Today, the United Kingdom elected to exit the European Union, with 52 per cent of voters choosing to Leave. Despite uncertainty this morning, though, the property industry has rallied to remind the world that a Brexit does not change the fundamentals of the UK’s attractive housing market.

The news of the result was announced this morning, causing the British pound to fall against other major currencies. Bank of England Governor Mark Carney, though, was swift to reassure the country that while there will be “a period of uncertainty and adjustment”, there will also be “no initial change in the way our people can travel, in the way our goods can move or the way our services can be sold”, as the UK begins to establish new relationships with Europe and the rest of the world.

“We are well prepared for this,” he added.

“The Treasury and the Bank of England have engaged in extensive contingency planning and the Chancellor and I have been in close contact, including through the night and this morning. We have taken all the necessary steps to prepare for today’s events.”

As well as the Treasury, the bank is also working closely with other domestic authorities and overseas central banks. Any future adjustments that might be introduced by the bank would be “supported by a resilient UK financial system – one that the Bank of England has consistently strengthened over the last seven years,” Carney continued.

“The capital requirements of our largest banks are now 10 times higher than before the crisis. The Bank of England has stress tested them against scenarios more severe than the country currently faces.”

Richard Lambert, Chief Executive Officer at the National Landlords Association, welcomes Carney’s steadying words, urging calm.

David Cox, managing director of Association of Residential Letting Agents, and Mark Hayward, managing director of National Association of Estate Agents, join him, predicting that in the short term, prices and rents will remain stable.

“We believe that the UK housing market is resilient, as is the supply chain that drives it,” they comment. “But as we indicated in our Brexit report last month, the bigger impact may well be in the skills necessary to drive UK housing development.”

“While markets may react negatively to today’s ‘Leave’ vote, the fundamentals underpinning the UK housing market still remain attractive,” comments Randeesh Sandhu, CEO of Urban Exposure, who also notes that foreign investment may increase too, thanks to sterling’s devaluation.

“A return to ‘business as usual’ may take longer than if we had remained as the specifics of a ‘Brexit’ will take time to determine,” Sandhu acknowledges, “but the imbalance between demand and supply in the UK housing market will endure.

“So while buyers may pause as the implications of Brexit are figured out, over the medium to long-term we do not expect housing markets to change drastically as a result of the vote.”

Doug Crawford, CEO of conveyancing firm My Home Move, notes that people choose to move home “for many different reasons – many of which are unlikely to be affected in the short term by the outcome of the EU Referendum”.

“This decision has been made against the backdrop of a UK housing market that is, arguably, leaner and fitter than at any point in the last 15 to 20 years, says Crawford.

“A strong regulatory structure, in particular through MMR, has meant we have sensible lending and the heat has already been taken out of the Buy to Let market with the most recent SDLT changes. Combine these factors with strong rental demand in the Private Rented Sector and an acute shortage of housing stock relative to the UK’s needs and it all suggests a stable market in the medium term.”

“There is still plenty of pent-up demand in the UK housing market and a leave vote doesn’t change that overnight,” agrees David Brown, CEO of Marsh & Parsons. “When you think back to before the financial crisis and the volume of transactions we were witnessing on an annual basis, there’s clearly scope for further improvement.

“The decision to leave doesn’t alter the fact that plenty of people have to and still want to move.”

Investor appeal is also expected to stay stable in the medium term, forecasts Mark Weedon, Head of Research at Property Partner.

“Between 1973 and today, the UK residential market has seen no five-year period with negative total returns, after accounting for both rental income and capital gains,” he comments.

“During periods of volatility like this, investors tend to prefer assets which can provide a reliable income, combined with lower risk to preserve their wealth. Now more than ever, investments that bring in a reliable income will be highly prized.”

The London Mayoral elections take place on Thursday 5th May and the city’s housing has been top of the campaigning list for months.

House prices in 28 of 33 London boroughs are now at least 10 times average salaries, with prices in London’s most expensive borough, Kensington and Chelsea, now 38 times earnings, according to research by the property crowdfunding platform Property Partner. When Ken Livingstone was elected London Mayor in 2000, average property prices in London were 5.6 times earnings – now they’re 11 times, as the gap between average house prices and earnings stretched by 33 per cent since Boris Johnson was elected in 2008.

As well as voters, though, agents, developers and investors will also be paying attention. Labour candidate Sadiq Khan’s policy of affordable housing making up 50 per cent of all new developments, for example, has been slammed by the Federation of Master Builders, as the city’s lack of supply is a key underlying factor for the market’s performance in the future.

Brian Berry, Chief Executive of the FMB, says: “Khan’s 50 per cent affordable housing target is entirely unworkable – as has been observed by others that, 50 per cent of nothing is nothing, and this is a particularly pertinent issue for small developers. We urge the Labour candidate to introduce a small site exemption, similar to that which Central Government is bringing forward in its Housing and Planning Bill. This recognises that placing unrealistic affordable housing demands on small sites will leave thousands of projects across the city unviable and hugely increase the barriers to growth of smaller developers.”

Five hundred senior housing figures attended the National Housing Federation’s 100,000 Affordable Homes for London campaign hustings last week, with candidates from the five main parties highlighting the importance of housing to the election and expressing their desire to work with housing associations to end the city’s housing crisis.

In attendance were the candidates for the Liberal Democrats, UKIP and the Green Party. Labour’s Sadiq Khan MP and Conservative’s Zac Goldsmith MP shunned the hustings, but were represented by James Murray and Stephen Hammond MP, respectively.

Hammond highlighted Zac Goldsmith’s passion for working with housing associations to unlock public land and regenerate estates. UKIP’s Peter Whittle spoke of the “feeling of optimism about what we could achieve together”. The Green Party’s Sian Berry highlighted her intention to work with a diversity of housing associations and community land trusts to build truly affordable housing. Murray promised to put housing associations’ commitment to 100,000 new affordable homes at the “very core of the consensus we’re building about what London needs”.

The shortage of skilled construction workers was another theme on the night and in response to a question of how she would do things differently to the previous two mayors, the Liberal Democrats’ Caroline Pidgeon said “I’d set up my own building company at City Hall to drive affordable housing building, and I’d set up a construction academy to get skills into the industry as there is a skills shortage”.

National Housing Federation Chief Executive David Orr comments: “This election has been called a referendum on housing, and it’s fair to say that housing has decisively proved itself the most important substantive issue in the campaign. London will lose its vital diversity without truly affordable housing for all.”

The proportion of landlords intending to sell their property has risen in the last year, new research reveals. As the legal challenge to the UK government’s planned tax grab continues, we map the areas where the most landlords are weighing up a buy-to-let exit.

The proportion of landlords intending to sell their property has risen in the last year, new research reveals.

While the UK continues to debate the possibility of a Brexit this June, next April could see an equally dramatic exit impact the real estate market: the exit of landlords from the buy-to-let sector.

The change in mood surrounding UK buy-to-let property has been driven by a string of measures announced by the government. Following a 3 per cent Stamp Duty surcharge for second homes introduced this month, the government also plans to restrict mortgage interest tax relief, which will leave landlords paying tax on the rental income they earn rather than their actual profits.

Many will be worse off, with some basic rate tax payers forced into a higher tax bracket as a result and higher and additional-rate payers facing considerably bigger tax bills.

A group of landlords, led by Platinum Property Partners’ Steve Bolton and fellow landlord Chris Cooper, are challenging the move. Earlier this year, they filed an application for a judicial review of the Finance Act 2015 – announced during last year’s Budget – and are now waiting for the court to rule whether they have permission to proceed to a full hearing.

“With the facts at hand, we are confident that we will have the chance to fight our case in court,” explain the campaign team. “Our hearing, if granted, is expected to happen this autumn, which gives us time to launch subsequent fundraising campaigns and prepare the best possible legal case.”

While buy-to-let investors may see their profits unfairly erased, though, the wider housing market would also be impacted by the changes, should they come into effect, with landlords either forced to raise rents to cover the additional costs or sell up their property altogether.

According to the National Landlords Association, the proportion of landlords in London considering selling up has quadrupled in recent months, with 19 per cent planning to sell in January 2016 – up from 4 per cent before the 2015 Budget.

The 15 per cent increase in intention to sell property is the highest witnessed across the UK over the last six months, with the North East seeing the smallest increase compared to other regions of the UK, rising from 17 per cent to 24 per cent.

“If landlords follow through with their intentions over the coming months this could lead to a massive sale of property, as we have previously warned,” comments Richard Lambert, Chief Executive Officer of the NLA. “However, this may not be a straightforward process, especially for those with stock in low demand areas.”

To see which area of the UK would be affected the most by the exit of landlords from the buy-to-let sector, navigate the map below.

 

For those planning to move or relocate to the UK, a wave of new fees have been introduced for the coming four years. The charges, which came into effect late last month, have been raised by 2 per cent for visas most closely linked to economic growth, such as those offered to workers and students. A 2 per cent increase will also apply to all visit visas, which the Home Office says will “help maintain the UK’s position as one of the world’s top tourist destinations”.

Those hoping to stay longer will see the highest increase in costs: an increase of up to 25 per cent applies to settlement, residence and nationality fees, as these routes deliver the most benefits to successful applicants, while an increase of up to 33 per cent has been introduced for optional premium services offered by the Home Office, such as priority visa services overseas.

Fees for all sponsorship categories have not changed.

“These changes ensure that the Home Office can achieve a self-funding system, whilst continuing to provide a competitive level of service, and a fees structure that remains attractive to businesses, migrants and visitors,” commented a spokesperson for the Home Office.

As an indication of how much the UK’s international relations are expanding, the UK government also extended its 24-hour Super Priority Visa Service to Astana in Kazakhstan.

The new service, which costs £750 in addition to the visa and User Pays fee, is aimed at those who want extra speed and flexibility. It is completely optional. The service can be used to apply for long term, multi-entry visas, valid for up to ten years, and also for long term study and work visas.

“As part of our long-term economic plan, we are determined to do everything we can to back business, support investment and create jobs. The new 24 hour visa service will persuade more business travellers, investors and tourists to visit Britain, to trade with Britain and to expand in Britain,” said Prime Minister David Cameron.

Last year, over 15 thousand UK visas were issued for Kazakhstani citizens.

Dr Carolyn Browne, UK Ambassador to Kazakhstan, welcomed the new service and predicted it would boost the number of Kazakhstani’s choosing to visit the UK.

After stabilising in 2015, Dubai is enjoying a record start to the year, with property sales already passing £12.8 million.

Figures from the Dubai Land Department show that a record total of AED68.48 billion has already been transacted, painting a positive picture for the coming year. Indeed, they follow a downbeat 12 months for the emirate’s housing market, with many brokers reporting that house prices fell around 10 per cent and sales moderated. Now, though, the mood is improving, with experts arguing the market has stabilised.

“Sentiments are slowly turning around by way of snapping up “below market” deals as well as end users looking to capitalise on current conditions,” Sameer Lakhani, Managing Director at Global Capital Partners, tells Gulf News.

“It is the nature of the turnaround that will be debated in the coming months — but what we are seeing is a clear bottoming out process underway.”

That bottoming out of values could attract more investors seeking to purchase before prices begin to climb once more.

Gibran Y. Bham, Co-founder of Lookup.ae, adds: “Sellers listing their properties are finding it difficult to move properties at perceived market prices. We’re seeing sellers revise prices downwards to attract buyers who are now patient and intent on obtaining the best possible price points.

“The current correction has brought prices back to just before pre-winning Expo 2020 levels.”

Expo 2020 is certainly set to be a milestone for the emirate’s real estate market, with the exhibition also expected to provide a major boost to both activity and demand.

KPMG expects the market will recover in 2017 as work surrounding the 2020 event really gets underway,

“With effective regulations in place and the infrastructure investment that is committed as part of Expo 2020, we should see an upturn in the real estate industry in 2017,” Sidharth Mehta, partner and head of building, construction and real estate at KPMG Lower Gulf, tells The National.

“When preparation for Expo 2020 picks up, we expect to see a significant amount of job creation and an increase in demand for residential real estate.”

Sultan Butti bin Merjen told Emirates247 that more than AED68 billion of deals have been struck in the first 53 days of 2016, forecasting a total of AED300 billion to be invested in the market over the course of 2016.

Speaking at the Cinder Dubai 2016 conference, Bin Merjen added: “Investors are buying into the property market and we can see that, with registration of AED68 billion worth of deals from January to February 22 2016. In fact, we expect to touch AED300 billion in real estate transactions this year.”

“People talk of a correlation between lower oil prices and property, but we haven’t seen any such thing,” he added.

“People are buying and not all of them have any business with oil. There are a lot of investors with money who have trust in Dubai.”

The figures follow figures from the DLD showing that 55,928 investors from 150 nationalities invested a total of AED135 billion in Dubai real estate in 2015.

From 1st April, a new 3 per cent surcharge to Stamp Duty Land Tax will be introduced in the UK for buyers of additional residential properties, including buy-to-let investments and second homes. But does it apply to you? Our Q&A guide is here to help.

What is the 3 per cent surcharge?

The 3 per cent surcharge will be added to existing Stamp Duty Land Tax rates for those who purchase additional residential property in the UK.

When does it come into effect?

The surcharge will take effect from 1st April 2016, following an announcement in both the Chancellor’s 2015 Autumn Statement and the 2016 Budget. It will apply to any transaction that has not been completed by midnight on 31st March 2016, unless you had already exchanged before the 25th November 2015 Autumn Statement announcement.

Who has to pay the new Stamp Duty surcharge?

The surcharge applies to anyone who buys a second residential property – i.e. an additional property that is not your main residence – in England, Wales and Northern Ireland. The government estimates around 90 per cent of residential property transactions in England, Wales and Northern Ireland will not pay the higher rates of SDLT.

How is the 3 per cent calculated?

Unlike the current Stamp Duty system, which is tiered in proportion to house prices, the surcharge applies to the entire price of a home. This will then be added to the traditional SDLT fee. If you purchased a property for £240,000, for example, you have to pay Stamp Duty of £2,300, plus a surcharge of £7,200 – a total of £9,500.

What if I am selling my home and buying a new one

If your home directly replaces your main residence, then you will not have to pay the 3 per cent surcharge.

I had to buy my new home before selling my old one. Do I still pay the surcharge?

Sometimes, a period of overlap when moving home is unavoidable. If you buy a residential property before you sell your old one, you will have to pay the new 3 per cent surcharge – but if you sell your old home within 36 months of completing the purchase of your new home, you can claim a refund.

Does the 3 per cent apply to corporate investors?

Yes. Chancellor George Osborne announced in the 2016 Budget: “There will be no exemption from the higher rates for significant investors, and the surcharge will apply equally to purchases by individuals and corporate investors.”

I’m legally married – does it matter if my partner owns a home, even though I don’t?

All married couples and civil partners will be treated by the Treasury as one unit, so if either of you own a property already, the purchase of another home will count as an additional residence and therefore be subject to the 3 per cent Stamp Duty surcharge.
However, if you are living separately in conditions that are deemed likely to become permanent, you will be considered as divorced for the purposes of rate calculation and will therefore not have to pay the 3 per cent surcharge.

I own a home but I’m purchasing another with a first-time buyer. Will I have to pay the higher Stamp Duty?

Yes – the prospective jointly-owned property still counts as an additional property, so it will attract the surcharge.

I’m a parent and I own a home. Can I buy another one with my child without the higher Stamp Duty?

No – because you already own a home, the purchase will count as an additional property and will be subject to the surcharge.

What if I inherit a home?
Stamp Duty is not applicable to inherited homes, so the surcharge will also not apply. If you go on to purchase a home without selling that inherited property, though, you will have to pay the higher rate of Stamp Duty on the new home.

I own a home overseas. Do I have to pay the Stamp Duty surcharge?

Yes, even if you own a home outside of the UK, any purchasers of additional residential properties in the UK will have to pay the higher rate of Stamp Duty.

Will I have to pay a higher Stamp Duty rate in Scotland?

Scotland has a different tax system to the rest of the UK: it charges Land and Buildings Transaction Tax on transactions, rather than Stamp Duty Land Tax, although they effectively both operate in the same way. From 1st April, there will also be a 3 per cent surcharge to LBTT on any purchases of additional residential properties.

Are there any exceptions?

There are some conditions in which you will be exempt from paying the 3 per cent Stamp Duty surcharge. If your second home costs under £40,000, you will not be subject to the fee, while caravans, houseboats, mobile homes and houseboats. Timeshare agreements are not subject to Stamp Duty. Social landlords and charities will also not be charged the higher rate of Stamp Duty.

According to the FTSE NAREIT PureProperty Index Series property values across the US increased by 0.4% in February. The PureProperty Index Series was launched last year to provide a daily measure of US real estate price and total returns at the level of both property (unlevered) and equity investments.

Brad Case, NAREIT’s senior vice president for research and industry information, noted that February was marked by “a marginal increase in property values, even though we saw a marginal decline in total returns for REITs.” Case went on to comment that the reason for the disconnect between REIT returns and property values is that REITs borrow money to invest in their properties and have to make payments on that money.

The PureProperty Index Series showed that the strongest growth areas in February were seen in the South, with a month-on-month increase of around 0.75%. The Midwest and West also performed well in February.

As renting is becoming more and more popular in the US, renters are now moving out of the confines of metropolitan areas with their high rise buildings and fast pace of life and into single-family homes in the suburbs.

According to a report from New York University’s Furman Center, there were almost 22 million more people in rented accommodation in the US in 2014 than there were in 2006. The report goes on to conclude that the majority of this growth was due to an increase in suburban renters. In major cities, the number of renters increased by nine million between 2006 and 2014. By comparison, the number of renters in suburban areas increased by over 12 million over the same period.

According to analysts, lower and middle income residents are being pushed out of the increasingly expensive downtown areas and forced into the suburbs. Laura Bailey, managing vice president of community finance at Capital One commented: “The story really is that the pressure in the market is growing. It may have started in the cities, but it’s moving further out”. This is evidenced by the fact that the median rental costs in principal cities, when adjusted for inflation, grew 5% from 2006 to 2014, compared with 2% for the surrounding suburbs.

In some metro areas the difference in rental costs was even more noticeable. In Washington, D.C., the median rent in the city, adjusted for inflation, grew by 27% from 2006 to 2014, while in the suburbs it only grew by 8%. In New York, the median rent in the city grew by 15%, compared with only 4% in the suburbs.

The authors of the report say that the growth in suburban renting underscores the need to build more housing in a wide range of different areas and not just pricey downtown areas of large metros. Ingrid Gould Ellen, faculty director of the NYU Furman Center commented: “As demand for renting continues…the suburbs need to make building rental housing easier”.

The major data reports for January have now been released, giving a clear view of how the real estate market is faring so far in 2016. The good news is; things are looking positive.

Job creation which has a huge impact on the real estate market continues at pace. In January over 151,000 jobs were created pushing unemployment to near 10-year lows. This level of employment growth should translate into the 3% growth in housing sales that analysts are expecting to see in 2016.

January’s existing home sales report was also very positive. Despite the fact that sales are now taking longer to close due to the implementation of new disclosure and closing forms and procedures, existing home sales grew 0.4% in January. Whilst this may not seem like a huge increase, it is a great improvement on the declines analysts had been expecting. In addition, existing home sales grew a very impressive 11% year on year.

The increase in sales seen in January has resulted in an even tighter supply of housing. The National Association of Realtors estimate that January only had four months’ supply of housing stock. With six to seven months’ worth of homes on the market considered normal, these levels are continuing to drive prices higher.

In addition to the positive data, analysts have confirmed that demand has grown rapidly at the start of the year. This has resulted in an acceleration in inventory movement that is not normally seen until March or April. With such a strong start to 2016, many are predicting great things for the real estate market this year.

With so many different options for investing your money. It is often hard to tell which is the best for you. Real estate is one of the oldest forms of investment and offers a great deal of advantages over other types of investment. For instance, when you buy a stock, the only way of realising a profit is if that stock appreciates in value. With real estate investments, there are a number of different ways of making a profit. To help you decide if real estate is the right investment for you, we’ve put together our top ten ways of making money from real estate.

Rental income

This is the main source of profit investors are normally going for when they buy to rent. It is a relatively hands off investment which offers investors a regular income and regular profit.

Buying low

If you manage to procure a property for less than market value, you will be able to turn an instant (an often sizeable profit). Undervalued properties can be acquired through foreclosures, quick sales, and your own negotiation skills.

Selling high

If you can manage to sell your property at above market value by staging it in such a way as to attract a number of different buyers, you will also make an instant profit. Unlike stocks and shares, real estate allows you to try to beat the market by negotiating at the selling stage.

Increasing equity

If you take a mortgage to finance the purchase of a rental property, you will be increasing your equity stake with every mortgage payment. If you use the rent to pay the mortgage, you will be increasing your net worth each month without paying out a single penny.

Leverage increases returns

No matter how much you put down on your property, if you chose to rent it, you will receive rent on 100% of that property, making for a great return on your initial investment. For instance, if you put 20% down on a property worth $100,000 and you charge $750 in rent with $500 in mortgage, taxes and fees. You have a $250 profit on $20,000 down. That is $3,000 a year, or 15% return on your deposit.

Leverage makes you profit on the full selling price

If you then sell that $100,000 property which you bought with a $20,000 deposit for $120,000 a few years later, you get your $20,000 plus principal payments back, and a $20,000 profit. It is only a 20% profit over the full value of the property, but thanks to your leverage, you are making a profit of 100%, minus principal payments to the $80,000 mortgage. The bigger the leverage, the greater the return.

Renting smaller units

If you want to, you can rent your property by the room. Often renting rooms to two or three tenants offers greater rewards than renting the entire property to a single family.

Renting to businesses

Businesses are often in need of properties for staff to stay in while they visit different offices. Renting to businesses often offer higher rents and greater security if you are letting your property to a well-known business.

Profit from a lump sum on a refinance

If you buy a property and make improvements (which can be paid for by rental income) which increase the value of the property, you can then refinance the property to realise that profit. If you want to, this money can then be used as a deposit on your next property.

Profit from extra cash flow on a refinance

If you are able to refinance the property to lower your mortgage bill payments while keeping your rent at the same level, you are generating more profit every month. This money can then be saved for a deposit on your next property or simply kept as extra income.