Property News Update - November 2021
Get an update on all the latest in the property market for November 2021. Changes in CGT changes, rent trends, and more.
Table of contents
CGT changes for landlords rejected by Treasury
The Treasury has scrapped proposals from a financial watchdog to increase capital gains tax rates and reduce the annual allowance.The measure would have hit landlords in the pocket as capital gains tax (CGT) is charged on the gifting or sale of buy to let homes.
The recommendation came from the Office of Tax Simplification (OTS), which published two reports on CGT on the orders of Chancellor Rishi Sunak. But on reading the reports, the Treasury sent a letter to the OTS confirming ministers would not implement the recommendations any time soon.
These reforms would involve a number of wider policy trade-offs and so careful thought must be given to the impact that they would have on taxpayers, as well as any additional administrative burden on HMRC, said Lucy Frazer, Financial Secretary to the Treasury.
The government will continue to keep the tax system under constant review to ensure it is simple and efficient. Landlords have a tax-free yearly allowance of £12,300 frozen at that level until 2025. However, they pay enhanced CGT rates on residential property disposals other than their main home: 18 per cent at the basic rate and 28 per cent at the higher rate.
The Treasury has agreed to streamline how CGT is paid by setting up an online hub. Officials will also look at extending, no gain, no loss‚ transfer rules between separating spouses. In the same letter, Frazer also dismissed overhauling inheritance tax along the lines suggested in two recent OTS reports requested by the Chancellor .Read the Treasury letter.
House building falls short of target
Hopes that more new homes were on the way to relieve the growing housing crisis took a bashing when the government released data showing demand is outstripping supply.
Figures from the Department of Levelling Up, Housing and Communities shows 216,490 new homes were added in England during 2020-21 - a fall of 11 per cent on the previous year. New builds accounted for 194,060 homes. The rest came from a change of use or conversion.
Timothy Douglas, policy and campaigns manager at ARLA Propertymark, the trade body for letting agents, said: The UK Government's latest figures on net additional dwellings paint a deeply worrying picture as industry data tells us that demand is far outstripping supply in both the sales and lettings markets meaning there could not be a worse time for housing delivery to plummet.
Despite the steady upwards trajectory of new delivery since 2012-13, the UK Government still had some way to go to deliver on their target of 300,000 new homes per year by the mid-2020s. Based on these statistics, it is unlikely they will achieve this. Due to the impact of the materials shortage for the construction sector, this also highlights real concern for the UK Government's ability to meet its target. See the latest data tables.
London landlords fined ¬£1m in a year
London councils have picked up more than £1 million in fines from rogue landlords over the past year.Total recorded landlord fines in the capital reached £7.1 million at the start of November, according to Kamma, a data company monitoring the Mayor of London's Rogue Landlord and Agent Checker. Fines so far in 2021 are £1.076 million, averaging just under £90,000 a month.
The most active boroughs for enforcing housing laws are Camden, Newham and Southwark.Kamma CEO Orla Shields said: 'The lettings market is more regulated than ever before. Licensing schemes, fines and enforcement through Rent Repayment Orders are all increasing, so it's vital'.
Agents act to protect themselves, their landlords and of course their tenants. Letting agents and landlords face fines of up to £30,000 for breaking housing law, including failing to comply with tenant safety and licensing regulations.
UK homes worth more than ever
House prices are still defying gravity with an 11.8 per cent rise, says the latest Office for National Statistics data. Average home values in the UK have reached £270,000 - up £28,000 in a year to reach a new high.
Homes in England are worth even more, rising 11.5 per cent in 12 months to reach a record average value of £288,000.London prices were in the doldrums for the tenth month in a row, posting an annual increase of 2.3 per cent. House prices rose the most in the North West - up 16.8 per cent in the year to the end of October. Get the ONS house price report.
UK rents revive, but London lags
Rents for property in London are slowly moving upwards after months of flat-lining, says new data. The Office for National Statistics figures for October reveals rents climbed 1.5 per cent after a slowdown driven by falling London rents dating back to November 2019. Private rents rose 2.2 per cent across the country but excluding London, while tenants paid just 0.1 per cent extra in the capital - the lowest rate in England.
This reflects a decrease in demand, such as remote working shifting housing preferences, meaning workers no longer need to be close to their offices. It also reflects an increase in supply, such as an excess supply of rental properties as short-term lets change to long-term lets, says the ONS report. Other data from tenant referencing firm Homelet suggests the average UK rent is £1,058 a month - up 8.6 per cent from last year. Read the ONS and Homelet reports.
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