Published On: Wed, May 15th, 2019

The B effect is still there in the background

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Brexit uncertainty is continuing to be a constraint on the UK residential property market, according to the latest monthly survey from the Royal Institution of Chartered Surveyors, but not all indicators are agreeing with this.
RICS says that new instructions have fallen further to their lowest point since June 2016, and the lack of new houses c…
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The average rent paid for a property in the UK now stands at £1,218, up by 0.96% in the 12 months to April 2019, the latest lettings index shows.
Excluding London, the average rent in the rest of the UK was £773, up 1.11%, with Scotland recording the highest annual growth at 1.78%, according to the data from the Landbay rental index.
Rents in London increased by 0.66% and the index report suggests that landlords looking for rental growth in London should look to Islington where rents increased by 1.64%, Wandsworth with a rise of 1.43% or Southwark, up 1.35%.
Edinburgh recorded the highest rental growth overall, up 5.44% year on year while in Glasgow rents increased by 2.59% and in East Lothian by 2.21%.
Wales has the second highest growth in terms of countries at 1.26%, but has lower rents of £658 on average. In Merthyr Tydfil rents increased by 4.65% and in Blaenau Gwent they were up by 3.92%.
In England, Nottingham recorded the highest rate of rental growth at 3.84%, followed by Rutland at 2.56% and Leicester at 2.33% while overall the East Midlands has a higher growth rate as a region at 1.98% than Scotland.
Some areas in the South of England are seeing reasonable growth with rents in North Somerset and South Gloucestershire recording above average growth of 2.39% and 2.25% respectively, leaving the average growth for the South West region at 1.24%.
‘Landlords can rest assured that there is decent rental growth to be found across the UK, particularly if they look north of London,’ said John Goodall, chief executive officer of Landbay.
‘On the face of it, landlords have had a tough time in the past few years, from increased regulatory pressure to a significant increase in stamp duty costs, yet they have managed to shoulder many of these costs without passing them onto tenants,’ he explained.
‘For brokers, this provides them with the opportunity to give expert advice to their clients about changing elements of the housing market and which areas have the most potential in the coming months,’ he added.
With just over two weeks until the letting fees ban comes into place in England landlords and agents are being urged to be ready.
Agents need to ensure that they are compliant with the new law and the Association of Residential Letting Agents (ARLA) has a Tenant Fees Toolkit providing practical tools and materials to support members through every step of the transition and beyond.
David Cox, ARLA chief executive, explained that there are answers to more than 70 Frequently Asked Questions to the Toolkit and ARLA has a series of upcoming roadshows which will update on the legislation and provide key insights on how businesses can thrive after the ban.
‘We urge members to attend as we rapidly head towards the 01 June. Agents can help reduce the impact on their business by being prepared and with the date fast approaching, they must act now,’ he said.
Ian Narbeth, solicitor at DMH Stallard, pointed out that all payments are prohibited unless expressly allowed. ‘If landlords don’t follow the rules, they could for example be fined for not returning a holding deposit to a tenant who withdraws without reason. Forfeit the holding deposit of a prospective tenant who has told blatant lies, and the landlord could be punished if he doesn’t follow precisely the Act’s procedures,’ he warned.
He also explained that if landlords overcharge, accidentally or otherwise, by even a penny they may commit an offence. Even repaying the tenant as soon as a mistake is spotted does not prevent liability.
Narbeth also warned that councils are tasked with enforcement and some tenants, especially those with large rent arrears or the ‘tenant from hell’ whom every landlord fears, may try to enlist over worked councils to threaten landlords with £30,000 fines and being placed on a ‘rogue landlords’ register. Landlords may have to spend thousands on legal fees or even sell up if they cross with crooks who know their way round this Act.
‘Landlords may even have to repay tenants who owe them thousands of pounds. Unless landlords take legal advice or are very experienced, they could lose their businesses. This Act, which MPs are so proud of, goes way beyond what was needed,’ he said.
‘In the wrong hands it is a rogues’ charter for devious and defaulting tenants,’ he added
Tax receipts on property sales in the first quarter of 2019 in England, Wales and Northern Ireland fell by 26.2% compared to the previous quarter, an analysis of stamp duty figures shows.
They now stand at £1,757 million a drop of £623 million since the fourth quarter of 2018.
Transactions in England, Wales and Northern Ireland fell 21.4% to 237,240, the analysis by London Central Portfolio (LCP) also shows.
Receipts from the additional 3% stamp duty on buy to lets and second homes, fell by 24.6% to £372 million and transactions dropped by 14.7% to 54,160.
The figures also show that first time buyer relief transactions fell by 23% as just 46,800 claimed relief amounting to £110 million, a fall of £34 million. Overall in 2018 stamp duty tax take has fallen by almost £0.75 billion.
According to Naomi Heaton, LCP chief executive officer, seasonality will have played a part as it traditionally takes a few weeks for buyers and sellers to get going after the festive period. ‘However, there is no doubt which external force is having the most destructive impact on the UK housing market, and that is Brexit,’ she said.
She believes that the fall in receipts will make uncomfortable reading for the Exchequer, as the continued downward trend of falling receipts will be creating an ever growing hole in the UK’s balance sheet.
‘The fall in transactions for additional homes suggests that both foreign investors and multi-property landlords are withdrawing from the market as continued political uncertainty gnaws away. The lack of a clear road map post-Brexit is leaving the UK housing market in limbo,’ she pointed out.
She explained that the number of transactions claiming first time buyers’ relief has fallen for the first time since its introduction. ‘Despite softening prices, it also appears that first time buyers are willing to wait and see what the rest of the year will hold before they make their move. This will be a blow for one of the Government’s flagship initiatives,’ said Heaton.
She also pointed out that since LCP’s last report the Chancellor confirmed his intention to introduce an additional 1% levy on purchases for overseas buyers. ‘One would have thought that with Brexit looming he would be doing everything within his power to emphasise the fact the UK is open for business to the overseas investor,’ she said.
‘It appears that he has not learnt from the previous Chancellor’s mistakes that continued increases to residential taxes has the knock-on effect of both suppressing transactions and revenue for the Exchequer. It seems short sighted to hit the property market, at such a low ebb, with a tax apparently designed to appeal to the popular vote,’ she added.
‘With the recent extension to the UK’s departure from the European Union, it is unlikely that we will see any material change to the status quo until our politicians can start pulling in the same direction, whichever way that might be,’ she concluded.
Source : property wire

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