Retirees would struggle without Buy to Let income

Almost three quarters (72%) of pensioners who have an investment property said they would struggle to make ends meet if they didn’t have the income from their buy-to-let, according to a poll carried out by Responsible Equity Release.

The reliance on income from buy-to-let in retirement is revealed, with eight out of 10 (81%) pensioners aged over 65, who own a buy-to-let, admitting their properties provide an important, even vital, boost to their retirement income, especially with low interest rates hammering retirees’ savings.

Responsible Life polled more than 1,000 retirees about owning a buy-to-let property. The majority, more than nine out of 10 (92%), said they are worried about the changes to mortgage interest tax relief and the impact on the profit they make from their investment property.

The buy-to-let tax changes coming into force have left many pensioner landlords considering whether it’s worth holding onto their buy-to-lets at all. Four out of 10 (41%) said although their buy-to-let property was a valuable income generator,they are now thinking seriously about selling it.

Steve Wilkie, managing director at Responsible Equity Release, said: "For many pensioners, having a buy-to-let property has been a life saver in this low interest environment. While their savings have languished, earning very little interest, and pension income has been hit hard by falling share prices, property income has remained strong.

“Without the income boost from their buy-to-let, many would really be struggling to make ends meet. But the Chancellor has yet again ignored UK’s retirees when he announced changes to the way buy-to-let would be taxed.

“George Osborne was so focused on taxing the rich, he forgot that a new tax on buy-to-let won’t just hit the wealthy, it will also hit those honest, hardworking people, who may have a single buy-to-let property, and were just hoping it would earn them a little extra income in retirement.”

Article courtesy of Landlord Today

HMRC reports whopping 70% leap in transactions thanks to Stamp Duty Surcharge

There was an extraordinary 70 per cent leap in residential transaction volumes in March this year compared to the same month in 2015 - the first quantification of the extraordinary surge to beat George Osborne’s stamp duty surcharge.

HMRC’s provisional data shows 165,480 residential transactions in March, which was 41.5 per cent higher than in February.  

The Revenue says the large increase in transactions for March was very likely to be down to the 3% surcharge being introduced on April 1 for buy to let and second homes. It says the same applies to Scotland, where the Land and Buildings Transaction Tax surcharge - mirroring the stamp duty surcharge south of the border - was an issue.

HMRC mentions that buyers may also have been trying to beat new and much-anticipated restrictions on buy to let mortgages as a result of expected Bank of England reforms, expected to be rubber-stamped in the coming weeks. 

The figures produced by HMRC are dramatic enough but are in fact they are adjusted to take account of seasonal fluctuations and other irregularities. 

When these are not taken into account, the non-adjusted residential totals are even more dramatic with last month’s figure being 74.8 per cent higher compared with February, and 77.1 per cent higher than March 2015.

Article courtesy of Letting Agent Today

Chichester’s “Generation Rent” to grow by 1,783 Households

 “The growth of the private rented sector, and the arrival of an investor class of buy to let landlords within it, is an issue that won’t be going away anytime soon, no matter what you read in the Daily Mail!” I said as I chatted over a coffee with a landlord client of mine last week.

Some commentators are saying that buy to let is about to die, with the new stamp duty changes and how mortgage tax relief will be calculated. Some say 500,000 rental properties will flood the sales market nationally in the next 12 months as landlords leave the rental market. Have you heard the phrase “Bad news sells newspapers”? Let me explain why buy to let in Chichester is only going in one direction – and not the direction the papers say it is going.

According to Sheffield University, buy to let landlord will continue fuelling the growth of the private rented sector in the coming decades. By their estimates (and they are considered a centre of excellence on the topic), the rate of homeownership nationally will fall to 50% by 2032 (today it is 58% in Chichester) while the rate of private sector renting will increase to 35% (interestingly, in Chichester it stands at 22% today). Therefore, the demand for rental accommodation in Chichester is expected to grow by 1,793 households’.

Chichester property values over the last six years have risen a lot more than average salaries, and as mortgage availability is dependent on your ability to pay, this means the dream of owning your own home is out of reach for many. This is at a time when the stock of council houses has actually withered (Nationally, the number of council houses in the last ten years has dropped from 3.26m to 2.18m – a drop of 31.1%).

Now it’s true that the Government’s efforts to fix the deficiency of affordable housing have focused on those who want to buy a home, ranging from Help to Buy and their much vaunted Help to Buy ISA and Starter Homes Scheme (an initiative offering a 20% discount for first time buyers). But if you are unable to save for the deposit, none of this means anything to the “20 somethings” of Chichester who still need a roof over their heads!

Currently 3,035 households live in private rented accommodation in Chichester. These are big numbers and a sizable chunk of the electorate. So whilst it appears Chichester’s “Generation Rent” will continue to rent and not to buy for the reasons set out above, Chichester’s buy to let landlords will be lifted by the projections of greater rental demand. Chichester and the area around it still offers the prospect of strong economic growth forecasts and has a reputation as a very desirable place to live.

Taking into account the projections from the experts at Sheffield University, the number of households in rental accommodation in Chichester will rise to over 4,800 in the next decade or so. This prediction in growth is even on the back of the Government clamping down on tax reliefs for landlord’s. 

Gone are the days of making guaranteed returns on buy to let property. For the last 20 to 30 years, irrespective of which property you bought, making decent money on buy to let property was like ‘shooting fish in a barrel’ – anyone could do it. But not now. Landlords must take a more considered approach to their existing and future portfolio, especially in Chichester. The balance of capital growth and yield, especially in this low interest rate world we live in, means Chichester landlords need to do more homework to ensure the investment in property gives the desired returns. One place for local landlords and homeowners to visit for such information is the Chichester Property Market Blog – www.chichesterproperty.com