After the Gold Rush

Nick Churton of our London Mayfair Global Network takes a look at the property market now the rush to avoid a higher stamp duty is over.

It happens after every major budget change where extra tax costs are involved when buying a home. There is a stampede to complete purchases before the tax axe falls. Most notable was when double tax relieve (MIRAS - Mortgage Interest Relief At Source) was removed on mortgages for unmarried couples in August 1988. This resulted in an average of two years’ worth of transactions being squeezed into a twelve month period - and a sharp rise in house prices. Sadly it also heralded a slump in activity the following year with all the negative knock-on effects to allied areas of the economy. Governments should see these things coming but they never seem to.

We have just witnessed a mini-stampede from buyers of second and buy-to-let homes pushing through their purchases before the April 1st deadline when higher rates of Stamp Duty Land Tax (SDLT) were imposed - a hefty rise when one hadn’t really factored it in before the last budget or even if they had.

Of course everyone in the industry could have anticipated this rush to complete purchases. In this area at least tax avoidance doesn’t appear to have the stigma that many other areas of this now-frowned-upon activity have.

But now comes the aftershock. Once again we can predict the outcome. Those who were serious about buying will have finalised their purchases. That leaves those who were not so serious. This group will take a little time to take stock and get used to the extra cost of buying - while some will decide not to purchase at all. This will leave a vacuum in the market for some months.

Nature and the property market don’t like a vacuum so a number of things will happen. There will be fewer motivated buyers and certain asking prices will come under pressure because of the extra cost of purchase. But the best bit is that for the first time in years first-time buyers should have a window of opportunity when there may not be so much competition from cash and/or professional property buyers. Given the low interest rates this then is the perfect time to enter the market for those with a deposit and an in-principle mortgage in place.

Every cloud has a silver lining. After the last gold rush this is the time for first-time buyers to strike it rich.

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Christies Network Auctions two day May auction catalogue announced.

NAVA Auction House of the Year Christies Network Auctions have published the catalogues for their two day auction sale in May.

The London auction will take place at the Grosvenor House hotel on Park Lane on 5th May and the Birmingham sale will be at St Andrews (Birmingham City FC) on Wednesday 11th May.

Following record sales at their last two auctions, Christies Network Auctions are expecting another successful outcome from the May sales.

With property from all over the UK (over 20 different counties) and guide prices ranging from no reserve to £750,000, there really is something on offer for everyone and some excellent investment, redevelopment and owner occupation opportunities to be acquired.

Christies Network Auctions spokesman Jeremy Richardson said: “Our May sale represents a great opportunity for both sellers and buyers to benefit from the transparency and certainty afforded by an auction. The concentrated focus of the auction removes many of the risks and delays of selling or buying by private treaty, especially in a market where uncertainty caused by the European referendum is cooling traditional activity.”

With the catalogue now closed for the May sale, Christies Network Auctions are already taking entries for their next sale in July.

If you would like to discuss how selling or buying at auction could work for you, please contact Jeremy Richardson at Christies Network Auctions on 020 8643 7777, by email at info@christiesworld.com or via our website at www.christiesworld.com

Not in the National Interest

Nick Churton of our London Mayfair Global Network goes beyond the hype and looks at what is really important in buying and selling a property this spring.

The property market is never static. But it is perhaps now at a unique juncture. It is hard to think of a time when the market was so politicised. Following on from last year's general election and the Scottish referendum in 2014 we now face the UK European referendum in June. No market likes uncertainty and on top of various recent tax changes - especially in the buy-to-let and second home sectors - these political events are certainly making some buyers and sellers wonder if they should wait for the dust to settle before moving.

But what if future events prevent the dust from settling? Perhaps after the referendum there will be something else to think about – a possible interest rate change, the US general election in November or some fresh global, economic or humanitarian crisis. The point is that our lives, although influenced by politicians, do not march to the drum of politics; they have their own rhythms - governed by personal events like leaving school or college, partnering or marriage, births, jobs, income changes, relocation, retirement, and - underlying it all - individual ambitions.

Some say there is never a perfect time to move home. But of course there is: it’s the time that is dictated by life. In or out of the European Union or despite what future events are in store we all have personal agendas that largely ignore national and international affairs as we seek to provide for our families and ourselves. We don’t move home in the national interest. We move home in our own interest - to fulfil our own ambitions. Despite what politicians may have us believe our own houses are rather more significant to us as individuals than either the Houses of Parliament in London or the European Commission in Brussels. So perhaps it’s best to forget politicians when it comes to moving home and listen instead to our hearts – and our financial advisors.

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Despair as ARLA slams Osborne’s ‘outright assault’ on PRS in ‘catastrophic’ Budget

The following is a report featured on Property Industry Eye.

The Budget was attacked as a clobbering of the private rented sector.

The previously announced 3% Stamp Duty surcharge on the purchases of second properties will go ahead on April 1, with three main changes from the original proposals.

There will be no exemptions for larger investors – previously, it had been proposed that those buying 15 properties in one deal would be exempt.

The second change is that people who buy a second property as their home before selling their first, will have a longer window in which to dispose of their first home.

A timeframe of 18 months has been replaced by 36 months. The Treasury said that this would now be the time at which a refund could be claimed.

The third important change is that husbands and wives living apart, and intending to remain living apart, will no longer be treated as a single unit. That means that separating couples will not be faced with an extra Stamp Duty bill should one of them buy a home.

The Treasury has also clarified the position of probate properties, typically left to children in the family.

It said that where someone owned less than half of an inherited property, this would not be considered as an additional property subject to the surcharge.

Yesterday’s Budget emphasised that Capital Gains Tax is being reduced from April 6 – down from 28% to 20% in the higher band, and from 18% to 10% in the basic rate.

However, there will be an 8% surcharge applied to the sale of residential properties being sold by landlords – meaning that what they pay will stay the same as now.

David Cox, managing director of ARLA, said: “This is now the third Budget which directly attacks landlords. The sector has been punitively taxed, with Stamp Duty on buy-to-let properties, mortgage interest relief and now Capital Gains Tax changes [which benefit others but not landlords].

“It’s an outright assault on the sector.

“Every other sector has been offered a tax break – yet there is nothing here to help the private rented sector, including landlords – and most importantly tenants – who will see rent costs rise to subsidise the taxes that landlords pay on property.

“The Government talks about wanting to help the younger generation get on to the property ladder, but with the changes announced today the supply of available property is bound to decrease, and as a result rents will rise.

“In November, when Mr Osborne announced an increase in Stamp Duty tax on buy-to-let properties, we described this as a catastrophic move.

“The news that larger investors will also have to pay the tax is even worse.

“Professional landlords play a vital role in providing rental stock to the market, and providing the army of renters we have in this country with housing.

“Our members forecast that the supply of BTL properties will dwindle when the new tax comes in to effect.

“We’re already in a position where demand outstrips supply, and as supply falls, rent costs rise, meaning the goal of home-ownership falls even further out of reach for most of the country’s renters.”

The Budget has introduced a Lifetime ISA, allowing people under 40 to save up to £4,000 a year, with the Government topping up the pot by another 25% annually until savers are 50.

They will be able to use the money to buy a house or for their retirement.

NAEA managing director Mark Hayward said this was welcome news.

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Budget newsflash: Chancellor confirms Stamp Duty surcharge

The following is a report featured on Property Industry Eye.

The Chancellor has confirmed in his Budget speech that the 3% Stamp Duty surcharge on additional properties is to go ahead next month. There will be no exemption for large-scale purchasers, as had originally been proposed.

In another change, people will now have twice as long as the original 18 months to sell their first property if they have already bought their next home.

Osborne said that the extra Stamp Duty receipts would go toward helping people get on the housing ladder in the south west of England.

There had been speculation that the implementation of the surcharge might have been delayed.

George Osborne also announced reforms to Stamp Duty Land Tax on commercial property, which will kick in at midnight tonight.

He said that the reforms would be similar to those introduced on residential property, meaning that smaller businesses would pay less and larger ones would pay more.

Osborne said: “Just over a year ago, I reformed residential Stamp Duty. We moved from a distorted ‘slab’ system to a much simpler ‘slice’ system. As a result, 98% of home buyers are paying the same or less and revenues from the expensive properties have risen. The IMF have welcomed the changes and suggest we do the same for commercial properties.

“That is what we are going to do, and in a way that helps our small firms.

“At the moment our small firms can pay just £1 more for a property and face a tax bill three times as large – that makes no sense.” From midnight tonight, there will be no Stamp Duty on purchases up to £150,000; a 2% rate on the next £100,000; and a 5% rate on properties above £250,000.

There will be transitional rules for purchasers who have exchanged but not completed before midnight.

Osborne has also announced a new measure to help younger people save. From next April, those under 40 will be able to take out a Lifetime ISA, and save up to £4,000 each year until they are 50, with the Government boosting the pot by 25% – putting in up to a further £1,000 each year.

Savers can, said Osborne, choose whether to use the money to buy their first home or pensions.

Early on in the Budget speech, he made a fleeting reference to two new tax break for people trading digitally, including property. The tax breaks would each be worth £1,000 a year. However, there was no explanation as to what would qualify people to claim these tax breaks, other than Osborne saying that some digital platforms such eBay had helped entrepreneurs start new businesses.

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Almost one in five landlords wants to sell up, "claim"

The following is a report featured on Property Industry Eye.

Almost one in five landlords across Britain is planning to sell up.

According to the National Landlords Association, the proportion planning to sell before last July’s Budget was 7%, and is now 19%.

In every part of Britain, more landlords are planning to dispose of property.

The NLA says the increase was triggered by the restriction of mortgage interest relief announced by Osborne in the Summer Budget.

The NLA says that this will leave many landlords worse off, forcing some basic rate taxpayers into a higher tax bracker, and leaving higher and additional rate-payers with considerably bigger tax bills.

The organisation’s CEO Richard Lambert, said: “Local property markets vary greatly across the United Kingdom, but we are seeing a loss of confidence across the board as many landlords realise they won’t be able to remain in the market.

“If landlords follow through with their intentions over the coming months this could lead to a massive sale of property, as we have previously warned.

“However, this may not be a straightforward process, especially for those with stock in low demand areas.

“We urge those considering selling up to think about when they will need to do so, and to plan ahead now in order to minimise the risk of losing money as a result of a failure to sell.”

Full regional breakdown:

Region	Intention to sell July 2015 (before Budget)	Intention to sell Jan 2016	% Difference
London (Central)	4%	19%	+15%
South West	6%	20%	+14%
East Midlands	15%	28%	+13%
Wales	10%	23%	+13%
North West	9%	22%	+13%
London (Outer)	8%	21%	+13%
South East	7%	20%	+13%
East of England	5%	18%	+13%
Scotland	9%	19%	+10%
West Midlands	10%	19%	+9%
Yorkshire	13%	22%	+9%
North East	17%	24%	+7%
UK average	7%	19%	+12%

* NLA Quarterly Landlord Panel – July 2015 (977 respondents)

**NLA Quarterly Landlord Panel – Jan 2016 (1364 respondents)

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Budget: Government to launch inquiry into failed housing transactions

The Government is to launch an inquiry into failed housing transactions.

Although part of the Budget, it was not announced by the Chancellor in his speech, but emerged in the small print of the lengthy Red Book that is published afterwards.

It gives few clues, but says that “consumers spend £270m each year on failed housing transactions”.

It adds that “the Government will shortly publish a call for evidence on how to make the process better value for money and more consumer-friendly”.

The inquiry will, it appears, be handled not by the Department of Communities and Local Government, but by BIS – the Department for Business, Innovation and Skills.

It is a familiar subject, giving off a distinct whiff of déjà vu.

Home Information Packs were meant to prevent fall-throughs by giving would-be purchasers information up-front. They were canned by the incoming Coalition Government in 2010.

In 2009, the then Office of Fair Trading launched a lengthy study into the home buying and selling process, and considered whether the market in England and Wales could be more like that in Scotland, where buyers and sellers make a binding commitment.

So what was the outcome?

The OFT came to this conclusion, with an emphatic hedging of bets.

It said that it was “not possible to quantify, with certainty, the costs and benefits of introducing a point of earlier commitment, but it is clear that the potential benefits might be substantial”.

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