How to Beat the Rise in Stamp Duty on Buy to Let Purchases
The headlines surrounding George Osborne’s recent Autumn Statement focused mainly on the decision to scrap plans to cut tax credits, and while this was a major news item it should be noted that there were several other important points. One of them will affect the housing sector in a big way, and it will spell bad news for anyone who is considering the purchase of a property that is to be let out to others.
From April 2016, purchases of Buy to Let properties and second homes will be subject to an additional 3% Stamp Duty charge, a strategy that will no doubt be a deterrent to some potential investors. The BTL market has been growing recently, but this announcement may cause a slowdown in the coming years as buyers start to rethink their options.
The 3% hike represents a significant rise in costs, and it’s possible that some investors will want to recoup their extra outlay via an increase in rents. For anyone who is thinking about the purchase of a BTL property, it’s a good idea to act fast. The increase takes effect from April 2016, so if a purchase is made before that date then it will be a great deal less expensive. On a £275,000 property, the Stamp Duty will rise from £3,750 to a whopping £12,000.
The clock is ticking for potential buyers
It should be noted that people who are thinking about selling their homes in the near future will also need to take this matter into account. If their house or flat is likely to be of interest to BTL investors, they will restrict their potential market if they wait too long before putting the property on the market. The next few months will almost certainly see a more active market for this reason.
While the increase in BTL Stamp Duty has understandably caused a great deal of concern in the property sector, it should be noted that there were other important announcements during the Autumn Statement. One of them, a pledge to build around 400,000 new homes in the coming years, will be seen as welcome news for a sector that is struggling to keep up with demand.
There will be incentives to construct starter homes, too. Following up on a policy announcement made a year ago, there is to be a 20% discount on prices of such properties. The Government has also pledged to invest in specialist homes for elderly people as well as those with disabilities.
A Simple Commute keeps London within Easy Reach
While Walton-on-Thames is a wonderful location in which to call home, it has to be said that a significant proportion of our local residents have to make their way into central London for work. The good news is that the daily commute from here is a relatively simple one, enabling people to get from home to workplace with a minimum of fuss.
Walton-on-Thames railway station is to be found on the southern side of town just a few hundred yards from the main A244 road. From here, commuters can catch a direct train to London Waterloo, a terminus that’s located on the south bank of the River Thames, and is within walking distance of landmarks like the London Eye, the National Theatre and the Houses of Parliament.
For those who need to travel on from Waterloo, there is a tube station here which has access to the Jubilee, Bakerloo, Northern and Waterloo & City lines. Given the fact that journey times from Walton-on-Thames to Waterloo can be as fast as 25 minutes, it’s easy to see why so many commuters find our area to be so convenient for the journey to work.
A commute that’s sometimes hectic but always easy
One of the main stops on the route between Walton-on-Thames and London Waterloo is Clapham Junction, which is located in Battersea, south-west London. One of the busiest stations in Europe, it offers commuters a chance to change for trains to Victoria. While it’s understandably hectic at times, it should be noted that it handles up to 180 trains every hour.
In February 2015, it was announced that London’s population had reached a record 8.6 million. It has been estimated that there will be as many as 11 million by 2050, and these figures highlight the importance of an easy commute for those who don’t want to live in the metropolis. Although the city itself is congested, it’s reassuring to know that there are wide open spaces, attractive homes and fresh air to be enjoyed in the suburbs of Surrey.
There are of course some people who will work in local towns, and they are grateful for the regular trains from Walton-on-Thames to Guildford, Woking and Basingstoke. Needless to say, there are buses from the town as well. Anyone who is thinking of moving to the local area will no doubt want to research the commute before committing to a move, so a quick call to James Neave the Estate Agents is highly recommended. We know the region well, and we are always happy to help.
A Property Inheritance brings a Number of Options
Inheriting a property may seem to some people to be a fortunate scenario that brings nothing but pleasure, but it should be noted that this isn’t always the case. If the house or flat in question was owned by a close relative who has recently passed away, then there will no doubt be a level of emotional attachment that will have to be taken into consideration before deciding what to do with the place.
The new owners have a number of options open to them, so it’s a good idea to sit down and go through them before committing to a particular course of action. If the property is to be shared among two or more siblings, as is often the case, then a consensus of opinion is a must. There are times when this won’t be easy, of course, but it’s important for everyone to be in agreement.
Some people choose to move into the property straight away, and to make it their home from then on. This is a sensible course of action if it ticks all of the relevant boxes, but of course it may prove to be difficult to cope with the emotion involved. If a loved one had lived there for many years previously, there will no doubt be a great many memories attached to every room.
To Sell or not to Sell? That is the Question
Another alternative is to put the home on the market in order to sell it. There is no right or wrong answer to this scenario, because every case is different, but if the new owners are looking for a lump sum and don’t want the emotional attachment of continued ownership, this may prove to be the most sensible outcome. As always, reputable estate agents are on hand to help make this a reality.
With property prices still recovering, it may be a better option for some people to consider letting the property out instead. Having a steady income stream for the foreseeable future will appeal to many, and over time there is a good chance that the value of the house or flat will continue to increase. There are a number of issues that need to be considered when renting, so it’s a good idea to ask for advice.
It should be noted that some properties, particularly those which have been occupied by the same people for many decades, may be in need of some tender loving care before they are suitable for renting or selling. The new owners may need to consider the tasks that will need to be carried out before the place is ready to be viewed by the general public. Here at James Neave the Estate Agents, we are always happy to offer guidance on this subject.
Landlords beware of cowboy contractors…..
One of our tenants recently reported that her boiler had stopped working. The timing was terrible, as the weather was turning colder and her young son had been unwell.
We let the landlord know there was an issue and sent our regular contractors out to assess the situation. It wasn’t good news; our contractors reported back that the boiler had a serious leak and a repair would not be an economical option.
Within 24 hours we had sent a quote to the landlord for a new boiler installation. The tenants would be without heating and hot water for the weekend but our contractors could get the job done on the Monday.
The landlord decided against our quotation. He wanted to use his own contractor, which of course is his right to do. Monday came, and Monday went. Tuesday came and went. The week came and went, but there was still no contractor. There were plenty of excuses but no contractor, no hot water and no central heating. The tenants were very unhappy.
Finally, late on the following Saturday afternoon, a contractor arrived. By Monday morning there was a new boiler. It didn’t work. By Tuesday contractors were back on site. They worked all day and by the end of it the boiler was working, and the tenant had heating and hot water. But the tenant was still worried; she hadn’t got a good feeling from the contractors and wasn’t convinced that they knew what they were doing.
We rang the landlord to ask if they had given him a new gas safety certificate, he said they hadn’t. By Wednesday morning the tenants were concerned and I was concerned as well. I sent my own contractors to do a gas safety certificate and to check all was well. It wasn’t.
They found multiple issues with the installation of the boiler, one of which could have been life-threatening. My contractors shut off the boiler. They are going back tomorrow to rectify the issues and ensure the boiler is safe. I will charge all of this back to the landlord. The tenants will be due compensation for their 13 days without heating and hot water. The tenants are deeply unhappy with the landlords and will not remain settled in the property for long.
If you think hiring a professional is expensive, wait until you see the cost of cleaning up after a cowboy…..
Buying or Renting? Which Side of the Fence are you on?
There has been a great deal of media debate recently about the plus and minus points of both buying and renting a property. The problem for those who are unsure about the best strategy is that there’s no specific right or wrong answer here – the path to choose will depend on the circumstances of the individuals concerned.
Those who prefer the concept of buying will understandably point out that one day you will own the house or flat outright. Most of us have an instinct for making our home into our castle, and this instinct becomes stronger when we can see the concept of ownership on the horizon. It should be pointed out, however, that there are drawbacks which should always be taken into consideration. They include:
Signing up to a mortgage represents a big commitment
The size of the monthly repayment can be affected by interest rate changes and we all know they are going to start going up at some point.
There is less flexibility for buyers than renters; it’s harder to move around if your situation changes.
If property values decrease, it will affect the value of your investment
It’s not all doom and gloom for buyers, however, because there are some highly tempting benefits that can make all the difference. If property prices rise, then the value of your investment improves, freehold owners can carry out improvements without needing to consult with a landlord and in some cases the cost of buying can be cheaper than renting.
Renting is an option that will always have its supporters
There are some people who would prefer to rent, and they have a number of valid reasons for doing so. They have more freedom to move, for example. If they are renting a home that doesn’t tick all the right boxes, they can switch to another house or flat at the end of their lease agreement. It’s a simple process, and there is usually a great deal of choice when it comes to finding rental properties in the local area.
It’s generally easier to budget accordingly for renters, because their lease agreement will detail rental costs in advance. If the Bank of England announces a rise in interest rates, it’s unlikely to make a great deal of difference to their arrangements for the coming months. There are obviously a number of disadvantages to renting, and they need to be given careful consideration. They include:
The property will never be yours to own
You can’t make improvements without the permission of the landlord
You have no rights if the landlord wants to sell the property
In many cases, you won’t be able to keep pets
Making a commitment on whether to buy or rent will depend entirely on your individual needs. As always, it’s a good idea to speak to the experts before deciding a strategy. James Neave the Estate Agents will be happy to help you.
38 High Street, Walton on Thames, Surrey, KT12 1DE
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