Student flatshare may save you money

Choosing to flat share instead of living in halls can cut costs by up to 15%.

Of the UK's 2.4m students, 22% live in university halls, the vast majority being first-year or international students.

But a first-year student could save £732 annually if they rented a room in a private flat-share, claims the research.

Second and third-year students living in university-owned houses could save £23 a week by seeking a private flat-share instead.

The research compared the average monthly rent for self-catering on-campus halls accommodation for the UK's universities with the cost of private flat-sharing.

On average, university accommodation costs came to £409 a month – this was £61 more per month than a flat-share (£348).

With thousands of students getting ready to start in September, many are considering whether living in halls or a private flat/house share is the best option.

There are advantages to both, but living in a private flat-share is more cost-effective. British students are already fighting a tough uphill battle financially - they'll already be saddled with thousands of pounds worth of debt after Uni.

By shopping for cheaper private accommodation, students can shave off the best part of a thousand pounds in rent each year. What's more, like those living in halls, if students flat-share with other students, they won't need to pay council tax.

And unlike most uni residences, they won't get turned out at the end

Can you put up the rent up every year?

It is normally stated in a letting contract that the rent will go up with the Retail Price Inflation (RPI) if you are doing a lease extension.

However, some years it can go up a great deal more than that. Other years it might not increase at all.

The biggest influence on rent increase is supply of available property for rent.

If lots of new properties to rent have just appeared next to yours, then increasing rates will be difficult.

Conversely, when the cost of buying property increases too sharply, more people stay renting and so the extra demand often feeds through into higher rents being achieved.

Bear in mind that the increase will be uneven. It is also easier to make larger increases when you change tenant.

 

 

House prices: Rises slow as sellers flood the market

Plans to tighten the rules on furnished holiday lettings will make it more difficult for owners to qualify for generous tax relief.

The Treasury proposes to raise the minimum period that a holiday home must be both let and available for letting each year, limiting the time that investors can relax in their own properties.

At present, the rules require homes to be let for 70 days a year and available to let for 140 days. But the Treasury plans to raise these levels to 105 days and 210 days, respectively.

Leonie Kerswill, a partner at PriceWaterhouseCoopers, said: “The changes will hit holiday homeowners who regularly use their properties for family trips and don’t tend to leave much time available for members of the public to use them.

“They will have to work harder to ensure that they let their homes out for 3½ months of the year.” The proposals, announced yesterday, include plans to tighten the rules on how losses can be offset against future income, bringing holiday lettings in line with other lettings businesses.

Owners will be able to offset losses only against income from the property, rather than from other income or investments. However, the Government is not proposing to change the tax relief available to owners of furnished holiday lettings, which includes the qualification for entrepreneurial relief on capital gains tax at 10 per cent and rollover relief on the tax.

The European Union has ruled that Britain’s furnished holiday lettings rules must also apply to properties owned across Europe.

The Labour Government had opted to scrap the scheme entirely, fearing that it would lose significant revenue as investors took advantage of the various tax reliefs available to invest in properties abroad.

Patrick Stevens, of Ernst & Young, said: “There are a substantial number of Brits with holiday homes in Europe and extending the present rules to the whole of the EU would prove too expensive.

“These changes will ensure that it is less of an easy option for investors.”

Proposed changes to pension tax relief will hammer another nail into the coffin of final salary schemes, accountants and pensions experts have said after the publication of Treasury plans to curtail tax relief for higher earners. The Treasury wants to replace the existing, hugely complex regime with a much simpler one with a much lower annual allowance. The sting in the tail comes in a change to the way the Treasury plans to calculate the notional contribution made by employers for staff in final salary schemes.

Article taken from the Times

 

House price inflation slows during June

Rate drops from 9.8% to 8.7%, with average house price £170,111
Scrapping of HIPs partly causing increase in housing supply

The annual rate of house price inflation dropped from 9.8% to 8.7% in June, and the rate of inflation is expected to "drift lower", according to the Nationwide building society.

Although the price of a typical UK property increased by 0.1% in June compared to the previous month, the rate of increase has slowed markedly from 0.5% in the previous month. The average price rose to £170,111 from £169,162 in May.

Martin Gahbauer, Nationwide's chief economist, said: "The month of June presented a picture of broad stability for the housing market. Barring a significant pick-up in house prices over the next few months, the annual rate of inflation should continue to drift lower, in light of the very strong price increases recorded during the summer of 2009. Over the first half of 2010, UK house prices have risen by a cumulative 3%.

"Recent indicators point to an increase in the supply of property coming to the market for sale, perhaps in response to the abolition of HIPs in the opening days of the new coalition government. With the level of demand remaining broadly stable, this would help to explain the recent slowdown in the rate of house price inflation."

He said the government's decision to implement an immediate hike in the rate of capital gains tax from 18% to 28%, rather than deferring the increase, helped to prevent a short-term supply distortion caused by large numbers of property investors selling up to avoid the tax rise. A flood of properties being put up for sale would have driven prices down more drastically.

However he added: "Looking beyond the short term, the spending cuts and tax increases in the budget will squeeze household disposable incomes, which are undoubtedly an important driver of house prices. Given that the already elevated level of house prices-to-earnings ratio, this limits the very strong upward momentum in property values we have seen over the past year. However, the acceleration of the fiscal consolidation means that interest rates are likely to be lower than they otherwise would have been which should provide some offsetting support to households and mortgage affordability."

The curtailed inflation rate reported by Nationwide is in line with other statistics published this week. Yesterday the Bank of England said the number of mortgages approved for house purchase remained broadly unchanged during May, while the Land Registry reported a 0.2% drop in house prices in England and Wales in May – the first monthly fall in values since April 2009.

David Smith, senior partner at property consultants Carter Jonas, said: "The latest Nationwide figures are broadly what we were expecting to see in June, as the abolition of HIPs start to have an impact on the supply-demand balance. There has certainly been more properties coming on to the market in recent weeks, and although on the one hand this is positive news for a market that has been bereft of stock, at the same time there hasn't been any noticeable uplift in buyer demand, which will inevitably see a suppression in house prices as a result.

"Where house prices go from here is difficult to predict because there are so many factors at work at the moment. The fallout from the budget will certainly have a major role to play in the coming months, with uncertainty surrounding impending public sector cuts and higher taxes, and of course we still have the ever-present threat of interest rate rises in the mix.

"Although these figures suggest house prices are starting to flatten out at their current level, the top end of the market is still performing remarkably well, with double digit price growth since the start of the year, and a stronger-than-ever demand for properties in desirable locations."

 

What next, post budget?

The increase in capital gains tax was expected but much more modest than feared. With rumours flying around of an increase to 40 or even 50%, it looks as though the Chancellor bottled it in the face of opposition from backbench MPs and traditional Conservative voters.

With higher-rate taxpayers paying 28%, those who rushed to sell their second homes and buy-to-let properties ahead of the Emergency Budget showed great foresight.

However, while an increase in Capital Gain Tax [CGT] to 40% or 50% was not realised, the lack of taper relief is a serious mistake. Those who invest in property over the longer term, perhaps to supplement retirement income, will be unfairly penalised when they come to sell their assets.

 CGT was the main story, as the proposed increase was heavily trailed in advance. In reality the rise to 28% for high-rate tax payers is a non-issue for the housing market.

The new rate takes us back to a similar rate to where we were under the pre-2008 rules, when taper relief was able to reduce a 40% headline rate of CGT to 24%.

With higher-rate CGT at 28% the argument for property investment still looks strong, and capital gains still compare very favourably with income tax at 40%.

The other issue of note is that with strong GDP growth forecasts for 2011 and 2012 - the inference is that the Bank of England will be encouraged to maintain a very loose monetary policy for longer than recently expected; suggesting interest rates at current levels could be maintained for longer.

This would underpin house prices and also contribute to ongoing low supply in the market.

In a world of imperfect choices, steps that help the economy to recover and help to maintain mortgage rates at affordable levels for most people are the measures that will underpin a healthy housing market in the long term. But in the short term pain is likely, as the effect of tax rises on household finances dampens the already fragile recovery in house-buyers' confidence, housebuilding is affected, and support for housing costs across all tenures is curtailed.

In housing terms this may be the "age of aspiration" as the housing minister said recently, but against an austere backdrop there is a long way to go before the supply of housing, or the ability of would-be home-owners to achieve their aspiration, are likely to show any significant pickup.

 

Britons take just 21 minutes to choose a new home

Britons take an average of just 21 minutes to choose their new home - less than that taken to pick a new television or a coffee table, a new survey has claimed.
A short supply of properties means that buyers feel driven to make a quick decision, experts said.
Figures from the Royal Institution of Chartered Surveyors (RICS) show demand for houses has overtaken supply for the last 16 months.

 The study found the average homebuyer spends just 21 minutes viewing a property before deciding to buy it.
On the other hand people take an average to 217 minutes to pick a satellite TV package, 284 minutes to decide upon a new television and 164 minutes to buy a coffee table.
The survey, conducted by mortgage provider ING Direct, found almost half of 1,000 recent homebuyers worried that they needed to make a swift decision to prevent another buyer from beating them to it.
Although most buys are mutual decisions (93 per cent), women are three times more likely to have the final say when there is a disagreement (73 per cent compared to 27 per cent).

Estate agents also play a part, with a quarter of buyers claiming they believe agents ‘talked up’ interest from other parties (26 per cent) and applied pressure to make a quick offer (21 per cent).
Residents in East Anglia were the quickest decision makers, taking on average 18.87 minutes to choose a home. This is followed by homeowners in the South East who take 19.54 minutes and Wales with 19.68 minutes.
In contrast, the most cautious buyers lived in Yorkshire and Humber, taking on average 23.54 minutes. The second longest were Londoners with 23.25 minutes and those is in the West Midlands took 22.31 minutes.
It seems strange that people will spend such little time making one of the most important decisions of their lives. However, in this market, people are afraid of missing out and are making snap decisions.

 

First-time buyers see house prices rise by 3%

First-time buyers may have noticed a slight recovery in the market, as figures just released show a three per cent rise in home values since the start of the year.

Joint ownership could be one option for individuals keen to join the market ahead of further price rises, but struggling to raise a deposit.

The Nationwide House Price Index shows the average UK property value rising 0.1 per cent last month, while the annual rate of home price inflation dropped from 9.8 per cent to 8.7 per cent.

Chief economist for the building society Martin Gahbauer said the figures showed "broad stability" in the market and noted the abolition of Home Information Packs was expected to increase the number of properties listed for sale.

The Royal Institute for Chartered Surveyors suggested the flatter price trend was the first indicator of an influx of sellers on the market and expects estate agent books to swell by around 15 per cent in the coming months.