What are the future changes that landlords will face post stamp duty tax hike? It came as no surprise that there was a record number of Stamp Duty Land Tax (SDLT) receipts earlier this year as buy- to-let landlords rushed to beat the deadline for increases in SDLT introduced on
MP demands carbon monoxide protection for renters Published: 26 July, 2016 Margaret Ritchie MP has tabled an Early Day Motion demanding that the government ensures renters up and down the country are properly protected from carbon monoxide (CO) poisoning. Ms Ritchie’s motion has called for the government to regulate the
19 March 2016 – by Alexander Peace UK councils are sitting on almost £1bn of pledged investment from developers to build affordable housing, according to an Estates Gazette investigation. Developers have been accused of building luxury homes at the expense of affordable housing, but EG’s investigation reveals the other side
According to new data, almost a quarter of a million homeowners have advertised for lodgers since the Rent a Room scheme threshold was raised in the Summer Budget. Under the new rules, from 6th April homeowners can earn £7,500 a year tax free by letting rooms. Since the announcement of
The building services engineering sector – which makes up 40 per cent of the UK’s construction and maintenance industry – believes it will successfully weather the outcome of Brexit over the next few years. That’s according to major new survey findings from the Electrical Contractors’ Association (ECA), the Building Engineering
What are the future changes that landlords will face post stamp duty tax hike? It came as no surprise that there was a record number of Stamp Duty Land Tax (SDLT) receipts earlier this year as buy- to-let landlords rushed to beat the deadline for increases in SDLT introduced on 1 April 2016. However, increased SDLT costs on the purchase of additional residential properties is not the only nasty surprise in store for residential property investors. Stress tests In March, the Bank of England announced its proposals for much tougher buy-to-let mortgage lending criteria. The rules will require lenders to carry out stricter “stress tests” on prospective borrowers or those wishing to re-mortgage to ensure that they have sufficient capital to cover repayments if interest rates increase to 5.5%. Tax relief for finance costs In the future, there will also be changes to the way that tax relief for interest payments on the purchase of residential lettings will be given in the tax computation. This will affect individuals, partnerships and limited liability partnerships which let out residential properties. At present there are no proposals for this restriction to apply to furnished holiday lettings nor to companies with residential lettings. Currently, rental profits are reduced by any loan interest paid and therefore a top rate taxpayer could receive tax relief at 45% on their finance costs. Under new legislation the loan finance costs will be relieved by way of a reduction of the tax liability, rather than a reduction in the rental profits, and is restricted to relief at the basic rate of income tax. Those with substantial rents and interest costs, thus with low net profits, who are currently basic rate taxpayers, could see their income pushed into the higher rate band as the interest costs will be added back to the rental income. For example, an individual whose only income is rents of £50,000 and interest costs of £20,000 would have net income of £30,000, and so within the basic rate tax band. Under the new rules the same individual would be a higher rate taxpayer because their income would be £50,000 with a deduction for interest relief given at the basic rate only. As a result of the way in which the net rent will be calculated those whose income is close to the £50,000 threshold for the withdrawal of child benefit, and those with income near £100,000 for the withdrawal of personal allowance could be adversely affected even though their income has not actually increased. To “soften the blow” these measures will be phased in gradually over four years and will apply to 25% of the interest costs in the 2017-18 tax year, 50% in the 2018-19 tax year and 75% in the 2019-20 tax year before being implemented in full in the year to April 2021. If you have a relatively modest portfolio of properties which are let out as residential lettings, it maybe that you will simply have to accept that your income tax liability in respect of those lettings may increase in future as taking any steps to mitigate the interest restriction could be costly. Sharing income with family members or family trusts may be worth considering but capital gains tax issues will need to be addressed. Incorporating your business If you have a substantial portfolio of residential lets you may wish to consider incorporating your business, however, there could be a substantial capital gains tax liability if you incorporate your property portfolio because moving the properties into a company could trigger capital gains tax. However, if you have a large property portfolio that you devote a substantial amount of time to managing, it may be possible to claim capital gains tax roll-over relief on incorporation of a business to mitigate the capital gains tax liability arising. If you have no gains in your property portfolio it may be possible to transfer the properties into a company without triggering capital gains tax. However, there is likely to be a substantial SDLT liability on the property transfers to a company, unless specific reliefs are available, and incorporation of a property business should not be undertaken without specialist advice. It would be necessary to weigh the costs of incorporating an existing property business, including administering a company, against the additional cost of the new interest rules. Also the new “stress test” rules could see the cost of your borrowings increase. The residential property investor is entering a whole new world and it remains to be seen if George Osborne’s efforts to help first time buyers onto the property ladder, which is a laudable aim in itself, are helped or hindered by the various measures he has introduced. Source link
MP demands carbon monoxide protection for renters Published: 26 July, 2016 Margaret Ritchie MP has tabled an Early Day Motion demanding that the government ensures renters up and down the country are properly protected from carbon monoxide (CO) poisoning. Ms Ritchie’s motion has called for the government to regulate the fitting of CO alarms in all rented properties across the UK. The motion addresses the concern that around 50 people a year still die as a result of CO poisoning and highlights the recent research undertaken at Liverpool John Moores University which indicates it is low income households that are most at risk of CO poisoning. All-Party Parliamentary Carbon Monoxide Group (APPCOG) Co-chair Barry Sheerman MP expressed his support, saying that the motion is a timely reminder that more can be done to stop preventable deaths in the UK. “By harmonising regulations for CO alarms across the nations of the UK, we can put an end to the needless suffering caused by CO poisoning,” he said. “The APPCOG has recommended that all homes in the private rented sector are fitted with standard-compliant CO alarms since the publication of our report Preventing Carbon Monoxide Poisoning in 2011, so we very much hope that the government will follow Scotland’s lead and ensure that householders in the English rented sector are provided with equal levels of protection.” The research carried out at John Moores University triggered the motion, as current legislation in England only requires landlords to fit CO alarms in rooms with solid fuel burning appliances. Margaret Ritchie MP has campaigned frequently for better safety and awareness around the dangers of CO and is urging the government, the Welsh Executive and the Northern Ireland Executive to follow the example of the Scottish Government and require all landlords to install carbon monoxide detectors in rented properties. Source link
19 March 2016 – by Alexander Peace UK councils are sitting on almost £1bn of pledged investment from developers to build affordable housing, according to an Estates Gazette investigation. Developers have been accused of building luxury homes at the expense of affordable housing, but EG’s investigation reveals the other side of the story. A Freedom of Information request to every council in the UK found that £1.2bn in affordable housing payments had been committed to councils by developers since 2010 but just 20% had been spent. Councils cited stretched resources and high land values as reasons for only £236m of commuted payments being spent over the past five years. London’s 11 inner boroughs received more £800m in the past five years – 68% of the UK total – but have spent just 8% of this. Westminster and Southwark took the lion’s share, receiving £554m, or 47% of the UK total. Southwark has spent £25m of its £163m, or 15%, and said it had large-scale plans in place to deliver affordable housing. All the content from this week’s magazine, including this article, is available in the new app. Cabinet member for regeneration and new homes Mark Williams said Southwark used the funds to buy directly from developers and in-fill on existing estates. Westminster has spent nearly £26m, which is just 6.6% of the £391m received in the past five years. However, it claimed all of the money had been allocated. “The council is currently embarking on its largest regeneration programme, which will deliver up to 1,400 additional homes over the next eight years,” said a spokesman. Commuted sums are recommended under the National Planning Policy Framework only when a council has exhausted all other forms of affordable housing provision. However, between 2012/13 and 2014/15 amounts received have risen by 135%. “Spending the money is where councils struggle,” said Anthony Lee, senior director of development consultancy at BNP Paribas Real Estate. “Many are not geared up as developers anymore – that skill has largely disappeared.” Click here to read the full investigation Source link
According to new data, almost a quarter of a million homeowners have advertised for lodgers since the Rent a Room scheme threshold was raised in the Summer Budget. Under the new rules, from 6th April homeowners can earn £7,500 a year tax free by letting rooms. Since the announcement of the increase to the Rent a Room Scheme tax threshold to £7,500 per year almost quarter of a million (233,697) homeowners have advertised for lodgers. This is an increase of more than 5.2% on the same period a year earlier. The data also reveals that August – the month following the Chancellor’s Summer Budget announcement – was the busiest since records began in 2007, with 31,109 people placing ads for lodgers. The table below shows average monthly and annual lodger rents in Q4 2015, for the UK’s 50 biggest cities. London is the only major city where annual lodger rents are still higher than the new threshold, which kicks in on 6th April 2016: UK’s 50 biggest towns/cities by population Monthly lodger rent (£) including bills Q4 2015 Annual lodger rent (£) including bills Q4 2015 Oxford £568 £6,816 Aberdeen £509 £6,108 Edinburgh £496 £5,952 Reading £488 £5,856 Poole £469 £5,628 Milton Keynes £468 £5,616 Bristol £456 £5,472 Bournemouth £450 £5,400 Cardiff £437 £5,244 Southampton £436 £5,232 Southend-on-Sea £435 £5,220 Glasgow £432 £5,184 York £426 £5,112 Luton £418 £5,016 Ipswich £417 £5,004 Portsmouth £414 £4,968 Manchester £409 £4,908 Swindon £409 £4,908 Birmingham £407 £4,884 Newcastle £406 £4,872 Northampton £406 £4,872 Leeds £405 £4,860 Dundee £404 £4,848 Coventry £399 £4,788 Peterborough £394 £4,728 Plymouth £391 £4,692 Norwich £389 £4,668 Stockport £387 £4,644 Middlesbrough £381 £4,572 Walsall £378 £4,536 Telford £377 £4,524 Swansea £375 £4,500 Liverpool £374 £4,488 Sheffield £374 £4,488 Nottingham £370 £4,440 Sunderland £369 £4,428 Derby £368 £4,416 Leicester £367 £4,404 Dudley £364 £4,368 Preston £362 £4,344 Stoke-on-Trent £357 £4,284 Blackpool £352 £4,224 Bolton £350 £4,200 Bradford £348 £4,176 Hull £346 £4,152 Wolverhampton £345 £4,140 Huddersfield £344 £4,128 West Bromwich £335 £4,020 Belfast £322 £3,864 London £708 £8,496 UK (excluding London) £424 £5,088 Matt Hutchinson, director of SpareRoom.co.uk, comments: “Across the UK, room rents are rising by 5.5% a year. The abolition of tax relief on mortgage interest could force rents up even further as landlords look to cover costs, so this change to the Rent a Room scheme can’t come soon enough. The UK is in the grip of a housing crisis nobody can see an end to. We’re not building anywhere near enough new homes so we have to make sure we’re using the ones we already have as effectively as possible. Incentivising even a small percentage of homeowners sitting on the 19 million empty bedrooms in owner-occupied properties to let them out would do just that. That’s why we campaigned for this change for six years and are delighted to finally see it come into effect.” Matt’s top three tips for renting out your room: It’s not just a financial transaction; it’s also about compatibility and lifestyle. Would you prefer a lodger you rarely see, or one you can eat dinner and watch a box set with? Everyone has different expectations, so think about who you’re looking
The building services engineering sector – which makes up 40 per cent of the UK’s construction and maintenance industry – believes it will successfully weather the outcome of Brexit over the next few years. That’s according to major new survey findings from the Electrical Contractors’ Association (ECA), the Building Engineering Services Association (BESA) and Scotland’s trade association for the electrical industry SELECT. Almost half of survey respondents (46 per cent) believe Brexit will have a positive impact on their company in just five years’ time, with less than one in five (19 per cent) saying it will have a negative impact. (23 per cent said it would have no discernible impact). However, the largest contractors in the survey (with over £20 million turnover) are slightly less optimistic about the short term business prospects than smaller contractors. The sector puts maintaining access to the EU ‘Single Market’ at the top of its list of Brexit aspirations, closely followed by more control of employment law and the need to negotiate non-EU trade deals. Despite the general positivity about Brexit, 47 per cent of respondents say they believe the cost of materials will rise as a result, while only 22 per cent do not think Brexit will cause this to happen. Reflecting a general tendency to use skilled UK rather than EU workers, the vast majority (92 per cent) of respondents say they ‘do not rely on EU migrant workers’, and only 25 per cent agree that Brexit would ‘worsen the shortage of qualified workers’. In addition, just 1 in 6 respondents (17 per cent) said that maintaining freedom of movement was their top priority. Some 71 per cent of the largest contractors (over £20 million turnover) report they did not rely on EU workers, indicating more reliance than the average for the sector. ECA CEO Steve Bratt commented: “No matter how our relationship with Europe develops, our sector has a huge role to play in achieving UK business growth. This includes providing skilled jobs, fully functional buildings and infrastructure, and UK energy security. “To help us achieve these aims, it’s vital that we know the initial views of our sector as we head towards Brexit. Significantly, contractors are telling us that they want the UK to maintain access to the Single Market, while they are less concerned about ensuring freedom of movement.” BESA chief executive Paul McLaughlin added: “Our survey clearly shows that many contractors are conditionally optimistic in the wake of the Brexit vote. In fact, putting these findings alongside the brighter than expected data for the UK economy as a whole gives us a much more upbeat feel than could reasonably have been predicted back in June. “The survey provides extremely valuable feedback about what matters most to contractors as the UK sets about negotiating a new relationship with Europe. As a result, we will draw up an action plan for the building engineering services sector to focus our lobbying efforts in the coming months.” SELECT Managing Director Newell McGuiness stated: “The results of the UK wide survey provide a valuable insight into the hopes and needs of contractors and will be very useful as we seek to influence government policy going forward.” The building services engineering sector, which spans construction and maintenance across the UK built environment and national infrastructure, comprises many multi-million pound contracting companies, and many more small contractors. Building engineering services contractors install and maintain a range of equipment such as electrical, heating and ventilating, fire and security, data communications and wireless, building energy management and renewables (e.g. solar PV). The UK construction industry alone comprises some 7 per cent of UK GDP. Source link
