Residential Property Purchases Rise
As new builds increase, so too will the demand on solicitors, as homeowners try to navigate their way through the ever-changing property landscape.
The latest figures from the Office for National Statistics (ONS) show that there has been a rise in the number of new housing sectors being developed in both the private and public arenas.
To restrict the booming buy-to-let market (BTL), the government announced in the new financial tax year that it was increasing the stamp duty land tax (SDLT) and reduced interest rate relief [see last month’s blog on Property law changes in 2016 (insert hyperlink)]. In a bid to maximise investments, it is perhaps unsurprising that buyers are looking for new properties now.
It seems that the demand from those renting is equally as high, with the number of new properties being built in the first quarter of 2016 at a record high. The beginning of the year saw a rise of 4.48% in new houses being built compared to Q4 2015. There has been a 4.2% rise in the public housing sector and 4.9% rise in the private sector.
In fact, figures from the Council for Mortgage Lender figures show that 162,000 properties were purchased in March, compared to the typical figure of 100,000.
Property buyers have clearly been on the lookout for new homes:
BTL purchases increased by 180%
Cash buyers purchasing properties increased by 80%
Despite this increase, which has incidentally occurred at a time when the construction output has dwindled, it is not good news for tenants. It is possible that the amount of rent tenants pay will increase, in a bid to provide BTL landlords with healthier investments resulting from the government’s new tax changes.
In a bid to halt the ever-growing BTL market, tenants may be the ones to suffer. Next year will also see the increasing cuts to mortgage relief pushing the annual tax paid by landlords into the upper tax bracket.
The latest figures from the Property Partner Residential Market Index reveal that last year saw landlords make an average profit of 9.6% - with London landlords making on average 16.5%.
It is therefore unlikely that BTL landlords will keep rent for their tenants the same if they want to achieve a profit that looks anywhere near as healthy as it has been. The newly elected Mayor of London, Sadiq Khan, has expressed that he wants to introduce a new London living rent to control prices rises. He proposes setting the rent at a third of local average earnings. The government intervention may well, therefore, be the way forward to provide a residential property outlook that satisfies both buyers and renters.
If you would like to receive more help and information on navigating your way through the residential property purchasing process, use our conveyancing services today.