News

Market Update
I’m sure you are all “budget drunk” by now with the media analysing the “winners and losers” and hoping to sell more newspapers on the back of it.
The main thing lost in everything I read is the changes to the buy to let (BTL) market, which may impact on the number of properties available to rent.
This is a business like any other business, yet any other business can offset its borrowing costs against tax. The buy to let market is to have tax relief reduced to base rate. Much is being made of this, yet corporation tax is 20% the same as base rate, so what is the problem?
The first thing that has gone completely unnoticed is the loss of 10% wear and tear allowance. From April 2016 private landlords will no longer be able to automatically right off 10% of their rental income to wear and tear even although they have made no improvement to the property. Now they will only be able to offset actual costs of repairs and improvements. (Actual costs). I get that, except the unscrupulous landlord whom it was designed to catch will just put the rent up!
The most publicised “removal of tax relief” at the higher rate for interest payments is I’m sure more political than practical. Many left wingers have been calling for this for years and now George has pacified them. In reality any landlord who is paying 40% tax should make an appointment with me as soon as possible. There is absolutely no need to be in this bracket, it is easily addressed.
The other reason I think the Chancellor took this step is FTB are still finding it very difficult to get on the property ladder. Yet the BTL market can snap up FTB property easily by releasing a deposit from equity in other property and topping up with a small mortgage. The idea that the BTL market is soaking up all FTB properties leaving nothing for the FTB is plain nonsense. The problem here is the Banks are still not lending enough to FTB and the lending criteria is so tight most can’t achieve it. We understand the problem George, your tackling the wrong people. We need landlords to satisfy the huge demand for rental and we need banks that will lend money to FTB who want to buy.
What about the buyers and sellers you may ask, well nothing in the budget to help or hinder either.
One problem we are experiencing just now and we were at a meeting in London yesterday, the entire Nation is experiencing a desperate shortage of stock. The last three properties we went out to take on the market, the surveyors valued two of them at £20,000 below similar property in the area, needless to say they are not coming to the market now! The third was £10,000 below comparable, but the seller has to sell and the property is on the market for what she paid for it 8 years ago!
I hope this is a trend the surveyor’s break and soon. It’s not price that is keeping purchasers away, it is uncertainty.
Bill Reid BEM BA NAEA DipPFS