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House Prices To Rise £40,000 In The Next Five Years Despite EU Tremors

 

The price of a home will still be around £40,000 more in five years' time despite the "tremors" caused by the Brexit vote, according to forecasts from one think-tank.

The Centre for Economics and Business Research (Cebr) said that while property values are expected to show weaker growth for the rest of 2016 and into 2017, the general direction of prices is still expected to be up.

The increases mean the average UK house price could rise from £194,000 in 2016 to £234,000 in 2021 - a jump of of £40,000.

The economic forecaster said despite "post-Brexit tremors", house prices are set to increase by 5.7pc over 2016 as a whole. Earlier this year, annual house price growth was running as high as 8pc, but Cebr expects to see a slowdown in house price growth over the second half of this year.

 

 

This slower growth will be caused by a three percentage point stamp duty hike which came into force for buy-to-let investors on April 1, combined with the general economic uncertainty following the referendum vote to leave the EU.

Next year, UK property values are forecast to increase at a slower pace of 2.2pc - although in London house prices are expected to fall by 5.6pc in 2017.

Cebr said London house prices are expected to increase by 6.8pc  across 2016 - and after a blip in 2017 they are expected to return to growth there in 2018 and beyond.

It said the top end of the London housing market, which has attracted strong interest from foreign investors in recent years, was "showing cracks well before the vote on June 23".

 

 

Cebr said: "Some of the global regions that many of London's non-UK buyers come from such as Russia and the Middle East are experiencing economic turmoil and are not as able to invest."

Many housing market reports have pointed to a lack of available properties helping to keep house prices up. Cebr said it expects the impact of Brexit on the housing market to be smaller as Brexit negotiations progress.

The expectation is in line with Cebr's central view of the negotiations progressing relatively smoothly, with the UK ultimately maintaining a close economic relationship with the rest of the continent, without necessarily agreeing to an unrestricted flow of labour or goods and services.

Beyond 2021, housing market developments will depend heavily on the immigration and economic policies the UK negotiates with the rest of the world, Cebr said.

 "Although Brexit has certainly sent shockwaves, Cebr expects the housing market to slow down but not plummet. Years of underbuilding mean that demand would have to fall very dramatically to meet the low level of supply increases. "Keeping in mind that construction companies are very likely to limit their output further in light of Brexit, price pressures will also come from the supply side."

 

Manchester City Centre Rents Continue To Rise

 

City centre living is quickly becoming the norm in a lot of places and with Manchester’s population growing year on year and space and supply being very limited, Mancunian renters are currently experiencing more than a tough time.

 

 

 

The Manchester Evening News reported that estate agents claim that there are over 2,000 potential renters to just 130 properties in Manchester, leading to a ratio of 15 prospective tenants for every single property.

The MEN research overall discovered the following trends:

  • It is becoming more and more difficult for renters to find the perfect property, with up to ten enquiries for every city centre flat.

  • Each apartment to rent is receiving 3 or 4 offers.

  • Some properties are let after just ONE hour.

  • Prices are rising by up to £75 a month in some city centre hot spots.

The market is becoming increasingly competitive due to the significant shift in interest of Generation Rent to move away from London and live their life in Manchester.

City Centre Estate agents stated:

“The market has definitely become busier and we have noticed that Manchester is becoming increasingly popular with clients from all corners of the globe.Generally we receive between 5 and 10 enquiries per property then receive 3 or 4 offers on each of our properties on average.”

“To rent they have to close on the day, as we would have around 4 or 5 people to view the property on the day.”

“I have dealt with properties before in the city which have been on the market for only 1 hour and been let.”

This is however not all good news, as demand is outgrowing supply at an impressive pace, it’s becoming harder to find the right fit for everyone. This lack in appropriate accommodation leads to only one thing: a rise in prices. Rents in Manchester have continued to rise over the last 12 months, a change that has been felt most significantly in the city centre.

A City Centre Estate Agent said: “The market has changed massively in the last decade. Prices can range from anywhere between £750 – £2,500 a month. In terms of inflation, I would say the prices are going up around £50-£75 a month.”

“The old stories from 2005/2006 that Manchester was building more apartments than there was demand for is long, long forgotten.

“We can see that Manchester has a strong economy, helped with the relocation of the BBC and we are very positive about the future with the high speed rail links “shrinking” the distance to London.

“But the only way we can see Manchester City Centre being able to supply the apartments needed is for it to “grow” bigger, moving the city centre out towards those areas that were once considered on the periphery.”

 

 

 

Borrowing Has Never Been Cheaper 

 

 

There has been a significant increased in the number of buy-to-let mortgage products available, with recent research by Mortgage Brain revealing that there are 1853 mortgage deals on the market, up 52% year-on-year, but which deals are the best? 

With competition between mortgage providers continuing to grow, buy-to-let landlords now have access to some of the cheapest ever buy-to-let mortgage deals.

Finding the right mortgage to suit your needs can be a challenge. Moneyfact.co.uk  provided us with the following range of ‘best buy’ buy-to-let mortgage products currently available:

 

BEST BUYS - Direct Products – BTL 2 Year Fixed Rates
Provider Rate Period Max LTV Min Fee
Virgin Money 1.85% 01/11/2018 60% £1,995
Virgin Money 1.99% 01/11/2018 60% £995
Principality BS 2.10% 30/09/2018 60% £895
Virgin Money 2.19% 01/11/2018 75% £1,995
Post Office Money® 2.27% 30/11/2018 70% £995
Virgin Money 2.45% 01/11/2018 75% £995
Skipton BS 2.49% 30/11/2018 70% £995
Post Office Money® 2.46% 30/11/2018 75% £995
Skipton BS 2.59% 30/11/2018 75% £995
HSBC 2.79% 31/12/2018 75% £349
         
         
BEST BUYS - Direct Products – BTL 3 Year Fixed Rates
Provider Rate Period Max LTV Min Fee
Virgin Money 2.29% 01/11/2019 60% £1,995
TSB 2.54% 30/11/2019 60% £1,260
Virgin Money 2.69% 01/11/2019 60% £995
State Bank of India 2.79% 3 years 60% -
Virgin Money 2.89% 01/11/2019 70% £995
Virgin Money 2.99% 01/11/2019 75% £995
Principality BS 3.05% 30/09/2019 75% £895
State Bank of India 3.09% 3 years 70% -
Metro Bank 3.09% 3 years 75% £999
Cumberland BS 3.26% 01/11/2019 75% £995
         
BEST BUYS - Direct Products – BTL 5 Year Fixed Rates
Provider Rate Period Max LTV Min Fee
Virgin Money 2.78% 01/11/2021 60% £1,995
Coventry BS 2.59% 31/01/2022 65% £1,999
Leeds BS 2.85% 30/11/2021 60% £999
Virgin Money 2.89% 01/11/2021 60% £995
Skipton BS 2.99% 30/11/2021 70% £1,995
Post Office Money® 2.99% 30/11/2021 70% £995
Leeds BS 3.15% 30/11/2021 70% £999
Post Office Money® 3.13% 30/11/2021 75% £995
Aldermore 3.99% 5 years 80% 2.50%
Clydesdale Bank 4.99% 30/11/2021 80% £999
         
BEST BUYS - Direct Products – BTL 1st Time Landlord Rates
Provider Rate Period Max LTV Min Fee
Virgin Money 1.80% 01/11/2018 60% £995
Leek United BS 1.99% 2 years 75% £995
Virgin Money 2.49% 01/11/2018 75% £995
Coventry BS 2.09% Term 65% £1,999
Virgin Money 2.45% 01/11/2018 75% £995
HSBC 2.79% 31/12/2018 75% £349
Virgin Money 2.29% 01/11/2019 60% £1,995
Virgin Money 2.99% 01/11/2019 75% £995
Coventry BS 2.59% 31/01/2022 65% £1,999
Post Office Money® 3.13% 30/11/2021 75% £995

Loophole that lets landlords dodge buy-to-let curbs: Six in ten invest

through limited companies to avoid the new rules 

 

 

Soaring numbers of landlords are using a tax loophole to beat the government’s buy-to-let crackdown. More than six in ten are now investing in properties through limited companies to avoid rules coming in next year. Curbs on buy-to-let, announced by former chancellor George Osborne in 2015, threaten to land thousands of landlords with bigger tax bills but the new rules will not apply to landlords who invest through a company rather than as an individual.

Figures show the number of applications for a buy-to-let mortgages made by businesses have tripled in the past year.  Now, 63% of applications for landlord loans are being put through a business, up from just 21% before Mr Osborne announced his crackdown in July 2015, according to specialist broker Mortgages for Business. The figures include both investors making new house purchases and landlords setting up companies and then selling their existing properties into them.

 

Currently landlords can claim tax relief on mortgage payments at the rate they pay income tax – up to 45%. But over the next four years this will be gradually reduced to 20%, making buy-to-let unprofitable for many landlords. Some will even begin to see losses. On top of this buy-to-let investors now have to pay an extra 3% in stamp duty when they buy a property.  And from January next year banks and building societies must introduce tougher affordability checks to ensure borrowers could endure a sudden interest rate hike.

As a result of this, many landlords could be refused a loan as a result. By contrast, investors who hold properties in a limited companies will continue to benefit from the full tax relief.  This is because they can write off all costs of running their buy-to-let properties as an ‘allowable expense’ – including mortgage payments. They then face just 20 per cent corporation tax on the profits, instead of income tax of up to 45 per cent paid by individuals. Limited company owners could also benefit from more relaxed affordability checks as lenders will take into account the fact they will still benefit from tax relief.

Properties bought through companies will incur stamp duty at the increased rate. The number of mortgages on offer to limited companies has also risen to 195, the figures showed. Meanwhile, the average interest rate is lower at 4.3% - or one percentage point higher than the average rate paid by the typical landlord who invests as an individual. A Mortgage broker in London reported : ‘We could well see more lenders start to offer buy-to-let loans to limited companies as more investors choose to go down this route. However, setting up a limited company is far more complicated than owning a property in your own name and there are costs involved. Investors will also need to file annual returns and accounts. Anyone considering this option must get professional advice to make sure all the maths works out'.



 

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