WHITEHALL THEATRE

Whitehall

I was delighted to carry on my firm’s long involvement with the Whitehall Theatre.  As a very proud Dundonian I am excited and very positive about the redevelopment of the city and in particular the waterfront. With all this massive investment it is also good to see a local icon, as the Whitehall Theatre is to most Dundonians, go from strength to strength.

Our initial sponsorship will be used to purchase a curtain which will be used to amend the size of the auditorium increasing the number and types of production that the Whitehall Theatre is able to host.  The undernoted photo, which is courtesy of the Evening Telegraph, Dundee and taken by photographer Bob Douglas shows me presenting the cheque to the Trustees of the Whitehall Theatre.

Lindsay Darroch
Partner – Head of Property
www.blackadders.co.uk

THE ADDITIONAL DWELLING SUPPLEMENT

As promised, I thought that I would give you my further thoughts in relation to the Additional Dwelling Supplement.  As readers of my blogs know, I am against this supplement as I feel 1) it will cause a manipulation of the market, 2) there will be unintended consequences and 3) it will put a brake on property investors buying certain properties which will have a blocking effect on the housing market, rather than the freeing up that was intended.  I will answer these points in order:-

  1. Manipulation of the Market I can confirm from personal experience, and also from speaking to other property lawyers, that there was a massive increase in the number of property investors purchasing investment properties in February and March of this year, prior to the introduction of the surcharge.  In my own local area of Dundee and Angus there was a 45% increase in the number of flats sold in March.  I have also been acting for a number of clients across Scotland and had to deal with rapidly increasing prices and competitive situations.
  1. Unintended Consequences – Clients may want to assist a child in buying a property and the only option may be to incorporate themselves onto the Title – this will now carry an extra 3% charge. Similarly, a separating couple where the person leaving the matrimonial home needs to buy another property will now incur the 3% charge. The unfairness of the system seems very clear to me.
  1. Blocking of the Housing Market – The surcharge was intended to price property investors out of the market to make it easier for first time buyers but in my experience, investors are generally not purchasing the types of properties that would be of interest to first time buyers. All that’s happened is there’s now a swathe of sellers who no longer have the property investors looking at their property or if they do, the investor has factored in the 3% charge. This is perhaps not true in all cases as there will be some instances where it will be easier for first time buyers to step on the ladder because they are not competing with property investors, but I would suggest that this will be by far the minority of cases.  A drying up of the supply of rented properties will increase rents meaning it will be harder for people to save the requisite deposit to allow them on the property ladder. I would hope that the Government would use some of the 3% surcharge to fund a scheme to assist first time buyers gain access to 95% loan to value mortgages, thus minimising their deposit to 5%.

I was also very interested to read an article by Phillip Aldrick in The Times on Saturday 23rd April.  The article was based on the introduction of a Land Bank Tax – a stick to encourage developers to begin developing properties to feed into the market.  This would have the benefit of alleviating the shortage of houses throughout the UK and would also help control prices, which continue to soar due to lack of supply.  I would agree with this policy. He concluded:-

Taxes are not just about revenues, they can be used to change behaviour.  Get a Land Bank policy right and it might not raise a penny but it could turn Britain’s dream of more houses into reality”.

In conclusion, I would urge the Government to rethink the Additional Dwelling Surcharge, introduce a Land Bank Tax and also change the Capital Gains Tax policies in relation to properties, using the extra funds raised to create a first time buyer fund.

Lindsay Darroch
Partner – Head of Property 
www.blackadders.co.uk

PROPERTY UPDATE – QUARTER 1 2016

It has been a very interesting start to the year for the property market.  After a very sluggish start in January, the number of new properties coming on to the market across Scotland picked up, with March being one of the best months ever. Although numbers were still considerably below peak market levels of 2007, Quarter 1 of 2016 was certainly moving in the right direction.

The extra properties coming on to the market were also reflective in the increase in purchases, which was driven to extreme levels in March with the introduction of the additional dwelling supplement coming in on the 1st April. This caused property investors to make purchases early to avoid the 3% surcharge (more on this in another blog).  As an aside, I am still not noticing any cooling off with property investor activity although it is perhaps too early to say at this stage what the rest of the year will be like.

Developers continue to play their part with new sites coming on line and incentives, such as part exchange, being used where necessary.  My feeling is that Quarter 2 will follow a similar pattern with April being slightly quieter but with a pick-up in May and June, with hopefully higher levels than 2015.

The main exception for the Scottish market is in relation to Aberdeen, which is going through a correction and I think 2016 will be a tough time for that market – again a blog to follow.

Lindsay Darroch
Partner – Head of Property 
www.blackadders.co.uk

STAMP DUTY SURCHARGE – UNFAIR AND EXTORTION!

Following on from my previous blogs I was interested to read a press release from Retties in relation to the impact that last year’s changes to LBTT (Stamp Duty) had on the £1m + market.  There was a 23% rise in £1m sales in Scotland in 2015 compared to a 5% rise in the general market.  However the interesting thing is that two-thirds of the sales occurred in the first four months of the year to beat the higher LBTT from April.

As previously indicated, my view is that the 3% surcharge will cause a very similar distortion and it will be interesting to see the stats over the next couple of months.

The Association of Taxation Technicians has released a report advising that in their opinion the stamp duty surcharge is incredibly unfair and will have an adverse impact on the very people the government claims to be helping.  They point to the fact that married couples are being treated as one unit and also that there is no exemption to deal with parents assisting young adult children getting on to the property ladder.

Let’s see what happens in the next couple of months!

Lindsay Darroch
Partner – Head of Property
www.blackadders.co.uk

PROPERTY MARKET SURGE

Further to my previous blog I can confirm that activity levels in March continue to soar. This is very much driven by the desire for property investors to complete their deals, either purchase or transfer, prior to the end of the month and the introduction of the 3% surcharge.

I still have doubts about whether this activity level will continue into April but I am pleased to report that there is a definite increase in the number of properties coming on the market and I will confirm figures to you in more detail at the start of April.

I was also very interested to see a report from the CML advising that gross mortgage lending in February hit its highest level since 2008. Also this figure was 30% higher than the corresponding February in 2015. The CML’s view is that this activity is being driven by low mortgage rates, an increasing appetite in business from lenders and also the stamp duty changes that come into force on 1 April 2016. It will be very interesting to see the levels in April and May how they compare to the year on year months. I will keep you advised of trends.

Lindsay Darroch
Partner – Head of Property
www.blackadders.co.uk  

MIXED MESSAGES FROM HOUSING MARKET

Following on from my recent blog regarding the rush of buy to let investors to purchase, I thought it would be interesting to have a look at my sense of where the housing market is going after the first two months of 2016.  Although official figures have not been released, my feeling is that new stock will be at roughly the same levels as last year or perhaps slightly down.  I think the number of transactions overall will be slightly down as for the first two months in 2016 there appeared to be a degree of uncertainty.  The March figures will be skewed with the buy to let stampede although I am watching very carefully the amount of new stock coming on to the market as I am of the view that this will be a clear sign of the market direction for 2016.  There are also a few more bumps on the road – the two main ones being the EU Referendum and global economic climate.  A blog about Brexit to follow.

Lindsay Darroch
Partner – Head of Property
www.blackadders.co.uk  

THE STORM BEFORE THE CALM?

It is very clear that government changes including the property surcharge have caused a rush of buy to let investors trying to complete deals before the end of March.  This is reinforced by a report from the Bank of England confirming that there has been an increase in the number of buy to let mortgage applications.  I myself have been involved in a number of transactions throughout the whole of Scotland with investors who are in a hurry to purchase or alternatively make changes to the structure of their property portfolio now to avoid the extra surcharge.  This is causing prices for traditional buy to let properties to go through the roof and will skew property price comparison figures for the next few months.  It will be interesting to see what impact there is on rents to make these higher prices work.  I am also concerned to see what happens come the 1st of April 2016 and I suspect that there will be a lull or plateauing in prices and activity for a couple of months.  A clear example of unforeseen  consequences! I will continue to report on trends.

Lindsay Darroch
Partner – Head of Property
www.blackadders.co.uk