Property Update – October 2021

Landlords Survive Budget 2021 With Minor Tax Tweak

Chancellor Rishi Sunak’s Autumn Budget 2021 has changed little for landlords with just a minor tax tweak.

After years of tinkering, the only property tax announcement that impacts landlords is extra time to pay capital gains tax (CGT) bills.

The deadline to report and pay CGT is pushed to 60 days after completion from the current 30-day limit.

The measure takes effect from October 27 and covers all resident and non-resident landlords selling or gifting homes in the UK.

“This will ensure that taxpayers have sufficient time to report and pay CGT, as recommended by the Office of Tax Simplification. In addition, when UK residents dispose of a mixed-use property, legislation will also clarify that the 60-day payment window will only apply to the residential element of the property gain,” said the Chancellor.

£65 million rescue package for renters in arrears

Private renters with rent arrears in England can access a £65 million support package from the Department of Levelling Up, Housing and Communities.

The funding will go to local councils to distribute to low-income renters to cut the number of evictions.

Renters in Scotland and Wales have had rent support packages throughout the coronavirus pandemic.

Minister for Rough Sleeping and Housing Eddie Hughes said: “We have taken action throughout the pandemic to support the most vulnerable families, and it is vital we continue to provide support as we enter the winter months.

“This new funding will support families that are struggling and help to get them back on their feet as we begin to recover from the COVID-19 pandemic.

“The £65 million will be available through the winter months, and households at risk of eviction or homelessness should contact their local council if they require support. The fund recognises the pandemic’s impact on households with the lowest income in the private rented sector.

“It is for councils to determine the best way to support each household on a case-by-case basis.

“Any payment is likely to be direct to the landlord if the money is for supporting a household to find a new home.”

Evening clouds over the City of London, affordable housing, England, UK

London rents still falling

London rents dropped by 0.3 per cent in the year to the end of September – making the capital the only English region with falling rents, according to the latest data from the Office for National Statistics (ONS).

Rents in England, including the capital, were up 1.3 per cent year on year. Excluding London, they rose 2.2 per cent

Scotland posts the highest rent increase over the past year – up 1.6 per cent, while Wales reported a 1.2 per cent rise.

Overall, says the ONS, UK rents have increased 11.1 per cent since January 2015.

However, influential property portal Rightmove revealed the private rental market shows signs of bouncing back stronger after the pandemic.

“Across Britain, rents are rising at the fastest rate ever recorded by Rightmove, now up 8.6% annually outside London, and the capital is finally showing signs of growth, with rents up by 2.7% on a year ago,” says the research.

“In Birmingham city centre rents fell by 5% between February 2020 and February 2021, but by September this year, the increased demand helped them to grow to 10% higher than pre-pandemic levels.

“It is a similar picture in Nottingham city centre where rents fell 2%, and have grown to 11% higher than before the pandemic.

“Edinburgh city centre has seen rents grow by £100 since February of this year, but they still trail by 5% when compared with February 2020.”

Rightmove looks at current asking rents on the website, while the ONS gathers data on prices paid, which explains the difference between their reported figures.

Towns with the most expensive and cheapest homes

House prices are booming, but new research shows the profits are spread thinner in former industrial centres.

Ferryhill, County Durham (Population 9,362) may have a proud mining history but also posts the lowest house prices in England. Homes in the village cost an average of £39,000.

But move south to Northwood, Hertfordshire, on the Greater London border, and the picture is entirely different.

The average house price is £1,050,000, and the town has sat at the top of the rankings since 2009.

At the time of the survey in December 2020, the average home was worth £250,000. Since then, the high was set at £265,000 but fell back to £256,000 in September.

The data covers 1,200 English towns with a population between 5,000 and 225,000 people.

Top 10 towns with the highest property values

trend
Source: ONS

 

Bottom 10 towns with the lowest property prices

 

trend
Source: ONS

Buy to let mortgage rates fall below 1%

The chance of securing a sub-1 per cent buy to let mortgage rate may be slipping away for landlords.

Messages from the Bank of England and hints that inflation may hit 4 per cent or more in the New Year could signal a rise in interest rates is on the way.

Meanwhile, The Mortgage Works and the Co-op Bank both have 0.99 per cent buy to let mortgages and remortgages.

To apply for the TMW two-year fix, borrowers have to dig deep to find a 35 per cent deposit and a 2 per cent arrangement fee.

The Co-Op offers the same deal but wants a 40 per cent deposit and a £2,450 arrangement fee. Other restrictions bar landlords with more than three rental properties and those with a household income of less than £60,000 a year.

Buy to let finance is cheap because banks and building societies are flush with cash from customer savings over the pandemic. They can also borrow at low commercial rates and still turn a profit with a sub 1 per cent deal.

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