New investment tax breaks are good news for SMEs

Smaller businesses can make substantial savings as a result of sweeping changes to the tax relief system for investment in assets such as plant and machinery.

From April 2008, spending on capital items will qualify for a 100 per cent tax break, up to an annual limit of £50,000. This will create opportunities for smaller businesses to significantly reduce their tax bills by deferring purchases until next tax year when this generous tax break becomes available.

“The present system means 100 per cent allowances are normally available only on certain environmentally friendly equipment,” explained David Teale, director of tax at UK accountants and business advisers DTE.

“Otherwise, the current relief for plant and machinery is usually 50 per cent for smaller businesses in the first year after purchase. So taking advantage of the 100 per cent relief on spending up to the £50,000 annual limit can add significantly to your bottom line performance – but only from 6 April 2008.”

Continue reading New investment tax breaks are good news for SMEs…

‘Unsafe homes’ warning to landlords

LANDLORDS who put their tenants at risk by failing to ensure their homes are safe are being warned by Bolton Council that they could face hefty fines.

The warning comes after Britannia Estates Lettings Ltd was fined £4,000 by Bolton Magistrates for failing to keep two family homes up to legal standards.

Rob Devey, Bolton Evening News - 26 December 2007

No representative of the company, which is based in Derby Street, Daubhill, turned up to the court hearing.

advertisementBut the firm was found guilty in its absence and was also ordered to pay £973 in costs.

The families complained to the council about problems with their properties in Charles Holden Street, Deane, and Nelson Street, Burnden.

When they inspected the properties, council officers found a poorly maintained gas fire and boilers, faulty electrical lights, loose carpet and poor lighting on the stairs - full article

Half Truths

Weak mortgage lending is far from being all bad news

Banks and mortgage lenders will be disappointed to learn that Britons borrowed less to buy houses in November than in any month since July 2005. So will many homeowners. It suggests that recent falls in the price of houses may continue. It indicates that consumer confidence is waning, and adds to concerns about the financial outlook. Much of the British economy is dependent on spending by individuals. If homeowners feel poorer, the impact may be felt widely. Bank of England data yesterday certainly showed homeowners much less eager to dig into accumulated equity in their properties. That stems the flow of cash that provides fuel for all sort of livelihoods.

The Times - December 28, 2007

It would be a mistake, however, to assume that the numbers are universally depressing. There may be at least as many people pleased by such “weakness” as there are those who are distressed. Those worried about the strains on banks and other financial institutions caused by the credit crunch may be relieved. By lending less, banks reduce the risk of incurring losses in the event that some loans turn sour. It suggests that individuals and institutions are becoming more cautious about debt. This is good in itself, and more so in in the context of fears that the housing market is a bubble inflating to bursting point. Evidence provided by yesterday’s mortgage lending numbers suggests that the pressure is being gently released. House prices, so far at least, are slipping, not collapsing - full article

House prices in 2008 - up or down?

The new year may bring cheer to those priced out of the market

House prices could be even more of a talking point than usual in 2008.

Ian Pollock, Personal finance reporter, BBC News - 28 December 2007

For the first time since 1995, this could be a year in which property prices actually fall.

However, that is not what most experts are predicting.

On the whole they think that prices will be flat, or may rise slightly over the next 12 months - full article

2007 an eventful year for lettings

2007 was an eventful year for the lettings market, characterised by exceptionally strong demand from tenants; new legislation to protect tenants’ deposits; a series of interest rate rises; and ongoing debate over the future of the market.

Says Paul Weller, managing director of Leaders – one of the UK’s largest independently owned letting specialists: “With interest rate rises, the credit-crunch crisis and a slowing sales market, there has been a lot of doom mongering about buy to let in recent months. However having 32 branches across the South East gives us an excellent picture of the industry and we see a buoyant market with good long-term prospects.

“Both rents and property values in our areas have risen over the past 12 months and there is no sign of the strong tenant demand abating. In the current market, good quality properties are letting very quickly, and people are staying in rented accommodation longer, with the average tenancy lasting almost 2 years, regardless of the length of their initial agreement which is commonly for six months.

”We believe tenant demand will remain high, not only from those who cannot afford to buy their own homes, but also from people who prefer to rent for convenience and flexibility; from those waiting to see what happens in the sales market; and from the many immigrants coming to live and work in the UK.”

Continue reading 2007 an eventful year for lettings…

RICS - the worst may be over

The Royal Insitute of Chartered Surveyors(RICS) believes that the heaviest falls in house prices are behind us, going against current opinion of more house price falls in 2008.

Housefund.co.uk - 21 December 2007

RICS said that the Bank of England’s commitment to keep the market liquid will mean that interest rates will be cut back to five per cent during the first 6 months of 2008, making any negative price growth in the market short-lived.

Repossessions to increase
However, RICS said that repossessions are set to rise from 30,000 to 45,000, but emphasised that the current employment situation is strong enough to keep the market resilient and avoid any repeat of 80,000 repossessions back in the 1990s.

And those set to prosper the most from the softening conditions could be first-time buyers, who could add a much-needed market boost should they capitalise on lower house prices - full article

Sub-prime lending undermining home ownership, says Citizens Advice report

A new report today from Citizens Advice reveals how the dream of home ownership has turned sour for many people on low incomes who have taken out mortgages or secured loans with sub-prime lenders only to end up deep in debt and facing the prospect of homelessness.

Set up to fail shows how dubious advice from brokers, irresponsible lending decisions and aggressive arrears management by sub-prime lenders are driving the current increase in mortgage arrears, court action and repossessions. It also shows how the regulation and safety nets currently in place are failing to protect vulnerable borrowers.

Citizens Advice concludes that government policy encouraging more people on lower incomes to buy their own homes, while a laudable aim, can only work if the problems its report highlights are addressed. The charity makes a series of recommendations which it believes would make home ownership more sustainable for those for whom at present it remains a high risk undertaking - full article

Oversupply to hit novice investors

The oversupply of flats in city centres is a problem likely to affect those looking for quick gains but not long-term investors, landlordzone.co.uk has said.

HotProperty.co.uk - 20 December 2007

The web portal has said that investors with long-term goals will not be concerned by short-term price drops, and may even be able to use the situation to their advantage when it comes to property investment.

But for inexperienced investors it is a different story, according to website editor Tom Entwistle - full article

Private investor fund blocks cash withdrawals

Friends Provident yesterday became the first property company in the current downturn to stop private investors withdrawing cash from a property fund.

Property Week - 21 December 2007

More than 118,000 investors in its £1.2bn pension and life-linked property fund have been told that they will have to wait up to six months if they want to redeem their cash.

The move is a sign of how decreased returns have led to the ‘man on the street’ turning against property, with redemptions having increased sharply in most private investor funds since the summer.

Fund managers in the sector such as New Star have commented on how bad news causes redemption levels to rise, so the actions taken by Friends Provident will spark fears that other funds will soon have to follow suit.

Friends Provident said that redemptions from the fund had increased in recent months and it had imposed a ban so it would not have to conduct a fire sale of assets - full article

UK’s economic growth built on unsustainable foundations, new studies say

Britain’s 15-year economic expansion is built on unsustainable foundations that are becoming more exposed as homeowners’ finances are stretched ever tighter, two reports have claimed.

Gabriel Rozenberg, Economics Reporter, The Times - 20 December 2007

Policy Exchange, the centre-right think-tank, says today that the UK’s unprecedented period of consistent growth and low inflation is “more mirage than miracle”. It argues that Britain’s record is worse than its rivals’ and is too reliant on erosion of savings and on rises in debt and immigration.

The report comes as Alliance & Leicester, the mortgage bank, gives warning of deterioration in many households’ finances. Savings rates of mortgage-holders have deteriorated far more quickly than have those of people without mortgages, it said. - Oliver Marc Hartwich, the Policy Exchange chief economist and lead author of the report, said: “Other European economies have recently embarked on a process of economic modernisation.

However, the UK’s tax, spending and regulation policies have gone in the other direction. We need to find more sustainable foundations for our future economic prosperity than house prices and debt.” - full article