction in benefit or moving to a smaller property faced "Catch 22" -- there were no properties available. 

 

The coalition government's Help To Buy Scheme offers a lifeline to would be homeowners. On the surface it sounds a good scheme but there are some possible pitfalls. One for the British economy is that it could create a "housing bubble" which sooner or later will burst. If that happens any short term monetary gains you may have made will soon be wiped out. 

 

Deputy Prime Minister, and leader of the Liberal Democrat party, Nick Clegg insits that the UK is not facing another "housing bubble". The Lib Dems are holding their annual conference and Monday the Irish Examiner reports: 

 

 Nick Clegg, Britain’s deputy prime minister, has said that the UK is nowhere near a house-price bubble and the Bank of England has tools to prevent it, amid growing concerns that government support for home-buying is stoking another boom. If there’s another bubble, the Bank of England and the government “have means by which we can anticipate that and make sure it doesn’t happen again,” Mr Clegg told the BBC. 

 

 An increase in the value of your home is good news if you are a home-owner. House prices in the UK have stagnated, with some decreasing in value, since 2008. 

 

A false house price increase, stoked by a boom in the housing industry though, is bad news. In the past it meant that banks had expensive mortgages on properties that had reduced in value. 

 

This shortfall hit the banking industry in Spain and that economy has yet to recover.

 

The UK and US can pinpoint there financial woes to the banking sector, and housing industry. 

 

Getting a mortgage in the UK has been difficult since 2008 but this weekend Santander announced that it was offering a raft of new deals to open up the mortgage market. 

 

More good news but what about a possible housing bubble? Monday the Guardian reports: 

 

A leading estate agent has tripled its forecast for house price rises in 2013, stoking fears of a destabilising house price bubble. 

Online estate agent Rightmove has raised its 2013 house price forecast for the third time this year to more than double the rate of inflation. The chain expects the average property price to increase by 6% this year, up from the 4% it predicted just two months ago. At the start of the year it predicted prices would rise by 2%

On Wednesday the Bank of England's financial policy committee will meet to discuss the possibility of a property bubble, and what remedial measures can be taken. 

 

Calls for that committee to cap annual house price growth in the UK at 5% a year illustrate concerns about a housing bubble which could quickly form and rapidly burst. According to the Independent: 

 

 Britain’s leading chartered surveyors have made an unprecedented call for the Bank of England to put a cap on annual house price inflation in order to avoid a “dangerous” debt bubble. 

 

Surely, however, this will hit confidence in the UK housing market and deter those who buy property as an investment? 

 

With a north south divide in the UK house prices are already a hotch-potch across the country.

Read more: http://www.digitaljournal.com/article/358436#ixzz2f7dQ2Rsn

Affordable Homes to Rent – Not Buy – Will Rebalance the Property Market

John Banham of The Independent on 18th August, 2013 stated that affordable homes to rent will help property market back into line.

Headlines about rising house prices may persuade observers that the housing crisis is over, and that the nation can safely return to the behaviour that caused the financial crisis in the first place. This would be a tragic waste of a huge economic opportunity.

The national housing crisis has been a long time in the making: a lack of housing that can be afforded by young working families, while rents soar; the future of farming at risk, because there is nowhere for retiring farmers to live; unsustainable villages becoming the preserve of wealthy retirees, with schools and post offices closed down.

For decades, in contrast to every other developed Western economy, Britain has been underinvesting in new homes. The consequences are all too apparent: two million families on council waiting lists for affordable homes, annual expenditure of over £20bn on housing benefit. The number of new homes built every year needs to treble, to around 300,000. No wonder Shelter could only raise half a cheer for last week's news that housing starts in England rose 7 per cent to 110,000 in the year to June, generating headlines that "Britain is building again".

Half of the new homes should be for rent or shared ownership, built on brownfield land in urban areas and in small developments alongside villages where the new homes house local families, are welcomed by local people, and where the land is invested through a Community Land Trust.

In a report published at the end of last year, the Future Homes Commission showed how the housing crisis could be turned into a massive opportunity for economic growth. Trebling the number of new homes built every year for 20 years would add at least 3 percentage points to annual GDP growth, an economic prize comparable to the impact of shale gas on the North American economy. If half of the new homes are in sustainable communities of rental or shared ownership properties, these would be funded by pension funds and international real estate investors. No additional government funding would be needed.

Despite the scale of the housing crisis and the size of the economic growth opportunity, local authority pension funds' pressing need for better investment returns, and the relaxation of Treasury constraints on these funds (which could free up as much as £30bn for investment in rental housing and infrastructure projects), progress towards the goal of trebling the number of new homes built every year has so far been disappointing. The Government's Help to Buy scheme does nothing to make housing more affordable or for would-be tenants, and a new house-price bubble could form.

Far from being embraced as a massive economic and social opportunity, the housing crisis is deepening; and millions of couples are having to postpone setting up home together. Nationally, the average age of first-timers buying without parental help is 33; in rural areas, where wages are lower and house prices are higher, it takes even longer. Local Enterprise Partnerships (LEPs) are backing affordable housing, and Lord Heseltine ensured that over £5bn of EU growth funding was allocated directly to LEPs, bypassing both Whitehall and local councils. Now there is no planning bureaucracy standing in the way of local communities having the homes they want and at prices they can afford: well-designed and energy-efficient homes can be built for £100,000. LEPs could kickstart the expansion of build-to-let homes and communities.

By separating developments of homes for rent and shared ownership from market housing, both sectors would benefit. Market housing would not be compromised by the need to accommodate a percentage of "affordable" homes (which are anything but). Towns and villages could have the number of new homes they wanted, rather than huge developments which rarely go ahead. Existing social landlords would be well-placed to manage the completed developments. These, in turn, could be sold on to pension funds and other investors, freeing up LEP funds for more local schemes.

The LEPs now have all the tools to address the local housing crisis and generate economic growth of over 3 per cent a year which will be sustainable for a generation, without leading to another house-price bubble. Now it could be harvest time, turning the local housing crisis into the economic and social opportunity for which the countryside has been waiting for decades.

Sir John Banham, chairman of the Future Homes Commission, is a former director general of the CBI
  
Article Source: http://www.independent.co.uk/voices/comment/affordable-homes-to-rent--not-buy--will-rebalance-the-property-market-8772635.html

How to Avoid Being Caught Out if the Property Bubble Bursts

Simon Read suggests ways on how to avoid being caught out if the property bubble bursts as revealed on this August 12, 2013 news by The Independent.

The Bank of England’s base rate has never been lower and the new Governor, Mark Carney, has signalled that rates may not rise for three years.

Meanwhile, competition among mortgage lenders is getting more fierce, leaving average five-year fixed rates at 3.83 per cent, the lowest they’ve been for some time.

It’s no wonder more people are thinking about getting on the property ladder or taking advantage of the attractive headline rates to move home. Especially as the latest survey of estate agents from RICS, published today, shows that home prices grew last month at their fastest rate since the market peak of November 2006. That raises fears that if you don’t take advantage soon, the affordability of your dream home may yet again climb beyond your reach.

And there are many ways that – even if you don’t have enough of a deposit – potential borrowers can climb on to the property-owning bandwagon. But before you leap it’s worth heeding the warnings from some economists that a housing bubble looms. If the bubble bursts, as some predict, that shiny new home could prove a financial drain, especially if you’ve stretched your finances to buy it.

But such uncertainties have been a feature of the mortgage market for much of the past six or seven years. With that in mind, it’s wise to look to buy a home that you may be happy with for some years, rather than a property that you hope to sell at a profit in a year or two. If there is a bubble and consequent price deflation, you’re more likely to end up in negative equity, owing more than you borrowed and stuck with a property you can’t sell.

Given that, there are several ways for the short-of-cash to buy a home, not least through the Government’s Help to Buy scheme. It offers loans of up to 20 per cent of the value of a new-build property in England and will start part-guaranteeing mortgages across the UK from next year.

Article Source: http://www.independent.co.uk/money/spend-save/simon-read-how-to-avoid-being-caught-out-if-the-property-bubble-bursts-8758229.html