The headlines this week have been shifted back to Brexit as we see deadline day looming and we wait in anticipation to see if the UK leaves with a ‘deal’ or ‘no deal’ scenario. With all that talk in the media, the latest Halifax House Price Index report has slipped under the radar. The new data shows that house price growth is on its strongest run since 2004 and prices are up 1.2% in October. House prices in November were 7.6% higher than in the same month a year earlier which is the strongest growth since June 2016. Very strong results here for the UK property market and we will probably see this continue into next year. It will be interesting to see if the Brexit news we are waiting for has an impact on the market.
Now, let’s take a look at the property headlines that caught our attention this week, I always try to summarise the links to save you having to click through.
Property news this week
Do we want Flood Certificates as well as EPCs? – A not-for-profit group of government and insurance industry representatives call Floor Re wants a Flood Performance Certificate to be issued for every home. They think that the certificates could encourage more people to install property flood resilience measures and mitigate against future flood risk and would need to be provided at the point of sale or rental of a property. I know that in property sale transactions, during the conveyancing process, flood risk reports are done and if it comes up as high-risk solicitors will advise their clients accordingly and some lenders may not lend on the property so this could help high prevent and/or highlight the problem in the beginning. However, if you then ‘ok’ this, where does it end? Do you then ask that every property has a full structural survey before it goes to market? Mainly property sale-related, but if we start going down this route we would have to change the whole buying and selling process. We would be heading to a Scottish style where all reports etc are done before you put the property on the market and presented to buyers beforehand. I can sense the talk of ‘HIPS’ making a return……and we all know how that turned out.
First-time buyer landlords remain buoyant despite pandemic – It is interesting to see this article report that instead of some first-time buyers trying to purchase their first home to live in, these borrowers are choosing a buy-to-let investment as their first purchase. The prominent type of this buyer seems to be purchasers who are living in London or the South East where it’s tougher for salaries to meet higher purchase costs so instead of these borrowers buying where they live, they can an buy a property in other parts of the country where prices are lower, and yields are favourable such as northern cities like Leeds, Manchester or York. The article points to the fact that with savings rates so low, someone who isn’t ready to buy a home may still want to put money into property as people want to invest in something tangible with bricks and mortar being a great example of this. There is a myth that you can’t buy an investment property unless you own your own home, this article proves that this is definitely not the case.
UK takes top-spot in European property investment market – International law firm DLA Piper undertook a recent global survey which surveyed 500 investors, developers, and asset managers from across Europe, China and the US where they ranked the UK highest for future residential property investment. Additionally, nearly one third (29%) expect to invest more in 2021 than they did in 2020. Behind the UK were France and Germany. It would seem that despite Covid-19 and uncertainty over long-term recovery from the pandemic, investors continue to feel positive about the European residential property market. Olaf Schmidt, managing director of practice groups at DLA Piper, put this down to the European real estate market having “strong fundamentals, low interest rates, and high potential yield returns compared to equity markets” and that the “UK remains an attractive market for investment also post-Brexit which should provide confirmation and reassurance that the UK is a vital hub for activity and growth”.
One-off tax grab on property values proposed – More taxation speculation and this time experts have warned that millions of people could see their main homes, not just additional properties, taxed as part of a one-off “wealth tax”. So, rather than increasing income tax or VAT, the government would instead look at a tax on people who who have assets worth £500,000 or £1m for a married couple and taxing those households an extra 1% on their assets could raise £260bn over five years according to a report from the Wealth Tax Commission. The concern for this would be that it would target thousands of people and households that are not particularly wealthy causing them to struggle and even find themselves in debt as they are asset rich but not cash rich. Nimesh Shah, CEO at tax and advisory firm Blick Rothenberg, commented: “Pensioners who fund their living costs through savings, farmers owning agricultural land and private business owners will all be concerned by the proposals and how they will feasibly fund the tax – these groups may need to burden themselves with debt to pay the tax, although this may not be an option or cost-effective for everyone e.g., the elderly”. According to Nimesh, recent tensions around future tax rises, in particular capital gains tax, risk damaging the UK’s reputation as a centre for international business at a time when the government should be doing all it can to keep the UK competitive under the backdrop of Brexit. Let’s hope this idea doesn’t get any traction and we don’t see it come to fruition.
That is all we have for you this week. If you have any comments or questions on this week’s news summary, please feel free to send us an email at [email protected]
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