{"id":3406,"date":"2017-03-28T15:13:38","date_gmt":"2017-03-28T15:13:38","guid":{"rendered":"https:\/\/bb.pixelanddot.dev\/market-update\/april-2017\/"},"modified":"2026-01-21T13:53:21","modified_gmt":"2026-01-21T13:53:21","slug":"april-2017","status":"publish","type":"market-update","link":"https:\/\/www.black-brick.com\/insights\/market-update\/april-2017\/","title":{"rendered":"April 2017"},"content":{"rendered":"

<\/a>April rings the changes for buy to let investors<\/span><\/span><\/span><\/p>\n

\"\"From this April, changes to the tax treatment of mortgage interest payments on buy-to-let properties come into effect. These could have major implications for how existing properties or portfolios of property are financed, and, for many buyers, will bear down on the economics of making new buy-to-let investments.<\/span><\/p>\n

The changes date back to 2015, as part of then-Chancellor George Osborne\u2019s campaign to stem the flow of money into the buy-to-let market. The new rules, in effect from April, cap the amount of tax relief landlords can claim against interest payments. <\/span><\/p>\n

The prior rules provided a tax relief in line with the landlord\u2019s marginal tax rate. However, the new rules, being phased in to 2020, will cap that tax relief at 20%. For higher rate taxpayers with high levels of borrowing against buy-to-let properties, this will lead to significant increases in their tax bills. According to accountants Smith & Williamson, the changes will wipe out the profits from buy-to-let properties where, after costs, interest payments are greater than 75% of rental income. <\/span><\/p>\n

The changes will not affect cash buyers, those who pay the basic rate of income tax, or existing owners of debt-free buy-to-<\/span>let investments. However, those planning a purchase, or those with highly geared current investments, would be well placed to take advice from accountants, tax advisors or lenders, says Camilla Dell, Managing Partner at Black Brick.<\/span><\/p>\n

\u201cThese changes underscore how important it is for new buyers, particularly, to look very carefully at the expected yield from a buy-to-let investment, and not necessarily take estate agents\u2019 predictions at face value,\u201d says Dell. \u201cWe always carry out independent research to make sure that the local rental market can provide the income our buyers need to generate.\u201d <\/span><\/p>\n

Once the tax changes come fully into force, Dell expects the degree of leverage that mortgage providers will be comfortable extending on buy-to-let properties to fall to 50%, from nearer 65% at present. \u201cThat\u2019s not to say that London\u2019s buy-to-let market doesn\u2019t offer attractive investment opportunities, especially in this low interest rate environment \u2013 but buyers must do their due diligence carefully,\u201d she adds.<\/span><\/p>\n

In a further complication for buy-to-let landlords, they will, from April 2018, be required to file quarterly tax reports to the HMRC,<\/a> using an electronic platform. To ease the burden for our clients, those using Black Brick\u2019s managed property service<\/a> are automatically sent the data required to make quarterly returns.<\/span><\/p>\n

<\/a>Green shoots extend to top end of prime market<\/p>\n

As we discussed in last month\u2019s newsletter, activity is picking up in the Prime London residential market \u2013 and the latest indications are that the higher end of the market, particularly, is finally on the turn. <\/span><\/p>\n

\"\"The latest figures from the Land Registry<\/a> show Prime London transaction volumes up 19% in the last quarter of 2016, compared to the previous three months, and average prices in London\u2019s prime districts reaching a record \u00a31.8 million.<\/span><\/p>\n

Sales at the top end provided a backstop to results from listed estate agency and advisor Savills<\/a>. It reported the fall in sterling as supporting demand for higher-priced properties, and noted \u201can increase in sales of properties over\u00a0\u00a320 million\u00a0year-on-year\u201d. The company also saw a \u201cstrong autumn selling season\u201d and noted \u201csignificant resilience\u201d in its residential transaction business. <\/span><\/p>\n

<\/a>…helping to deliver a banner year for Black Brick<\/p>\n

Indeed, two big transactions at the higher end of the market helped propel Black Brick to a stand out 12 months, as we approach our financial year-end. Purchases of houses costing \u00a355 million and \u00a337 million contributed to a total of \u00a3129 million of property acquired for our clients in 2016-17, compared with \u00a347 million in the previous financial year \u2013 an amazing 175% increase! <\/span><\/p>\n

\"\"This year, we saved our clients \u00a33.8 million on asking prices, while we also acted for the sellers of a total of \u00a348 million of property. We represented buyers from 13 countries, from America, Africa, the Middle East and Asia. <\/span><\/p>\n

\u201cIt\u2019s in tricky markets such as these where we add the most value,\u201d says Dell. \u201cIt\u2019s when clients particularly need advice, help with negotiating, and indeed when we can find them properties that may not come onto the open market.\u201d <\/span><\/p>\n

This is especially the case with more expensive prime properties. \u201cNeither of our two largest deals this year were publicly marketed,\u201d notes Dell. \u201cIt was through our network and connections that we were able to secure these stand-out properties for our clients.\u201d <\/span><\/p>\n

<\/a>PM fires Starter pistol on Brexit talks<\/p>\n

Prime Minister Theresa May has officially notified the European Union that Britain is to leave the bloc, triggering two years of negotiations under Article 50 of the Lisbon Treaty.<\/span><\/p>\n

Both before and since last June\u2019s referendum, we have often been asked for our opinion on how Brexit, and the negotiations leading up to it, will affect the London property market. The only honest answer is, we don\u2019t know.\u00a0<\/span><\/p>\n

\"\"There are simply too many variables at play to confidently predict how leaving the EU will influence the supply of and demand for property in the capital. Probably the most important is the access the UK\u2019s crucial financial sector is able to secure to the EU market \u2013 but here, the range of outcomes is wide. Some research suggests as few as 4,000 jobs are at risk \u2013 while others predict up to 232,000 could go. The former would have little impact on house prices \u2013 the latter, profound effects. <\/span><\/p>\n

\u201cThere are two things we can say with confidence,\u201d says Black Brick Partner Caspar Harvard-Walls. \u201cThe first is that uncertainty can create opportunity. The process will create some motivated sellers, and those buyers prepared to move fast could find bargains. The second is that, regardless of the outcome, London will remain an attractive home for international high-net-worths. It will take more than even a \u2018hard\u2019 Brexit to wipe out the city\u2019s cultural, historical, social, educational and political attractions.\u201d <\/span><\/p>\n

<\/a>Black Brick on the road<\/p>\n

\"\"Those attractions were evident in Managing Partner Camilla Dell\u2019s recent trip to the Middle East. \u201cThere\u2019s continuing huge interest in London property among our clients in the Gulf,\u201d she says. Many see the falls in sterling and prices in prime areas \u2013 which together have seen cost reductions in the 30-40% range for dollar buyers \u2013 as presenting a huge opportunity. \u201cMany have decided that this is the year to add to their London portfolios,\u201d she adds.<\/p>\n

Dell is on the road again next month, visiting Zurich on the 16th and 17th of May, and Geneva on the 18th and 19th, meeting with local clients, banks, accountants, law firms and trust companies. To arrange an appointment, please email camilla.dell@black-brick.com<\/a><\/p>\n

<\/a>Acquisition of the month – Mathison House, Kings Chelsea, SW10<\/p>\n

\"\"Our clients, a family from the Middle East, were looking for a centrally located pied a terre with good security, as they only plan to be in London for part of the year. With limited knowledge of the city, we helped acquaint them with options across a large area, presenting them with a range of property styles to enable them to make an informed decision.<\/p>\n

They settled on a beautiful dual-aspect two-bedroom apartment in the Kings Chelsea development<\/a>, built in 2005 on the former site of Kings College, on the King\u2019s Road. The apartment, secured for \u00a32.2 million, is within a Grade II listed building, set in 7.5 acres of landscaped and walled parkland. As well as total privacy and security, the development includes a gym, swimming pool, tennis courts, and underground parking.<\/p>\n","protected":false},"excerpt":{"rendered":"

April rings the changes for buy to let investors From this April, changes to the tax treatment of mortgage interest payments on buy-to-let properties come into effect. These could have major implications for how existing properties or portfolios of property are financed, and, for many buyers, will bear down on the economics of making new […]<\/p>\n","protected":false},"featured_media":2358,"template":"","meta":{"_acf_changed":false,"_relevanssi_hide_post":"","_relevanssi_hide_content":"","_relevanssi_pin_for_all":"","_relevanssi_pin_keywords":"","_relevanssi_unpin_keywords":"","_relevanssi_related_keywords":"","_relevanssi_related_include_ids":"","_relevanssi_related_exclude_ids":"","_relevanssi_related_no_append":"","_relevanssi_related_not_related":"","_relevanssi_related_posts":"","_relevanssi_noindex_reason":"","inline_featured_image":false,"ghostkit_customizer_options":"","ghostkit_custom_css":"","ghostkit_custom_js_head":"","ghostkit_custom_js_foot":"","ghostkit_typography":""},"tags":[],"class_list":["post-3406","market-update","type-market-update","status-publish","has-post-thumbnail","hentry"],"acf":[],"yoast_head":"\nApril 2017 | Property 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