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Think-Tank suggests higher council tax for homes worth over £1m


London property tax

The findings of a recent report conducted by the Joseph Rowntree Trust has suggested that a higher rate of council tax should be paid by occupants of houses worth over £1m. According to the report the income derived from the extra taxation would mean that the poorest tenth of the population would have their bills reduced by more than 10%. The report states that Council tax is in need of urgent reform as it has not been assessed since 1991. The tax was put in place to tax a higher proportion of cheaper properties compared to expensive homes which is why it deemed to be so unfair. The government provides loans in the forms of grants to freeze  increases in the tax but this is becoming increasing expensive to do.

The Conservatives have so far resisted the mansion tax which is being sought by the Liberal Democrats but it looks like this demand will not go away particularly as house prices are continuing and it doesn’t seem fair that a mansion valued at £5m should be paying the same tax as a family in a 3 bedroomed home. For more information on the report please go to the Joseph Rowntree report here.

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Average earners need to see their salaries doubled to keep up with rising house prices


housing crisis

If average earners are to get on the housing ladder they would need to have seen their wages more than double over the last decade. This is despite the crash in 2008 and the subsequent problems that this brought with it. The property market has seen a significant recovery in prices whereas wages have seen very little growth. This means that property values are now totally out of sync with wages and average earners in London would need to see wages increase by £100,000 per year in order to buy in some parts of London. These figures have been put forward by Shelter, the housing charity that have carried out research from 1997 to the present date.

Since 2003 house prices on average have gone up by £1000,000. This compares to the annual average salary that has risen by just £6,750. If you take London and the south-east out of the equation the average house price across the country has risen by £73,000. You can see why house prices look very inflated when wages growth has been so low. Average earnings have a long way to catch up and house prices look as though they will continue to rise further particularly if there are not enough new affordable homes being built to satisfy demand

Property boom brings sellers to the market


Housing bubble

January saw a large number of vendors looking to cash in on the booming property market. Rightmove the online estate agent said that the number of sellers looking to sell their properties had increased dramatically compared to a year ago. They also said that they have had their busiest January on record as their website received £50m hits per day or 500 hits every second. Whilst the number of sellers had increased so has the number of buyers with buyers up 50% on a year ago. People are scared that they are going to miss out and there is a frenzy out there that has been created by the Help To Buy scheme and the cheap money that is being thrown at buyers.

Some estate agents are reporting record numbers of buyers and in many parts of Britain house prices are up 10% on a year ago. Gazumping is also back and many houses that are coming to the market are being chased by more that one buyer which is also pushing up prices. Prices in London are now at an all time high of just over £450,000 which is also causing alarm amongst many commentators who believe that the government should consider pulling the plug on the Help To Buy scheme before the average price is pushed up to the 600k threshold.

Construction industry grows at fastest rate since 2003


Construction industry improving

In what will be welcomed news by the government the construction industry has at last started to pick up and is now growing at it’s fastest rate since 2003. The construction industry has seen a slump in recent years as the recession took hold and no new homes were built. It is not just residential properties that are now being built but there has also seen a pick up in commercial properties being built and civil engineering. This is all good news for George Osborne who will say this is more evidence that his policies are working and that we are moving forward at last.

The Chancellor will be glad to see the construction industry showing signs of strong growth as it accounts for around 6% of the UK economy. The resurgence has been put down to confidence returning to the residential and commercial property sector with developers able to borrow at favourable rates as and a big upturn in the number of buyers looking to get onto the housing ladder. With 2014 looking to be a very good year for the housing market developers are snapping up sites and are hoping to cash in. The number of buyers looking for a home is now approaching record levels with buyers looking to get on the ladder before the government withdraws the Help To Buy Scheme.

First time buyers being drawn in by Help To Buy scheme


Help To Buy benefitting first time buyers

Estate agents are reporting a surge in first time buyer registrations as the number of people looking to buy their first home increases. Many of the buyers are borrowing money with the help of the taxpayer backed scheme. The boost in numbers has been welcomed by the government who say that they are giving families and individuals the opportunity to get a foot on the housing ladder.

The number of mortgages being approved has also risen along with completed sales. The picture is very different in the north of the country where the Help To Buy scheme has yet to take hold. Much of the activity in the south has been put down to the number of foreign buyers that have been buying in the south-east of Britain. This has pushed prices higher and has had an adverse affect on the number of homes that are available for first time buyers.

Londoners being forced to buy outside of London

New evidence suggests that Londoners are now being forced to move out to the suburbs so that they can buy a home. The high house prices in London and the south east is affecting the growth of many businesses in ~London because they are struggling to find staff that can afford the rents in and around london.

The government has said that it is doing everything it can to encourage new homes to be built. The Chancellor announced in the Autumn Statement that the government would be giving a further £1bn of new funding to help boost the supply of new homes in Manchester and Leeds

Chancellor changes rules on capital gains tax for non UK residents


Image

The Chancellor George Osborne has said that the government will change the rules on non UK residents in 18 months time. Currently the rules are deemed as unfair because a non resident UK property owner may buy and sell a property in the UK without paying any tax on ant profits. The same does not apply to UK residents who have to pay capital gains tax when they buy and sell a property and make a profit. The move has been welcomed by UK investors who have long said that the regime is unfair and favors overseas landlords. There are many people that believe that this has been a major driver in house price increases in the capital as overseas buyers look to take advantage of the favorable tax regime.

This is seen as an attempt by the government to level the playing field and to treat UK residents fairly. It is also hoped that this may reduce the demand for property in the capital and quell the price increases that we have seen so far in 2013. 60% of the homes that have been sold in London have been sold to overseas buyers and most of those sales have been purchased with cash. Whilst this will be welcomed by London property owners it is pushing Londoners out of London and London workers are being forced to commute because they can’t afford to live in the capital.

Freehold Ground Rents


Not a lot of people will know that you can invest in freehold ground rents. Most of us will have paid a ground rent to our freeholder at the end of each year if we owned a flat that is, but not many people will have actually invested their money in buying these types of investments.

They are becoming increasingly popular amongst property investment  companies as they generally offer a good return on the money invested and you can more or less guarantee that your ground rent will be paid each year. If you purchase the freehold of a building you will be the person that receives the ground rent income each year. If you decide that you want to try to manage the property yourself (good luck) you will normally be able to charge your lessee a fee for doing so but be warned you will have to deal with the day-to-day running of the block and be on call for any emergencies that need tending to.

Most investors simply just want to collect the ground rent each year without dealing with the management of the building and therefore instruct a management company to look after the building. As a general rule ground rents are paying a return of between 5% – 7% so whilst interest rates are this low they may be worth having a look into. I will be updating this blog regularly but if in the meantime you have a ground rent to sell please visit my site at Ground Rents for Sale

 

Freehold Ground Rents


Not a lot of people will know that you can invest in freehold ground rents. Most of us will have paid a ground rent to our freeholder at the end of each year if we owned a flat that is, but not many people will have actually invested their money in buying these types of investments.

They are becoming increasingly popular amongst property investment  companies as they generally offer a good return on the money invested and you can more or less guarantee that your ground rent will be paid each year. If you purchase the freehold of a building you will be the person that receives the ground rent income each year. If you decide that you want to try to manage the property yourself (good luck) you will normally be able to charge your lessee a fee for doing so but be warned you will have to deal with the day-to-day running of the block and be on call for any emergencies that need tending to.

Most investors simply just want to collect the ground rent each year without dealing with the management of the building and therefore instruct a management company to look after the building. As a general rule ground rents are paying a return of between 5% – 7% so whilst interest rates are this low they may be worth having a look into. I will be updating this blog regularly but if in the meantime you have a ground rent to sell please visit my site at Ground Rents for Sale

 

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