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By Rosie Murray-West
Last Updated: 8:01AM BST 24 Apr 2009

Holiday homeowners will no longer be able to write off “trading” losses from second homes against your tax bill, while capital allowances and capital gains benefits will also go.

Currently a home qualifies as a holiday property if it is furnished, being run as a commercial business and available for rent to the public for at least 140 days per year. It must also be let for at least 70 days a year to attract the tax benefits. They have only been available on properties in the UK.

The one silver lining to the holiday home cloud is that those people in the EU who have holiday lets will benefit from the same allowances until April.

The only way to get around these tax changes is to sell your holiday home. If you sell before April 5 you will be able to claim entrepreneurs’ relief (which means gains of up to £1,000,000 attract a lower rate of CGT).

“This could result in a rush to try to sell qualifying properties before 5 April 2010 and the resulting surplus of properties for sale could delay any recovery in the housing market in seaside towns around the UK,” said Richard Mannion, tax partner at Smith & Williamson.

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It is no exaggeration to say that this week's budget will define our politics, our prosperity and the nature of our society for at least five years and probably much longer than that.

As Stephanie Flanders, Nick Robinson, myself and others have elucidated, everything stems from the massive increase in public sector debt over the next few years to a level that will take more than a generation to pay down to levels that we consider normal.

The political debate will be over whether to attempt to pay the debt down faster, by cutting public spending more than the chancellor set in train and/or by increasing taxes more than he announced. That debate will frame the next general election.

How fast we reduce the debt and how we pay it down will also have an impact on the long-term growth of the economy and on the prosperity of the nation.

There is a trade-off between the scale of early pain - in the form of how fast and how much the size of the state is shrunk - versus the rate at which the economy will subsequently grow.

Economists are, of course, divided about whether our net long-term prosperity is maximised or minimised by being brutal early with public spending reductions.

But even if it were incontrovertibly true that we'd all be richer in the long term from fast and savage cuts in public services, those cuts would be felt most acutely by the poorest - which many would see as an argument for a more gentle approach.

Whether David Cameron likes it or not, the long shadow of the Thatcherite 1980s still conditions the consciousness of voters and politicians.

Which brings me to what I really want to talk about, which is the attempt to increase the tax burden on high earners.

According to the Treasury's figures, £7bn will be raised by 2012/13 from three raids on the rich: the new 50% tax rate for those earning £150,000 and above; the tapered reduction of tax relief on pension contributions to 20%, again for those whose incomes are £150,000 or more and the abolition of tax-free allowances for those earning £100,000-plus.

In respect of the hole in the public finances, the better-off are being asked to make a disproportionate contribution. But £7bn won't go anywhere near to closing a gap between the government's income and expenditure, which is currently running at £175bn.

What's going on can perhaps be best seen in a bit of analysis by the Institute of Fiscal Studies.

It points out that if high earners made no attempt to avoid paying the new 50% rate, this new top rate would yield £7bn a year on its own, as opposed to the £7bn actually generated (in the Treasury's view) by all three tax changes.

But the Treasury believes that the yield from the 50% rate will be just £2.4bn because high earners will adjust their behaviour in ways that mean they avoid incurring all the increased liability.

Here's the thing. The IFS says that the Treasury's own figures imply that the new tax rate will in fact only generate about £1bn of extra tax, once the depressing effect on revenues from VAT, stamp duty and other indirect taxes is included (because the wealthy will spend less than they would otherwise do).

What's more, the IFS says that the Treasury is actually being too optimistic, on the basis of the best economic model of the impact on revenues of tax-rate increases. This model predicts that the Treasury will actually lose money on the new 50% rate, once the reduced harvest from indirect taxes is taken into account.

Now we're in the realms of behavioural uncertainty here. But there is a clear implication that if the Treasury simply wanted to raise a big sum of money fast and cleanly, it would have gone for other kinds of tax rises.

Which in turn implies that the 50% rate is less of an economic necessity and more a return to Labour's 1980s ideological view of fairness in taxation, that taxing the rich is a good in itself for the way it closes the gap between rich and poor.

The prime minister insists that New Labour - or Labour reconstructed as a party of financial aspiration which celebrates wealth creation - isn't dead. But many will say that the budget tells a different story.

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The property industry has dismissed the Budget’s package of measures for the housing market as “ineffectual” and “not bold enough”.

Website Rightmove says average asking prices in England and Wales rose 0.9% in March. Yet this masks big regional variations – in the north of England, typical asking prices fell 9.7% just last month alone. Rightmove also suggests that each agent now has an average of 72 homes for sale, higher than in recent months; but as unknown numbers of estate agents have gone bust since the downturn began, such comparisons become highly unreliable.

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To view the Slideshow click here - http://www.isleofwighthomes.com/propertyslideshow.aspx?p=435

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Mortgage approvals for house purchases in Britain rose more than expected in February, according to official figures from the Bank of England.
There were 38,000 approvals in the month, up from 32,000 in January.
There was also the biggest net repayment of consumer debt since records began in April 1993.
Consumers repaid £245m worth of credit more than they took out in February, having taken on an extra £165m of credit in January.
The mortgage figures suggest that low interest rates and falling house prices may be encouraging people back into the market.
"February's household borrowing figures suggest that housing market activity may finally have turned a corner," said Vicky Redwood at Capital Economics.
"However, approvals have a long way to go before they get to levels that are no longer consistent with falling house prices - in fact they need broadly to double."
Savings
Separately on Monday, figures from the Building Societies Association (BSA) showed that mutual societies had received their highest net deposits on record.
Building societies had £1,595m more deposited in them than was withdrawn in February.
"Despite the Bank Rate being so low, people are still keen to save, probably in response to the uncertain economic outlook and reduced job security," said Brian Morris, head of savings policy at the BSA.
Both banks and building societies saw their overall mortgage lending shrink in February, as customers repaid more of their mortgages than they replaced by taking out new loans.

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Wednesday 8th April 2009

The Tories have again pledged to get rid of HIPs. They would also move the requirement for an Energy Performance Certificate to the end of a property sale.

The party has also promised to carry out a review of the private rented sector, to see whether it can play a greater role in the housing market and to assess the accumulative effect of statutory regulation on landlords.

All three pledges are made in a policy green paper from shadow housing minister Grant Shapps called Strong Foundations.

The paper will form the basis of manifesto promises on housing and would appear to give HIP suppliers the clearest warning yet that Packs really will be ditched.

Peter Bolton King, NAEA chief executive, said: “The NAEA welcomes confirmation by the Conservative Party that they will abolish HIPs if they form a government.

“The NAEA has long called for HIPs to be abolished and I am personally pleased that Mr Shapps has taken on board our point of view – a point of view shared by the vast majority of property professionals and, we believe, the vast majority of consumers.

“In our opinion HIPs became untenable once the Government’s own statistics revealed that 77 per cent of housebuyers paid no attention to them, and I would now call on Alistair Darling also to commit to scrapping them in this month’s Budget.”

There was a little less enthusiasm for the Conservatives’ proposals on lettings, as the paper stops short of proposing to license letting agents.

ARLA operations manager Ian Potter said: “ARLA would be keen to see more proactivity on the regulation of letting agents. Referring back to the recommendations of Rugg Review in October last year, ARLA again calls for the compulsory licensing of all letting agents to raise professionalism and confidence in the sector.

“In the absence of a Government-led scheme – and it seems a proposal from the shadow cabinet – ARLA will be launching its own licensing scheme, introducing the highest standards for letting agents in the UK, in early May.”

Much of the Tories’ green paper is about social housing, planning and the need to deliver more new homes. Eco-towns are firmly ditched as a concept, whilst right to buy makes a comeback.

The proposals include:

*Rewards for good behaviour – social housing tenants with a record of five years’ good behaviour will be offered a 10% equity share in their property
*A ‘Right to Move’ to other social sector properties
* Local Housing Trusts – villages and towns will be able to create entirely new community-led bodies with planning powers to develop local homes for local people, provided there is strong community backing
* Local people will have new powers to demand the selling of empty or under-used government property
* Regional planning will be scrapped, enabling councils to revise their plans to protect Green Belt land and prevent the unwanted imposition of so-called eco-towns.

The paper also goes into considerable analysis of the ‘boom and bust’ syndrome that marks the housing market.

David Cameron said at the launch of the green paper: “Houses are not really like every other investment. While houses may have a price, homes have a value. We need to kick our addiction to house price volatility and concentrate on making sure we build enough homes so that every community can meet its housing needs.”

 

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Home owners are using their savings to pay off a record amount of their mortgages, figures reveal.

They reduced their home loans by £8 billion in the final three months of last year, the biggest injection of cash since records began in 1970, according to the Bank of England.

Falling house prices have eroded much of the equity left in people's homes while fears about rising unemployment has encouraged many to reign in their spending and focus on paying off their debts instead.

Andrew Montlake, of mortgage brokers Coreco, said: "People's number one priority in these uncertain times is to put money into their homes, not to take it out.

"Saving and paying down debt, as opposed to tapping into your home for another exotic jaunt abroad, is now in vogue, and as dull as it may seem it is just what the doctor ordered."

In recent years, home owners have increasingly relied on being able to cash in the value of their homes.

Equity withdrawals have been falling from a peak in the last quarter of 2003, when in the three months between October and December home owners increased their borrowing by a massive £17.1 billion.

However, the latest Bank of England figures show the picture has changed significantly since then, and in the first three months of last year the withdrawal figure had fallen to £6.6 billion as mortgage costs increased and borrowers grew concerned about house prices.

 

http://www.telegraph.co.uk

 

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Globrix loves Twitter...

Everyone seems to be talking about Twitter at the moment, I've been addicted to the darn thing for a good year or so now but it seems that Twitter is no longer reserved for those of us who spend too much time at their computers. You don't have to live and breathe social media to give two tweets about it, Twitter is finally entering 'the mainstream' in the UK.

This month, for the first time ever, Twitter became one of the 100 most visited websites in the UK. It placed above well loved websites like Gumtree and Expedia to reach 91st place. Part of this surge in traffic is certainly due to the British celebs who have fallen in love with the site and promote it at every chance they can, Jonathan Ross, Chris Moyles, Philip Schofield and (of course) Stephen Fry being just a few of the well known celeb Twits....no pun intended.

US real estate agents have been tweeting for a long time now, you would be shocked at how tech-savvy some of them are. Many of them have thousands of followers because they use Twitter effectively to promote themselves without being, in a word, annoying.

I was really pleased to see recently that some UK estate agents and property professionals are starting to use Twitter. Marsh and Parsons, Greene & Co, Isle of Wight Homes and The Homebuyers Consultancy being a few of those who add tweeting to their lists of 'things to do today'. Of course, Globrix is on Twitter too.

Last week, Globrix proudly sponsored London Twestival, a global Twitter charity event that took place in over 200 cities on one night. The aim? To raise as much money as possible for charity:water. The total amount raised hasn't been announced yet, but the event shows that online interactions on a site such as Twitter can lead to genuine offline change in the wider world.

And whilst we're banging on about the joys of Twitter, it seems only right to announce that last Friday we added a button to all the property listings on Globrix to allow you to easily tweet your favourite properties.

You'll see the 'Twitter this property' button whenever you click 'Preview' or 'Details & Trends'.

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Twit this, twit twoo, Twitter is a bit like marmite, you either love it or hate it. Actually, you either love it or you don't really get it. Well, I like marmite!

Anyway, everyone is talking about it, saying it is the next google, a social network for the entire planet and will take over the world etc.

So, whether you are new to the game or a high tech want to have it all on your page type how does the average estate agent benefit from Twitter. The simple answer is sign up and play. Great agents already using twitter - have a look at Isle of Wight homes.  

Anyway, we like to think we were ahead of the game when we adopted the 'twit twoo' for Property Owl.

 

 

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Debt-laden Countrywide has won court approval for meetings of shareholders to vote on the raising of extra money for the estate agency group.

Documentation for a draft scheme has been lodged with the High Court of Justice in England and Wales, and the Grand Court of the Cayman Islands. Meetings will be held on April 28.

The proposed injection of extra funds would write off debts and give the UK’s largest estate agency firm working capital.

Countrywide was acquired by US private capital group Apollo in spring 2007, shortly before the downturn savaged the housing market. It paid around £1bn.

Meanwhile, Foxtons – also bought by an American private equity firm at much the same time – may also need a cash injection.

Acquired by BC Partners for £360m, the new owners have already conceded – in January this year – that they made a ‘wrong call’.

Last week, BC Partners’ managing partner Andrew Newington told Reuters that sales volumes had fallen 75% from the market peak.

He apparently claimed:  “Foxtons is trading very profitably, but not in line with initial expectations.”
 
However, he went on to admit that banking covenants had now been breached, and said that unless there was a quick recovery in the housing market, the business might need additional support.