Mortgage Lending up 12% in May
The latest release of date from the Council of Mortgage Lenders (CML) shows that lending in May increased 12% when compared to April’s figure. Standing at £20.1 billion, it is also ahead of the May 2016 figure when it stood at £17.9 billion. However, it’s not all positive growth. The CML has also revised down its forecast for buy-to-let mortgages for 2017 and 2018.In December 2016, it had forecast lending of £38 billion in both 2017 and 2018. These figures have been reduced to £35 billion in 2017 and £33 billion in 2018.
Paul Smee, Director General of CML commented:
“Re-mortgage activity and first-time buyers continue to drive lending this year. Looking ahead, we expect to see this trend continue, but not as strongly, as the factors supporting lending are blunted by less favourable economic conditions.
Buy-to-let had a weak start to 2017, and the sector’s contribution to overall net mortgage lending has fallen considerably over the last year.
While falling mortgage interest rates have helped support borrowing, tax and prudential measures are exerting pressure on the buy-to-let market. Following the distortion of the stamp duty change on second properties last year, we expected a slight recovery in lending levels. However, this has not materialised, and we therefore have lowered our forecast for buy-to-let lending this year and next.
This re-emphasises the case for avoiding further changes to the tax and regulatory framework until the effect of these already in train have been properly assessed.”
Contact Us
If you’re thinking of moving house, contact our experienced estate agents and property solicitors on 0141 887 5271 (Paisley) or 0141 886 5678 (Renfrew).
Inheritance Tax – Residence Nil Rate Band
A new Inheritance Tax allowance comes into force on 6th April 2017. This will apply to property left to direct descendants. The Residence Nil Rate Band, as the new relief is called, means that from this year, a new tax free allowance will apply to a property left by a deceased person to a descendent. If there is more than one property in the estate, the executor can decide which property is to be allocated for this purpose.
This allowance starts at £100,000 and will rise in £25,000 blocks over the next 4 years until, in the tax year 2020/21, it will stand at £175,000. If the property is held in joint names of a married couple or civil partners, each of the parties enjoys this relief - and it’s transferrable from one to the other on death if it’s not been used up.
Here are the basic rules. The Residence Nil Rate Band will apply if the:
- individual dies on or after 6 April 2017
- individual owns a home, or a share of one, so that it’s included in their estate
- individual’s direct descendants such as children or grandchildren inherit the home, or a share of it, and
- The value of the estate isn’t more than £2 million
Direct descendants include, the children, grandchildren and further lineal descendants of the deceased. They also include the spouse or civil partner of a direct descendant. Also included are step children, adopted children, fostered children and children of whom the deceased was guardian. You can find an outline of what are considered to be descendants on the HMRC website. You can click here to view this information.
Direct descendants don’t include nephews, nieces, siblings and other relatives who aren’t included in the list above.
The Residence Nil Rate Band is in addition to the current Inheritance Tax (Nil Rate Band) threshold of £325,000. This is also transferrable between spouses or civil partners if it is not exhausted on death.
The total Inheritance Tax allowances available to married couples and civil partners from the tax year 2020/21, will be £1 million – and after that the allowances will increase in line with inflation (as measured by the Consumer Price Index).
There are a number of helpful case studies on the HMRC website ranging from the most simple and straight forward to the very complicated. You can view those case studies by clicking here.
Interestingly, if one spouse or civil partner dies before April 2017(whether or not they owned a share of the property or had already passed a share to children), the survivor will be able to use both of their family home allowances when he or she dies.
If you have a Will, you need to make sure it’s up to date so that you can take advantage of this tax-free allowance. If you don’t have a Will, you need to make one now to ensure you can decide who will benefit from this allowance.
Inheritance Tax planning is a complex process and we recommend this be undertaken by an expert in this field.
Get In Touch
Contact us on 0141 887 5271 (Paisley) or 0141 886 5678 (Renfrew).
Helping your children get on the property ladder
The bank of mum and dad is a cliché that’s well worked in today’s economic times, not least when it comes to helping children to get a leg up onto the property ladder. Rising property prices and lenders restricting the level of borrowing has meant that younger people have found it increasingly difficult to bridge the gap between the amount they are able to borrow and the price they have to pay for the property.
Many parents and grandparents who have the financial wherewithal to help need to consider very carefully how to go about providing any sort of assistance to their children or grandchildren.
The option of helping with the deposit without any expectation of this being repaid is straightforward – it’s a simple gift from one to the other.
However, if the plan is to provide a home for the child, then there are potential difficulties that need to be addressed before embarking on such a scheme.
If the title to the property is to be taken in the name of the child, then the child can subsequently do what he or she wants with that property. The child can borrow money and use the property as security or sell the property and keep the proceeds of that sale.
If the child were to run into financial trouble and be pursued by creditors to the point he or she becomes bankrupt, that is likely to lead to the property being sold to meet the debts the child has run up.
Should the child be married and the marriage fail, it is likely that there will be a claim by the spouse for a share in the value of the property.
You should also be aware that if the child is under the age of 16, even though they take the title in their own name, the purchase will be considered as a purchase of an additional dwelling and the rules relating to the Additional Dwelling Supplement will apply. The Additional Dwelling Supplement is a tax of 3% of the purchase price of the property (if the property is purchased for more than £40,000) that is charged when someone buys a property in addition to their current main residence - and is payable in addition to any Land & Buildings Transaction Tax (in England and Wales, Stamp Duty) that may already apply.
Parents and grandparents must think through the options very carefully before embarking on any such scheme.
So, what are the options to secure the position for the parents and grandparents?
There is always the option of buying the property either with or without a loan and then allowing the child to live in it. This would mean that the property would always belong to the parents or grandparents and when it is eventually disposed of, it is likely that Capital Gains Tax will need to be paid on any gain achieved on that sale. If the parents or grandparents already own their own home, there is also the added cost of the Additional Dwelling Supplement.
If the parent holding title to the property were to die, then the property will form part of the estate – and there may be other siblings who are entitled to share in the estate and that might mean that the property must be sold to satisfy that entitlement. Even this method of helping has its problems!
As an option, to try to at least secure the money invested in the property, the parent or grandparent might decide to secure their interest by taking a Standard Security over the property. If this is done, it’s usually backed up by an Agreement setting out in what circumstances any money secured should be repaid. That’s fine as far as it goes because even if there is a problem and the property has to be disposed of, then the money paid to buy it (and potentially any notional interest payable on that money as might be provided for in an agreement) would need to be repaid – but the parent or grandparent might not be able to share in any profit on the sale. If the property is in the child’s name, then the same problems can arise regarding bankruptcy or divorce as mentioned above, but of course, the security would go some way to protect the money invested!
One option that has been getting more attention in recent times is the creation of a trust. The basic methodology is that a trust is created with the parents or grandparents as trustees and the child as a beneficiary. The property is then purchased by the trust with money put into the trust by the parents and/or grandparents. The trust then becomes the owner of the property. The child can live in the property and be sheltered from the vagaries of divorce, separation or bankruptcy as none of these events could have an effect on the ownership of the property – it’s owned by the trust!
The trust can sell the property and buy another property and allow the child to live in it and it can ultimately transfer the property to the child or dispose of it and pass the free proceeds of that sale to the child.
There are also taxation implications that will need to be addressed. The Additional Dwelling Supplement we discussed above will apply to a purchase of this nature if the parents or grandparents who created the trust own their own homes. On disposal,
Capital Gains Tax may apply. It is beyond the scope of this article to enter into a detailed discussion of when Capital Gains Tax will apply so for further information on that we would direct you to the Government website dealing with this topic. You can access that by clicking here. One important point to note is that the money paid into the trust to enable the trust to purchase the property, no longer forms part of the parent’s estate and, as such, is sheltered from Inheritance Tax. Again, to ensure that this is done correctly, you need to take proper legal advice on this.
Contact Us
If you find yourself in such a situation or are currently considering your options, we’d be happy to speak to you about this. Please call us on 0141 887 5271 (Paisley) or 0141 886 5678 (Renfrew).
A great year for our Estate Agency and the local property market!
While there have been challenges for both buyers and sellers this year, the property market in Renfrewshire has experienced considerable improvements and we are delighted to announce that our Estate Agency has secured over £20 million worth of property sales on behalf of our clients, in 2016.
The volume of residential sales in Renfrewshire increased in 2016. The latest Registers of Scotland house price report shows a 19% increase in quarter 2 sales this financial year in the local area, compared to quarter 2 last year. For the same period, the average property value in Renfrewshire increased by 3%. Clearly despite uncertainty surrounding Brexit and more recently the US presidential election, the local market has shown resilience.
In 2016, we have not only seen more buyers in the local market, but also more sales being agreed and in shorter periods of times, with Walker Laird selling over 100 properties in Renfrew alone. This year has also brought more favourable conditions for sellers, with growing demand and a steady supply of new properties. In 2016 we witnessed the frequent return of closing dates – an impressive 44 times at Walker Laird this year.
Competition amongst buyers has been particularly obvious when marketing family houses, as we found that some buyers were prepared to pay a premium price for the right property. One property for example, went to a closing date with 12 offers in place, the highest of which was 28% above asking price.
The demand for good family size accommodation looks set to continue, so if you want to know how much your home is worth in today’s market or get advice about moving in 2017, we would be delighted to provide you with an up to date and free valuation. Buyers trying to identify their ideal home should also get in touch and speak to us about using our matching service.
We can offer competitive fee structures for sellers coming to the market early in the new year, which is the ideal time to take advantage of that early rush and pick up of activity after Christmas. We can also offer a full deferral of the up-front costs.
Get In Touch
Call 886 5678 and speak to one of our experienced team.
Walker Laird Can Sell Your House This Winter
Speak to us about selling your home over the winter months without all the up front fees usually attached to selling.
Winter isn’t traditionally seen as a good time to sell property, but our experience tells us that this can actually be a great time to sell your home.
Many sellers are reluctant to come to the market at this time of year, preferring to wait until spring instead. But this often means there is less competition for those who do choose to market their property.
We normally find far more serious buyers looking around the local market at this time of year as well. Those who are looking to make a move are more motivated about doing so. During November and December we have sold many properties within days of coming to the market.
The online property portals also tell us that the festive period is a good time to sell. Rightmove and Zoopla have reported high levels of online traffic at this time, particularly Boxing Day. In fact, on the first working day of January last year Rightmove received 2.8 million hits. If you happen to be looking to buy yourself, take a look at our current property listings.
Winter can also be the perfect time to emphasise your home’s character, with cosy fireplaces and lighting, allowing for a much more relaxed environment during viewings.
If you are thinking about selling then you should be coming onto the market now to take advantage of this. And if you are worried about there being a lack of interest over the festive period we will update your home report for free in the new year.
Contact Us
Call us today to arrange a free property valuation.
Constructing Schools in Ghana
Giving something back to communities is something that at Walker Laird is very passionate about. Two of our staff Graham Paisley and Luke Eaton, of our Paisley office, went over and above in helping those in need by giving up their time to fly to Ghana and help build all new facilities at a new school this summer.
This level of dedication has impressed the whole team at Walker Laird, and we wanted to share their story from their time in Africa and just how their work will go to help children over there.
Inspired from a previous trip to Uganda two years ago, also to help construct important buildings, Luke was wanting to return to the continent and assist once again. For Graham, this sounded like a brilliant opportunity to give something back and signed up alongside Luke to go out to the village of Kaleo in Ghana for 17 days, both there as part of a team of nine to help build a teacher's dormitory at a new school.
Once they were both signed up, they worked hard at fundraising the money they needed to go over for the trip. After some hard work putting on dedicated fundraiser evenings, raffles and sponsored walks, they both met their target and were ready to embark on this trip.
They arrived in Accra, the capital city of Ghana, which both described as being as “a bit more upmarket”. From here they then had a 17 hour bus journey to the small town of Kaleo, where they would be spending the rest of their time to help construct the dormitory.
Arriving on the Sunday, they met with the builders on the Monday to go over the full project and understand exactly what work needed to be done. Graham and Luke’s team of nine were joined by another group, also from Scotland, who were building classrooms. During their time their, they all worked hard to construct these much needed areas for the school.
Supporting Education
In this school most of the kids who would be attending were not actually from Kaleo, but from outside. This is simply due to the fact that it still costs money for a child to attend. So over the 17 days they were there, Graham and Luke were able to get to know some of the local children and residents, including the village chief, who could be found enjoying a refreshing beer in the 40°C heat!
Since they returned, they both said that they would “go back in a heartbeat”, and have plans to return in a few years and volunteer once more. The experience has been an extremely positive one for Graham and Luke, and everyone here at Walker Laird are happy to have two such giving members of the team.
If you would like to find out more about how you can get involved with helping communities abroad, why not check out the charity Graham and Luke supported on their trip - Connected. Check out more of their pictures from the gallery below!
Our Easy Guide To Conveyancing
When it comes to buying or selling a house, a key part of the process involves conveyancing. For most people they understand the basics of what is required to buy a house and how to market it, but the conveyancing process still remains somewhat of a mystery, after all, it isn’t a word that comes up too often in day to day conversation is it?
So to help we have created a quick guide to help you understand the conveyancing process, helping to clear exactly what it is, what stages are part of it, how long it takes and help answer some of the most commonly asked questions around it.
Conveyancing...What is it?
In a nutshell, conveyancing is the legal process which takes place after the main details of buying or selling your house has been agreed. This usually involves a contract being created which confirms ownership of the property being transferred from one person to another, done by way of missives (an exchange of letters between the buyer's and seller’s solicitors).
The conveyancing process will also involve your solicitor carrying out additional searches on the property itself and the parties involved in the purchase. These searches are done to make sure the buyer gets and knows what they paid for and to make sure there will be no additional costs incurred after purchasing the home.
What are the stages?
Once an offer has been accepted, both parties solicitors will then work to negotiate the terms of the contract by completing what is known as “missives”. This entails a number of important tasks, including agreeing a date of entry as well as what (or any) additional items to be left in the property (this is commonly things such as blinds, kitchen equipment etc).
The next stage is to “conclude missives”, which simply means that the contract of sale and purchase of the property has been agreed between the buyer and seller. By this point you will have your entry date, funds secured and insurances arranged for the transfer.
Moving forward to the date of entry both the buyer and seller’s solicitors will arrange the successful transfer of the funds. Once complete and correct funds have been received, the new owner will be able to pick up their keys to their new home from either the seller themselves, the seller’s solicitor or the estate agent, leaving them free to begin moving in!
How long does this take?
There is no set timescale for the conveyancing stage, but on average it can take six to eight weeks. This can very easily be longer or shorter depending on the circumstances, everyone will be different. There are a number of factors to consider in a house purchase or sale that can vary the timescale, for example agreeing the initial terms of the sale or securing your mortgage from your chosen lender.
We have a vastly experienced conveyancing team here at Walker Laird who will help you every step of the way, regardless of your circumstances. If you have any questions about conveyancing or would like us to help you during this stage then please give us a call on 0141 887 5271.
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