Category: News Blogs

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How Mortgages Work in the United Kingdom

mortgage

Navigating the property market can feel overwhelming, but with the right strategy, it’s possible to make confident decisions. I have a lot of expertise in this area, having worked in property for so long, and I’m always looking to share my knowledge. Today, let’s discuss how mortgages work in the UK, an essential subject for anyone thinking about buying a home.

When you’re searching for homes in the UK, understanding mortgages is fundamental. A mortgage is essentially a loan taken out to buy property, which you then repay over a set period, typically 25 to 30 years, with interest. The property itself serves as security for the loan. If you fail to make repayments, the lender could repossess your home.

The first step in securing a mortgage is often getting a ‘mortgage in principle’ (MIP) or ‘agreement in principle’ (AIP). This is an estimate from a lender calculating how much they might lend you, based on a brief assessment of your finances. It’s not a formal offer, but it shows sellers and estate agents that you’re a serious buyer. When applying for an MIP, lenders will look at several factors, including your income, outgoings, credit history, and the size of your deposit.

Speaking of deposits, this is the amount of money you put down upfront towards the purchase of a property. The larger your deposit, the less you’ll need to borrow, which can lead to lower interest rates and smaller monthly repayments. Typically, deposits range from 5% to 20% or more of the property’s purchase price. For instance, if you’re buying a £200,000 home with a 10% deposit, you’ll need £20,000 upfront, and your mortgage would be £180,000.

There are various types of mortgages available in the UK, and understanding the differences is key to choosing the right one for your circumstances. The two most common types are:

  • Repayment Mortgages: With a repayment mortgage, your monthly payments consist of both interest and a portion of the capital borrowed. Over the mortgage term, as long as you make all your payments, you are guaranteed to have paid off the entire loan by the end. This provides certainty and gradually builds your equity in the property.
  • Interest-Only Mortgages: As the name suggests, with an interest-only mortgage, your monthly payments only cover the interest on the loan. The original capital amount remains outstanding, and you will need to pay this back at the end of the mortgage term through a separate repayment vehicle, such as an investment or sale of another asset. These are less common for residential properties now and are often used by landlords or those with specific financial strategies.

Beyond these fundamental types, you may also encounter different interest rate structures like these:

  • Fixed-Rate Mortgages: The interest rate on your mortgage remains the same for a set period, usually 2, 3, 5 or 10 years. This offers stability and predictability in your monthly repayments, protecting you from interest rate fluctuations during the fixed term. However, if interest rates fall, you won’t benefit from the decrease.
  • Variable-Rate Mortgages: The interest rate can go up or down, typically tracking the Bank of England base rate. This means your monthly payments can change. While you might benefit from lower payments if interest rates fall, you also risk higher payments if they rise. Within variable rates, you might find:
    • Tracker Mortgages: These directly track a specific interest rate, usually the Bank of England base rate, plus a set percentage.
    • Standard Variable Rate (SVR): This is the default rate your mortgage will revert to after a fixed or tracker deal ends. It’s set by your lender and can change at their discretion. SVRs are often higher than initial deal rates.

When applying for a mortgage, lenders conduct a thorough affordability assessment. They want to ensure you can comfortably afford your repayments, not just now but also if interest rates were to rise. They’ll scrutinise your income, outgoings (including existing debts, living costs, and childcare), and your credit score. A strong credit history, demonstrating responsible borrowing and repayment, is crucial.

The mortgage application process can involve several stages: gathering documents like payslips, bank statements and utility bills; valuation of the property to ensure it’s worth the amount you’re borrowing; and legal work carried out by solicitors. It’s a significant financial commitment, so taking your time, researching thoroughly, and seeking professional advice is paramount.

If you’d like to know more, let’s connect. I’d be happy to explore how I can help you with your property journey. Whether you’re considering a rental home search or need expert guidance from estate search agents to find your next property, feel free to send me a message. I’m always open to sharing my expertise.

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How to find the Best Rental Deals in London

How to find the Best Rental Deals in London

Finding a place to rent in London is not easy. We’ve been helping people navigate this market for years now, so we’ve seen the good, the bad and the downright ugly. So, if you’re looking for houses for rent in London, England, this is a bit of what we’ve learned about the process

First off, it’s worth remembering that a good deal is always relative, especially when you factor in the London price surge. What might seem pricey up in the north of England could be a steal inside the M25. It’s all about location, size and what you’re willing to compromise on. But don’t despair: there are ways to find a home without breaking the bank.

Timing is (Almost) Everything 

Just like when you’re scoring tickets to a West End show, timing is crucial. The London rental market has its own rhythm. Generally, things get a bit quieter after the summer rush. If you can hold out until autumn or winter, you might find landlords are a tad more open to negotiation. I’ve seen people get a bit knocked off a rental’s asking price simply because demand had dipped once August was over.

Location, Location, Location (But Be Flexible)

We all have our dream postcodes, but in London it helps to be flexible. Zones 1 and 2 are usually the most expensive places to live, so consider venturing out a bit and it could help you save. Areas like Leyton, Walthamstow and Croydon have become increasingly popular in recent years, with improving transport links and more affordable rents than in the city centre. I’ve seen some fantastic apartments for rent in these areas, and they offer a great balance of city life without the hefty price tag.

Agent Advice: Use Them, But Be Savvy

Letting agents are a necessary part of the renting process, but remember they work for the landlord, not you. Be clear about your budget and what you’re looking for. Don’t be afraid to ask questions and negotiate. And if you get a bad vibe from an agent, trust your gut. There are plenty of good ones out there. But plenty of bad ones too.

Be Prepared to Pounce

When you find a place you like, be ready to move quickly. Have all your documents – proof of income, references, deposit – ready to go so you’re not wasting time when you find a place you like. Landlords and agents want tenants who are organised and reliable. I’ve seen lots of people lose out on great places because they weren’t prepared.

My Personal Tips:

  • Don’t be afraid to negotiate. It doesn’t always work, but it’s worth a try, especially if a property has been on the market for a while.
  • Check the transport links yourself. Don’t just rely on what the agent tells you. Have a look at the bus routes, the nearest tube station and how long it actually takes to get where you need to go.
  • Read the small print. Make sure you understand your tenancy agreement. What are your responsibilities? What are the landlord’s?
  • Factor in extra costs. It’s not just the rent you need to think about. There’s council tax, utility bills and sometimes agency fees.

Finding a place to rent in London can be a challenge, but it’s not impossible. Do your research, be prepared and don’t give up hope. And remember, a good agent can make all the difference. If you need help, we at Homesearch Properties are here to help make your rental home search as stress-free as possible. Let us know if you want to chat. 

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How Much Does It Cost to Buy a House in London, England?

How Much Does It Cost to Buy a House-in London England

London is one of the most iconic and sought-after cities in the world, known for its rich history, vibrant culture, and endless opportunities. But when it comes to buying a home in this bustling metropolis, many prospective buyers are often left wondering, “How much does it actually cost to own a property here?” In this guide, we’ll explore the various aspects of purchasing a house in London, what you can expect to pay, and provide essential tips for those searching for homes. We’ll also take a closer look at the diverse areas of London and the range of prices you might encounter when looking at houses for sale in London.

The London Property Market: An Overview

London’s property market is known for its diversity, with prices ranging significantly depending on location, property type, and size. As of 2024, the average price of a house in London is around £525,000, but this figure can vary widely. While some areas of London see property prices well below the city average, others, especially in Central London, can command prices well into the millions.

Factors Affecting House Prices in London

  1. Location: One of the biggest influences on property prices in London is the location. Central areas like Kensington, Chelsea, and Westminster are notoriously expensive, with average house prices ranging from £2 million to £5 million. On the other hand, outer zones like Barking, Croydon, and Bromley are more affordable, with average prices ranging from £350,000 to £600,000. Proximity to amenities, schools, parks, and transport links also affects the value of properties significantly.
  2. Property Type: Whether you are looking at terraced houses, semi-detached homes, or detached properties, the type of house you choose will also influence the cost. Flats are more common in central areas and are typically less expensive than houses. However, larger family homes, such as detached or semi-detached houses, can be found in suburban areas or on the outskirts of the city, where the cost per square foot is lower.
  3. Size and Condition: The size of the property and its condition will greatly impact the price. Larger homes with more bedrooms, gardens, and other amenities will be priced higher than smaller, less-equipped properties. Newly renovated or modern homes are generally more expensive than older properties that might need work.
  4. Market Demand: The London property market is competitive, and this demand drives up prices. Areas that are popular with professionals, families, or international buyers often see higher prices due to increased competition. For example, prime locations such as Mayfair and Knightsbridge see consistent demand, keeping prices high.
  5. Economic Factors: Economic conditions, including interest rates and housing policies, also affect property prices. Periods of low interest rates often see a surge in buying activity, driving up property prices due to increased affordability of mortgages.

Average House Prices in London by Area

Area Average House Price (2024)
Central London (e.g., Kensington, Chelsea) £2,000,000 – £5,000,000
North London (e.g., Camden, Islington) £750,000 – £1,500,000
East London (e.g., Stratford, Hackney) £500,000 – £900,000
South London (e.g., Clapham, Wimbledon) £650,000 – £1,200,000
West London (e.g., Hammersmith, Ealing) £800,000 – £1,800,000
Outer Zones (e.g., Croydon, Bromley) £350,000 – £600,000

These average prices give a snapshot of what you might expect when searching for homes in different parts of London. Let’s dive into some of these areas to provide a clearer understanding of the property landscape.

Popular Areas to Buy a House in London

1. Central London

Buying a property in Central London means being at the heart of the action. This area is characterized by luxury apartments, historic townhouses, and stunning penthouses. However, these properties come at a premium price.

  • Kensington & Chelsea: Known for its luxurious homes, high-end shopping, and proximity to some of London’s best schools. Average house prices here are among the highest in the city, ranging from £2 million to £5 million.
  • Mayfair: Another exclusive neighborhood, home to embassies, upscale hotels, and luxury boutiques. Properties here can easily surpass £5 million, especially for penthouses or large townhouses.

2. North London

North London offers a mix of vibrant culture and residential areas, with neighborhoods that are ideal for families, professionals, and artists alike.

  • Camden: Famous for its markets and music scene, Camden offers a mix of period properties and modern flats. Average house prices are around £800,000.
  • Islington: A trendy area with a mix of Georgian townhouses, Victorian terraces, and modern apartments. Homes here can range from £750,000 to £1.5 million.

3. East London

Known for its creative vibe and rapid development, East London has become a hotspot for young professionals and families.

  • Shoreditch: Trendy, artsy, and filled with life, Shoreditch has seen significant growth in the last decade. Expect to pay between £600,000 and £1 million for a home here.
  • Stratford: Known for its regeneration following the 2012 Olympics, Stratford offers more affordable housing options, with prices ranging from £450,000 to £800,000.

4. South London

South London is known for its parks, community vibe, and a good balance of city life with suburban peace.

  • Clapham: Popular with young professionals and families, offering good schools, parks, and a vibrant nightlife. Average prices are around £700,000 to £1.2 million.
  • Wimbledon: Famous for the annual tennis tournament, Wimbledon is a peaceful, green suburb with excellent schools. Expect to pay between £900,000 and £1.5 million.

5. West London

West London offers a range of properties, from elegant townhouses to more affordable options in suburban areas.

  • Hammersmith: Well-connected with a mix of cultural attractions and residential areas. Average house prices range from £800,000 to £1.5 million.
  • Ealing: Known for its green spaces and Victorian homes, Ealing is more affordable than central West London, with prices around £600,000 to £1 million.

Additional Costs When Buying a House in London

  1. Stamp Duty: A significant cost to consider is stamp duty, a tax that is calculated based on the property price. Rates vary but can add up to tens of thousands of pounds, especially for properties over £1 million.
  2. Legal Fees: Conveyancing fees are typically between £1,000 and £3,000, depending on the complexity of the purchase.
  3. Surveys and Inspections: These are crucial to ensure the property is in good condition, with costs ranging from £300 to £1,500.
  4. Mortgage Fees: Additional costs may include arrangement fees for mortgages, which can be around £1,000.

Tips for Searching for Homes in London

  1. Determine Your Budget: Before you start your search, set a realistic budget. Consider not just the price of the house but also the additional costs involved.
  2. Choose the Right Location: Think about your priorities—proximity to work, schools, parks, or nightlife. London is vast, and each area offers something different.
  3. Use Reliable Platforms: When searching for homes, ensure you use reputable platforms that list verified properties. This will save time and ensure you are viewing genuine listings.
  4. Visit the Neighborhood: Spend time in potential neighborhoods to get a feel for the area. Check local amenities, transport options, and general vibe.
  5. Consider Professional Help: Buying a home is a big investment, and professional estate agents can help you navigate the market, especially if you are new to the city.

How to Find the Best Houses for Sale in London

When looking for houses for sale in London, it’s essential to work with trusted estate agents who understand the local market and can provide tailored advice. Online property platforms are a good starting point, but connecting with professionals can provide exclusive insights, off-market properties, and smoother negotiations. A company like Homesearch Properties can offer a personalized service, ensuring you find the perfect home based on your needs and budget.

Ready to find your dream home in London? Let Homesearch Properties help you navigate the exciting yet complex world of houses for sale in London. Our team of dedicated experts is here to assist you every step of the way, from identifying the perfect neighborhood to securing the best deal.

Whether you’re a first-time buyer or looking to upgrade, we make searching for homes easier and more efficient. Contact us today to get started on your journey to owning a home in one of the world’s greatest cities!

Visit our website at Homesearch Properties or call us at [Phone Number] to explore our listings and find your perfect home in London!

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The Right Way to Choose Property for Sale: A Complete Guide to Buying Houses for Sale in London

London is a city that blends rich history, vibrant culture, and an ever-evolving property market. Whether you’re a first-time buyer or an experienced investor, the process of buying a house in London requires careful planning and consideration. In this guide, we will walk you through every step, offering insights to help you make informed decisions when searching for houses for sale in London.

Understanding the London Property Market

London’s property market is one of the most dynamic in the world. With a diverse range of homes, from period properties to sleek new builds, buyers have plenty of options. However, this diversity also brings challenges: fierce competition, varied pricing, and fluctuating demand.

Why Buy Property in London?

  • Cultural Diversity: London is home to people from all walks of life, making it an exciting place to live.
  • Strong Investment Potential: The city consistently ranks as one of the most desirable global destinations for property investment.
  • Excellent Amenities: With world-class schools, healthcare, and entertainment options, London has something for everyone.

Step 1: Define Your Budget

Before starting your search, establish a clear budget. Buying a house in London often requires a significant financial outlay, so knowing your limits will help you narrow your options.

Costs to Consider:

  • Purchase Price: Property prices in London vary significantly by borough. Prime central areas like Kensington and Chelsea are more expensive, while outer boroughs like Croydon offer affordability.
  • Stamp Duty: A tax paid on property purchases in England. Check current rates to estimate your costs.
  • Additional Costs: Include solicitor fees, surveyor charges, and potential renovation expenses.

Step 2: Choose the Right Location

Location is everything when it comes to property. London is a sprawling city with unique neighbourhoods, each offering a different lifestyle and price point.

Popular Areas for New Homes in London

  • Canary Wharf: Known for modern developments and proximity to financial hubs.
  • Clapham: Perfect for families, offering parks and excellent schools.
  • Stratford: A rising star with a mix of luxury and affordable housing, boosted by Olympic legacy projects.
  • Wembley: Rapid regeneration has made this area a hotspot for buying houses.

When choosing a location, consider transport links, schools, nearby amenities, and future development plans.

Step 3: Decide Between New Homes in London or Period Properties

London offers a variety of housing styles. Your choice will depend on personal preferences, budget, and intended use.

Benefits of New Homes in London

  • Modern Amenities: Many new builds include features like energy-efficient designs and smart home technology.
  • Low Maintenance: New homes typically come with guarantees, reducing the likelihood of major repairs.
  • Stamp Duty Discounts: Certain new builds may qualify for government schemes or tax incentives.

Advantages of Period Properties

  • Character and Charm: Victorian and Georgian homes often have distinctive architectural features.
  • Established Neighbourhoods: Period properties are often located in mature areas with strong community ties.

Step 4: Secure Financing

If you’re planning to buy a house in London, you’ll likely need a mortgage. Securing a competitive rate is essential for affordability.

Key Considerations:

  • Deposit Requirements: Typically, a deposit of 10-20% of the property’s value is needed.
  • Mortgage Broker: A broker can help you find the best deals tailored to your needs.
  • Government Schemes: First-time buyers can explore options like Help to Buy or shared ownership schemes.

Step 5: Find the Right Property

Once your budget and financing are in place, it’s time to start searching.

Tools for Finding Houses for Sale in London

  • Estate Agents: Build relationships with agents specialising in your desired area.
  • Online Portals: Websites like Rightmove, Zoopla, and Homesearch Properties offer extensive listings.
  • Property Developers: For new homes in London, contacting developers directly can give you access to exclusive deals.

Step 6: Conduct Thorough Due Diligence

Don’t rush into a purchase without thoroughly evaluating the property.

Key Checks:

  • Structural Surveys: Identify any hidden defects that could lead to costly repairs.
  • Legal Reviews: Ensure the property has no disputes or issues, like unpaid service charges.
  • Neighbourhood Research: Visit the area at different times of the day to gauge the atmosphere.

Step 7: Make an Offer and Close the Deal

When you’ve found your ideal property, the final steps are to make an offer, negotiate if necessary, and proceed with the purchase.

The Buying Process:

  1. Make an Offer: Work with your estate agent to present a competitive bid.
  2. Solicitor Services: Hire a solicitor to manage contracts and liaise with the seller’s representatives.
  3. Completion: Once contracts are exchanged, the property is legally yours.

Common Challenges When You Buy Property in LondonCommon Challenges When You Buy Property in London

Buying a house in London can be complex. Here are some common challenges and how to address them:

  • High Competition: Work with proactive agents who can alert you to new listings before they hit the market.
  • Rising Costs: Look for areas undergoing regeneration for better value.
  • Legal Complications: Always hire a qualified solicitor to handle documentation.

Tips for First-Time Buyers

  1. Start Small: Consider flats or smaller properties in outer boroughs.
  2. Use Government Help: Leverage schemes like Help to Buy to reduce upfront costs.
  3. Be Flexible: Broaden your search criteria to increase options.

Why Choose Homesearch Properties?

At Homesearch Properties, we understand that buying a house in London is a significant decision. Our team of experts is dedicated to helping you find the perfect property that fits your lifestyle and budget. With access to an extensive portfolio of houses for sale, including exclusive listings for new homes in London, we make your property search seamless and efficient.

 

Start your property journey with us today! Explore our latest listings to buy property in London or contact our expert team for personalised guidance. Visit Homesearch Properties to make your dream home a reality.

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Angela Rayner set to clampdown on Thatcher’s Right to Buy scheme

Angela-Rayner

Angela Rayner plans to reform Margaret Thatcher’s Right to Buy policy, which allows most council tenants to buy their council home at a discount, to ensure the stock of social housing is not depleted.

The deputy prime minister and housing secretary reportedly plans to slash Right to Buy discounts by two-thirds in an unprecedented attempt to stop council house tenants from buying their own homes.

Under plans to be unveiled in the Budget, the discount of 70% available to those seeking to buy their council house would be cut to about 25%.

At the same time, Rayner is to more than triple the amount of time people need to have lived in their home to qualify, from three years to 10.

Last year, 10,896 homes were sold through Right to Buy while only 3,447 were replaced, resulting in a net loss of 7,449. Since 1991, the scheme has resulted in the loss of 24,000 social homes, according to official figures.

Under Right to Buy, which was introduced in 1980 as one of Mrs Thatcher’s flagship reforms, the government sells off council housing at discounts of up to £102,400 to sitting tenants, rising to £136,400 in London.

Rayner acquired her council house using the Right to Buy scheme in 2007 with a 25% discount, making a reported £48,500 profit when selling it, albeit eight years later.

A Ministry of Housing, Communities and Local Government spokesperson recently said: “Right to Buy remains an important route for council housing tenants to be able to buy their own home but it’s scandalous that only a third of council homes sold under the scheme have been replaced since 2012.

“Increasing protections on newly-built social homes will be looked at as part of our wider review but there are no plans to abolish the Right to Buy scheme.”

Original Post: https://propertyindustryeye.com

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Housing Ombudsman highlights over 100 damp and mould cases

Housing Ombudsman highlights over 100 damp and mould cases

The Housing Ombudsman has released its latest ‘learning from severe maladministration’ report, focusing on inspections and timeliness within damp and mould complaints. 

With the important role that social housing has to play in giving safe and secure housing to millions, the Ombudsman says the learning in these reports should help landlords provide effective services that protect this aspiration.  

Throughout the report residents’ experienced distress and disruption from damp and mould as landlords responses were delayed, with residents losing the use of bedrooms or belongings, such as sofas, as mould spread, reporting ceilings near collapse and health impacts to them or their children, including asthma and eczema.   

The decisions are grouped together to show the organisational risk to the landlord as well as the impact on the resident because of a lack of timeliness around initial inspections, the commencement of works or their completion. Some of these cases concern all three of these delays which would need to be addressed under Awaab’s Law which is proposed for both social and private landlords. 

The Ombudsman says it is also important to stress that while this report focuses on findings about damp and mould, these cases often include a wide range of other property condition issues. 

The Ombudsman has also used this report to show where the redress being offered by landlords for significant and prolonged failings was repeatedly inadequate. For example, one landlord offered just £150 compensation to a family who lived within extensive mould for 5 years, including their bedrooms being uninhabitable, and another proposed £850 for failings in damp and mould for 4 years, despite the huge impact the issues had on a disabled resident.

The explanations of the compensation provided in these cases should assist landlords to make consistent payments that are clear, specific and proportionate and help to prevent cases being escalated. 

The landlords named in this report are: 

  • Bromford 
  • Clarion 
  • Croydon Council 
  • Curo Group 
  • Islington Council 
  • Kingston upon Thames Council 
  • Lewisham Council 
  • Barking and Dagenham Council 
  • Longhurst Group 
  • L&Q 
  • Metropolitan Thames Valley 
  • Moat Homes 
  • PA Housing 
  • Peabody 
  • Places for People 
  • Sanctuary 
  • Southwark Council 
  • Sovereign Network Homes 
  • Swindon Council 
  • Waltham Forest Council 

For the first time, the Ombudsman has also compiled an annex in this report due to the large number of severe maladministration decisions that relate to damp and mould. Download the report by clicking here. 

Richard Blakeway
Richard Blakeway

Richard Blakeway, Housing Ombudsman, said: “This is a topic that now dominates half of our casework and one coming into sharp focus given the government’s intention to introduce Awaab’s Law into both the social and private rented sectors.

“It is clear is that landlords are still struggling with timescales. This is despite policies often setting out a clear sequence of actions and existing obligations requiring reasonable resolution times.

“Throughout these cases landlord inspections are revealed as limited or repeated because of poor records before action is taken, with living conditions deteriorating during these delays. Often there can be a disconnect between the survey recommendations and the schedule of works as these repairs being delayed. Cases also include repairs being ‘completed’ but issues remaining for the resident and cases being closed without follow up inspections or communication with the resident.

“Together with the human impact, these delays can result in greater costs for the landlord, both in terms of repairs and avoidable redress. Landlords need to reevaluate approaches to compensation using these cases, to embed a fair and reasonable approach within local complaints procedures, which is an expectation of the statutory Complaint Handling Code. It is wholly unreasonable to offer just £150 to a resident who lost both their bedrooms to mould for more than a year, as happened in one case.

“Moreover, addressing the root causes of inadequate inspections and delays means resources can go into services rather than redressing service failings.

“We encourage landlords to engage positively with the lessons these cases provide and opportunities through our Centre for Learning. These are invaluable and will help you to provide an improved service for your residents.”

Original Post: https://propertyindustryeye.com

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Landlords ARE working people, and the Government needs to know that

Landlords ARE working people, and the Government needs to know that

Keir Starmer’s suggestion that landlords are not ‘working people’ is mistaken, says NRLA Chief Executive Ben Beadle. 

It’s depressingly familiar.

The tired rhetoric of the fat cat landlord living a life of luxury, paid for by their hardworking tenants.

We’ve heard it time and time again, but it was disappointing to hear it from our Prime Minister.

For those of you who have missed it, I will bring you up to speed.

In an interview this week Sir Keir Starmer told Sky News he would not consider someone who made income from property ‘a working person’.

Like you I was shocked. Like you I was incensed.

We just need to look at the Government’s own statistics to see why.

Official data shows that 30 per cent of landlords are employed full time, with a further 10 per cent working part-time; 28 per cent are self-employed in some way, while 35 per cent are retired and are likely to rely on their rental income for their pension.

It couldn’t be more categoric. We are working.

We are also not the ‘fat cats’ some elements of the media would have us believe, with almost 70% basic rate taxpayers. Read that figure again. 70%.

In my role as chief executive of the NRLA I travel the length and breadth of England and Wales, meeting our members and hearing your stories.

Our members come from all walks of life, but what unites you is a strong work ethic and a determination to do the right thing by your tenants.

Over my last four years at the helm, challenging stereotypes and preconceptions when it comes to landlords and the private rented sector has been one of my key objectives and slowly, slowly I felt we were turning the tide.

It is ill-thought through comments like this, that make me question that.

But since coming to power Labour has had much to say about the great work landlords are doing in providing vital homes to rent.

Indeed, Housing Secretary Angela Rayner, introducing the Renters’ Rights Bill, acknowledged the ‘important role of landlords, most of whom provide good-quality homes for their tenants’.

Being a landlord isn’t easy. It’s hard work.

Millions of families look to our sector for a home, satisfaction rates are high, and demand is growing.

Rather than stoking misconceptions, the Government needs to focus on the key challenge in the rental market, namely a lack of homes to rent to meet ever growing demand.

More information

  • If you are a landlord who wants to do it right, why not join us at our annual conference in Birmingham next month. The NRLA’s annual Landlord Conference, on November 6 will offer a unique opportunity for property professionals to here from experts from across the industry, including keynote speakers Andy Burnham and James Caan . Tickets for the event, which will be held at Birmingham’s NEC, are selling fast, so to find out more and book your place, click here.
  • In special recognition of our hard working landlords we’re offering £15 OFF membership. The offer can be redeemed this weekend only and is available to members and non members via our Refer a Friend scheme using promotion code WORKINGPEOPLE. If you successfully refer a friend during this period they will receive £15 off membership and you will get £15 off your next renewal.

Original Post: https://www.nrla.org.uk

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Capital gains tax speculation leads to ‘significant increase in market appraisal’

Rachel Reeves

There are growing that potential tax changes in the Autumn Budget next month may curb demand and increase downwards pressure on prices in higher-value markets

Rachel Reeves has not yet delivered her Budget but it is already having repercussions in the property market.

The government has said private schools will be charged VAT from January, but other announcements on 30 October may focus on capital gains tax (CGT), non doms, pension tax relief and inheritance tax.

By Tom Bill, head of UK residential research at Knight Frank, commented: “While there was a 34% increase in the number of sales in London in July and August compared to the five-year average, there was a 16% decline above £2 million, Knight Frank data shows.

“When you consider that £2 million-plus sales accounted for 22% of the £11.7 billion raised in stamp duty last year, it highlights the risk of tax rises having unintended consequences.

“The other way in which the Budget is impacting the property market relates to CGT and speculation that it may increase from its current level of 24%.

“Supply looks set to rise this autumn, which will be driven in part by owners attempting to sell before any changes are introduced.”

In an indication that more sellers are planning to list their property, the number of market valuation appraisals in August was 25% above the five-year average in London, Knight Frank data shows. Any future rise in supply would increase downwards pressure on prices.

“We are seeing a significant increase in market appraisals and listings from clients who have residential lettings portfolios,” said Andrew Groocock, chief operating officer of Knight Frank’s estate agency business.

“There is a feeling among many owners that they are better off bringing their properties to the market now and perhaps accepting a price that is 5%-10% lower, rather than running the risk of a CGT increase after the Budget.”

Average prices in prime central London (PCL) continued to edge down on a monthly basis in August. A fall of 0.2% took the annual change to -2.3%, which was the 16th month in a row the annual change was negative.

In fact, annual price growth in PCL has not been above 3% since March 2015 and prices remain 18% down on their last peak in August 2015.

Prices in prime outer London were flat in the 12 months to August as lower-value, needs-driven property markets perform more strongly. By comparison, prices in POL are 8% below their last peak in July 2016.

As far as lettings is concerned, rental value growth continued its return to earth in August as supply climbed and demand fell. Overall, rents rose 2.1% in prime central London (PCL) and 2.2% in prime outer London (POL).

In both cases, it was the lowest figure since the summer of 2021 when the long-let market was flooded with short-let properties during the pandemic. Supply subsequently fell sharply, in part thanks to landlords selling up during a stamp duty holiday, which meant rents were growing by more than 20% in the early months of 2022 as demand far exceeded supply.

The chart below shows how the market has rebalanced and put downwards pressure on rents.

The number of new listings in August was 8% below the five-year average, Rightmove data shows. That compares to much steeper declines in recent years.

Meanwhile, the number of new prospective tenants was 11% below the five-year average in August, partly due to a decline in overseas students applying to study in the UK.

The number of students accepted from China, which accounted for the largest proportion of overseas students in 2021/22, dropped 6% to 10,950 this year, according to UCAS data.

UK universities may have reached “peak China”, according to comments last year from the head of the Universities and Colleges Admissions Service, for reasons that include visa and tax changes as well as the fact rents have risen in recent years.

“International students coming to the UK are tending to focus on London more closely than other cities” said John Humphris, head of Relocation & Corporate services at Knight Frank. “With fluctuations in applications from China, but notable increases from Turkey and Canada, London remains an evergreen destination in spite of competition from other global education hubs, notably Australia”

Average rents in PCL are 34% higher than they were before the pandemic in February 2020, while the equivalent rise in POL is 29%.

While rents are normalising, there is a risk that upwards price pressure may intensify as more landlords sell due to possible legislative changes.

First, there is speculation that capital gains tax may increase from its current level of 24% in next month’s Budget.

In an indication that more sellers are planning to list their property ahead of possible changes, the number of market valuation appraisals for sale in August was 25% above the five-year average in London, Knight Frank data shows. Conversely, any future rise in supply would increase downwards pressure on prices.

“We are seeing a significant increase in market appraisals and listings from clients who have residential lettings portfolios,” said Andrew Groocock, Chief Operating Officer of Knight Frank’s estate agency business.

“There is a feeling among many owners that they are better off bringing their properties to the market now and perhaps accepting a price that is 5%-10% lower, rather than running the risk of a CGT increase after the Budget.”

Second, there is uncertainty over the revived Renter’s Reform Bill, as previously explored. Measures could include making it harder to evict tenants and tighter rules around the green credentials of lettings properties, according to recent press reports.

Original Post from https://propertyindustryeye.com

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How buy-to-let landlords selling up can recoup capital gains tax AND boost their pension in one move

Jumping ship? Some landlords may be looking to get out of the market as CGT hikes loom

With the Autumn Budget looming large in the minds of landlords, some have decided to sell up in order to avoid higher costs now and a possible capital gains tax raid in future.

The fear among buy-to-let owners is that Chancellor Rachel Reeves, will massively hike CGT in the Budget, as part of her bid to fill her claimed ‘£22billion black hole’ in the UK’s finances.

Currently, higher-rate taxpayer landlords would pay 24 per cent on gains they make on their properties, but this could increase to 40 per cent if the Chancellor decided to bring capital gains tax in line with the rate of income tax.

Regardless of a potential CGT raid, more buy-to-let landlords are already selling up. However, many will be left wondering how to save or invest the proceeds after the sale of their property is completed.

Paying into a pension could prove to be a lucrative move, as it could effectively recoup money lost to capital gains tax and boost their retirement pot.

Putting cash into their pension would fit with the investing strategy of many landlords, who use property investments as a nest egg for retirement.

Pension tax relief means landlords could claw back some money lost to capital gains tax. They can contribute as much as the £60,000 annual allowance this year to a pension and potentially more if they have previous years to carry forward.

Steven Cameron, pensions director at Aegon, said: ‘There’s widespread speculation that the Autumn Budget could bring increases to the rates of capital gains tax and possible changes to pensions taxation, such as the loss of higher or additional rate tax relief on personal contributions.

‘The threat of more penal rates of CGT is reported to be prompting many landlords to consider selling rental properties.

‘This is reshaping the longstanding debate between investing in property versus a pension, particularly relevant to those people who might regard second properties as their retirement saving.’

‘Those considering selling a rental property might consider investing the proceeds in a pension or stocks and shares Isa.’

Landlords are taking note of the speculation on capital gains tax but it is pressure elsewhere that is prompting many to sell.

Higher mortgage rates, less generous mortgage interest tax relief, greater regulation, the cost of energy efficiency improvements and other increased bills are encouraging more to cash in gains and move on.

There are other reasons landlords may be looking to sell, however.  These include higher mortgage rates and the Renters’ Rights Bill which will make it harder to evict tenants without a good reason.

Should you reinvest your cash into a pension?

As a buy-to-let owner, it’s unlikely that you could put your property on the market now and sell it before the Budget on 30 October.

But those that are already in the process may find themselves quids in before that date rolls around.

Capital gains tax is charged on annual profits on assets of more than £3,000. As it stands, landlords who are in the process of selling will face 24 per cent CGT if they are higher rate or additional rate taxpayers.

Basic rate taxpayers face capital gains tax at 18 per cent but gains are added to their other income to decide the rate – meaning they could be pushed into the higher rate bracket.

Landlords could consider paying the proceeds of their sale into a self-invested personal pension, known as a Sipp, as a way to claw back their CGT loss on the sale, and provide a boost to their pension in one fell swoop.

Pension contributions for most people automatically qualify for basic rate tax relief from the Government.

In order to take savers back to the position they were in before 20 per cent tax, contributions get a 25 per cent uplift – turning £80 paid in back into £100 pre-tax, for example.

Higher rate and additional rate taxpayers can claim the rest of their tax relief through self-assessment, delivering 40 per cent and 45 per cent tax relief on contributions.

The annual allowance – and need to be a high earner

There is a pension annual allowance that caps contributions eligible for tax relief at £60,000 per year, so for those making big profits it might take a number of years to contribute the funds from the property sale.

However, savers can carry forward unused allowances from up to three years previously, provided they were part of a registered pension scheme during those years. This would include a workplace pension scheme.

People can also only get tax relief on private pension contributions worth up to 100 per cent of their relevant annual earnings.

Neither rent or capital gain on a property will count as annual earnings for this, meaning that to pay the maximum into a pension, someone would generally need to earn £60,000 from employment or self-employment.

Those who have previously flexibly withdrawn money from a pension may have a lower £10,000 annual allowance.

Very high earners with adjusted incomes of more than £260,000 have their annual allowance tapered down.

Savers should also realise that withdrawals from their pension scheme will be taxed beyond the first 25 per cent, which is tax-free.

Cameron explained: ‘The pension annual allowance is currently £60,000, with the potential to carry forward unused allowances from the past three years.

‘In some circumstances, making a personal pension contribution, could also result in some or all of the capital gain from the rental property sale being taxed at the basic rate of CGT, 18 per cent, rather than the higher rate 24 per cent.

‘Paying into a pension means you can’t access your funds, currently until age 55 but rising to 57 in 2028. However, you could qualify at present for tax relief at your highest marginal income tax rate.’

According to data from the Institute for Fiscal Studies, between 30 and 40 per cent of private sector employees, equating to between 5 and 7million people, are on course to see their workplace pension fail to meet the requirements for a minimum standard of living.

Diverting your money into a pension also gives you access to a tax-friendly wrapper which will allow your investments to grow without facing further capital gains, dividend and income tax.

Landlords making big gains and considering paying into a pension would be wise to speak to a specialist tax or financial adviser, who can help explain their options and make sure things are done correctly.

 

What CGT changes could mean for property investors
Capital gain Current basic If aligned Impact Current higher If aligned Impact Current additional If aligned Impact
Gain 18% 20% 24% 40% 24% 45%
£10,000 £1,260 £1,400 £140 £1,680 £2,800 £1,120 £1,680 £3,150 £1,470
£20,000 £3,060 £3,400 £340 £4,080 £6,800 £2,720 £4,080 £7,650 £3,570
£30,000 £4,860 £5,400 £540 £6,480 £10,800 £4,320 £6,480 £12,150 £5,670
Source: Quilter 

What if capital gains tax is hiked in the Budget?

It looks highly likely that capital gains tax rates will be raised in the Budget.

It has been suggested that Rachel Reeves could equalise CGT with income tax and change the higher rate to 40 per cent, and the additional rate to 45 per cent. Basic rate taxpayers could see a lesser increase to 20 per cent.

Of course, if any Budget changes do come in, they might not be as extensive as landlords fear – and they might not come into force immediately.

Economists have warned against raising capital gains tax rates to as high as income tax rates without bringing in indexation, so that only gains above inflation are taxed.

If capital gains tax was raised to income tax levels and pension tax relief remained the same, landlords could potentially recoup their CGT by paying profits into a pension.

Landlords should also consider making use of their Isa allowance in order to benefit from another tax wrapper.

With an annual Isa limit of £20,000, this combined with paying £60,000 into a pension could allow themto place up to £80,000 of proceeds into tax-efficient accounts, without having carried forward any pension allowances.

Unlike pensions, Cameron said, ‘Isas offer tax-incentivised savings without locking your money away.

 

Selling out: Landlords purchased just 10% of all homes sold during the first half of this year, the lowest share seen since 2010 according to the estate agent Hamptons
Selling out: Landlords purchased just 10% of all homes sold during the first half of this year, the lowest share seen since 2010 according to the estate agent Hamptons

 

How many landlords are selling up?

Figures from Rightmove show that 18 per cent of homes currently up for sale were previously available to rent. This compares with just eight per cent in 2010.

In London, this figure rises to almost a third of homes having previously been available to rent. In the North East and Scotland, 19 per cent were previously rented.

Meanwhile, data from Hamptons reveals that the number of homes being bought by landlords has dropped to a 14-year low.

Original Post from https://www.thisismoney.co.uk

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Rates cut on wide range of buy to let and holiday let mortgages

Rates cut on wide range of buy to let and holiday let mortgages

Suffolk Building Society is taking up to 30bps off its fixed Buy to Let, Buy to Let Light Refurbishment, Expat Buy To Let and Holiday Let products.

It is also slicing up to 30 bps off its 95% resi mortgages, giving an affordability boost to first time buyers and those with smaller deposits.

A society spokesperson says: “We’re pleased to be able to offer landlords more affordable rates across various Buy To Let product types to help lower their monthly costs. And of course, lower payrates help with BTL affordability, enabling them to access the loan amounts they require.

“As well as new regulations around energy efficiency and the introduction of a new Decent Homes Standard requiring improvements, landlords are also facing further changes from the upcoming Renters’ Rights Bill. In addition, the Budget may bring further change. As a result, landlords face uncertainty so saving money where possible is always a positive.”

She adds: “With house prices still rising, and the average UK house price standing at £289,723, there’s a clear need to support first time buyers with their property ownership ambitions. First time buyers are in the spotlight at the moment and rightly so.

“With the cost of living and the ability to save up a sizeable deposit becoming even more challenging, higher LTV products go some way to help those looking to get on the property ladder. It also provides an alternative for those looking to remortgage and borrow extra for home improvements too.

The following are now available for both purchase and remortgage:

Buy to Let

  • 80% LTV 2 Year Fixed capital and interest has been reduced by 20bps to 5.39%, max loan £1m.
  • 80% LTV 5 Year Fixed capital and interest has been reduced by 30bps to 5.19%, max loan £1m.

Buy to Let Light Refurbishment

  • 80% 2 Year Fixed capital and interest has been reduced by 20bps to 5.49%, max loan £1m.
  • 80% 5 Year Fixed capital and interest has been reduced by 30bps to 5.29%, max loan £1m.

Expat Buy to Let

  • 80% 2 Year Fixed capital and interest has been reduced by 16bps to 5.69%, max loan £1m.

Holiday Let

  • 80% 2 Year Fixed capital and interest has been reduced by 14bps to 5.55%, max loan £1m.

Residential

  • 95% LTV 2 Year Fixed capital and interest has been reduced by 30bps to 5.39%, max loan £500,000
  • 95% LTV 5 Year Fixed capital and interest has been reduced by 24bps to 5.05%, max loan £500,000

Original Post from https://www.landlordtoday.co.uk