Estate agents predict ‘no property Armageddon’ in 2017
The leading professional body for estate agents says that 43% of its member agents expect prices to stay the same, with a positive knock-on effect for first-time buyers. Almost a third (29%) of NAEA agents believe that more first-time buyers will get on to the property ladder in 2017.
While the NAEA welcomes the government’s support for first-time buyers purchasing new-builds, it believes there should be more of a focus on helping them to afford older ‘fixer upper’ properties, which it says offer better value.
Mark Hayward, managing director of the NAEA, says: “It would be an understatement to say this year has not gone as expected. However, the property market is mostly still feeling the effects of events that happened last year.
“The high-end London property market is suffering at the hands of increased stamp duty taxes and while Brexit uncertainty definitely hasn’t helped repair this, it’s not the sole reason why London’s more expensive properties aren’t being snapped up at the same speed they were.
“Next year, we expect it’ll be more of the same; there won’t be a ‘property Armageddon’, but things won’t get much better for first-time buyers and those looking to up or downsize.”
Rent price hikes
When it comes to the rental market, the Association of Residential Letting Agents (ARLA) predicts that there will be a drop in the number of rental homes coming on to the market in 2017. More than a third (37%) of ARLA letting agents believe that supply will fall, as April 2016’s stamp duty surcharge on additional properties continues to deter would-be property investors.
More than half (53%) of ARLA agents expect rents to go up in 2017, blaming this on lower stock levels, cuts to mortgage interest relief and the ban on letting agent fees.
ARLA predicts that demand will continue to rise but there will be fewer properties available to tenants, as some landlords will sell up as a result of the recent tax changes. It says this will be made worse as tighter lending criteria will make it harder for new property investors to enter the market.
David Cox, managing director of ARLA, says: “Our private rented sector report findings over the past few months have been positive and we were confident approaching the end of the year. However, following the announcement of an outright ban on letting agent fees during the Chancellor’s Autumn Statement, we expect rent prices to rise and tenants to be forced to look for properties in cheaper areas.
“The government continues to lash out against the private rented sector to cover its own failure to build the number of homes this country needs. Such policies will have a detrimental effect on the very people the government aims to help the most. As a result, we predict 2017 will be a raw year for renters. We now need stabilisation from the government before tenants are squeezed dry of every penny.”
A hugely unpopular tax paid on property and share purchases. Stamp duty on property is levied at 1% for purchases over £125,000 (£250,000 for first-time buyers) which then moves up at a tiered rate. For property between £125k and £250k you pay 1%, then 3% from £250k up to £500k and then 4% from £500k to £1m and then 5% for properties over £1m. But unlike income tax, which is “tiered” and different rates kick in at different levels, stamp duty is a “slab” tax where you pay the rate on the whole purchase price of the property. On shares, stamp duty is charged at a flat rate of 0.5% on all share purchases. Figures correct as of May 2011.
An increase in the general level of prices that persists over a period of time. The inflation rate is a measure of the average change over a period, usually 12 months. If inflation is up 4%, this means the price of products and services is 4% higher than a year earlier, requiring we spend and extra 4% to buy the same things we bought 12 months ago and that any savings and investments must generate 4% (after any taxes) to keep pace with inflation. Since 2003, the Bank of England has used the consumer prices index (CPI) as its official measure of inflation (see also retail prices index).
Everything you own: all your assets (property, cars, investments, savings, insurance payouts, artwork, furniture etc) minus any liabilities (debts, current bills, payments still owed on assets like cars and houses, credit card balances and other outstanding loans). When you’re alive this is called your wealth; when you’re dead, it becomes your estate.
The catch-all term applied to investors who buy properties with the sole intention of letting them to tenants rather than living in them themselves, with the proceeds from the let usually used for the repayment of the mortgage. Buy-to-let investors have to take out specialised mortgages that carry higher interest rates and require a much bigger deposit than a standard mortgage. Other expenditure can include legal fees, income tax (on the rental profits you make), capital gains tax (if you sell the property) and “void” periods when the property is unlet.