Help to buy ISA

With rents generally increasing around the country it is becoming more difficult for prospective home owners to save that all important deposit.  To help the government this year has introduced the Help to Buy ISA.  This is a product aimed solely at first time buyers who will have their savings boosted by 25% by the Government up to a maximum return of £3000.

This ISA is available through most banks and building society’s but as you would expect there are some conditions to be met:

• The saver must be over the age of 16
• The value of the property cannot exceed £450k in London or £250k in the rest of the country
• This scheme cannot be used to fund a second home or buy to let investment
• The saver must save at least £1600
• The saver can only open one Help to Buy ISA
• The buyer can use any mortgage provider, not necessarily the bank who has provided the ISA
• The ISA is for an individual so if a couple are looking to buy their first home they can both open a Help to Buy ISA
• Buyers can transfer the ISA if they can get a better deal elsewhere

Obviously this is a positive step in helping people get on the property ladder and should be seriously considered but as with all these products, shop around for the best deal.

Rent payments have now overtaken mortgage payments

Savills have recently reported that in the last year they estimate rental payments have totalled approximately £74.8bn while mortgage payments were estimated at £73.2bn.

They also report that private Landlords own more housing equity than owner occupiers with the figures being £1,077bn against £!,067bn.  However, the amount of property owned outright stands at an estimated £2,097bn.

In a separate report Savills state that a house worth £66,110 in 1995 is today worth an estimated £262,847.  

Currently less than 6% of local government wards have average house prices of under £100,000 compared with 88% in 1995.

Huge fines for tax evasion Landlord

A Landlord has recently been fined a massive £283,886, been given a two year suspended sentence, ordered to carry out 200 hours of unpaid work and pay £1,500 in costs following tax evasion charges.  It was alleged that the defendant had failed to pay tax on rental income on his ten properties in the London area covering a period of 5 years.  If the fine is not paid within 3 months he has been warned he will face 3 years in prison.

HMRC decided to carry out a full investigation into College principle Macdonald Abambas affairs following a crackdown on Landlords in the area.  Mr Abamba was given the opportunity re repay the tax, which he had used to buy further property abroad, but failed to do so.  HMRC then launched a criminal investigation and the defendant was charged with cheating the public revenue, under common law.  Once the case got to court Mr Abamba pleaded guilty.

#John Cooper, assistant director, Fraud Investigation Service at HMRC, said: “Abamba should have done the right thing by declaring this income. He was given the opportunity to come clean and pay what he owed but he chose to ignore it.

“He now has a criminal record, has ruined his reputation and must rightfully repay the money he stole, plus interest, within three months or face real jail time.

“The majority of us pay the tax that’s due, when it’s due, and it is unfair that people like Abamba think they have the right to steal money that is needed to fund vital public services.

“We know that some landlords are unsure of their tax liabilities which is why we launched the Let Property campaign, but this man clearly knew what he was doing and continued anyway.”

Its official! UK property selling at record prices

The Office for National Statistics has this week revealed that the average house price in the UK has now reached £288,000, breaking the previous record.  The average price across England now stands at £302,000.  This figure is somewhat confirmed by Rightmove who reported this week that the average price of new properties to the market is £290,963.

The ONS also report that in November annual house price inflation was 8.3% in England, 0.4% in Scotland, 4.6% in Northern Ireland and 1.3% in Wales.  The biggest regional rise was the east of England at 10.2% followed closely by the south-east and London at 9.8%

Head of lending at Mortgage Advice Bureau, Brian Murphy said “House prices in November saw the biggest annual increase in eight months, despite traditionally being a quieter time in the housing market.
“Those lucky enough to already be on the property ladder are the clear winners of this boom, as home owners trading up to the next rung take advantage of improving property values. Increased equity means even those not looking to sell can benefit by switching to a more affordable mortgage deal.
“The heat is set to rise in the buy-to-let and second home market in the short-term, as buyers rush to complete before the changes to Stamp Duty kick in in April.
“In the long term, the dearth of properties available combined with rampant demand means house price growth isn’t likely to slow any time soon.

“This creates clear affordability concerns for first-time buyers.”

Top Housing Lawyer calls for delay in implementing “Right to Rent” rules

Lawyer David Smith, policy director of the Residential Landlords Association and partner at law firm Anthony Gold has, this week, called for implementation of the Right To Rent Act to be postponed from its proposed date of 1^st February 2016. 

Mr Smith reported that the Right To Rent rules had only been trialled in the West Midlands with the limited data collected being contradictory at best.  He also stated that it was not achieving what the Government had set out to achieve and was possibly leading to discrimination.

Speaking for the RLA, Smith said: “To proceed at this stage runs the very real risk of causing considerable harm to the relationship between landlords and tenants which are so crucial to the smooth operation of the private rented sector.”

Watch this space for further updates.

Burghclere Down or Charlton. Which makes the best investment?

A landlord came to our office for advice as he was considering one of two three bedrooms properties, one on Burghclere Down and one in Charlton.

We did some research and found that the three bedroomed mid terraced house on Berry Way, Burghclere Down, for sale for £225,000, would probably achieve a rent of £875pcm. The properties in this area are quite popular with families and tend to have a great demand with investors and tenants alike, making it a relatively good investment.

A slightly larger three bedroomed semi detached property in Charlton has a value of £275,000.  The possible rent for this property is slightly higher at £995pcm, as it is slightly larger.  We found that although the rent can be higher, the annual yield was similar at 4.3%.

This shows that while a property can achieve a higher rents, it does not necessarily mean higher returns.

If you would like any advice when choosing properties, you may come and see us at our offices.

Deadlines revealed for energy efficiency compliance for rental properties

The Residential Landlords Association has reported that the Government has now revealed the dates for rental properties to comply with new energy efficiency rules.  They are:

April 2018: by this date it will be unlawful to let out a property with an F or G Energy Performance Certificate rating, as a new let.

April 2020: by this date the requirement for a minimum E rating will apply, not just to new lets but also to existing tenancies;

2025: the target is for a minimum D rating;

2030: the minimum target will be a C rating.

Richard Jones, company secretary of the RLA however has stated that there is some doubt over the accuracy of a large number of EPC’s  “The Building Research Establishment estimates that around 100,000 properties have an incorrect F and G rating so these ratings should be better than they are. This means some of those currently rated at the lowest banding Band G ought to be reclassified as Band F and quite a number of those that are in Band F do in fact meet the Band E requirement. We are making repeated representations to the government on this issue because we firmly believe that EPCs must be accurate before compulsion is brought in” he says.

We will update our blog with any further changes.  With most of these things we find there is always a few along the way!