PROPTECH-X ‘Proptech & Property News’: Landlord exodus fuelled by capital gains allowance | Property trends for 2023

Property Trends and Projections for the Coming Year

Stacks Property Search’s regional directors’ views on current and future trends.

Woodland:

Anto Clay says, “Property with attached woodland is attracting a premium; everybody used to want a pony paddock, now mature trees are the new must-have. In these days of stratospheric fuel prices, firewood keeps you warm three times – once when you cut it, once when you split and stack it, and finally when you burn it. And of course it’s good for the soul.

“Owners should protect against timber-rustling; wood theft will inevitably become a product of the times we are living in.

“Generally speaking, a small patch of land is becoming very desirable. Property owners want space that isn’t house, for a growing project of some sort, whether that’s veg, vines, orchards, wildflower meadow or chickens. When times are hard, there’s something rather reassuring about having your own plot.”

Projects:

James Law says, “Building plots and huge renovation projects are currently out of favour with many buyers. Historically, young buyers could achieve what they wanted by buying a wreck and doing it up slowly. But the rising costs of materials and building work has discouraged this sector. However the wealthy retired, who know what they want in terms of lifestyle, sustainability and future nest-proofing are looking for projects that will allow them to achieve their perfect later-life property. Many are selling up in the home counties and looking for a plot or a knock down further west.”

Sara Ransom says, “London is full of overpriced unmodernised properties. Eager buyers are putting in offers then getting quotes for the work and realising that the numbers simply don’t make sense and pulling out. Prices for properties that require a great deal of work, or that are half finished projects, require significant downward adjustment.

“New builds in London are enjoying a revival in popularity because they’re more energy efficient and require little maintenance.”

New vs old:

“New builds in London are enjoying a revival in popularity because they’re more energy efficient and require little maintenance.”

James Greenwood says, “In the country, more and more buyers who used to say ‘period only’ will look at both new and period. There’s an aspirational funkiness to owning a good new eco home. Downsizers in particular are looking for properties that are low maintenance and have low outgoings.

Listed properties:

Craig Fuller says, “People who are selling Listed properties are finding that it helps to have a survey before they go to the market so that interested buyers go into a transaction with open eyes.”

Anto Clay says “Period properties used to come with a cachet and premium; now estate agents are inclined to hide Listed information away in the small print.”

Emma Barkes says, “Owners of Listed properties are finding themselves paralysed when it comes to getting work approved. Many councils no longer have a functioning Listed Building department, and a single conservation officer can have a huge territory to cover, often spanning two counties.”

Sheds:

Bill Spreckley says, “Everybody wants an outbuilding – you can never have too  many, and a property with a barn or shed, or several of both, will attract a lot of interest. Historically buyers would be inclined to convert their outbuildings; these days they’re more likely to use them for a myriad of outdoor paraphernalia, cars, garden tools and equipment, apple storage, bicycles, or sometimes for utility space, fridges and freezers.”

Retro-fitting:

James Greenwood says, “As fuel prices increase and homeowners panic about how much their homes will cost to heat, retro fitting property will become more widespread. Pioneers may have overpaid in the past, but as the industry evolves, prices will inevitably start to fall, and better environmental solutions will be developed.”

Transport:

Sara Ransom says, “Forget electric cars, in London nobody wants a car at all. Crossrail has made getting around London by public transport a joy, while driving gets slower and slower with more and more cycle lanes and less capacity for cars. The premium for property with off street parking is diminishing – space is more likely to be transformed into a mini wildlife meadow than used to charge an E-car.”

Lifts, stairlifts and handrails:

Nick Wooldridge says, “More and more people are installing internal lifts. People are staying in houses for longer so they’re looking at ways of future-proofing. Lateral space is ever popular, tall skinny town houses are losing popularity rapidly, but if you already live in one, an internal lift solves some of the problems.”

James Greenwood says, “If you inherit a property with stairlifts, ramps and handrails, strip them all out before you put the property on the market. They can reduce the value by as much as 10%.”

Hong Kong buyers:

Sara Ransom says, “Hong Kong buyers are arriving in flurries that I expect to become a steady stream. The locational draw tends to be based on the availability of good schools. Favoured London locations include Wimbledon, Wokingham, Esher, Cobham, Epsom.”

West is best:

Anto Clay says, “As people chase value, there’s a move from east to west: London to Oxfordshire; Oxfordshire to the Cotswolds; then on to South Herefordshire and Monmouthshire; then to West Wales. The latter stages tend to be later-life moves as although property prices are dramatically lower, wages fall off a cliff.”

Return to London:

Sara Ransom says, “People who moved out of London during the pandemic are returning in significant numbers. They’ve tried it for two years, moved into local communities but found they miss the bright lights and that they’re struggling to fit in.”

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Landlords looking to sell & exit market at 13-year high 

“UNWELCOME” CHANGES TO CAPITAL GAINS ALLOWANCE IS CAUSING THE EXODUS 

PRESS RELEASE: The reduction in Capital Gains Allowance is an “unwelcome blow” and has seen the number of landlords looking to sell up hit a 13-year high. 

Jeremy Hunt announced that the amount you can make from the sale of certain assets before paying tax  will fall from £12,300 to £6,000 in April and then to £3,000 in April 2024 in the Autumn statement on Thursday.

And Tom Cranenburgh from Get An Offer Estate Agency, said many landlords are now opting to exit the market.

He said: “The changes to Capital Gains Allowance couldn’t really have come at a worse time for landlords. Right now many are already facing a reduction in property values, rafts of new regulation and the prospect of many of their tenants struggling to pay their rent due to the cost of living crisis. 

“That’s why many are reacting to this unwelcome blow by already opting to quit the market and sell up. 

Mr Cranenburgh said data indicated the number of landlords looking to exit the market had hit a 13-year high.

He said: “We track all enquiries really carefully, and landlords looking to sell are coming to us more than I can remember since we began back in 2009. Some are hoping to sell with tenants remaining, others have given two months notice and want the place sold as soon as it’s empty to avoid paying all the costs with no rent coming in. Landlords looking to sell are up nearly 65% in November versus October and nearly 300% versus November 2021.”

Basic rate taxpayers pay 10 per cent CGT on most asset sales and 18 per cent on property. Higher rate taxpayers pay 20 per cent CGT on most assets and 28 per cent on property.

A landlord paying higher-rate tax would pay up to £1,764 more tax on a property gain above the threshold if they sold between April 2023 and April 2024 (when the threshold is £6,000), and up to £2,604 more after the threshold drops to £3,000, according to the investment platform AJ Bell.

A landlord paying basic-rate tax would pay up to £1,134 more in CGT if they sold their property between April 2023 and April 2024, and up to £1,674 extra from April 2024.

Landlords who manage their buy-to-let portfolio through a limited company and pay themselves in dividends will also be hit by changes to the dividend allowance, which is the amount that an individual can receive in dividends before paying tax on them.

The allowance will be cut from £2,000 a year to £1,000 in April, and then halved again to £500 in April 2024.

Last month the number of limited companies set up to hold buy-to-let properties passed 300,000 for the first time as more landlords moved properties from personal to company names. 

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Proptech and Property News in association with Estate Agent Networking.