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Attracting Investment For Property Oliver du Sautoy, head of research at LSH, believes what we have seen this year will be a tough act to follow, but is optimistic for future growth. “Healthy levels of active demand and an analysis of forthcoming lease events point to another year of above-trend activity and take-up across the region in 2018,” he said. “Investors and developers must therefore take heed of the rapidly changing dynamics within the Northern Powerhouse office markets if we are to continue to support home-grown businesses and attract greater inward investment. “Solid asset management strategies and refurbishment of poorer quality stock will be key to securing the best occupiers and boosting returns in the coming 12-18 months.” There is a lack of supply in the regions – total availability has shrunk by 12% since the start of this year – and this has encouraged “steep increases in rental levels for existing space in some markets”, according to the LSH report. This could result in more opportunities for developers looking to bridge the supply and demand gap, as well as higher yields for investors. There are almost four million British people live abroad according to the latest figures from the Office for National Statistics. Despite choosing to settle in another country, many expatriates wish to retain a link to home in the form of investment property in case they return or even for investment purposes. But getting a mortgage in these circumstances can be more challenging than expected compared to being based in the UK. Tougher identity checks, a comparatively small number of available lenders and restrictions on certain countries can all prove a significant stumbling block for expatriates based overseas. The number of expats looking to buy property in the UK is growing, according to Gerard Ward, of  Premier Expat Mortgages based in Asia, a mortgage broker which works with expats. “We are speaking to a lot of expats at the moment,” he said. “It’s picked up recently from countries like Dubai, Canada and the US. “A lot of expats are paid their salary and aren’t paying as much, if any, tax because of where they live. In places like Dubai your work will often pay for your accommodation so they have a lot of cash in the bank and buying a property in Britain and renting it out is attractive.” There are fewer lenders and you will pay a premium OneRead more →

Housing: Stamp Duty, Supply And More Central to this is housing, which the Government has seen as essential to both its political and policy agenda. While housing has played a key role in the Budget formulation, this has predominantly been focused on the domestic market, looking for new ways in which to boost home ownership, particularly amongst young people, rather than focusing on overseas investors in UK property. The most eye catching announcement was the cut in stamp duty for first time buyers. Philip Hammond said he would abolish stamp duty on homes priced up to GBP300,000. This is very much restricted to first-time owner-occupiers who reside in the UK, which, although seen as a positive move to aid younger people getting on to the first rung on the property ladder, is also seen as a potential catalyst for rises in prices by some analysts. In full, the key announcements by the Chancellor consisted of a GBP44 billion package of measures to deliver 300,000 homes a year by the middle of the next decade – an increase from the 217,350 homes supplied in 2016-2017. The money will be spent on a range of measures including financial guarantees to support private house-building and purpose-built private rental homes, government working with private developers on new towns, and regeneration schemes and loans to support small and medium-sized building companies. WHAT CHANGES WILL THE RECENT BUDGET HAVE ON FOREIGN INVESTMENT? This year, the Budget’s focus was most definitely on the domestic scene, meaning not much has changed for foreign investors. For residential property, investors were actually given a small level of relief – in a single measure. For investors seeking to divest assets, a delay of one year in the plans to make investors pay capital gains tax within 30 days of selling a property were announced, deferring until April 2020. The Government is still relying on private investment to further boost a much-needed supply in housing, so we believe they will still be keen to provide a fairly advantageous regulatory environment. Along with this, the Government has focused more on the buy-to-let market and the Private Rented Sector (PRS) due to the acknowledgement that home ownership is not achievable for many. As a result, there may be some encouragement for investment, if this can significantly contribute to the aim of building at least 300,000 homes a year. As a result, the market is expectedRead more →

Changes to Stamp Duty On December 4th 2014 stamp duty on property purchases was reformed by the Government. At the time the Chancellor George Osborne stated around 98% of purchasers in England and Wales would pay less after stamp duty reform. Changes to stamp duty meant people who buy homes for under £937,000 would pay less in tax when compared to the old system. From April 2016 a 3% Stamp Duty Land Tax surcharge has applied to purchases of buy to let property and second homes. In Scotland a similar LBTT 3% surcharge applies to additional property transactions from April 2016. Old Stamp Duty System With the old system before December 2014, stamp duty was considered to be a “slab tax” where higher rates were incremented and applied to the whole property purchase price. The old system meant there were sudden increases in stamp duty liability as the purchase price rose above the next threshold. This had a negative impact for both purchasers and vendors with costs increasing or values artificially diminishing around each threshold. New Stamp Duty System Since December 2014 the tax system has become “progressive” and rate increases are applied between stamp duty thresholds only.This means stamp duty rate increases are no longer applied to the whole purchase price. Because of this progressive nature, the new system has been compared to income tax. The updated stamp duty thresholds range from £125,000 to £1.5 million. Changes to Stamp Duty in Scotland Following on from changes to Stamp Duty in England Wales and N.Ireland, stamp duty in Scotland was reformed on April 1st 2015. Stamp duty in Scotland has been replaced by Land and Buildings Transaction Tax (LBTT). LBTT in Scotland works in a very similar way to Stamp Duty in the rest of the UK. LBTT is a progressive tax with slightly different thresholds ranging from £145,000 to £750,000. Buy to Let and Second Homes Levels of stamp duty for buy to let property and stamp duty for second homes has now changed. Changes were announced by the chancellor in his 2015 Autumn statement and came into effect from April 2016. The stamp duty changes introduced a significant rate increase for property being purchased in addition to a main residence. From 1st April 2016 a 3% surcharge has been applied to buy to let and second home purchases with a new lower initial threshold of £40,000. Given that the vast majorityRead more →

Consultation On Property Wear And Tear Allowance In the Summer Budget 2015 the Government confirmed its intention to introduce measures to improve how landlord’s businesses are taxed. The new measures which are detailed in the full Consultation Document are designed to provide consistency and fairness in the taxation of rented properties. However, you still have until 9 October to submit your comments and responses to the consultation. An outline of the new measures is given below and we’ve also produced a handy fact sheet which you can print out: The changes The current 10% Wear and Tear Allowance which allows landlords to reduce the tax they pay, regardless of whether they replace the furnishings in their property, will be replaced. From April 2016 landlords will only be allowed to deduct the costs they actually incur for replacing furnishings in their rental properties. Eligibility All landlords will be eligible for the relief respective of whether they let their properties on an unfurnished, part furnished or fully furnished basis. However, Furnished Holiday Lets and commercial premises are excluded. NOTE: The relief will only cover replacing existing furnishings – landlords cannot claim for the initial purchase of furnishings (i.e. when they buy a new property and furnish it for the first time). How it will work Landlords will be able to claim for the capital cost of replacing furniture, furnishings, appliances and kitchenware provided for the tenant’s use; such as beds, wardrobes, tables, sofas, fridges, washing machines, carpets, curtains, cutlery and crockery. However, if the landlord sells the item being replaced, the sale price of that item must be deducted from the purchase price of the replacement and the tax relief can only be claimed on the remainder. Further, landlords cannot claim for ‘improvements’. If the replacement item is an improvement on what was there before (i.e. a washing machine is replaced with a washer-dryer), then only the cost of a like-for-like replacement can be claimed. NOTE: Fixtures integral to the building (i.e. baths, toilets and boilers) that are not normally removed by the owner if the property was sold are not included. The impact Landlords will no longer need to decide whether their property is sufficiently furnished to make a claim as the relief because applies to all rented properties no matter the level of furnishing. With the current 10% allowance, the higher the rent, the larger the tax relief. In some areas of the country, 10%Read more →