2018 was an interesting year in the property industry. The beginning of the year was relatively strong as renewed interest after the Christmas period saw lots of new properties enter the market and new sales agreed. The middle of the year was a little more mixed with price rises seen in many areas of the midlands, however sales began to slow and less property entered the market. As we drew towards the end of the year the Autumn months, as expected saw a slight increase in both stock and sales but as the dark nights began to shorten our days, the enthusiasm for moving home began to slow.
Lets take a look at some of the big influences to both the national and local housing market and explore what 2019 may have in store for us!
New build homes and Help to Buy
2018 was one of the strongest years for Help to Buy sales. 14,867 Help To Buy equity loans were taken out in the second quarter of 2018 in England alone.
This takes the total loans to 183,947 since the scheme started in 2013.
Over 82 per cent of the equity loans taken out were for homes bought by first time buyers.
Critics of the Help to Buy scheme believe it may have indirectly increased the price of the new build homes, (new build homes form the majority of properties included in the scheme), and have led to what some regard as excessive profits by builders who often tailor specific products for buyers using the scheme, and this has in turn saddled these buyers with uncompetitive mortgage rates.
Supporters of the Help to Buy scheme argue that it has become essential for getting first time buyers on to the property ladder and has helped many families move from rented accommodation into their own home.
Regardless of which opinion you agree with, new build housing projects have certainly changed the Amber Valley landscape over 2018 with more projects set to begin in 2019!
No longer the elephant in the room Brexit was at the heart of the property industry in 2018. The interest in how Brexit will effect the property market increased after the Bank of England has warned that a no deal outcome could lead to a fall in property prices of up to 35%, although this is a worst-case scenario! As we enter 2019, Brexit will most certainly be a factor that shapes this year’s property market statistics and we may just have to wait and see exactly what the impact will be.
Landlord Tax Changes
Although the changes began in April 2017, many landlords hadn’t felt the squeeze until 2018.
The amount of Income Tax relief landlords can get on residential property finance costs are now restricted to the basic rate of tax.
• Affect you if you let residential properties as an individual, or in a partnership or trust
• Change how you receive relief for interest and other finance costs
• Will be gradually introduced over 4 years from April 2017
Finance costs won’t be taken into account to work out taxable property profits. Instead, once the Income Tax on property profits and any other income sources has been assessed, your Income Tax liability will be reduced by a basic rate ‘tax reduction’. For most landlords, this’ll be the basic rate value of the finance costs.
These changes have resulted in some landlords deciding to sell their property in 2018 with more already deciding to put their rental portfolio on the market in 2019 as there profits are squeezed even further.
Stamp Duty Changes
From November 2017 first-time buyers spending £300,000 or less on a property purchase will be free of duty. First-time purchases worth between £300,000 and £500,000 no stamp duty will be paid on the first £300,000, meaning a reduced rate is paid.
The maximum amount first time buyers can save under the policy is £5,000, which is the duty arising on a £300,000 purchase, however substantial savings can still be made on less expensive homes.
This has been fantastic for First Time Buyers in Amber Valley and has helped many young people take their first steps onto the property ladder!
Changes to buyers of second homes and Buy to Lets
The introduction of the additional 3% stamp duty on second homes and buy to let purchases in April 2016 has begun to effect the number of new private residential landlords in our area. Many people who may have previously decided to keep a property and rent it out, or purchase a second property elsewhere in the UK have started to think twice before embarking on this venture.
A petition was started to ask the Government to reconsider the 3% stamp duty surcharge which reached over 100,000 signatures during 2018 and in brief the Government gave the following response.
“The Government introduced changes to finance cost relief as part of a package of measures at Summer Budget 2015 to help reduce the deficit and rebalance the economy.
By restricting landlord’s finance cost relief to the basic rate of income tax we are helping to reduce the advantage landlords may have over homeowners in the property market.”
Between the introduction of the surcharge in 2016 and 2017 the Government made over 2bn more than they had the previous year. However, HMRC stamp duty statistics reported receipts for the second quarter of 2018 were 13.8% down to £317m, compared with the same period the year before, which, if this trend continues, could mean we see even less people investing in buy to let properties and second homes during 2019.
There’s no denying that 2019 is going to be an interesting year for property for both the Amber Valley area and the UK as a whole.