All posts by Ruban Selvanayagam

Commentary on the June 2017 Property Investor´s Factfile

by

June 2017 Property Investor´s Factfile The Property Investor Blog´s monthly factfile presents relevant data from national / London house prices, the latest buy to let Limited Company (SPV) loan rates, LIBOR / SWAP rates and rentals to  mortgage debt figures and information on the first-time buyer sector.  Some noteworthy observations from the last month are outlined below: Nationwide reported average prices in the UK reaching £208,711, slowing down annual growth to 2.1 per cent – the lowest in four years.  Despite the national unemployment rate hitting a 42-year low in the quarter preceding March, Robert Gardner the building society´s chief economist pointed out that real incomes were under pressure due to inflation overtaking wage growth. Speaking to the Guardian, Gardner commented that there is further evidence “that the housing market is losing momentum” which “may be indicative of a wider slowdown in the household sector, though data continues to send mixed... [Read More]

The 2017 London Residential Summit (Estates Gazette)

by
Leave a comment

Estates Gazette´s early May event sought to address a number present-day questions relating to the current state of London´s residential property sector. Introduction Against a backdrop of Sterling´s post-Brexit devaluation, a marked decline in high-end property prices and the threat of skills shortages, many of the discussions were nonetheless refreshingly directed towards sustainable, non-speculative industry growth. With the government´s housing white paper now in play, the issue of whether “action will follow talk” was deliberated alongside frequent mention of the build to rent sector´s role in tackling the Capital´s housing shortage.  Other conversations included panel discussions amongst Outer London Borough council on the future of housing delivery, advancing social housing delivery in the capital´s estate communities and a very interesting debate amongst leading Housing Associations. London´s Housing Plan Reflecting on the first anniversary of Sadiq Khan’s mayoralty, Deputy Mayor for... [Read More]

Acuitus Auctions on Transitioning from Residential to Commercial Property (Part 1)

by

In a “post-Section 24” operational environment, the changing face of residential buy-to-let has spurred investors to explore alternative strategies as means of not only overcoming the impending punitive tax burden but also diversify into other asset classes. For capitalised buyers, the case for commercial property as a potential direction of travel is a compelling one: finance costs that are fully tax-deductible, lower stamp duty at purchase, Full Repairing and Insuring (FRI) leases and simplified enforcement of contractual breaches are just some of the commonly-cited advantages. However, evidence does suggest that the risks may be greater as investors can end up more susceptible to market swings, legislation and sector-specific behavioural shifts.  From the outset therefore, successfully investing in commercial property ultimately requires meticulous due diligence alongside an inherent ability to forecast changing trends well into the future. We were very grateful to have a conversation on this subject with Richard... [Read More]

Acuitus Auctions on Transitioning from Residential to Commercial Property (Part 2)

by

Following on from part 1 of our interview with Richard Auterac, chairman at commercial auction house Acuitus, we continued to explore the question of due diligence and how building relationships with commercial agents and attending auctions is fundamental to gain a greater understanding of the sector. No contemporary interview would be complete without asking about the EU referendum and Richard also gave us his thoughts on how business rate reforms may impact buying decisions in the coming years. Finally we approached the office building segment, the rapid growth of schemes with B1 to C3 Permitted Development Rights and gained some practical insights on buying commercial property at auction. — PIB: Ruban Selvanayagam from the Property Investor´s Blog RA: Richard Auterac from Acuitus Commercial Property Auctions — PIB:  Do you have specific advice on how an investor can engage in more granular research? RA: My view is that if you are a first-time commercial buyer, it... [Read More]

Commentary on the May 2017 Property Investor´s Factfile

by

May 2017 Property Investor´s Factfile The Property Investor Blog´s monthly factfile presents relevant data including national / London house prices, the latest buy to let Limited Company (SPV) loan rates, LIBOR / SWAP rates, rentals, mortgage debt figures and information on the first-time buyer sector.  Some noteworthy observations from the last month are outlined below: According to Rightmove, asking prices were up 1.14% over the previous month (the equivalent to £3,547, raising the average price of new properties to the market to £313,655). The property portal also reported that the first-time buyer sector, typically of two bedrooms or fewer, gained strength (a 6.5% annual rate of increase). At the same time however, the same data showed that higher priced property saw an overall annual rise of 2.2% – the lowest recorded since April 2013. Also, whilst the market observed the highest number of sales agreed at this time of the year since prior to 2007 credit... [Read More]

RICS Economic & Residential Property Outlook (End of April 2017)

by

Below is a summary of a spring 2017 talk given by Simon Rubinsohn, chief economist at the Royal Institute of Chartered Surveyors (RICS) – largely based on his insights using the high profile market surveys regularly conducted by the organisation as well as other reputable data sources. Rubinsohn is closely involved with policy development and regularly works with the Bank of England, International Monetary Fund (IMF) and the World Economic Forum on issues related to property sector as well as being on the board of housing provider L&Q. Simon split his talk into two parts: the macro-economic picture and a more specific exploration of the housing sector. The Macro-Economic Picture Commenting that many economists have had to admit a gross overestimation of the impact of Brexit, Rubinsohn started by referring to the Citi UK Economic Surprise Index demonstrating that the preponderance of data flow has shown that the economy... [Read More]

Purplebricks on Expanding into the Lettings Sector

by

The online estate agency´s role in how homes are bought and sold looks set shape the evolution of the property industry in the coming years.  Established in 2014, Purplebricks was the first to adopt the “hybrid” model, bridging the gap between using the experienced local knowledge of traditional agents with the convenience of online and mobile access.  As a result, with a current market cap £746.63 million, the company has been able to position itself solidly in what is a massively competitive sector and remove itself from some of the negative murmurings regarding this non-traditional sales route. Comparative research by Which?, for example, demonstrated that vendors using Purplebricks had to reduce their asking prices the least compared to other online estate agencies and, interestingly, online/hybrid agents sell on average 38 days faster than traditional agents. With the company now bringing its expertise into the rental sector,... [Read More]

How Landlords Can Be More Tax Efficient Post Section 24 (Part 1)

by
2 Comments

Although there is arguably a broader awareness of the tapered erosion of mortgage interest relief resulting from Section 24 of the Finance Act 2015, many landlords have decided to adopt a “wait and see” approach with regards to their future liabilities.  Indeed, for basic rate taxpayers there may not be too much cause for concern – even after the full implementation of the legislation in 2020.  For everyone else however, early preparation for what will be a notable hike in tax liabilities is strongly advisable. With a thwarted Judicial Review attempt and a Chancellor seemingly paying little attention to the issue, hedging on some form of policy reversal or retrospective allowance is risky and could create insurmountable challenges down the line. We explored the issue with Simon Misiewicz of Optimise – a Nottingham-based accountancy practice that works predominantly with property investors and traders.... [Read More]

How Landlords Can Be More Tax Efficient Post Section 24 (Part 2)

by
2 Comments

Following on from part 1 of the Property Investor Blog´s extended interview with Simon Misiewicz of Optimise Accountants, in this post we explore the pros and cons of some of the prominent strategies touted as a means of reducing Capital Gains Tax (CGT) and Stamp Duty (SDLT) when transferring properties into a Limited Company.  Simon also discusses how investor landlords can engage in a cost-benefit analysis to examine if incorporation is genuinely worthwhile, seek approval from the HMRC and ensure that any future Limited company buy to let purchases are undertaken in an efficient manner. (5) What are Optimise advising clients who are considering transferring personally owned properties into a Limited Company, particularly with regards to ensuring that General Anti-Abuse Rule (GAAR) are observed?  For example, there is a lot of talk of transferring properties into a Limited company and it would be great to hear... [Read More]

Can Landlords Help Alleviate Homelessness? (Part 1)

by

Accurately tracking the how many people are homeless and rough sleeping has become practically impossible given that an increasingly large number of people are falling in and out of fixed accommodation.  However, there is little doubt that the problem is getting worse, particularly when observing the “hidden homeless” phenomenon – i.e. those in gainful employment that are still struggling to find a decent and affordable place to live. Exclusively blaming the speculative nature of larger property markets such as London would be unfair – but, objectively speaking, market rents that are increasingly out of sync with incomes and other negative influences such as Local Housing Allowance caps are undoubtedly having a contributory effect. Many readers would already aware of the charity Crisis´ work both in service centre provision across the UK and as a central government lobbyist.  What may not be known is that the organisation is also actively looking to build synergies with the private... [Read More]