The property market is still in a flurry with some buyers still trying to rush and beat the stamp duty holiday deadline that is looming. Rightmove are saying that potentially 100,000 buyers will miss it and face an unexpected tax bill with a mammoth 613,000 sold subject to contract properties still awaiting legal completion. It is crazy to think that there is still an influx of buyers trying to buy now to beat the deadline and if you look back, we did warn of this happening back in November.
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.
- Stamp duty holiday extension – MP calls for action after debate is postponed – There have been growing concerns that the abrupt end of the stamp duty holiday could see property transactions nose dive and an online petition passed the 100,000 signature threshold to trigger a discussion in the House of Commons. However, sittings in Westminster Hall, where petitions debates take place, will be suspended until further notice, due to the Covid-19 outbreak and the chair of the Petitions Committee Catherine McKinnell has called on the government to urgently make plans to restart petitions debates. Rishi Sunak is coming under constant pressure to extend the deadline and avoid a stressful house moving “completion chaos” frenzy. With the debate postponed and no real signs of Rishi succumbing to the mounting pressure, it is hard to see this changing. If it doesn’t, will it really cause chaos? I am not totally convinced, yes there will be clients trying to get transactions completed, but based on monetary reasons, I don’t think the majority of buyers are going to sacrifice a sale or purchase for stamp duty unless you are saving the highest amount of £15,000. We will see.
- Government unveils green standards – The government is definitely taking climate change very seriously and by 2025 new builds will be expected to produce 75-80% lower carbon emissions compared to current levels. Existing properties will also be subject to higher standards such as a significant improvement on the standard for extensions, making homes warmer and reducing bills along with the requirement for replacement, repairs and parts to be more energy efficient. Christopher Pincher, housing minister, said “The radical new standards announced today will not only improve energy efficiency of existing homes and other buildings, but will also ensure our new homes are fit for the future, by reducing emissions from new homes by at least 75%. This will help deliver greener homes and buildings, as well as reducing energy bills for hard-working families and businesses”. It is great to see this enthusiasm and action being taken which is a step towards their aim of achieving net-zero emissions by 2050.
- One in five landlords unprepared for end of interest tax relief – Since April 2020, landlords are no longer able to deduct any of their mortgage expenses from rental income to reduce their tax bills and Instead, landlords will receive only a tax-credit, based on 20% of their mortgage interest payments. It is a tax change that caused the seismic shift to more investors purchasing properties using a limited company. The major detrimental effect with this tax change is that it will push some landlords into the higher tax bracket because they now have to include income money they have actually paid out in interest payments as part of their earnings. Also, since April 6, 2020 there have been changes to how landlords need to declare and pay Capital Gains Tax meaning anyone who disposes of a UK residential property that is not their main home and make a capital gain where there is tax to pay, now need to inform HMRC and pay the tax due within 30 days of completion. According to the Property Master survey, over 40% of landlords were unaware of this. If you are a landlord unsure of these new changes then we strongly recommend speaking to an accountant to know where you stand.
- Boost for investors as mortgage choice improves across Buy To Let – Moneyfacts, who is an independent financial service market monitor, have found that after two months of small increases, investors now have the highest number of deals to choose from since March 2020. This will be encouraging news with 1,976 BTL products now on offer. Investors with lower deposits will also be pleased to hear of the return of the higher-risk 80% LTV bracket. Moneyfacts did encourage an air of caution with in-house finance expert Eleanor Williams saying their “data reflects the fact that the market remains volatile since the start of the New Year. Lenders have been adjusting their offerings and consequently, availability continues to fluctuate”. It would also transpire that average rates across the LTV tiers are all currently in excess of their equivalents year-on-year. Williams also thinks that the recent research from Hamptons reporting prospective tenant numbers in December 2020 outstripping 2019 levels while the number of available rental homes dropped everywhere outside of London may lead to a rise in rental growth that may outstrip house price growth. She goes on to say “This seems to confirm that there is cause for optimism and that despite the knocks of recent years the BTL sector has a vital place in our recovery”.
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.