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Changes to Landlord Tax Relief - Budget 2015

The Chancellor announced in the newly elected Government's first Summer Budget (July 2015) that Mortgage Interest Relief for residential landlords would be restricted to the basic rate of income tax (20%).

How does this affect me as a Landlord?

Mortgage Interest Relief

Under the current rules the full amount of finance costs paid by Landlords are allowed as deduction against rental income.

The new rules will be introduced gradually over a three year period starting from 6 April 2017, and relief will be available as follows:

 

  • In 2017/18, the deduction from property income will be restricted to 75% of the finance costs incurred, with the remaining 25% being available as a basic rate reduction.
  • In 2018/19, 50% of the finance costs will be given as deduction and the remaining 50% will be given as a basic rate reduction.
  • In 2019/20, 25% of the finance costs will be given as deduction and the remaining 75% will be given as a basic rate reduction.

(ShareCast News) - On average, real house prices in the UK continue to be far below their pre-crisis peaks, but some indicators are pointing to an acceleration, favouring those homebuilders which are continuing to seek further volume growth, a leading team of research analysts claimed.

Since 1975, nominal house prices have risen by a compound annual growth rate of (CAGR) of approximately 7.8% and in London by another 9.3% - hugely outperforming other indices such as GDP, Barclays pointed out in a research note sent to clients.

However, upon deflation by the Retail Price Index UK house prices have in fact gained at a compound rate of about 2% and are now approximately 16% below their 2007 peak (despite the distortion posed by London).

On the basis of the historical correlations between the RICS price expectations survey with home prices in Britain and London, the value of the typical house in Britain and in London will increase by close to 9% over the coming six months.

Nevertheless, and as one possible caveat, Barclays added how: "the charts show that expectations of future price increases tend to run at higher levels than actual price data, suggesting that exuberance can triumph over reality. This suggests that the analysis should be considered to be 'best case'."

In a housing market which continues to strengthen, those stocks that favour growth over income should do best.

Interest rate predictions – The Greek Effect

 

The market predicts the first rise in the UK Bank Rate around May or June 2016 with the consensus of economist views pointing to March. The market has shifted a little since the end of May when trading suggested the first increase would come in August or even September. Since then the UK has swung back out of its brief spell in deflation (-0.1pc CPI back to +0.1pc).

Also, the monetary policy committee has been voting unanimously to keep rates on hold but last week Martin Weale, a committee member, suggested he may soon break ranks and call for a rise.

But Paul Hollingsworth of Captial Economics said: "Even if one or two members vote to raise rates, we doubt that this will be a sign that the tide is turning.

With Greece’s No vote the pressure to hold rates may remain.

 

"Indeed, with concerns about Greece likely to linger, inflation to remain low by past standards and plenty of spare capacity left in the economy, we think that the MPC can hold off from raising interest rates until Q2 (April-June) next year."

Goodbye to the Woolwich

Barclays has confirmed that, 15-years after buying the former building society, the Woolwich brand is being dropped.

 

A spokesman for Barclays said the end of the brand “will be a very gradual process” with mortgage holders still receiving paper documents with the Woolwich name appearing, although the websites will now feature the Barclays name.

New Web portal www.onthemarket.com has reported record visits and unique visitors for June, using Google Analytics data.

In June, the portal recorded 4.4m visits, with over 2m unique visitors.

Chief executive Ian Springett said: “We are continuing to see strong engagement from consumers in terms of pages viewed per visit and time on site and a high percentage of repeat visitors.

“This reflects both the quality and range of agents and properties listed with us and the usability of the portal.

“Our ongoing multi-million pound national TV, press and online advertising campaigns continue to work really hard at driving active property seekers to OTM.”

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