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Where the first-time buyers are going, incorporation, staycations and more property news

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Whether you are an established landlord or a first-time investor in property, the following are some of the stories making the headlines.

First-time buyers head for the seaside

They do like to be beside the seaside just as much as the next person. An article in Property Wire earlier this week reported a 15% increase in mortgage applications from first-time buyers looking to purchase a home near the seaside.

After months’ of lockdown, hours’ spent working from home indoors, and a craving to enjoy the open fresh air once again, individuals who had previously enjoyed the city life are now looking for locations beside the sea or in the countryside.

The top three sought-after seaside locations were Brighton – an unsurprising first choice, given its proximity to London – followed by Plymouth and then Bournemouth. Next most popular were the coastal towns of Portsmouth, Scarborough, and Blackpool.

Incorporating your buy to let business

The current tax breaks provided by a Stamp Duty holiday until the end of next March, coupled with the continued benefits of writing off mortgage interest payments against profits, makes the incorporation of your buy to let business more attractive than ever, suggests a story in Property Investor Today on the 3rd of August.

The tax holiday was recently announced by the Chancellor of the Exchequer Rishi Sunak and has provided sufficient stimulus to the re-emerging property market to reveal many attractive deals for investors and buy to let landlords.

Although the purchase of such investment properties continues to attract the 3% Stamp Duty surcharge (imposed since April 2016) the holiday on standard Stamp Duty rates for the purchase of property up to £500,000 in value – or, importantly, the transfer of such property into company ownership is a welcome change for investors. The current tax holiday, therefore, raises the prospect of significant savings.

With effect from the beginning of the current tax year, buy to let investors can no longer claim any tax relief on the income tax payable on mortgage interest instalments. Corporately owned investment property, on the other hand, is liable only for corporation tax, with mortgage interest payments that may be set as company expenses against profits.

In our blog dated the 12th of February 2020, we explained in further detail the advantages of incorporation to some landlords – especially those with portfolios of several buy to let properties. Those benefits may have become more relevant than ever thanks to the current Stamp Duty tax holiday.

Staycations are welcome news

The Great Staycation Guide we published on the 3rd of July mentioned the boost given to the domestic tourism industry by government leaders such as the Prime Minister, the Chancellor of the Exchequer, and the Health Secretary.

Has the changing face of the pandemic has lurched from the easing of limited foreign travel to tighter lockdowns once again, those landlords who have switched to short-term holiday lets have given a big welcome to the surge in the great British staycation.

In a story on the 3rd of August, Landlord Today reported that Cornish hotspots such as Polzeath and Newquay are especially busy.

But the story also echoed warnings from the Residential Landlords’ Association (RLA) about the steady loss of longer-term accommodation in the private rented sector as more and more landlords turn to the lucrative, short-term holiday market. Studies suggest that as many as 500,000 properties have already been lost to long-term tenancies because of this trend.

Is there a cannabis farm on your property?

A story in Letting Agent Today recently warned of a recent proliferation of cannabis farms as criminals took advantage of the recent lockdown in premises they had rented.

Police in Nottinghamshire, for example, have already reported a 280% increase in the volume of cannabis plants seized during lockdown compared with the same period the year before.

For the avoidance of any suggestion that they are condoning such use of their property, the article advises landlords and agents to take swift action to evict tenants they suspect of running a cannabis farm.

The landlord may need a court injunction to stop the activity immediately, since eviction procedures through the courts may currently take three months or longer. What is required, in that case, is a Section 8 eviction notice on the grounds of sub-section 12 (which may grant eviction on the grounds of any breach of the tenancy agreement) or sub-section 14 (where the tenant has been found guilty of causing a nuisance or other illegal activity).

Counting the cost of the pandemic

In a piece published on the 3rd of August, Property Industry Eye revealed some of the figures estimating the cost of the pandemic so far in terms of lost government revenue.

Property transactions slumped by as much as 45% at the height of the lockdown, with a corresponding fall in Stamp Duty raised by the Treasury in the second quarter of this year of 42% – that represents a total take of £1.08 billion from 133,300 residential property sales.

Sales to first-time buyers, who qualified for reduced rates of Stamp Duty, was also down by 43% to a total of 30,100 transactions.

These latest statistics run until the end of June, so do not reflect the Chancellor’s recent introduction of the Stamp Duty holiday on the 8th of July.