London Property Market Goes from Strength to Strength

This article by David Shuker of Prudential on October 23th, 2013 shows figures that property market in London is riding in the crest of a wave at the moment.

The London property market is currently riding the crest of a wave, with prices having risen dramatically in some boroughs over the last few weeks.

In Kensington and Chelsea and Westminster, for instance, asking prices have climbed by 12% in just one month.

What's more, prices in these boroughs have jumped by as much as 30% over the past year.

Miles Shipside of Rightmove remarked: "Some agents currently report a buying frenzy in parts of prime inner London, with available stock so low that their shelves are now bare.

"Unsurprisingly, many of this month's best performers are boroughs in inner London."

Earlier this month, the EY Item Club, one of the country's leading economic forecasters, said that there is minimal risk of another bubble developing in the UK housing market.

The body speculated that government schemes would lead to a 3.5% boost in houses prices this year and 6.6% in 2014.

Article Source: http://www.pru.co.uk/guides_tools/articles/801652378-London-property-/

UK Taxman Launches New Crackdown on Residential Landlord Payments

This article by the Property Wire on September 25th, 2013 reveals how private residential landlords are being advised to put their house in order as the UK's taxman has announced a crackdown on unpaid taxes.

It is estimated that around £500 million is owed by landlords in unpaid tax and HMRC has launched a campaign to target buy to let, student and holiday let landlords who it believes are underpaying or deliberately not declaring rental income.

Residential landlords can expect a knock on the door during the Let Property Campaign which builds on previous initiatives aimed at plumbers and electricians, building contractors, takeaway restaurants, motor traders and many other sectors that have collectively seen HMRC collect over £800 million in unpaid tax.

The so called ‘amnesty’ will last 18 months and failure to come forward could result in criminal proceedings. ‘All rent from letting out a residential property or holiday home has to be declared for income tax purposes,’ said Marian Wilson, head of HMRC Campaigns.

‘We appreciate some people will have made honest mistakes, and some may not be fully aware that the rent from a property is taxable, and that is why it always makes sense to talk to us so we can help,’ she explained.

‘It is always cheaper to come forward voluntarily and pay the tax you owe, rather than wait for HMRC to come calling. Telling HMRC about your tax liabilities is simple and straightforward, and help, advice and support are available. The message for all landlords owing tax is simple; it is better to come to us before we come to you,’ she added.

Stephen Barratt, private client tax director at accountants James Cowper said landlords should not be wary and take it as an opportunity to put their tax affairs in order.

‘This campaign is designed to give residential landlords the opportunity to come forward and disclose any unpaid or under paid tax.  This is a window of opportunity to get tax affairs in order before HMRC comes knocking,’ he explained.

He pointed out that in targeting residential landlords, HMRC recognises that there will be instances where individuals have either deliberately not declared rental income on let properties or made an honest mistake. This distinction is important when looking at what penalty might be imposed.

‘HMRC is using increasingly sophisticated software to identify those who are not paying sufficient tax and the chances of going undetected are therefore diminishing. This campaign offers landlords the opportunity to come forward voluntarily and pay any unpaid tax, interest and penalties at a preferential rate,’ said Barratt.

‘Landlords who continue to close the curtains and hide behind the sofa can expect HMRC to find them and enforce much stiffer penalties or even criminal prosecution,’ he added.

The advice from the firm for residential landlords who believe that they may have an outstanding tax liability is not to approach HMRC directly without first speaking with an accountant or tax adviser as HMRC is an increasingly tough negotiator and without detailed knowledge of the tax system larger tax bills and penalties than necessary might be charged.

It also says landlords should not ignore this clampdown as it is possible that HMRC is already aware of landlords’ financial details.  Also, if HMRC make the first move because no voluntary disclosure has been made, penalties can be expected to be more severe.

Article Source: http://www.propertywire.com/news/europe/uk-landlords-tax-crackdown-201309258276.html

Student Flatshare Rents 'up 8.5%'

According to a study, rents are higher in a third of university towns than students are willing to pay as revealed in this recent article by Express & Star on September 5th, 2013.

Research reveals that the cost of a room in a student flatshare has soared by 8.5% in the past year, to an average of £357 per month.

The research based an analysis of rents in 25 university towns and cities, and a survey of students, found that unsurprisingly, London is the most expensive place, with average monthly rents of £567, followed by Cambridge (£450) and Oxford (£398).

At the other end of the scale, Cardiff and Swansea are the cheapest, with landlords in these places asking for £255 and £260 a month respectively.

The research, conducted by flatsharing website easyroommate.co.uk, found that in eight of the areas examined, rents were higher than the maximum amount students were willing to pay.

The biggest discrepancy was in Exeter, where the average monthly student flatshare rent was £385, but students said they were only willing to pay out a maximum of £300.

Other places where rent exceeded expectations were Bournemouth, Hull, Leeds, Leicester, London, Manchester and Plymouth.

More than half (54%) of the 1,100 students surveyed said they had seen their rent rise in the last 12 months, the research found.

It claimed that the rate of growth in the cost of rents had been fuelled by higher numbers of people going to university.

Increasing rents had also forced students to change their lifestyle and accommodation, the study found.

Over a fifth of those questioned said they now shared a property with more people than last year to reduce their costs, while more than a quarter (28%) said they had less money to spend on their social life.

Around one in eight (12%) said they were able to save less money for after they graduate, while 7% had had to cut back spending on books and study materials.

Rishi Patel, manager of easyroommate.co.uk, said: "Student rents are once again on the march as student numbers begin to recover following the increase in tuition fees.

"Rents for student flatshares are now at their highest level in five years which is increasing the financial pressure being felt by many students across the country who also have to deal with higher fees and more expensive day-to-day living costs."

The survey questioned 1,122 students between August 16 and 27.

Article Source: http://www.expressandstar.com/business/uk-money/2013/09/04/student-flatshare-rents-up-8-5/

Is Shared Ownership a Real Housing Solution?

With the ongoing nation's housing crisis it has been carried out that shared ownership plan is the solution according to this article on August 31st, 2013 by Patrick Collinson of TheGuardian.

A Shelter report has concluded that a robust and organised shared ownership scheme is a key part of solving the nation's housing crisis.

The shared ownership flat in London's Docklands seemed like salvation for Mark and his partner, who had spent years trying to find a home in striking distance of where they work in the capital. It was pricey, at £437,000, so they could only afford a 25% share, but with the rent set at a reasonable level it was just about affordable.

Yet just a few months later it turned into a nightmare for the first-time buyers, with the service charge hiked up by 73% to an unmanageable £380 a month, or £4,560 a year.

The service charge, plus the mortgage payment and rent, make the property no longer viable for Mark who feels conned by the housing association that sold the flat. At the time of the purchase, the association provided him with an "estimate" of the service charge, even though, he claims, it later admitted it knew this was not an accurate reflection of the costs, and that it would be raised in a matter of weeks.

If the true charge had been disclosed Mark would not have proceeded with the purchase, and in any case would have failed the affordability test.

Mark's tale is just one among many about this hybrid form of property buying for the desperate. One former head of the National Association of Estate Agents likened shared ownership to "sending lambs to the slaughter".

The concept of "staircasing", where a young buyer takes on a 25% share then buys further portions on the way to full ownership, is largely illusory.

A Cambridge University report found that of the estimated 145,000 shared ownership properties already sold in England, only 27,908 have been staircased up to 100% ownership since 2001.

Many shared ownership apartments are overpriced new-builds flogged by housing associations using dubious techniques whereby the buyer is almost guaranteed instant negative equity. So-called "affordable" homes sell for as much as £640,000 (a two-bed in Tower Hamlets, east London) with combined monthly costs adding up to as much as £2,000. To qualify buyers need incomes of up to £80,000 a year.

Legal fees to staircase can be high, service charges are steep and selling up is difficult when you are restricted to just a small pool of potential buyers. Much of the public subsidy that goes into shared ownership ends up in the pockets of developers and landowners, which are able to charge an inflated price.

Yet housing charity Shelter, after a long investigation into the property market focusing on the 1.8 million low-to middle-income "forgotten families" trapped in renting this week concluded that the solution to the UK's housing problem is … shared ownership.

To be fair to Shelter, its inquiry makes no bones about the current shoddy state of the shared ownership market. It has developed in a piecemeal way, with multiple schemes launched by successive governments, none having a material impact on the market.

Shelter's vision is for a major, mainstream shared ownership market supported by the government to the tune of £12bn in order to provide 600,000 decent homes for priced-out families throughout their lives.

Shelter reckons the minimum share of ownership should be as low as 12%. That effectively turns the purchase into a controlled rent home from a social landlord with a bit chipped in by the "buyer". But maybe that is no bad thing. The main attraction of shared ownership is that unlike the private rented sector it gives full security to the occupiers, as they can't be evicted with just a couple of months' notice.

Shelter acknowledges that shared ownership is not the entire answer – we need to address the chronic undersupply of new homes in other ways as well. The government's Help to Buy scheme won't help, either. Shelter estimates that when the second part of the scheme goes live in 2014, three in four families will still be unable to raise enough money to buy an average three-bedroom home in their area.

It is good that Shelter has put shared ownership under the spotlight, as it is a sector that urgently needs reform. But it's sad that the best we can offer today's younger generations is a quarter share of what the baby boomers saw as their birthright.

Article Source: http://www.theguardian.com/money/blog/2013/aug/31/shared-ownership-housing-solution

Private Rents Edge Up Slightly

This August 16, 2013 article by Express & Star reveals that private rents has only lifted a slight pace.

Private rents have edged up by just £1 on average over the last couple of months as more people find it easier to get on the property ladder, according to a major lettings network.

Rents saw a small 0.2% increase in July to reach £738 a month typically, following a flat month in June, according to LSL Property Services, which owns chains Your Move and Reeds Rains.

The findings mean that rents across England and Wales have risen by just £1 typically since May, LSL said.

Its report comes in the same week that the Council of Mortgage Lenders (CML) said that first-time buyer numbers have soared to their highest levels since 2007.

A range of Government schemes have made it easier for people with smaller deposits who may have found themselves previously "trapped" in the rental sector to get access to a mortgage.

London is the only area where rents have lifted at a faster pace than inflation over the last 12 months, with an annual increase of 5.7%. Rents in London rose by 0.3% month-on-month to reach a new high for the study of £1,118 typically.

Wales and the South East saw the strongest month-on-month increases in rents, both recording rises of 0.8%. By contrast, rents in the South West fell by 1.1% and the North East saw rents drop by 0.8% on a monthly basis.

Across England and Wales, rents are around 1.8% higher than they were a year ago, which is well below consumer price index (CPI) rate of inflation of 2.8% in July.

The easing pressure on rents led to an improvement in tenants' finances. Some 8.1% of rent across England and Wales was late or unpaid in July, edging down from 8.3% in June.

LSL said that in the medium-term it still expects rents to at least keep up with wider inflation as demand in the sector is still strong, despite the softening in demand due to people getting on the housing ladder.

David Newnes, director of LSL Property Services, said: "This summer, the house purchase market has jerked into motion. And everyone is feeling the impact of that sudden change of gear.

"Buying a first home might only be possible for those with a big enough deposit and sufficient earnings, but the effects are reverberating through the rental market too."

He added: "It's unlikely July will be typical after the initial change of pace in the purchase market, but a few months of more affordable rents are win-win for everyone."

The findings are based on rents achieved on 19,000 properties.

Article Source: http://www.expressandstar.com/business/uk-money/2013/08/15/private-rents-edge-up-slightly/

First-time Home Buyers Priced Out

This is an interesting report by the CNBC on July 23, 2013.

Home buyers face competition as investors want to rent the homes out, with CNBC's Diana Olick; Mike Aubrey, HGTV host of "Power Broker"; and Jared Jones, Horizon Realty Group. "In the next year, buyers may get a baton pass from investors," says Jones.'

To watch the video, click here.