Housing & Mortgage Round Up: HMRC clampdown on buy to let investors, as house prices rise


Housing & mortgage round up_istockphotoWe’ve got the usual wide range of stories in this week’s Housing & Mortgage Round Up, including a crackdown by HMRC on buy to let landlords, interest rate news and the latest house price survey from the Halifax.

Bank of England leaves interest rates unchanged, again!

As expected the Bank of England’s Monetary Policy Committee (MPC) has left base rate on hold at 0.5% for another month. It’s now four years since the rate changed and there seems to be little prospect of an increase in the short term; which will delight borrowers and anger savers in equal measure.

House prices on the rise

The latest Halifax House Price Index figures have shown that prices rose in February by 0.5% and are 1.9% higher than this time last year, with the average house now worth £163,600.

Commenting on the figures Martin Ellis, Housing Economist at the Halifax, said: “The housing market continued to provide evidence of improvement in February. Prices in the three months to February were 1.9% higher than in the previous three months. This was the third successive increase in this measure of the underlying trend. Prices were also 1.9% higher than in the same period a year ago.”

Are you looking for mortgage advice?

Linda Wood, Investment Sense mortgage adviser in Nottingham

Contact Linda Wood today:

0115 933 8433


Online enquiry form

Ellis continued: “House sales also continue on a modest upward trend. This increase in both house prices and activity in recent months is consistent with evidence of some improvement in market conditions. The more than half a million increase in the number of people in employment over the past year is likely to have been a factor supporting housing demand.

HMRC crackdown on but to let landlords

If you have sold a property, perhaps a second home or a buy to let investment and not declared any profit or paid the tax due, now it the time to confess and pay up!

HMRC launched ‘The Property Sales’ campaign this week, targeting people who have sold property, for a profit, without paying the necessary tax due.

Although an individual’s main residence is exempt from Capital Gains Tax (GCT), second homes and buy to let investments are not and any gain above the annual allowance, currently £10,600 per person, is taxable at a rate of 18% or 28%.

It seems that HMRC believes some investors are trying to escape paying tax on profits, simply by not declaring the sale, a practice the taxman is now clamping down on.

Investors have until 9th August to own up to any undeclared profits and until 6th September to pay any tax due.

Speaking about the new scheme, HMRC’s Marian Wilson, said: “Some people will not understand that selling a second home, a holiday home or a property disposed of as a gift could attract Capital Gains Tax. They need to look at our website or contact us.”

She continued: “It is better to come to us before we come to you.”

Mortgage approvals dip despite the Funding for Lending Scheme

In the same week that HSBC announced their lowest ever two year fixed rate mortgage comes news that the number of mortgage approvals has dipped for the first time since the introduction of the government’s Funding for Lending Scheme (FLS).

As most people now know, the FLS gives banks and building society access to cheap money, which they then have to lend on to individuals and businesses in the form of loans and mortgages.

The effect has been to reduce interest rates and, until the latest set of figures, give a boost to the number of mortgages being agreed.

According to the Bank of England 54,719 mortgages were approved in January, down 2% on December, which was in turn the highest level for nearly a year.

The number of mortgage approvals has risen each month since July last year on the back of the FLS; it remains to be seen whether January’s dip is a one off blip or the start of a reversal to this trend.

The Bank’s figures are confirmed by data from the Council of Mortgage Lenders (CML), but there is still confidence that the housing market will improve in 2013 with the FLS pushing down mortgage interest rates and falling unemployment boosting homebuyer confidence. Indeed reacting to the latest Halifax house price figures, Martin Ellis, their Housing Economist, said: “We expect to see a national increase in house prices over the course of 2013. Weak income growth and continuing below-trend economic growth, however, are likely to remain significant constraints on housing demand.”

Clamp down on letting agents

The fees charged by letting agents to tenants have hit the headlines recently and agents now need to be clearer in their advertising.

The Advertising Standards Authority (ASA) said this week that letting agents must display the compulsory fees paid by tenants to rent a property in any advertising or promotional literature.

The move comes after the ASA ruled against the estate agent, Right Move, who ran an advert which did not declare that compulsory fees would be added to the quoted price.

Although there will be no change to the law the ASA ruling will now apply to all future adverts. Guy Parker, Chief Executive of the ASA, said: “Hidden fees are not only unfair, they hit those who are struggling hardest. Our ruling today makes clear that letting agents need to get their houses in order and treat potential tenants fairly.”

Parker continued: “It is now our priority to make sure agents across the sector bring their advertising into line.”
The news will be welcomed by the UK’s growing number of renters, although calls for tougher rules to clampdown on some of the practices of rogue landlords and letting agents will continue.

Our mortgage adviser, Linda Wood, is here to help you. If you would like advice on your options or you are affected by any of the stories in this week’s housing round up please call Linda today on 0115 933 8433, alternatively enquire online or email linda.wood@investmentsense.co.uk

Your home may be repossessed if you do not keep up repayments on your mortgage.

For providing mortgage advice we will charge an application fee of £300 and we may also be paid a fee from the lender, any fee paid by the lender will be disclosed to you. Alternatively we will charge an arrangement fee of 0.5% of the loan and refund to you any payment received by us from the lender.