Budget- UK residential property held by non-natural persons

The measure

The Chancellor has announced that certain anti-avoidance rules which were introduced in 2012 and 2013 on residential properties valued at more than £2m held by ‘non-natural’ persons will now apply to such property worth £500k or more.

SDLT – extension of the 15% rate

A rate of 15% SDLT currently applies to residential dwellings valued at more than £2 million purchased by certain non-natural persons (principally companies, but also including unit trusts and certain partnerships). The 15% rate will now also be capable of applying to a purchase of residential dwellings worth more than £500,000.

ATED – introduction of new rate bands

The government will introduce two new rate bands for the Annual Tax on Enveloped Dwellings (ATED), to bring properties worth more than £500,000 into charge. The first band will apply to residential properties worth more than £500,000 up to £1 million and will impose an annual charge of £3,500. The second band will apply to properties worth more than £1 million up to £2 million and will impose an annual charge of £7,000. As with the annual charges under the current ATED bands, the two new charges will be increased by CPI each year.

The ATED-related capital gains tax charge will also apply to properties in the two new ATED bands.

Who will be affected?

The measures are aimed at owner occupiers (or people who leave their properties empty) holding property through companies rather than in their own name. Reliefs continue to be available for property investors, developers and traders.


The extension of the 15% rate will take effect from 20 March 2014. The introduction of the two new ATED bands will be staggered, with the £1 million to £2 million band coming into effect from 1 April 2015 (and the capital gains tax charge applying to gains accruing from 6 April that year), and the £500,000 to £1 million band coming into effect from 1 April 2016 (and the capital gains tax charge applying to gains accruing from 6 April that year).

Our view

This measure reflects the government view that the existing rules on enveloped dwellings are seen as a success, both as a counter against the avoidance of SDLT through selling property in corporate ownership and as a revenue raiser in its own right. ATED has raised five times more revenue than expected and this extension is forecast to generate an additional £90m annually. There is also a welcome recognition that this imposes an administrative cost on those businesses claiming relief and that this needs to be addressed.

Source: Deloitte

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Budget- Capital gains tax on residential properties owned by non-residents

The measure

In his Autumn Statement in December 2013, the Chancellor announced that, from April 2015, the scope of capital gains tax would be extended such that ‘future gains’ on all disposals of UK residential property by non-residents would be subject to the charge.

The Government’s intention is reaffirmed in the Budget but there are no further details on what measures can be expected.  A consultation document is to be published shortly.

Who will be affected?

Those affected will be all non-resident individuals holding UK residential property and any non-resident non-natural persons holding UK properties valued at £1m or less (as those holding property worth more than £1m will be subject to CGT from 6 April 2015).  It is not yet clear how non-resident trustees holding residential property will be treated.


From April 2015

Our view

We have yet to understand the meaning of ‘future gains’ but anticipate that the consultation will include draft measures for the rebasing of acquisition cost to the value at April 2015

The Government predicts that the measure will generate no additional revenues in 2014/15 and 2015/16 and that the additional revenue resulting from the measure will be £15m in 2016/17 and increase incrementally thereafter.  This gives some comfort regarding the rebasing position as it appears that the Government does not anticipate collecting additional revenues until such a time as property values can be expected to have increased materially by comparison with their value at April 2015.  We will need to await the consultation document to see how these rules will interact with the Principal Private Residence Relief.

Source: Deloitte

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Housebuilders urged to sell to Londoners first

BORIS Johnson has urged housebuilders and developers to sign up to a new deal to stop giving buyers living abroad the first chance to buy London homes sold before they’re built, in a bid to get more Londoners onto the housing ladder.

Speaking at Mipim, the property industry’s annual conference in Cannes yesterday, the London Mayor said that 50 companies – including the UK’s second biggest landlord British Land and Capital & Counties, the group regenerating Earl’s Court – have agreed to market their homes to Londoners first, or at least at the same time as overseas.

“There can be no doubt that the cost of getting on the London housing ladder is higher than at any time in recent memory and the sense of frustration is growing, and many people feel a sense of particular rage about one thing – that there are times when new homes in London are actually being marketed overseas before Londoners get a look in,” Johnson told the conference.

“It cannot be right that people in great Asian capitals should be able to look at images of new London properties and put down cash – before Londoners even know that the opportunity is there,” he added.

Overseas investors have piled into London’s property market, with some critics blaming the influx of investment for driving up average prices, despite targeting a very specific prime part of the market.

But Johnson said that without overseas investment, schemes such as Qatari Diar’s redevelopment of the Olympic Village, which is delivering 50 per cent affordable housing, would not have been achievable.

A report released today by Cushman & Wakefield said €63.8bn (£53.2bn) was invested in the London commercial property market in 2013, up 52.9 per cent on the previous year.

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Capital’s skyscraper boom set to dramatically change skyline

LONDON’S skyline is set to change dramatically over the next decade.

Over 236 towers over 20 storeys are being proposed, approved or under construction – more than double the number of tall buildings estimated to be in the capital today, according to a new report released yesterday.

Traditionally a low-rise city, London’s skyscrapers have, until now, been mostly confined to areas like Canary Wharf and the City, responding to demand for office space from growing businesses.

However, the survey from the think-tank New London Architecture (NLA) and property consultants GL Hearn shows that 80 per cent of the towers in the pipeline are in fact residential, and sprouting in areas that have previously been void of high-risers such as Greenwich and Lambeth.

Tower Hamlets, for example, which has traditionally been one of London’s less affluent boroughs, accounts for 23 per cent of the schemes being planned.

Of the remaining towers, 18 are set to be office developments, while eight will be hotels and 13 are mixed-use schemes.








Source: NLA & GL Hearn

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Focus on… Kings Cross: Creating the king of regeneration

IN TWO years’ time, around 30,000 Londoners will be working or studying in King’s Cross every day. At least, this is what is envisioned by Argent, the property developer behind one of the biggest regeneration projects in London.

The site encompasses 67 acres of mixed use development, half of which has been completed or committed. The scheme will bring 50 new buildings, 20 streets, 10 public squares and around 2,000 homes to the area.

Businesses are also showing signs of wanting to be a part of this central London revival – Louis Vuitton, Google, BNP Paribas, and Camden Council are all set to move in and four restaurants have already opened.

Prestigious art college Central Saint Martin’s has already welcomed 5,000 students to King’s Cross and The Plimsoll Building will house an academy, nursery, and Frank Barnes School for Deaf Children. Over the last 10 years, almost £2.5bn has been spent on transport infrastructure. Robert Evans, director of Argent, has the unenviable task of juggling all of these elements and delivering the scheme on schedule.

“It’s a bit daunting but very exciting at the same time,” says Evans. “That’s the thing about regeneration – you end up wearing lots of different hats. But we all very much think this will be the most amazing project we’re ever going to work on in our lives.”

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Riverside homes at Fulham Reach

Between Putney Bridge and Hammersmith Bridge, this scenic riverside development includes 744 new homes, a park, community boat club and jetty.

Londoners selling up in posh Kensington & Chelsea are buying into a fresh wave of riverside developments under way in neighbouring Fulham. The new schemes are attracting buyers seeking an “affordably prime” address on the desirable north side of the Thames.

Fulham Reach is a 744-home scheme between Putney Bridge and Hammersmith Bridge, a remarkably serene section of the river favoured by scullers and oarsmen. A location previously out-of-bounds for home buyers, this spot is now a pleasant residential address. Developer St George has created a new riverside promenade a new park, community boat club and jetty.

Glass-clad apartment blocks have wraparound balconies to make the most of the view across the Thames to the splendid Harrods Furniture Depository. Residents have exclusive use of a spa, screening room and wine cellar as well as a 24-hour concierge. The River Café, the lauded restaurant where Jamie Oliver cut his teeth, is housed in an adjacent wharf. Homes in Goldhurst House, the latest phase, are priced from £1,749,950.

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King’s Cross gets a spruce-up with new flats at the Plimsoll Building

Built beside Regent’s Canal, apartments at Plimsoll Building will revamp the once-blighted railway land behind King’s Cross station.

Buyers are already in the starting blocks for the newly launched Plimsoll Building, the latest unveiling at King’s Cross Central, the epic redevelopment of once-blighted railway land behind the station.

The dashing new scheme of 178 flats, pictured, sits beside Regent’s Canal and, in a union consistent with the diverse mix at this new neighbourhood, above two new schools. Ready next year, the architectural detail features textured brick cladding that dovetails neatly with surrounding heritage buildings, and an internal podium garden designed by Dan Pearson.

The triple-height entrance foyer has a glass scenic elevator for the ride to upper floors including a rooftop conservatory, an art gallery and three communal terraces. A business lounge and dining space will be open for meetings and private events, and there will be a gym. Prices start at £430,000.

The building is named after Samuel Plimsoll, a Victorian industrialist famous for developing the Plimsoll line loading guide on the side of ships. He also built the railway coal drop viaduct at King’s Cross.

Google is building a new HQ in the 67-acre district, joining the Central St Martins College of Art and Design campus. The finished project will have 2,000 new homes, 20 new streets, 10 new public squares, 20 restored heritage structures including listed gas holders, many offices and generous retail space.

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London landlords ‘enjoy bumper rental returns’

Landlords in London have seen annual total returns increase to 14.6 per cent in the year to January 2014.

It represents an average return of £38,104 per property in the capital, which is more than five times the returns recorded in both the North East and Yorkshire and the Humber, LSL Property Services reveals.

Across England and Wales, average returns were £14,767, a year-on-year increase of 3.2 per cent.

“Rental yields remain historically high and such rental income is still underpinned by a demand-driven lettings market,” said David Newnes, director of estate agents Your Move and Reeds Rains, part of LSL Property Services.

He added landlords are also benefiting from an equity bonus thanks to rising house prices.

Mr Newnes expects landlords to increase their portfolios in the coming months as mortgage affordability continues to grow and interest rates look set to stay low for the foreseeable future.

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First-time buyers ‘driving housing recovery’

Lending to first-time buyers increased in all parts of the UK during the final quarter of 2013 as this group continues to drive the market’s recovery.

London led the way, as 13,400 loans were advanced in the three-month period and this represented a 33 per cent year-on-year increase, according to figures from the Council of Mortgage Lenders (CML).

People looking to take their first steps onto the property ladder in the capital are typically borrowing £198,900 and spending an average of 20.6 per cent of their monthly income on mortgage payments.

“First-time buyers have continued the strong upward trend in lending we have seen throughout 2013 and, despite much debate in political spheres about their affordability plight in the capital, an increasing number are realising their aspirations to become homeowners,” said Bob Pannell, CML chief economist.

All parts of the country have been buoyed by first-time buyer activity, with significant rises also recorded in Northern Ireland (29 per cent), Wales (28 per cent) and Scotland (26 per cent).

This group of homebuyers has been boosted by the greater affordability of high LTV mortgages, meaning they do not need to save up as big a deposit.

Measures such as the government’s Help to Buy have underpinned this growth, as it has left lenders more inclined to give loans to candidates they would have previously viewed as risky or not suitable.

Iain Malloch, chair of CML Scotland, sees reasons for optimism north of the border too, as greater mortgage availability and the economic recovery are leading an upturn in activity in Scotland.

“First-time buyers have been a crucial driver throughout 2013, and the CML anticipates this growth in the market will continue into 2014,” he added.

The property market has already had a positive start to the year, as the CML revealed earlier this month that gross mortgage lending increased by 33 per cent year-on-year in January 2014.

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House prices rise 9.4% in February as market strength grows

House prices in the UK were 9.4 per cent higher in February than a year ago as the sector goes from strength to strength, according to Nationwide.

It represents the strongest rate of annual growth since May 2010 and means house prices are now only three per cent behind their 2007 peak.

The average price of a property in the country now stands at £177,846, up slightly from January’s figure of £176,491, and it demonstrates how confidence is now flooding back into the market.

Robert Gardner, Nationwide’s chief economist, is glad to see house prices have now increased for 14 consecutive months.

“Demand continues to be supported by record low interest rates, improved credit availability and rising consumer confidence thanks to the healthy gains in employment recorded in recent quarters,” he added.

Mr Gardner pointed to the constrained supply of housing as one of the main reasons prices are continuing to rise and this situation is expected to continue as housing completions are still well below their pre-crisis levels.

In April, the Mortgage Market Review will also come into force, which will see lenders made to carry out more stringent affordability checks before agreeing to grant loans to customers.

There has been a lot of talk recently about the impact of cash buyers on the market and Nationwide’s analysis shows the share of cash transactions has increased significantly from around 20 per cent in 2005-06 to around 35 per cent.

According to Mr Gardner, adverse labour market conditions and the tightening of credit conditions after 2008 are responsible for this rise.

The government is keen to encourage as many people onto the property ladder as possible and the number of homeowners who have been helped to buy or reserve a home since 2010 is around 112,000.

“Both buying and building are at their highest levels since 2007, underpinned by our action to cut the deficit and keep interest rates low,” said Eric Pickles, communities minister.

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