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Property and economic update
On the 17th of March the chancellor delivered his eighth budget.
There are four main points that relate directly to the property
market. Firstly, stamp duty and land tax rates remain unchanged.
Next as a result of the Barker review, the chancellor said that
he would immediately issue a consultation document with regard to
introducing Property Investment Funds (PIF). The main objectives
would be to allow smaller investors a better choice; bring more
liquidity to the commercial market and improve commercial and residential
housing stock. The chancellor also announced the sustainable communities
plan (SCP) backed by a £22bn investment and concentrating
on 4 growth areas; Thames gateway, Ashford, Milton Keynes/South
Midlands and London/Stanstead/Cambridge. Finally, for residential
landlords he announced relief of up to £1,500 per dwelling
for capital expenditure on loft and cavity wall insulation.
The market as a whole continues to experience
substantial growth. The Hometrack March survey of the housing market
reports a 0.7% increase in house prices across the country, slightly
down on last months figure of 0.9%. All 52 county areas reported
price rises, the highest increases being in the North: Teeside (1.5%),
Northumberland (1.2%), Tyne and Wear (1.2%), Cumbria (1.1%) and
North Yorkshire (1.1%). Oxfordshire was the slowest moving county,
with a rise of only 0.1%.
Among the country’s major cities,
Bath compounded its status as fastest moving city for the second
month running with increases of 2.4% (2.2% in the February survey).
Other cities with high price rises included Middlesborough (2.1%),
Cardiff (1.7%), Milton Keynes (1.7%) and Taunton (1.6%).
The Nationwide have reported a March rise
of 1.4% bringing the average price of a house to £142,584,
16.7% more than the same time last year.
What's new?
We say ‘bon voyage’ to
Tristan Soames who after several months has decided to take time
out to embark on a period of travel. We wish Tristan the best of
luck.
As our contact database is growing so rapidly
we have decided to employ the services of a telemarketing call centre.
You will shortly be receiving a call to check that we have your
details recorded correctly so that we can continue to bring to you
the latest developments, seminar information and of course, this
newsletter.
We are recruiting! Are you, or do you know
of a qualified mortgage advisor who is looking for a new challenge?
We are looking to recruit someone with these skills, so if this
is you or you know of someone who would be interested, please contact
us.
Property related tax – Where do you
stand?
When purchasing a property for investment
purposes there is one main factor that determines how the tax is
calculated. This is based on ownership of the property, for instance,
whether the property will be owned by an individual, a partnership
or joint ownership (usually but not necessarily a spouse) or a limited
company. There are five major taxes impacting on an investment property,
these are, Stamp duty, Income tax, Corporation tax, Capital gains
tax and Inheritance tax.
Stamp duty is broken into four different
bands as follows:
Up to £60,000
£60,001 to £250,000 1%
£250,001 to £500,000 3%
More than £500,000 4% |
Nil
1%
3%
4% |
* Residential property transfers up to
£150,000 in certain disadvantaged areas are exempt from stamp
duty.
Many people ask us whether they should
purchase property through a company or personally, and here’s
where it gets complicated. If the property is purchased through
a company the first £10,000 of profits are taxed at 0% and
the small companies corporation tax is only 19% as opposed to the
higher rate of income tax at 40%. This is great as long as the profits
are retained in the company, however, when extracting money from
the company further income tax is payable. Also, corporation tax
will be payable each time a property is sold unless the sales proceeds
are re-invested. Because the properties that we source are aimed
more at capital growth than high rental income, we suggest that
personal or joint ownership is often the more appropriate route
as you can potentially use both your capital gains and income tax
allowances. It is also generally easier to obtain funding for property
when purchased personally.
Many people consider using a company as
a retirement fund. This is because it is highly possible that by
retirement the property has been paid off and there will be a strong
income stream. The company profits (after paying corporation tax)
can be paid out to you and/or your spouse as shareholders. If, when
added to your other income, the dividends do not exceed your personal
allowances and the basic rate band, there will be no income tax
to be paid.
Although no one likes to consider this,
inheritance tax can be the largest tax that you will pay. With the
rising value of property, if inheritance tax stays at its current
level, your tax bill will increase dramatically, so it is worth
investigating ways of minimising this.
As you can see, it can be very difficult
to determine which taxes will be applied to your property investments
(income tax and/or capital gains tax). For instance a property purchased
for renovation and then sold would be taxed differently to a property
purchased on a buy to let basis. It is therefore very important
to establish how your property would be taxed given different scenarios
before you go ahead and purchase in order to minimise the amount
of tax payable. As tax can be so complicated it is vital to speak
to a reputable tax expert. Property for Life has access to a number
of highly regarded, specialist tax advisors, just give us a call
and we will be happy to put you in touch.
""Champions
aren't made in the gyms. Champions are made from something they
have deep inside them - a desire, a dream, a vision." - Muhammad
Ali, American Boxer" - Muhammad
Ali, American Boxer
"For anything worth having one must pay the price; and the
price is always work, patience, love, self-sacrifice. No paper currency,
no promises to pay, but the gold of real service." -
John Burroughs, 1837-1921, Author and Naturalist
A tale of two cities -
Focus on Manchester & Nottingham
Manchester
Manchester is the regional capital of the north west of England,
the UK’s largest economic region outside London It is the north
west’s regional centre for finance, commerce, retail, culture
and leisure, home to a major international airport and one of the
largest student populations in Europe. The city is transforming
itself from an industrial to a thriving, modern, dynamic, international
city. Manchester has recently attracted growth in the knowledge
- based economy and is in the top ten European cities for business
location.
Manchester’s renewal
programme has rightly received national acclaim. The newly created
city centre task force aim to not just rebuild but re-plan the city.
This constitutes one of the largest regeneration projects in post-war
Britain. Physical transformation has been coupled with a substantial
increase in the city centre resident population. From less than
a thousand in 1990/91 the population is now over six thousand and
will grow to over ten thousand over the next few years.
Manchester has a shortage
of high quality, high value homes. Amongst the core cities, house
prices are lower in Manchester than in all but Liverpool. About
60% of homes in Manchester are either terraced or flats, compared
with a figure of 48% nationally and 52% in greater Manchester. Demand
for homes in the city centre is boyant, where high value, quality
accommodation is attracting new residents. The city centre task
force will continue to identify strategic development opportunities
at a scale that will create new residential markets, support long
term sustainability and attract new and economically active residents
into a variety of areas across the city. The future of the city
centre could not be more exciting – new developments continue
at an ever increasing rate.
Nottingham
Nottingham is close to the centre of England,
approximately 120 miles from London and 50 miles north of Birmingham.
Nottingham is the undisputed capital of the East Midlands. It is
the 9th largest travel-to-work area in England with a population
of 740,000 and 3 million people within an hour's drive. Over the
past 20 years Nottingham has undergoing a transformation that has
made it one of the most stylish and vibrant cities in the UK. Day
and night Nottingham buzzes with life thanks to the great choice
of shops, bars and pubs, restaurants, theatres and galleries, fine
hotels, international sporting events and its world class universities.
The University of Nottingham is consistently rated among the top
ten in the country with ten applications for every one student place
and it is the most oversubscribed university in the country (UCAS).
Nottingham has a higher than average number of young people and
one city resident in every 11 is a university student.
City centre living is
a particular area of dramatic growth in Nottingham. Many redundant
industrial premises and warehouses have been adapted to create modern
homes. In the Lace Market, stunning loft conversions are fetching
up to £1/2million. Nottingham is the fastest growing major
city in the UK in terms of job creation (RICS Foundation). Employment
increased by 14 per cent between 1981 and 1996 and unemployment
halved in the last five years of the Nineties. The city’s Urban
Design Forum, set up by the council in 2001 to consider major developments
proposed for Nottingham and tap into the expertise of urban design
specialists in the public and private sector has contributed hugely
to Nottingham’s success.
Spring – a great
time to sell.
How to maximises your chances of a quick sale.
Spring time is widely regarded as the best time
to sell a property, with property selling faster and achieving greater
sale prices than at any other time of the year. But how can you
maximise your chances of a quick sale as well as achieving the best
possible price? Easy, take a look at our simple 12 point guide,
it may make all the difference.
- Curb appeal! The first
thing a buyer will see is the outside of the front of the house.
That first few seconds will determine if they will consider buying
or not! Make it shine. Keep the grass cut, the garden well manicured
and a clean car on the driveway, you'll be ahead of the game.
- The front door is where you greet the potential
buyer's. Make it the most inviting part of the house. Look at
it objectively. Is it faded or worn? Is the weather striping loose?
Does the doorbell work?
- Take a walk through and inspect your home.
Take notes of all the things that may need to be repaired or improved.
Make all necessary repairs before you put your property on the
market.
- Paint or redecorate parts of the house only
if really needed. Most purchasers will prefer to paint the home
themselves.
- Clean, Clean, Clean, Make your home Sparkle,
because home buyer's equate clean with a well kept home. Don’t
forget to wash windows and coverings.
- Clean the garage. There is nothing worst
than walking into a dirty garage piled with boxes.
- Un-clutter and create space! Clutter makes
a home seem smaller and therefore less desirable. Walk in cupboards
and wardrobes are particularly important. Consider storing any
excess items in the attic.
- Make sure all plumbing and appliances are
in working order.
- Check that all sealant (windows, bath, shower,
sink) is in good condition.
- Make sure the roof and gutters are clean
and need no repair.
- Switch on the display lights, concealed lights
in the kitchen, picture lights and any table lamps, this makes
the property feel warmer and more inviting as well as lighting
up dark corners.
- Finally, place some fresh flowers around
the house, and yes, fresh coffee really does work!
Happy selling!
"Keep away from small people
who try to belittle your ambitions. Small people always do that,
but the really great make you feel that you, too, can become great."
- Mark Twain1835-1910, Writer
"I make the most of all that comes and the least of all that
goes." -
Sara Teasdale 1884-1933, Poet
Completion & after sales – additional
services
I thought I would take this opportunity to bring
to your attention two additional services that we offer to investors
who purchase property through ‘Property for Life’.
Snagging
This is a professional check of your new property immediately prior
to completion. This service ensures that your property is finished
to the highest standard by identifying any defects and poor finishing
in such areas as paintwork and decoration, plumbing and electrics,
windows, floors and doors, fixtures and fittings and so on. This
service not only secures your peace of mind but it also increases
your rental potential when compared to a property that has not had
the treatment. This can also be used as a tool to delay completion
if necessary. Our partner company is ‘Inspector Home’
and they can be found at www.inspectorhome.co.uk.
As always, as a ‘Property for Life’ investor you will
benefit from a substantial discount on this service.
Furnishing
Through our partner company ‘Fully Furnished’, we can
offer a full furnishing service. ‘Fully Furnished’ can
supply full furniture packages to enable you to furnish your new
property in one easy move and with the minimum of fuss. If you are
planning to sell your property we can help you obtain rental furniture
for the period of the sale and once again we offer substantial discounts
on this service. ‘Fully Furnished’ can be found at www.fully-furnished.com.
Meet a fellow 'Property for Life' investor
Meet Prakash Tailor (33) and his wife Rina (25). Prakash works night
shifts within the logistics division of the Royal Mail at Warrington
and Rina is studying for a Biomedical science degree. After attending
a well known property seminar course, Prakash and Rina purchased
their first property and were able to move out of his parents home.
They purchased the house for £114,000 and it has subsequently
increased in value to £175,000. Prakash and Rina then came
to ‘Property for Life’ and by using some of the equity
from their property were able to buy an apartment off-plan in Crusader
House in Nottingham. This property is now constructed and let. The
market value of this property was £141,000, but with a 15%
discount, Prakash and Rina were able to buy it for £119,850
and by using the discount as deposit a 100% mortgage was achieved.
Prakash and Rina have now gone on to purchase another off plan apartment
in Glossop. This property is due for completion in January 2005.
Prakash says, “Property for life have been great! They guided
us through the whole process and now we have a substantial portfolio
that should in time generate some real wealth. I will definitely
be buying more”. This demonstrates just how a small amount
of equity can be turned into a serious business venture. We wish
Prakash and Rina the best of luck with their growing investment
portfolio.
What's available
We currently have the following investment opportunities:
The Litmus Building
- Nottingham
Paisley High Street
- Glasgow
Tramway Hights
- Glasgow
Spembley Works
- Chatham
Please goto our website
www.propertyforlife.com
for full details.
Completion update
Marco Island
Full demolition and reconstruction will
begin at the site on the 17th April. Many people have asked what
would be on the lower floors of the development, in answer to this
we are told that this area will be made up of a number of retail
units as well as the swimming pool and gym facilities.
Recent events
We recently exhibited at the Kent property investors’ fair.
This was a very successful show and we registered many new people
including Anne Widecombe! I’m joking of course, although she
was at the show.
Upcoming events
With the bank holiday season now
upon us, many people are using the extra time to sneak a quick getaway.
As a result of this we have decided to postpone our seminar programme
to May. We will however be holding a seminar covering buy to let
and off-plan investments with CBF (Commercial business funding)
at The Hilton, East Midlands Airport, Derby on Saturday April 24th.
If you are interested in attending this event please e-mail me adam@propertyforlife.com
as soon as possible.
New registrations
A big thank-you to all those people who have registered this month,
and believe me there are a lot of you.
'Property for Life' Referral
programme
A quick reminder that ‘Property for Life’ offers a generous
referral programme to any individual or company that refers an individual
or company to us which leads to a successful property purchase.
The payments are made on an increasing percentage scale based on
the number of purchases.
These percentages are as follows:
Nš of
Purchases |
 |
% of
Property Price |
|
 |
|
| 1- 5 |
|
0.25% |
| 6 – 10 |
|
0.5% |
| 11-15 |
|
0.75% |
| 16 or more |
|
1% |
|
Full details can be found on our website where you will also find
a property referral form.
Then start earning cash rewards for recruiting new customers!
Next edition
The next edition of 'News & Views'
will be delivered right to your computer next month.
Back issues
Please take a look at the back issues
of our newsletter where you will find some really interesting articles
and information. All back issues are available on our website www.propertyforlife.com
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