Mortgage News

Collapse
This is a sticky topic.
X
X
  • Filter
  • Time
  • Show
Clear All
new posts

  • loanarranger
    replied
    Chestertons view on impact of Stamp Duty and its potential effect on Pensioners entering into BtL


    Will the stamp duty hike deter pensioners from BTL?

    According to London based estate agents, Chestertons, the decision to add 3% to the rate of Stamp Duty for BTL investors from April next year means it may no longer be a financially viable option for pensioners looking to generate revenue in retirement.

    The announcement of the additional levy on second homes and buy-to-let purchases came as a surprise announcement in the Chancellor's Autumn Statement, and initially caused some confusion across the industry as pundits disagreed on how the additional 3% would be applied.

    Chestertons has now calculated that the extra duty will hit the lower end of the market more heavily in terms of a percentage increase than it will the higher end. A buy-to-let property acquired for £150,000 attracts Stamp Duty of £500, but under the new regime the Stamp Duty rises to £5,000 – a ten-fold increase. By comparison, an investor buying a property for £1m currently pays £43,750 in Stamp Duty, compared to a new rate of £73,750 from next April – less than double the original duty – though of course a larger amount in cash terms.

    Nick Barnes, Head of Research at Chestertons, says: “The Chancellor claimed that this change to Stamp Duty would prevent wealthy investors and overseas buyers from pricing first-time buyers out of the market, but as usual the devil's in the detail. What we can now see is that this change is likely to completely deter many 'first-time' landlords from getting into the private rental market in the first place, including pensioners looking to wisely reinvest their precious pension pot.

    The obvious effect of this will be that there may well be a significant number of smaller landlords deterred from entering the sector altogether. Those who remain will have their margins slashed and, on top of the increasing regulatory burden and the planned reduction in mortgage interest relief, they may have to raise the rent in order to make the numbers stack up. Either way, the already highly competitive private rental market is about to get a whole lot more so.”

    Robert Bartlett, CEO of Chestertons, adds: “We had asked the Chancellor to review the Stamp Duty changes he introduced last year, as they are having such a negative impact right across the house sales market, but particularly on transactions above £1m, a majority of which are here in London. We'd hoped he might consider capping rates, or reducing them by 3%, so you can imagine the dismay when this extra surcharge was announced. The buy-to-let sector has become an essential part of the UK housing landscape and we urge the Chancellor to think clearly around the rules for when this is being introduced. Does, for example, an investor who has contracted to buy a new home today have to pay the extra 3% SDLT if the building actually completes post 1st April.

    While we welcome anything to discourage property owners from sitting on empty property, given our chronic housing shortage, we are concerned that as well as landlords and tenants suffering from this new policy, sellers will also be hit, as investors seeking to mitigate this additional cost on top of their property purchase will doubtless try to negotiate a reduction in the asking price as we are already seeing post the massive hick in SDLT rates last year.”

    Leave a comment:


  • hech123
    replied
    Freehold finance is very difficult indeed unless anything has changed. Perhaps a high street lender would look at it on a commercial basis but not many lenders deal with it

    Leave a comment:


  • loanarranger
    replied
    Gordon999
    I do not know the answer to this apart from individuals raising capital individually for the purchase either on their own account or collectively to acquire the freehold but when I am back at base I will make enquiries and respond hopefully with a better solution.

    Leave a comment:


  • Gordon999
    replied
    Do any lenders offers loans to assist groups of leaseholders to buy the freehold of their block ?

    The rules require a majority of leaseholders in the block to exercise the right to buy the freehold but often a large minority are unwilling or don't care or too ill ( like those in retirement homes ) to participate and this makes raising funds is a big problem.

    Leave a comment:


  • loanarranger
    replied
    I cannot disagree with your comments, it was only a few months ago that market indicators suggested a possible hike in rates as early as Spring 2016 so he advice to clients was to give consideration to 3/5 year fixes , now that sentiment is erring against any increases until 2017 it really is a question of considering say 2 year tracker discounts ideally with no Early redemption costs thereby enabling a borrow o switch to say a fix rate should the BofE get their forecasts wrong.
    I spend one day a week updating my lender analysis just to try and keep abreast of the changing sentiment that exists with lenders and the underlying changes in money market rates, these to my mind are a better indicator of which way the wind is blowing so far as interest rates are going say 6/12 months ahead.
    2016 will be an interesting year with all the changes which are about to happen hence why I feel that posting market changes and news articles might to some degree help both established and novice landlords on the Forum.

    Leave a comment:


  • hech123
    replied
    Good articles - I would like to think someone could predict interest rate rises but if Mark Carney can not even give us the correct year then what hope does anyone else have!

    Leave a comment:


  • loanarranger
    replied
    Aldermore makes announcements in advance of the European Credit Directive.

    Aldermore has today published a new leaflet outlining its preparations ahead of the implementation of the European Mortgage Credit Directive on the 21st March 2016.

    Aldermore will offer consumer buy-to-let to all customers who meet their lending requirements and will be adopting the KFI+, transferring to the ESIS in time for the regulatory deadline in March 2019, and a seven day reflection period, which commences from the date of mortgage offer, will also be implemented.

    Aldermore will fully implement MCD in March 2016 ahead of the regulatory deadline and will provide further updates to their intermediary partners in early 2016.

    Leave a comment:

Latest Activity

Collapse

Working...
X