Buy to let stamp duty surcharge and other related news

[Martin@AS Financial]

In other words, the next few years is a good time to get out of BTL, at a hefty profit, let the idiots charge in, await the crash, await the repeal of these "tough" changes and pile back in.

BTL == Sell up now and pocket your profits.

It's the last quote from Andrew Bailey that I would struggle to take comfort from if I were a landlord.

[Martin@AS Financial]

Buy-to-let borrowing dropped 65 per cent between March and April

Taken from Mortgage Strategy:

Buy-to-let borrowing dropped 65 per cent between March and April, according to figures from the Council of Mortgage Lenders.

The data shows that landlords borrowed £2.5bn in April, down 7 per cent year-on-year.

This came to 16,100 loans in total, down 64 per cent compared to March and down 10 per cent compared to April 2015.

Homeowner borrowing for house purchase was down 40 per cent between March and April to £8.1bn for the month, a drop of 4 per cent since April last year.

This was made up of 47,300 loans, down 31 per cent on March and 5 per cent on April 2015.

There was also a monthly drop in first-time buyer borrowing, down 11 per cent on March to £3.5bn but rising 15 per cent on last April.

There were 25,100 first-time buyer loans, down 9 per cent month-on-month but up 7 per cent year-on-year.

The CML said the average loan size taken out by first-time buyers dropped to £130,000 from £133,000 last month.

This was offset by the average yearly household income of borrowers also falling slightly, from £40,600 in March to £39,700 in April.

Homemovers borrowed £4.3bn, down 53 per cent on March and a fall of 14 per cent from a year ago.

This category took out 22,200 loans, down 46 per cent month-on-month and 15 per cent on April 2015.

The average amount borrowed fell to £162,995 from £180,000 in March.

CML director Paul Smee says the figures reflect a rush of investors trying to beat the March stamp duty deadline.

He says: “We expect the market to take several months to return to its previous levels after the lending surge.”

Remortgages rose 25 per cent in April and 40 per cent year-on-year.

This camp includes 34,800 mortgages.

[DimPrawn]

BTL disease still rife then?

[Martin@AS Financial]

Rental calculations

Joining the likes of Mortgage Woks and TSB, Coventry are now changing their rental calculation to rent x 140% which will significantly restrict BTL lending for those without large deposits.

"The Coventry for intermediaries has adjusted its Buy to Let lending policy in advance of the changes to landlord tax relief which take effect from April 2017. From 8pm Wednesday 13 July their new rental calculation will be applied to all BTL applications and will increase from 125% to 140% of the monthly mortgage interest payment. This will be calculated using the reference rate or current product pay rate, whichever is higher. Its reference rates remain unchanged.

Kevin Purvey, Director of Intermediaries, said: "With the upcoming changes to mortgage tax relief for landlords, there will be increased costs for brokers’ Buy to Let clients. We have made the decision to adjust our rental calculation to ensure that applicants can afford their mortgage both now and in the future”.

[Martin@AS Financial]

Calls for chancellor to scrap stamp duty

Taken from FT Adviser:

The TaxPayers’ Alliance has called on the government to undertake “real reform” to tackle the housing shortage in the UK and re-stated its demand that the stamp duty be abolished.

A new report from the lobby group accused successive governments of avoiding meaningful reform, focusing instead on tinkering around the edges, which has only served to worsen the situation and drive up prices.

It argued stamp duty is an unfair tax which stops people from buying their own home, settling down with a family, moving for work or downsizing

“The recently implemented 3 per cent tax additional homes surcharge and new restrictions on finance cost relief will also advantage richer prospective buyers at the expense of poorer tenants,” it stated.

The TaxPayers’ Alliance suggested both policies distort housing markets, with implications for incomes, employment and overall welfare.

It called for a cancelling of the additional homes surcharge and restrictions on finance cost relief, with a halving and eventual abolition of the stamp duty altogether.

Planning restrictions should also be reformed, according to the think tank, to declassify some green belt land and allow taller, denser construction in urban areas.

Jonathan Isaby, chief executive of the TaxPayers’ Alliance, said for decades politicians have failed to tackle the root causes of the housing crisis: a chronic lack of supply.

“What’s more, stamp duty is still punitively high and gimmicky tweaks to the tax system will ultimately end up penalising tenants and increasing rents,” he commented.

“The new chancellor should now seize the opportunity to drastically simplify and reduce property taxes as well as liberalise planning restrictions, which prevent huge swathes of land from being built on for no good reason at all.”

The Residential Landlords Association’s chairman Alan Ward called the report a damning indictment of the government’s tax grab on landlords.

“Recent tax changes will see many landlords increase rents, this will make it harder for tenants to save for a deposit for a home of their own; it will go against everything the government claims it wants,” he stated.

“A tax system that encourages rather than damages housing supply would boost revenue for the Treasury and cut costs for tenants. Ahead of the Autumn Statement there is now an opportunity for the new government to think again about its tax on new housing.”

A report, published earlier this month by the House of Lords’ Economic Affairs Committee, strongly recommended the government lift its target by 50 per cent and build 300,000 homes each year in order to tackle the housing crisis.

While the new chancellor Phillip Hammond has so far been quiet on housing policy, the new housing minister Gavin Barwell outlined his plans for the role last week, aiming to work with a range of stakeholders to hit building targets.

[GB9]

Bizarre! I struggle to see how anyone buying more than one property could be described as poor.

[AtW]

Bizarre! I struggle to see how anyone buying more than one property could be described as poor.

Parents buying for children who can't afford anything because they've got crazy student debts.

I doubt very much Chancellor would remove or reduce 3% - it will bring nice cash this year, and maybe for some time ahead, and overall stamp duty is big money maker for Govt.

[GB9]

Parents buying for children who can't afford anything because they've got crazy student debts.

I doubt very much Chancellor would remove or reduce 3% - it will bring nice cash this year, and maybe for some time ahead, and overall stamp duty is big money maker for Govt.

Which only wealthier patents could do.

[AtW]

Which only wealthier patents could do.

So they should be made poor also?

[Martin@AS Financial]

Property V Pension

Property trumps pension for retirement, says Bank’s Andy Haldane

(Taken from Mortgage Solutions)

The Bank of England’s chief economist Andy Haldane has ranked property higher than pensions as the safer way to save for retirement as the under-supply of new homes continues to drive prices up.

In an interview with the Sunday Times, Haldane disclosed he owned two homes, one in Surrey and a holiday home on the Kent coast as well as a pension currently valued at just under £84,000 a year.

When asked for his opinion on how best to save for retirement, Haldane chose property, but said that it ‘ought to be pension’.

Haldane added that as long as the country continued not to build anything near as many houses to meet the people’s needs, the UK would continue to see ‘house prices relentlessly heading north’.

The former pensions minister Baroness Altman criticised his comments for being ‘divorced from reality’. She said it was irresponsible to suggest people should rely on property instead of saving into a pension pot.

Haldane came under fire in May for claiming he could not ‘make the remotest sense of pensions’. Haldane dealt the sector a further blow by stating discussions he had been party to with many experts and independent financial advisers revealed ‘they have no clue either’.