How much do you need to earn to secure a new home by this Sunday?

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The latest research by new home specialists,
Stone Real Estate, has looked at just how long it will take to earn the
equivalent of a 15% mortgage deposit for a new home based on the daily wage at
a number of different salary brackets.

Stone Real Estate looked at the net earnings
per day for various salary levels since the year began and at what point this
year or next, these earnings would have reached £43,975, the average 15%
deposit for a new build home (£293,167).

The data shows that for those on a wage of
£1.2m or above, the minor sum of £43,975 has been in the bag since yesterday,
just 26 days into the new year.  

However, spare a thought for those buying in
London where the average new build cost is £502,228 and a 15% deposit equates
to £75,335, as they would have to be on a wage of £2.1m or above to hit the
threshold as of yesterday.

In contrast, those just starting out on a wage
of £20,000, would have to work for 937 days, 912 days more, just to hit a 15%
mortgage deposit on the average new build home, meaning they won’t reach the
same point until 26th July 2022! 

This is again higher in London, where it would
require someone on £20,000 to work for 1,604 days or until 23rd May 2024 just
to earn the required deposit of £75,334.

Raking in £50k a year? It would still have to
work until 4th March next year (428 days) or 3rd January 2022 in the capital.

From £70,000 a year and up you’re on track to
save the average UK new build deposit before 2020 is out, taking 241 days on a
£100k salary and just 58 if you’re earning £500k.

In London, you need to be earning £200k to make
the cut by August of this year (235 days), while £500k will see you reach the
sum in just 100 days!

Even when taking life’s other expenses into
account and working on the basis of saving just 20% of your net income, those
on £400,000 or more would still have tucked away enough to afford a 15% deposit
on the average UK new build this year!

Founder and CEO of Stone Real Estate,
Michael Stone, commented: 

“For many aspirational homebuyers across the UK
and particularly in London, the financial hurdle of compiling that
all-important mortgage deposit is huge and it can take them years of saving in
order to get to that point.

Of course, life makes it impossible to save
100% of our income and while it may take you even longer tucking away 20% of
your net income, doing so will soon provide you with a very firm foundation and
luckily for most of us, the Bank of Mum and Dad will help to reduce the time it
takes to get a foot on the ladder considerably.

The silver lining of this long savings slog?
Yes the initial hurdle is high, but the reward is one of the most fulfilling in
adult life and when buying a new home you’re not only getting great value for
money, but your investment will require little to no maintenance for the
foreseeable. 

Not only this but a new home will hold its
value much better than an existing property and even during periods of market
uncertainty as we’ve seen recently, new home buyers have enjoyed robust price
growth and a great return on their hard-fought investment.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – How much do you need to earn to secure a new home by this Sunday? | LandlordZONE.

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Daily politics update: Carbon monoxide alarms

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Proposals to extend regulations concerning carbon monoxide alarms are being considered by the government. Barry Sheerman MP (Labour, Huddersfield) has received a response to his written question asking if the government will bring forward legislative proposals to require carbon monoxide alarms in both private and social-rented homes with a carbon fuel-burning appliance. Under the Smoke and […]

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Landmark property investment tax ruling given on Andrew Lloyd-Webber case

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Investors who lose money on risky property investments, can now claim their losses against tax following a First-tier Tribunal ruling.

Off-plan property buyers now have more
confidence to invest in potentially risky developments after a tribunal ruled
they can claim tax relief on losses if
their investment fails.

Investors
scored a victory when the
First-tier Tribunal (Tax) ruled in favour of Andrew Lloyd Webber against HMRC for his capital gains tax
rebate claim, over the development of a luxury beachside mansion in Barbados
which was never completed.

Lord Lloyd-Webber and his wife won their legal
battle after the tax authority said they could not offset £6.25m they had lost,
for tax purposes. 

Lord and Lady Lloyd-Webber invested in the Clearwater Bay
property development project in 2007, entering into contracts to buy two plots
of land and two villas, due to be part of a large holiday homes complex. 

But the couple’s planned £14.3m venture failed in
February 2009 when property developer Cinnamon 88 suspended construction during
the financial crisis.

They had claimed the sums paid as capital losses, which
they’d tried to offset against other capital gains realised by them, but this
was rejected by HMRC.

The Tribunal subsequently ruled that the £6.25m had been
paid by the Lloyd-Webbers for the acquisition of their rights under the 2007
Contracts.

It agreed that relief should be allowed in these
circumstances, saying this was consistent with the “real world” approach to
capital gains and losses established by the courts.

Nick Clayton, partner at Herbert
Smith Freehills, says the
ruling is a welcome source of comfort to other investors. “The decision gives
effect to the reality of an investment in off-plan property, by recognising
that, whether or not the property is ultimately acquired, the investor has made
an investment and made a loss on it,” he says.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Landmark property investment tax ruling given on Andrew Lloyd-Webber case | LandlordZONE.

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Delay to Minimun EPC Band E for Scotland’s PRS

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Hot off the press from a SAL Mailing to their members:

Scottish Association of Landlords (SAL) has been advised by The Scottish Government that it intends to postpone the introduction of the minimum EPC requirement until 1 October 2020 due to delays in finalising the regulations.

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Agent ordered to pay £25k for illegal lettings

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Letting agent Olympia Estates Ltd has been ordered to pay out £25,000 for illegally operating two properties, following a long-running investigation by a London Council. The Paddington-based letting agent didn’t apply for a House in Multiple Occupation (HMO) licence on the two properties and was found to be trying to evade the licensing process. The […]

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Freeholder excavating below our ground floor flat?

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Dear All, Firstly thank you to the website and its members for all the informative content which has been of enormous help to us throughout the years!

We currently own a ground floor flat on a very long lease.

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Home ownership grows amongst the young…

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Home Ownership:

The number of young people now owning a home has grown to the point where it matches the number renting. The “bank of mum and dad” and help-to-buy are beginning to redress the balance.

Go back to 1918 and less that one-quarter of households were privately owned.

But with increasing prosperity after WW2 there was a surge in house building which brought that balance closer to three-quarters. With rising incomes came access to mortgages and private renting declined; home ownership was transformed, particularly from 1980 to 2003 – helped by a large scale sell-off of social rented properties – and it peaked at 73 per cent of all English Households around 2003.

However, post 2003 home ownership and social housing have gone down again with just 64 per cent of residential housing in England now owner occupied, around 10 per cent is rented from housing associations and 7% from local authorities.

In the 80s and 90s private renting accounted for less than 10 per cent of households, but this proportion was transformed by the growth of buy-to-let from the mid 1990s onward, reaching almost 20% in 2013-14. This proportion of households in the private rented sector (PRS) has remained relatively unchanged ever since – for the sixth year in a row, according to the English Housing Survey’s (EHS), figures for 2018-19 released this month.

The ready availability of buy-to-let mortgages, the assured short-hold tenancy – giving landlords the confidence that they could to recover their property relatively easily if things went wrong – low interest rates, and increasing asset prices, have all conspired to boost buy-to-let and private landlording. It’s only recently that Government policy has started to reverse the trend with an increasing tax burden on landlords and more regulation of the PRS. The help-to-buy scheme is helping more and more first time buyers onto the housing ladder.

The “bank of mum and dad” and help-to-buy have started to redress the renting / ownership balance, or at least slow down the booming buy-to-let industry, with the number of young adults now owning a home reaching the same level as those renting for the first time in six or seven years. According to the EHS, ownership rates among 25 to 34-year-olds rose from 38 to 41 per cent last year, roughly equalling private renters – see the chart.

Daniel Tomlinson, policy analyst at the Resolution Foundation think tank says, “The 140,000 increase means that, for the first time since 2012, young adults are as likely to own as live in private rented accommodation”

However, the small shift from renting to ownership, which in any case is stated Conservative policy, is somewhat off-set by the rise in renting by the baby boomer generation, where renting in this cohort is definitely on the rise. Ten per cent of 55-64s now rent privately, which compares with 7 per cent a decade ago, and those renting social homes increased from 14 to 17 per cent.

But despite Generation Rent’s gravitating toward home ownership, the home ownership rate among young households is still one-third lower than it was in the early 2000s. There are millions of young adults who can’t afford to get onto the property ladder, and while house prices keep increasing faster than wages, that elusive deposit threshold keeps getting further out of reach for those without help from other sources.

The average deposit required of a first time buyer rose by 7 per cent last year reaching £46,187, according to the Halifax, while the equivalent in London is £109,885, up 2 per cent on 2018; but this did not stop 356,767 buying in 2019 compared to 193,940 in 2009.

The fact remains that millions of young adults, including double earners with professional careers, many who have grown up in privileged circumstances, often cannot afford to buy basic accommodation for themselves. When it comes to starting a family they reach desperation point, because their situation contrasts so starkly with their own childhood home.

With a reversal in generational fortunes, on a national scale, the government realises it has a problem on its hands and long-term it strains on the social fabric. Owner occupation helped millions of baby boomers, ordinary working people, get the means to accumulate wealth.

As Conservative policy proffers, help people build a tangible stake in their future, get a lower propensity to withdraw labour, and of course, they vote conservative. Home owners generally have more control over their lives and more money to leave to the next generation.

Housing tenure
balance in England is a problem which the government will have to
face up to, a problem which the Boris Johnson Government is about to
grapple with. But of course, it is not alone: it is a problem facing
every other western democracy.

English Housing Survey Headline Report, 2018-19

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Today in politics: Section 21, Universal Credit, LHA, evictions and more

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Today we look at evictions and the PRS, housing benefit, new reports and figures. Law Society backs plans to end Section 21  The Law Society has backed plans to end Section 21 repossessions. Simon Davis, society president said: “Section 21 is one of the leading causes of family homelessness in the UK. In addition, because of […]

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Law Society backs government’s controversial eviction law reforms

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Main organisation representing lawyers in the UK says plans will increase tenant security but makes no mention of likely backlogs it will create within court system.

The Law Society has backed the government’s controversial plans to significantly reform evictions laws in England.

Despite howls of protest from landlord and many industry organisations pointing out that banning Section 21 notice evictions will lead to huge backlogs as more evictions are pushed into the court system, The Law Society has said the proposals will ‘improve security of tenure’.

The announcement it its response to the government’s A New Deal for Renting consultation on ending assured shorthold tenancies (ASTs) and revoking section 21 of the Housing Act 1988.

The Law Society’s views echo many of the government’s arguments for abolishing ‘no fault’ Section 21 evictions.

“Section 21 is one of the leading causes of family homelessness in the UK,” says Simon Davis, president of the Law Society.

“In addition, because of the absence of legal aid support, many are unable to obtain the legal advice they need to enforce their rights.

“This creates an inequity of power between landlords and tenants. The rule of law should be available equally to both sides.”

But Paul Shamplina of evictions
specialist Landlord Action, says although increased tenant security is to be
welcomed, the reforms must be backed up by additional funding for the court system.

“It’s very important that tenants have more security in their tenancies, and clearly when section 21 is abolished, there will be major amendments to a Section 8 notice, with extra grounds added to the current 17, which are out date in my opinion.

“But we have still not heard anything from the Ministry of Justice that there will be extra resource put in the court system.

This must include employing more judges, bailiffs and more online tools to assist landlords and tenants, along with a new mediation service, to prevent cases going to hearing/eviction stage.

“Without extra
resource to deal with all these extra hearings from the switch of Section 21,
it falls down. 

“We still see
horrendous delays on cases at present at Landlord Action.

“’ve said it once
and I will say it again, if landlords feel they cannot obtain possession within
a reasonable time period, they will have no confidence in new ‘Housing Court’
and you will see landlords exit the market, which will result in more
homelessness and reduced stock in the PRS.

“It needs to be
joined up and not rushed.”

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RLA opposes plans to renew an additional licensing scheme in Swansea

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The RLA has opposed plans to renew and expand an additional HMO licensing scheme in the Castle, Uplands and St Thomas wards of Swansea. Currently, an additional licensing scheme is already in place in the Castle and Uplands wards, meaning landlords with HMOs in these areas have to pay for a licence in order to […]

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