In June, we breathe a sigh of relief that we were no longer in political limbo and we hoped that the Cameron/Clegg coalition would give us political stability. We started to see a recovery which was stalled once again while we waited for the new Government’s first budget.
The planned rise of Capital Gains Tax was not as extreme as many of us had feared but sadly it still comes with little consideration for the needs of landlords. Unfortunately the Chancellor risks driving those landlords paying a higher rate of tax from further investing as they will now be penalised by Stamp Duty when purchasing and a 28% CGT when they sell. The increase came into effect overnight so at least some landlords did not then become reluctant sellers in order to escape this increase.
The Private Rented Sector is in desperate need of more stock and the Government have failed to encourage more people to invest. On a more positive note, however, the Buy to Let mortgage market is moving again although there is a similar story – demand for mortgages is exceeding supply. The main lenders appear to be BM Solutions, the Mortgage Works, Clydesdale Bank and the Bank of China. The best deals are 60% loan to value although I believe that 80% is possible but at an expensive premium. The Buy to Let market really appears to be opening up with twenty new lenders considering coming back into it, including Northern Rock. Professional landlords are a good risk to lenders, the Buy to Let market is a profitable business and thankfully there are much tighter controls now that the Bank of England is regulating these banks. It is vital for the housing infrastructure that the PRS continues to grow and with first time buyers being an important part of the housing ladder, an imbalance is created whilst they still struggle to obtain mortgages.
So, lesson one for the Government is to help landlords and lesson two is to regulate agents. I was disheartened to hear that Grant Shapps was closing the door on Labour’s initiative to regulate agents and we all continue to lobby him and to make him understand how unregulated agents are precariously holding millions of pounds on behalf of landlords and tenants, much of which is unbonded – hopefully one day they will sit up and listen!
The influx of new tenants and families coming into London is well under way. Historically, July is the changeover month of the year as the school year ends. All areas of the market are busy with ‘bidding wars’ taking place on high quality stock. The high net worth student market is also extremely active as students come into London to register for courses from September and arrange their homes prior to soaking up the sun on the Mediterranean.
With the Election, the Budget and now the World Cup behind us, it’s all systems go for a busy and active property market; let’s hope until the Olympics 2012!
Lucy Morton.
Email this Newsletter article
Print this page