I hope you have all had a great week. The office and phones remain busy which shows confidence and positivity in the property market. We are also seeing some people looking to take advantage of the extended stamp duty holiday with some of our property investments which was bound to happen.
We have a good episode on the podcast this week where we go over the risks of property investing and you can use the links below to check it out.
Now, let’s take a look at the headlines that caught our attention this week, I always try to summarise the links to save you having to click through.
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- Corporation tax hike not ‘massively important’ to BTL investors – When I read that corporation tax was going to be increased following the Chancellor’s spring budget, my heart sank for a minute. I was thinking that I had invested in property using a limited company to be more tax-efficient and now they are coming for that. Luckily, when I read through it in detail, I soon realised that I (along with many other landlords) am unlikely to be affected. The rate will taper up to £250,000, and only at that point will corporation tax kick-in at the full 25% which Elise Coole, managing director at buy-to-let lender Keystone Property Finance said would potentially only “hit one in every 25 buy-to-let investors”. HM Treasury has said that the rate for small profits under £50,000 would remain at 19% and that there would be a relief for businesses with profits under £250,000 so that they pay less than the main rate.
- London landlords have good news – renters are on the way back – We recently said this may happen on one of our podcast episodes and it seems that London is showing signs of renters wanting to come back to the capital. New data from Rightmove has shown an increase in portal enquiries for Zones 1 and 2 rising significantly, with areas like Nine Elms and Battersea the most popular. It has analysed over 23 million London searches and says searches for rental homes in areas of Zones 1 and 2 have jumped significantly. Letting agents in London are also experiencing more interest from prospective tenants now the vaccine and Coronavirus roadmap suggest that the city may get back to some form of normality in the coming months. Glynis Frew, chief executive of Hunters, adds: “Despite short term uncertainty and some people moving out of London temporarily, the fact is that most young professionals want to be amongst the buzz of the city – it’s the reason they moved here in the first place. With the vaccine providing light at the end of the tunnel now, many will be planning their next move as life starts to return to normal and their places of work start to open up again”. Savills recently upgraded its house price and transaction forecasts following the Budget and tipped prime central London to bounce back after a torrid performance in recent years with a 21.6% increase by 2025. I am hopeful that this positive trend will continue and it won’t be long before London is back how it was pre-pandemic.
- Lloyds Bank plans to become a large private landlord – It seems Lloyds, which is Britain’s biggest mortgage lender, are putting their money where their mouth is and want to cash in on the property market like many of the landlords they are providing mortgages to. Under the plan, called “Project Generation”, Britain’s biggest retail bank will buy and rent out new and existing properties across the UK, as it looks to boost profits. This is encouraging to see because if Britain’s biggest mortgage lender sees the property market as profitable and a good investment then landlords should have confidence as well.
- Habito to launch ‘lifetime’ fixed-rate mortgage that lets you lock in for up to 40 years – I had to read this twice to make sure I was reading it correctly, Habito is offering Homebuyers and movers in England and Wales the chance to fix their mortgage rate ‘for life’ later this month as Habito has revealed it will allow borrowers to lock in mortgages for up to 40 years with no early repayment charges. The online broker, lender and home-buying service Habito claims its new range includes the UK’s ‘longest ever’ fixed deal with interest rates from 2.99% to 5.35%. You can take these long-term fixed mortgages with you if you move and you can repay them early without incurring extra fees. The deals will be available from 60% loan-to-value (LTV) all the way up to 90% LTV. This is potentially a game-changer and will be especially good for those that prefer stability and certainty or are worried about interest rates rising. Just bear in mind you are gambling that you won’t be able to save more in the long run by switching to cheaper rates in the meantime.
That is all we have for you this week. If you have any comments or questions on this week’s news summary then please feel free to send us an email at [email protected] – if not, see you next week.