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By Spencer Gordon, Feb 23 2016 03:00PM


According to the latest data from ONS, 20 to 34 year olds are now more likely to be living at home with parents than in the last 20 years.


There were 618,000 more young adults living with their parents in 2015 than in 1996 – 3.3 million compared with 2.7 million.


In total, nearly half of 20 to 24 year olds and a fifth of 25 to 29 year olds are currently living with parents. For 30 to 34 year olds, this figure was less than one in 10.


In comparison, the percentage of young adults owning their home decreased from 55% in 1996 to 30% in 2015 for 25 to 29 year olds; and from 68% to 46% for 30 to 34 year olds.


In 2015, 91% of householders aged 20 to 24 were living in rented accommodation.


Only 9% of 20 to 24 year old householders owned their homes either outright or with a mortgage or loan in 2015, down from 30% in 1996.


The ONS attributed the rise in adult children living at home to a rising delay in getting married and having children, increasing numbers of young adults choosing to stay in education for longer, and rising house prices and deposits.


By Spencer Gordon, Feb 18 2016 04:07PM


Chancellor George Osborne's imminent 3% stamp duty rise might be good for first time buyers, but what does it mean for property investors?


Jimmy King, board director at Pierce Chartered Accountants, explains: "As of 5 April 2016, the stamp duty rules are changing. Any purchase of a second property costing more than £40,000 will be subject to an additional 3% stamp duty, on top of any stamp duty already to be paid.


In addition, from 2017 onwards, the rules restricting tax relief on mortgage interest will be reduced from 40-45%, ultimately to 20%, squeezing the profits gained from any rental income.


The chancellor introduced these measures to support first time buyers, but what can you do if you want to invest in property for residential letting?


Window of opportunity


From now until April 5 2016 there will be no change in the stamp duty rise, so would-be investors could look at buying property quickly. Advise your agent and the seller that you are looking to complete before April 5 and ensure this is written into your contract.



If you do wish to invest quickly, look for properties with no chain or try buying a property at auction, where you will complete in 28 days.


Since the chancellor’s announcement in the autumn budget, there has been a measurable rise in the sale of one and two bed properties. Indeed The Royal Institution of Chartered Surveyors (RICS) reported an unusually buoyant December and suggests this is in part due to investors rushing to beat the stamp duty change.


However, this has been mirrored by an upward trend in prices – which is beginning to distort the market. You may find that the price you have paid for a property is not retained post April 5 and should take advice when looking to buy.


The benefits of using a company?


There is some hope for property investors, but it’s not a simple solution. Companies will not be subject to the restriction on relief for interest paid on loans to purchase residential properties for letting.


Purchasing property and operating as a landlord through a limited company may therefore be an attractive option post April 5.


Unfortunately, it’s not a perfect solution. If you wish to invest in more property, transferring existing property ownership from yourself to a limited company could incur capital gains tax (CGT); dependent on whether you are sat on profit or not (ie. has the property increased in value from the time you bought it).


For new property purchases post 5 April buying through a limited company should however be considered, but only if you don’t want to make a quick turnaround profit, as in these instances the annual CGT allowance available to individuals will prove very beneficial. If landlords however want to hold properties for long term capital growth operating through a company is now a more attractive option.


Even though this may be a possible solution, it’s a complicated area as access to finance in a limited company can prove more costly and can be very difficult to obtain. This issue may ease if enough people look to limited companies for property ownership as a future solution.


As this area is so complicated and each and every case will be different, investors looking to set up a limited company to buy and manage property should always seek independent financial advice.


Investing in regeneration


There is one area of the market where George Osborne’s increased stamp duty will not apply and that is the purchase of second properties that are worth £40k or less.


Will this mean that the buy-to-let landlord is the new social regenerator, investing in areas where there has been none and boosting up property markets in areas that are flat or still declining? That’s a distinct possibility.


By Spencer Gordon, Feb 12 2016 11:40AM


First-time buyers will have spent on average nearly £53,000 on rent in their lifetime before they have saved enough to buy a home. And those starting to rent in 2016 are projected to pay more than £64,000 into landlords' pockets before they can afford to buy a property. That is according to the Association of Residential Letting Agents (ARLA) in its Cost of Renting report.


Arla, which compiled its report with the Centre for Economics and Business Research (Cebr), said the average first-time buyer will have spent 16.4% of their total lifetime earnings on rent before stepping on to the property ladder. The generation after will spend even more.


High house prices, which the Office for National Statistics (ONS) said rose 7.7% to £288,000 on average in the year to November 2015 in the UK, are shutting many aspiring homeowners out of the market. First-time buyers are struggling to save a sufficient deposit, while those with savings may not get a mortgage large enough to buy a home, particularly in London and the south east of England.


That leaves many in the private rented sector, where rents have spiralled in recent years because of a shortage of housing supply and high demand.


In England, private rents rose 2.5% over the year to December 2015, said the ONS, while pay excluding bonuses increased by 1.9%, squeezing renters' finances. Private rents grew by 3.9% on average in London over the year to December 2015 but pay growth was flat for full-time workers in the city.


"The rising cost of rent in this country is a huge issue, and is preventing tenants from being able to save to buy a home," said David Cox, managing director of Arla. "Our Cost of Renting report reveals that tenants are already spending a significant proportion of their income on rent and therefore struggling to save any money. However, as house price affordability worsens and interest rates start rising, more pressure will be put on renting with weekly rent likely to rise, so home ownership will remain out of reach for many.


"Rents are becoming alarmingly unaffordable due to the lack of available housing; the north-south divide we're currently seeing in the UK is a clear illustration of this. The London rental market is competitive, with far more prospective tenants looking for properties than actual houses available. This is pushing up rents in the capital, which will continue to put pressure on surrounding areas, including the south east, as Londoners relocate to avoid high rent costs."


By Spencer Gordon, Jan 29 2016 02:16PM


According to a new report from the Cebr, 15% of landlords are sitting on £514m of unprotected deposits.


Despite government intervention to make it a legal requirement for landlords to protect renters’ deposits in one of the government backed schemes, new research carried out on behalf of financial comparison website money.co.uk by the Cebr (Centre for Economics and Business Research) reveals that 284,000 landlords have failed to do so. Research estimates that these landlords are sitting on £514 million of deposits that should be protected by an official third party service.


With approximately one in five (4.6 million) households in the UK now privately rented and the average protected deposit at £1,040, the total value of deposits paid by tenants and placed in protection schemes by landlords has now reached a whopping £3.2 billion. Despite the risk of fines for landlords who fail to protect their tenants’ deposits, 15% are still failing to do so running the risk of a £2,400 penalty. Landlords that flout the rules could together be earning up to £8.5 million a year in interest on unprotected money, while leaving themselves and their tenants with no third party protection when their agreement comes to an end.


What is deposit protection?


It is mandatory for all landlords to protect deposits for assured shorthold tenancies via a government backed tenancy deposit scheme. They must also give tenants prescribed information about where their deposit is protected, who they are renting from and how they raise a dispute. Different approved deposit schemes are used in England and Wales to Scotland and Northern Ireland but they all operate in a similar way. The schemes give landlords and tenants access to a free dispute resolution service if things go wrong when the tenant moves out, eliminating the need for court action in many cases.


The government imposed deposit protection schemes to stop landlords unfairly taking money out of deposits for things such as wear and tear or pre-existing damage when tenants move on. With this protection in place, an alternative dispute resolution scheme will step in and assess the case and make sure any money held back by the landlord is a fair deal for both the tenant and the landlord.


Hannah Maundrell, Editor in Chief money.co.uk comments: “Renting is a money minefield and with troubled times ahead for the buy to let market, the problems caused by ‘dodgy landlords’ are only likely to get worse. While many landlords are doing the right thing and protecting deposits in one of the official government backed schemes, a worrying amount of money is falling through the cracks and far too many tenants are being left vulnerable.


Renters must take control and ask landlords which protection scheme their money will be stashed in before signing on the dotted line. Existing tenants must ask for proof their money is protected if their landlord hasn’t given them the correct written documentation.


It’s not right that tenants are left responsible for taking their landlord to court if their deposit hasn’t been protected. The government needs to step in and take decisive action. Introducing a compulsory register listing every landlord that rents out property in England and Wales would be a start. This works for Scotland and Northern Ireland and it seems crazy this hasn’t been brought in across the UK. Add in tenants’ ratings and reviews to this too and you have both the beginnings of a solution that helps renters make an informed choice about who they’re handing over buckets of cash to; and the foundation for policing landlords that are currently going unchecked.


That said, it’s not just renters that stand to benefit from deposits being protected; after all landlords need a safeguard against renters that misbehave too. I can’t understand why any landlord wouldn’t do this; it doesn’t have to cost too much to place money with a tenancy deposit scheme and could save so much hassle later on.”


If you have any questions on tenants deposits, whether you are a landlord or a tenant, then please feel free to contact ourselves at Spencer Gordon Lettings 01704 460160.


By Spencer Gordon, Jan 20 2016 01:16PM


The governor of the Bank of England has booted an interest rate rise into the long grass and beyond and this will further drive demand for mortgages throughout 2016, affirms the boss of deVere Mortgages.


The comments come as Mark Carney in a speech on Tuesday confirmed that there would be no immediate interest rate rise due to an “unforgiving” global economy and weaker growth in the UK.


Mike Coady, Managing Director of deVere Mortgages, observes: “The collapse of oil prices, weak economic performance in China, and the slow down in UK wages and growth, have made their mark on the Bank of England’s decision.


Bearing in mind these serious concerns that won’t be resolved overnight, noting the language used by the governor in his statement, plus the fact that the MPC have voted to hold rates by 8 to1 means, I believe, that the first rate rise has been booted into the long grass – and beyond.


There always seems to be a stream of important reasons for the Bank to keep the rate unchanged.


Mr Coady continues: “I think the earliest we can now expect a rate rise will be in 2017. This is primarily because headline CPI inflation is almost back to zero and because whilst UK GDP growth is steady, current forecasts for wage growth in 2016 of 3.75 per cent look very optimistic. And when interest rates do eventually rise, there is little reason to expect a return to the rate levels of before the credit crunch.


The justified expectation that ultra low interest rates are the new normal and the view that generally house prices across the UK are correctly priced in the current low interest rate environment, will fuel mortgage applications throughout 2016 and for the next few years at least.”


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