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HMRC wins stamp duty court case

HM Revenue & Customs (HMRC) has won a court case, claiming victory over a scheme designed to help property buyers avoid paying stamp duty land tax (SDLT). The case involved an SDLT avoidance scheme perpetrated by the Vardy group, which wanted to structure the purchase of a property through a newly-formed unlimited company and distribute the property as a dividend to the shareholder company.

A tribunal found that the unlimited company had not carried out company law requirements for declaring a dividend and the ultimate owner of the property had indirectly provided the purchase price.

Following the victory, regulations have been laid to prevent a wider range of SDLT avoidance schemes. The rules will give tax authorities better access to information about the schemes and those who promote and use them, allowing them to be challenged and shut down more quickly.

“This victory at the First Tier Tribunal sends a clear message to tax avoiders that we will challenge avoidance relentlessly,” said Jim Harra, HMRC’s director general of business tax. “The decision is good news for the vast majority of taxpayers who pay, rather than try to dodge, their taxes.”

Retirees falling short of savings targets

Over-55s are falling nearly £70,000 short of their goal when saving for retirement, research from HSBC has revealed, which could lead to problems later down the line as they are unable to support themselves from savings alone. The average aim is to save £99,495 by the end of their working life, but only manage to accumulate around £31,900.

The study found that after the age of 35, people’s savings habits appear to suffer - something that could leave them in need of a quick home sale when they reach retirement age. Increased financial responsibilities such as raising children, paying higher mortgages and dealing with debts could all contribute to this mid-life savings dip. Additionally, despite having slightly lower aspirations for nest egg savings, women tend to have a greater shortfall on retirement, falling £32,900 short of their goals.

Bruno Genovese, head of savings at HSBC, said the expense of retirement means people will appreciate having a substantial savings pot to supplement their regular income. “The increased financial responsibility that many people face around their mid 30s, such as buying a house, having children and taking on more debt, seems to be hindering long term savings habits, despite the good intentions,” he added.

Scots pay 7% less to buy than to rent

Property buyers north of the border are paying, on average, seven per cent less to live in their homes than their counterparts in rented accommodation. According to a survey by the Bank of Scotland, the average monthly cost of a three-bedroom house was £505 in June, £40 lower than the typical rent of £545. In the last year, the cost of renting has increased by one per cent in Scotland, while buying costs have fallen by six per cent.

However, despite the increasing affordability of Scottish properties, the number of buyers in the market has almost halved over the last four years. There were 46,200 buyers with a mortgage in the 12 months to June 2012, according to the research, compared with 86,200 in June 2008.

“It is clearly encouraging that there has been a significant decline in the cost of buying a home for those able to enter the Scottish housing market since 2008,” said Nitesh Patel, housing economist at the Bank of Scotland. “The improvement is due to a combination of lower mortgage rates and declining house prices. In contrast, market conditions for renters have deteriorated slightly as rents have risen in the past two years.”

Landlords looking at greater variety of properties

Property buyers seeking a solid investment are most likely to look for terraced houses and flats, according to new research from buy-to-let lender Paragon Mortgages. In a quarterly survey of landlords, 58 per cent said they planned to invest in flats or maisonettes during the fourth quarter of 2012, and the same proportion were interested in adding terraced houses to their portfolios.

Semi-detached houses and detached houses were the next most popular types of property at 30 per cent and 21 per cent of landlords, followed by bungalows and multi-unit blocks. Overall, 16 per cent of landlords are planning to increase the size of their portfolios in the fourth quarter of the year, with professional landlords the most likely to buy more property than their smaller-scale counterparts.

“It is very encouraging to see private landlords looking to invest in a wider variety of property types,” said John Heron, managing director of Paragon Mortgages. “This may well be in response to the fact that we are starting to see higher demand for larger rented properties from families who are choosing the private rented sector because they do not want to, or cannot buy in today’s difficult economic environment.”

More towns named as Portas Pilots

Almost 400 towns are set to win a share of a package of government support designed to revive the high streets, housing minister Grant Shapps has announced. An additional 15 Portas Pilots - towns that will trial the recommendations of high street tsar Mary Portas - have been announced, taking the total to 27. High streets that sign up to become Town Team Partners will receive backing from a multi-million pound support programme, as well as gaining access to events and workshops addressing the issues facing town centres.

Town Teams will also meet with one another regularly to share their experiences and receive mentoring support from experts. The support package is part of a response to Mary Portas’ review of the high street last December, which set out a plan to reinvigorate the nation’s shopping centres - something that may also benefit commercial property buyers looking for a safe investment.

“The response to the challenge created by the government’s response to the Mary Portas report from communities in towns and cities across England was enormous. It is terrific to see the government acknowledging that groundswell of activity in such a positive way,” said Martin Blackwell, chief executive of the Association of Town Centre Management.

More people seek help with payday loans

Recent figures from the Money Advice Trust’s National Debtline show that calls to the service over payday loans have more than doubled in the past year, indicating that more people than ever are having trouble managing their finances. In the last six months, the charity has logged 9,500 calls for help with payday loans: financial products which are typically easy to get but come with high rates of interest.

Joanna Elson, chief executive of the Money Advice Trust, said it is vital that the payday loan industry is scrutinised by the government and made to adhere to certain standards to prevent more people from falling into a cycle of debt - something which can leave them unable to pay their mortgage and in need of a fast home sale.

“We have several areas of particular concern around payday loans and the new codes have done little to address these issues. Ultimately, unless a single code of practice binding on all lenders is put in place, clear protection for consumers is unlikely to be achieved,” she said.

The Money Advice Trust recommends that anybody struggling with debt seeks free, impartial advice on their situation before taking action, and tries to avoid borrowing more to solve their problems.

East End house prices get Olympics boost

House prices in the East End of London have long been expected to do well out of the upcoming Olympic Games, and a new report from Lloyds TSB has revealed the extent of the borough’s fortunes. Property buyers in the East End have seen prices rise by more than £200 a week since London was awarded the Games, adding an impressive £70,000 on average since 2005, outperforming the national market in the past year.

In March, the average house price across the 14 postal districts closest to the main site for the London 2012 Olympic and Paralympic Games stood at £273,157, and has risen by 1.6 per cent in the past year compared with a 2.2 per cent fall nationally in England and Wales. Dalston is the most expensive location, with the average house price standing at £355,963.

Suren Thiru, housing economist at Lloyds TSB, said: “This partly reflects greater interest in these locations from both buyers and investors emanating from the award of the Games and the large scale regeneration taking place there, including improved transport links.

“However, the real Olympic legacy for the East London property market may well only be seen long after the closing ceremony as the dramatic transformation of this part of the capital is completed.”

Adults rely on Bank of Mum and Dad to age 38

More and more adults are receiving financial help from their parents for basic living costs as well as weddings, property buying and education, according to a recent study by LV=. The survey revealed that parents in the UK are likely to contribute an average of £2,103 towards each child’s basic living costs every year, as well as £9,476 per child on big-ticket items and events over the course of their lifetimes.

In fact, it isn’t until people reach the age of 38 that they are expected to be financially independent, while over a quarter (28 per cent) of parents expect to be supporting their children throughout their entire lives. According to the study, the average age of a first-time buyer in the UK is also now 38, and this is predicted to rise to 41 by 2025.

Mark Jones, head of protection at LV=, said: “Bringing up a child is expensive and for millions the cost doesn’t stop when your child turns 21. In fact the Bank of Mum and Dad continues to foot the bill well into adulthood. Young people are leaving university with large debts, youth unemployment is high and property is unaffordable for many. Many parents won’t have considered how their kids would continue to cope if they could no longer support them financially.”

Mortgage lending competition heats up

Mortgage providers have been competing among themselves to offer property buyers more tempting deals in the past few weeks, and customers now have their pick of a few competitive products.

Santander launched a “best buy” fixed-rate mortgage of 2.99 per cent for its existing current account and loyal mover customers who want to purchase a new home or remortgage with a 40 per cent deposit. The term is fixed for five years with a £1,495 fee, which can be added to the mortgage. “It’s really exciting to be able to offer exclusively our existing current account and loyal mover customers such a low mortgage rate giving them peace of mind for the next five years,” said Phil Cliff, director of Santander Mortgages.

Meanwhile, Barclays has lowered six of its fixed-rate mortgages by up to 0.3 per cent, as well as introducing a new two-year package at 3.29 per cent and 70 per cent loan-to-value, with no fee. Barclays’ two-year fixed-rate mortgage at 60 per cent loan-to-value will drop to 3.09 per cent.

Finally, Nationwide has also reduced rates across its range of fixed-rate and tracker products and now offers a five-year fixed-rate deal at 3.39 per cent with a 30 per cent deposit. “These latest cuts ensure our popular range of fixed rate mortgages remain very competitive,” said Tracie Pearce, head of group mortgages at Nationwide.

Mortgage lending dips in June

Gross mortgage lending declined in June by five per cent compared with the preceding month, the latest figures from the Council of Mortgage Lenders (CML) have revealed, indicating that activity from property buyers declined during the month. In total, £11.9 billion was lent for house purchases during the month, compared with £12.5 billion in May.

However, lending for the first half of the year totalled £67.9 billion, seven per cent higher than the same period in 2011. “Mortgage lending has experienced something of a see-saw pattern over recent months, largely reflecting the short-term spike and subsequent trough in house purchase activity associated with the ending of the stamp duty concession for first-time buyers in late March,” said Bob Pannell, chief economist at the CML. “Weaker mortgage lending in June points to a more subdued tone for the housing market in line with that for the wider economy.”

He went on to say that the recent launch of the Funding for Lending scheme, a government initiative designed to make mortgages cheaper and more plentiful for individuals and businesses, may help to stave off a further contraction in lending over the next 18 months. Funding for Lending will provide banks with money at low interest rates over a four-year period, directly linked to the amount they lend, in an effort to encourage the availability of loans.

Buying Houses since 1972