United Kingdom | EdgeProp.sg

Rental Yields

Annual price falls in London were reported for the first time since Q3 2009, at -0.6% according to Nationwide. The East Midlands saw the highest regional house price growth in the year to Q3 2017, with growth of 5.1%. At a national level monthly growth moved back into positive territory through September at 0.2%, with annual growth now sitting at 2.0%.

Despite the indices showing a slowdown, surveyors responding to the August RICS sentiment survey were more positive about house price growth. This is the first improvement in sentiment for nine months. The numbers of surveyors reporting rising and falling numbers of new instructions was broadly in balance for the first time since before the EU Referendum. More surveyors reported rising numbers of new instructions in August than in any of the previous 18 months. Instructions have now moved slightly ahead of enquiries in the survey. If this trend continues we may see downward pressure on house price growth.

Theresa May’s Florence speech restored some confidence in the progress of Brexit talks. The conciliatory tone prompted Oxford Economics to amend the likelihood of agreeing transitional arrangements from 60% to 70%, raising the overall likelihood of a transition agreement followed by an FTA to 35%. Meanwhile members of the MPC, including the Governor, Mark Carney, have signalled that a rate hike before the end of the year is likely. Although some news reports suggest mortgage rates are beginning to rise pre-emptively this has yet to filter through into the data. Any base rate increase is likely to be modest but adjustments to mortgage rates may dampen price growth in the coming months.

Download the full PDF report >> http://pdf.euro.savills.co.uk/uk/residential---other/uk-housing-market-update-october-2017.pdf

Buying Guide

Why invest in the UK?

Historically, the UK has delivered stable returns on investment over time, and this trend shows no sign of stopping any time soon. This makes it an excellent choice for investors looking at property as a means of wealth preservation. In the wake of the EU Referendum, the relatively weaker British Pound is working to overseas investors’ advantage.

Where to buy?

London has always been popular with overseas buyers and will continue to be so as Crossrail revolutionises the city’s transportation system and breathes fresh life into neighbourhoods like Ealing, Whitechapel, Stratford and Woolwich. More and more investors are also looking north to Manchester. The city will soon benefit from the UK’s second high-speed rail line, connecting it with the British capital.

Source: Jones Lang LaSalle

Taxes & Costs

Acquisition Cost

Buyers should expect to pay Legal Fees of around 0.5-1% of the property price. In addition, Stamp Duty Land Tax (SDLT), more commonly known as Stamp Duty, may be chargeable on the acquisition of UK property worth more than £40,000. Investors purchasing their second homes or buying to let are charged an additional 3% on top of the basic SDLT rate.

Property Value	Basic SDLT Rate	Second Home / Buy-to-let SDLTRate
Up to £125,000	0%	3%
£125,001 - £250,000	2%	5%
£250,001 - £925,000	5%	8%
£925,001 - £1,500,000	10%	13%
More than £1,500,000	12%	15%

Ground Rent

A regular payment by the owner of leasehold property to the property’s freeholder, amounts to around 0.1% of the purchase price per annum, depending on the property type. This is typically subject to review every 10 years.

Service Charges

Vary among developers and according to the property’s level of facilities.

Disposal Cost

You have to pay Capital Gains Tax on residential property in the UK, even if you’re a non-resident for tax purposes. You only have to pay Capital Gains Tax on your gains above the tax-free allowance, or Annual Exempt Amount, of £11,3005 . The amount you pay depends on how much you have earned from the property sale and your taxable income, but it ranges from 18- 28% of your capital gains.

Inheritance Tax is charged at 40% on UK assets worth more than £325,000. There is no Inheritance Tax to pay if you pass a home to your husband, wife or civil partner, but if you leave the property to another person in your will it counts towards the value of the estate.

Brokerage and Legal Fees associated with property disposals vary.

Source: Jones Lang LaSalle

Economic Growth

UK Housing Market Forecast - December 2017

Knight Frank's latest house price forecasts, outlining market trends to 2021. The report examines how the UK mainstream market will fare, as well as prime London and country markets. It includes the latest Knight Frank Risk Monitor, identifying key issues that could affect the UK property market.

View REPORT.

For more information contact:

Liam Bailey
Partner, Global Head of Research
T: +44 20 7861 5133

Landlord & Tenancy

Letting Cost

If you generate rental income from your UK property, you are required to pay Income Tax. The rate depends on how much you earn, although a variety of exemptions can help offset the cost. Fees for Letting Services are a percentage of rental income, varying by agent and service level.