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The ascendancy of Equity Release continues

Please find below a link to an article in the autumn edition of the Surrey Lawyer
Equity Release by HFS Milbourne Financial Services

Buy-to-let hit again

Last month’s Autumn Statement marked another future tax increase for buy-to-let.

“Frankly, people buying a home to let should not be squeezing out families who can’t afford a home to buy.”

Those words from Chancellor George Osborne, heralded the announcement in the Autumn Statement of an increase in Stamp Duty Land Tax (SDLT) for the purchase of “additional properties like buy-to-lets and second homes”. The rise will take place from 1 April 2016 and, while full details are subject to consultation, looks set to add three percentage points to the SDLT cost of property purchase. For example, it appears that SDLT on a flat costing £200,000 will cost you £1,500 as a home buyer but £7,500 as a buy-to-let investor.

That was not the only fresh blow to buy-to-let investors. The Chancellor also announced that from April 2019, any capital gains tax (CGT) due on the sale of residential property (typically buy-to-let and second homes) will be payable on account within 30 days of the disposal date. At present, CGT is payable on 31 January in the tax year following sale, which means a deferral of up to nearly 22 months.

These changes come on top of the two measures announced in the July Budget:

  • The phased reduction in tax relief to basic rate for mortgage interest paid by individual buy-to-let investors, starting in 2017/18; and
  • The replacement from next April of the 10% wear and tear allowance with a new expenditure-based allowance.

It is unclear what the long term effect on the housing market of Mr Osborne’s reforms will be. However, nobody would doubt that the Chancellor is making buy-to-let a more heavily taxed investment than in the past. Meanwhile, he has eased tax in other investment areas – such as next year’s personal savings allowance and the new dividend allowance. Perhaps Middle England’s love of buy-to-let will start to wane over the next few years. (In theory, Middle-Scotland will be unaffected by the SDLT increase as Scotland levies its own Land and Buildings Transaction Tax (LBTT). However, it is quite possible that the Scottish Finance Secretary will choose to copy his English counterpart’s idea, if only to stop a flood of cross-border purchases.)

The value of your investment can do down as well as up and you may not get back the full amount you invested. The value of tax reliefs depends on your individual circumstances. Tax laws can change. The Financial Conduct Authority does not regulate tax advice.

 

Will the Eurozone Survive?

The subject of the Eurozone problems will be with us for a few years to come, and if you believe the Eurozone will break up, in whole or in part, the following article is well worth a read. Written by Roger Bootle of Capital Economics, it recently won the Wolfson Economics Prize, and I have attached a link to a summary of the piece, the full article is available to download on the internet.

http://www.policyexchange.org.uk/images/WolfsonPrize/leaving%20the%20euro%20a%20practical%20guide%20summary.pdf

Happy reading!

Rod Milne

How the Greek Crisis Could Benefit Homeowners

No you haven’t read it wrong, the Greek sovereign debt crisis could have a positive impact for UK homeowners.

If Greece leaves the Euro it is quite likely the rest of Europe, including the UK, could suffer.  This does however mean that interest rates could remain at their all-time low of 0.5% for some time – there is even talk of them being reduced further.

If you have a tracker mortgage, this is good news.  Even if you don’t have a tracker mortgage you could possibly switch to one to benefit from lower interest rates.  Please
call Luke Ashton on 01483 468 878 or email luke.ashton@hfsmilbourne.co.uk to find out more.

 

850,000 Halifax customers see surprise mortgage rate hike!

Halifax have today announced that they are increasing their standard variable rate from 3.5% to 3.99% on 1st May this year.

This surprise move will mean a customer with a £150,000 interest only mortgage will be £61 per month, or £735 per year worse off following these changes.

With other lenders offering tracker rates from 2.6% and fixed rates from 3.09% it might be worthwhile seeing if you should remortgage elsewhere.

If you would like to find out more feel free to contact Luke Ashton on 01483 468878 or email luke.ashton@hfsmilbourne.co.uk
 

Have you thought about Equity Release?

Recent figures from Safe Home Income Protection (SHIP) show that the number of Equity release cases taken out in the final quarter of 2011 were up 15% based on the same period for 2010.  With pressure on people’s pensions, poor returns from annuities and cost of living ever increasing it’s not hard to see why. 

People are looking for other ways of getting a bit of extra income to help them during retirement and Equity release is proving to be a very popular way of helping. In basic terms Equity Release is a way of releasing money from your home whilst still being able to live in the property.  People decide to release money for a number of reasons such as helping with the cost of living, to pay for some home improvements, helping other family members onto the property ladder, to pay for that holiday you always wanted or, to put it another way, for any reason you want.  For example, you can actually release up to 65% of the value of your home this way, and this can have a significant effect on your quality of living going forward

There are several different ways of releasing money from your property all have their advantages and disadvantages.  It is important to speak with someone suitably qualified to find out if equity release is right for you. 

If you would like to find out more feel free to contact Luke Ashton at HFS Milbourne on 01483 468 878 or email luke.ashton@hfsmilbourne.co.uk