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JUN
17

More Warnings for those who buy former Local Authority Properties on Estates or High Rise Buildings

housesAfter decades of underinvestment, many local authorities are having to find huge amounts of money to fund major works, and purchasers have found themselves presented with huge contribution bills.

The Guardian reports that in Oxford, 50 local authority property purchasers have been presented with bills of £50,000 each) towards these major works - there are no 'right to manage ' provisions which are available to leaseholders in the open property market, and those who cannot afford to pay are finding themselves having to surrender amounts of their equity to the local authority in lieu of payment.

It's an expensive lesson, but before buying such a property, do your research and make sure that your solicitor asks the right searching questions of the local authority and their plans for the future.

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JUN
17

At Long Last, the Mortgage Market is Waking Up

Housing questionThe mortgage market has finally realised that people are living for longer and the majority of property owners are asset rich and cash poor, and likely to lose out at the older end of the market to Equity Release, which has seen a huge surge over recent years.

After the early horrors of the early Equity Release products, the current offerings are clear, comprehensive but expensive.

Smaller specialist mortgage lenders have been prepared after the last financial crisis to lend to older borrowers but now the mainstream lenders have entered that older borrower market.

The Nationwide are prepared to lender BTL investors up to the age of 105, and The Halifax will lend to residential borrowers up to the age of 85 years.

Young people now fully expect to have a mortgage during their working lives and into retirement and so the mortgage market had to react to this and dispense with their ageist policies of refusing to lend after 65 years of age.

What is the best choice - Mortgage (mortgage extension) or Equity Release?

Equity Release, as we have already said is undoubtedly more expensive but it prevents repossession of the property. The ER borrower remains in the property until death or removal to a Care Home.

There is also the 'no negative equity guarantee'; i.e. that a borrower cannot owe more than the value of the property.

The huge increase in negative equity is used by borrowers to: assist family to get onto the property market; pay for grandchildren’s university education; meet the cost of home adaptations so that the borrowers can remain in their homes or to pay off existing debts There also remains the issues of potential beneficiaries, many of whom are shocked to learn after probate that their parents have obtained Equity Release against the family home, often the main asset. It's best to ensure that all potential beneficiaries are made aware, in writing, of your ER intentions before you go ahead.

If on the other hand you have an income in retirement it would be cheaper to mortgage or extend a mortgage but there always remains the threat of repossession should you default.

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JUN
17

So Just How are Buy to Let Investors reacting to the Increase in Stamp Duty?

buy to let signMost assume that the increase, together with the reduction in tax relief, will be passed to the Landlord’s tenants.

Some investors are setting up corporate structures in which mortgage interest could still be set off against tax; we would advise consulting a specialist tax accountant if you are thinking of doing this.

Allsop, the auctioneers, are reporting that they witnessed the largest turnout to date at one of their more recent property auctions, though they noted that the bids on property  were lower than the past.

Overall, the increase in stamp duty does not appear to have deterred BTL investors.

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JUN
16

A Buoyant Year End for HMRC

HMRC logoHMRC had a buoyant year end in March 2016, as a result of the Stamp Duty increase deadline; a record high in stamp duty receipts was recorded.

A YouGov survey concluded that the majority of public opinion gave overwhelming support to the increase in stamp duty, because they believed that the benefit will be passed to First Time buyers. The outcome remains to be seen.

Things became more difficult for HMRC when in an embarrassing (for them) judgement handed down by the Court of Appeal, it was pointed out to HMRC that they had pursued the wrong party when seeking the payment of £50 million stamp duty due as a result of the sale of the Chelsea Barracks in 2007. It seems that the true owner of the property is the Qatar based bank Masraf al Rayan, though the purchaser was an investment company ultimately owned by the Qatar Investment -Authority. HMRC will appeal, apparently, but we can't help thinking that there wouldn't be many UK based purchasers that could get away without paying Stamp Duty!

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JUN
16

Property Market Awaits the June Brexit Referendum

brexit 1After having successfully survived the frenzied madness of March 2016, during which our property lawyers were overseeing up to 16 completions a day because of a rush to beat the March 31st Stamp Duty Land Tax increase deadline, the property market is now quieter.

Most potential buyers and sellers anxiously await the outcome of the Brexit referendum on June 23rd 2016. Other factors suggest that perhaps we have reached the top of the 12 year increase in property prices and the market, especially in London and the South East, is heading for a correction.

Statistics published in April 2016 show that mortgage lending for the month fell by under 1/3; residential transactions in the country fell below 100,000 as did Stamp Duty receipts, as one would expect.

The National Association of Estate Agents in April saw a marked reduction of new buyers (the lowest since March 2014) together with a sharp drop of properties coming to market .

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