Blog Post No. 207
£6 Billion Potential Stamp Duty Refunds, Help to Buy Scheme, BTR Growth – 31st Oct Property Bulletin
In a stunning revelation, British pension holders have been potentially misadvised on stamp duty payments, leading to the prospect of a massive £6 billion in refunds from HMRC.
New research has unveiled a startling revelation – British pension holders could be in line for substantial refunds, totalling nearly £6 billion, due to erroneous advice regarding stamp duty. A trusted authority in financial matters has brought this issue to light.
It appears that pension holders may have been wrongly informed about the necessity of paying stamp duty when transferring commercial properties into their pensions. This error stems from misguided advice provided by certain solicitors and financial advisors.
Pension-related transactions, often part of retirement planning, have become a prime source of stamp duty miscalculations. Many businesses sell their properties to their pension funds, aiming to secure their financial future. However, amid today’s challenging cost of living conditions, financial security in retirement is paramount.
This error has not only cost clients the initial stamp duty payment but also the potential growth on that capital in the following years.
To quantify the claim, it’s calculated at 150% of the incorrectly paid tax, assuming a 7% Return on Investment (ROI).
Remarkably, this issue was first identified in early 2019 and immediately shared with key figures in the pensions industry. Advance clearance from HMRC confirmed that pensions acquiring trade properties from joint owners or owner-managed companies since 2007 should not have paid stamp duty on these contributions.
It is estimated that this has affected between 3,000 to 5,000 cases annually, totalling 45,000 to 75,000 cases since 2007. Those affected could be owed up to £80,000 each.
The advice is to conduct a thorough analysis, seek professional advice, and understand the applicable regulations to minimize the risk of overpaying stamp duty. If an overpayment does occur, initiating a review promptly allows you to rectify the situation, gather evidence, and pursue appropriate actions to claim a refund or make adjustments as required.
This revelation may be a game-changer for British pension holders. Keep an eye on this developing story for more updates.
If you think you have been affected by this our experts can help, with over 120 expert conversations our podcast channel is a fantastic resource on all aspects of property. We help you make informed decisions – email us at email@example.com.
In the ever-evolving world of housing policy, clarity and consistency are often elusive. With their absence, rumors and speculations tend to fill the void. However, some rumors carry more weight than others, and one of them is about the potential revival of the Help to Buy scheme.
In early summer, reports surfaced that Prime Minister Rishi Sunak was considering putting Help to Buy “back on the table” before the next general election. This scheme, which was initially introduced in 2013, aimed to kickstart the housing market after the financial crisis. But, at the time, there were concerns that it might lead to inflation.
Now, with inflation on the decline, the question is, could Help to Buy or a similar scheme be resurrected? It’s a complex issue, and the government’s stance on it is critical. The Help to Buy Equity Loan scheme, as many of us remember, offered first-time buyers a loan ranging from 5% to 20% of the purchase price of a newly built home. It even went up to 40% in London. Buyers only had to put down a 5% deposit, and the equity loan came with an interest-free period for the first five years.
It’s clear that Help to Buy had its supporters and critics. Some believed it inflated the housing market and, in particular, the cost of new-build properties. They argued that it artificially increased homebuyer demand. Others thought that the price caps were too generous in some areas, allowing those who could have afforded a home without support to buy larger, more expensive houses.
Despite the controversy, Help to Buy undeniably kickstarted the housing market in 2013, benefiting various industries from construction and mortgage lending to retail furnishing. Over a decade, more than 380,000 people used this scheme to get on the property ladder. Some may have used it to buy a family-sized house instead of a smaller starter flat, which, considering the demographics, seems understandable.
However, today’s landscape is quite different. The cost of living crisis is making it increasingly challenging for first-time buyers to save for a deposit. The rental market is tight, with record-high rents, and higher interest rates are affecting mortgage affordability. In this scenario, the argument for reintroducing a scheme to support aspiring homeowners is gaining traction.
There are other initiatives like the Deposit Unlock scheme and companies like Ahauz, Even, and Proportunity offering equity loans to buyers with different criteria. These endeavors have some lender support, but they haven’t reached the scale of Help to Buy. Some lenders and mortgage advisors had become familiar with the scheme, and it had the added benefit of government backing.
So, while we acknowledge the flaws of the previous scheme, perhaps a revised one, focusing on struggling first-time buyers, could be implemented relatively quickly. The big question here is, will the government consider it?
In January 2020, Microsoft, one of the tech giants of our time, took a momentous step by committing to a comprehensive sustainability plan. This plan was more than just a nod to environmental responsibility; it was a bold declaration of intent. The company outlined a detailed roadmap to achieve significant goals related to carbon reduction, waste reduction, water conservation, and ecosystem protection, all to be realized over the next few decades.
Microsoft set its sights high, aiming to become not just carbon-neutral but carbon-negative, water-positive, and zero waste by 2030. Looking even further ahead, the company pledged to remove an equivalent amount of carbon dioxide from the atmosphere that it had emitted directly or through electricity consumption since its founding in 1975 by 2050. These are ambitious goals for one of the largest companies globally, and their achievement demands unwavering dedication and consistent progress monitoring.
The key to Microsoft’s approach has been its commitment to transparency. The company has diligently reported on its progress toward these sustainability objectives and has been open and candid about its processes. In doing so, Microsoft has set an exemplary model for companies, especially those in the commercial real estate sector, that are also making ambitious sustainability commitments.
Microsoft is not alone in its pursuit of ambitious sustainability goals. In recent years, many companies have recognized the importance of initiatives like decarbonization and achieving net-zero emissions. Stringent legislation on greenhouse gas emissions, extensive research outlining the impacts of climate change, and considerations for their corporate reputation have driven these commitments. Having a strong Environmental, Social, and Governance (ESG) strategy has become essential in today’s corporate landscape.
The real estate sector, in particular, plays a pivotal role in addressing climate change. Buildings are among the leading contributors to greenhouse gas emissions, making it crucial for companies to adopt and report on sustainability measures. Many of the major players in commercial real estate have made significant sustainability commitments. For instance, Boston Properties aims for carbon-neutral operations by 2025, Alexandria Real Estate Equities seeks net-zero emissions (with a target date yet to be set), and Hines, a global real estate developer, is working toward achieving net-zero operational carbon in its building portfolio by 2040.
However, setting these goals is only the first step. The pressure is now on companies to demonstrate tangible progress in their sustainability efforts. While making promises to operate in a more sustainable manner is admirable, being transparent about the actual progress they’re making toward these commitments is equally critical. Without regular updates on their progress, these promises could lose their significance and potentially risk a negative perception by investors, employees, and clients.
Jeremy Kelly, a director of global research at JLL, highlights the importance of a robust legal and regulatory framework that is enforceable, along with strong corporate governance, to ensure that corporations follow through on their sustainability commitments.
Many companies are increasingly prioritizing ESG initiatives, as evidenced by recent surveys. Business leaders across various industries believe that their sustainability efforts are making a difference in advancing sustainability. However, while the intention and drive to establish robust sustainability goals are present, many companies struggle to implement the commitments they aspire to achieve.
Quantifying sustainability efforts is a challenge for many organizations, with 65% of business leaders indicating a desire to enhance their efforts but a lack of clarity on how to do so. Only around a third of respondents said their organizations have the necessary measurement tools to quantify sustainability efforts, and just 17% are utilizing these measurements to optimize their strategies based on results.
Sustainability reporting has been on the rise, with approximately 79% of leading companies worldwide providing sustainability reports. However, while progress has been made in reporting carbon reduction targets, some areas still lag, and less than half of companies currently recognize biodiversity loss as a risk.
Microsoft’s sustainability plan encompasses four key areas: carbon-negative, water-positive, zero waste, and protecting and preserving ecosystems. To achieve its carbon-negative goal by 2030, the company is taking steps to reduce emissions by 50% and has engaged its entire supply chain in this effort. Microsoft is also leveraging its technology to assist customers and suppliers in reducing their carbon footprint and has established a $1 billion fund to invest in tech companies advancing carbon reduction, capture, and removal technologies.
Microsoft’s commitment extends to the built environment, recognizing it as a significant source of global emissions. The company aims to build infrastructure in a lower-carbon way, with less waste, reduced water consumption, and minimized environmental degradation from building materials.
Since unveiling its sustainability plan in 2020, Microsoft has dedicated a section of its website to showcase its sustainability efforts. It offers comprehensive overviews of the steps it is taking, shares articles, white papers, and information about products that help companies plan and track their sustainability targets. Most importantly, Microsoft releases a thorough and detailed annual report on its progress every year since initiating its plan.
In corporate discussions on decarbonizing real estate portfolios, Microsoft has earned praise for its transparency and reporting on sustainability progress. The company’s commitment to sharing this information has not led to any loss of business. Instead, it has set an example for others to follow.
Sustainability commitments are a significant undertaking for real estate companies. With the built environment contributing to a substantial portion of global greenhouse gas emissions, the pressure on property owners to take action is greater than ever. Meeting targets like net zero, carbon-negative, and zero waste requires ongoing dedication and attention. Microsoft has provided a valuable template for other companies, demonstrating how to build a sustainability commitment effectively, communicate it to the public, and be diligent in regularly reporting on progress. While improvements in ESG and sustainability reporting are still needed, industry leaders like Microsoft are paving the way for a more sustainable future.
At London Property we support sustainability in real estate, in collaboration with FORE Partnership we have launched the “Sustainability Health Check”. 85% of commercial property risk being stranded assets if they ignore their sustainability commitments. We help you make informed decisions, email us firstname.lastname@example.org to start the conversation.
According to a recent report by Al Rayan Bank, London remains the top global destination for property investment by investors from the Gulf Cooperation Council (GCC), comprising Saudi Arabia, Qatar, and the UAE.
The report, titled the 2023 GCC Investment Barometer, surveyed 150 investors with an average net worth of $208 million. It revealed that 33% of respondents had invested in London property in the past year, spending an average of $90.8 million, surpassing other global markets.
Over the past five years, nearly all (95%) of the surveyed investors have made property investments in the UK, with an average value of $81.9 million. The report highlights that 89% of these investors view the UK as a strong investment opportunity, with 85% expressing increased confidence in the market over the last year.
Key factors driving GCC investors to the UK property market include surplus demand, reliable investment returns, strong rental growth, and the availability of diverse assets. Additionally, the stability of the UK’s currency, rising housing demand, transparent legal systems, and access to skilled property professionals contribute to the UK’s attractiveness for investment.
The report also indicates that GCC investors are planning to increase their investments over the next five years, with a focus on various regions in the UK. Besides London, the top five destinations for investment include Liverpool, Manchester, Birmingham, Brighton, and Newcastle. In London, 55% of investors are targeting Central London, with East London as the next popular choice at 32%.
Investors are considering various property types in the UK, with 59% looking at residential apartments, 52% considering commercial office spaces, and 49% showing interest in residential housing. Sustainability is becoming a growing concern, with 58% of respondents finding access to green investments an attractive feature of the London property market.
Overall, the report demonstrates the enduring appeal of the UK for GCC investors, driven by stable investment conditions and a variety of opportunities across different regions. It also highlights the growing interest in sustainability within the property investment sector.
At London Property we believe that markets always find a way. For investment opportunities email us email@example.com.
Recent research by Knight Frank suggests that the UK’s build-to-rent (BTR) sector is poised for substantial growth, with its total value projected to nearly double by 2028, reaching £126 billion. In just four years, from 2019 to 2023, the combined value of existing and upcoming BTR properties has already doubled, going from £35 billion to £71 billion.
Build-to-rent is a property market model where residential properties, typically large apartment complexes, are purpose-built for rental purposes. These properties offer high-quality living with modern amenities, making them attractive to renters willing to pay more for the added conveniences.
The UK currently has 90,000 completed BTR homes, with 67,000 units under construction and an additional 74,000 granted full planning permission, totaling over 230,000 BTR homes. In the third quarter of 2023, transactions in the BTR sector reached £698 million, bringing the year-to-date investment to a total of £2.7 billion.
Guy Stebbings, Head of Operation Build-to-Rent at Knight Frank, noted that the BTR sector’s value has doubled over the past four years, driven by rising demand for rental homes and changing lifestyle preferences. The sector is seen as addressing the urgent need for rental housing in the UK, and its total value is expected to nearly double again by 2028, highlighting its strength and adaptability.
The build-to-rent sector is significant in 2023 due to the imbalance between rental supply and demand, leading to increased rental costs. BTR projects can help ease this pressure on the market and offer potential for a substantial return on investment, especially in areas with capital growth potential and high yields. Additionally, BTR properties often incorporate cutting-edge energy-saving technology, making them appealing to renters and aligning with eco-friendly trends.
While BTR has advantages, it may not be accessible for small-scale investors due to high upfront costs. Alternatives like buy-to-let property investment or off-plan property investment may be more suitable for such investors, offering different advantages and considerations.
In summary, the BTR sector is experiencing rapid growth, driven by increasing demand for rental homes and attractive features. This growth has significant implications for property investment in the UK, offering potential opportunities for investors and addressing the supply and demand imbalance in the rental market.
For investment opportunities in the build to rent & assisted living sectors, email us firstname.lastname@example.org.
According to analysts, the London housing market is expected to face two more years of challenges, adding to the woes of potential homebuyers in the UK. Lloyds Banking Group, the owner of Halifax, anticipates a 4.7% decrease in house prices this year, followed by a 2.4% decline in the following year, with a subsequent recovery.
The ongoing increase in interest rates by the Bank of England, resulting in higher borrowing costs, has been identified as a key factor contributing to the housing market slowdown. While lower house prices can benefit individual buyers, they often signal economic difficulties, as housing costs and mortgage rates are closely linked to interest rates, impacting public spending.
Despite the recent price drops, house prices are still around £40,000 higher than they were before the pandemic, when cash-rich remote workers fueled the market.
London, in particular, has witnessed a 4.8% decrease in property values over the past year, with an average price of £525,000, making it the most expensive area in England for homebuyers. This has left many London residents stuck in a cycle of renting.
A report from Moody’s, a global risk assessment firm, suggests that prospective buyers in London will continue to face these challenges over the next 12 months. While house prices may decline, it is unlikely to significantly improve housing affordability in major European cities, particularly in London and Dublin, where borrowers face pressure due to high interest rates, often associated with floating-rate or short-term fixed-rate loans.
Tom Bill, head of UK residential research at Knight Frank, predicts a slightly improved housing market in the coming year but notes that the run-up to the general election could impact buyer demand. The market often experiences uncertainty in the lead-up to elections, with the Bank of England’s actions taking precedence in recent months. However, it is expected that the attention will shift to Westminster in the coming year.
Bill also suggests that when there is an acknowledgment that mortgage rates are significantly higher than they were three years ago and are unlikely to decrease, market activity may start to pick up.