by Mark Johnston
A new spread of housing developments is springing up in Hampshire, most notably in Southampton and these are looking quite attractive investments. Without singing the praises of Southampton too much, these houses are being built close to the city centre and within easy reach of the beach.
Set in idealist tree-lined roads with easy and convenient rail and road links to the city, Miller Homes is setting up some very attractive new homes. Prices for these semi-detached townhouses are around £299,950 for a three floor “Greenwich” style home.
For affordable housing in the city, you could purchase one for £28,750 on a part buy / part-rent basis from Affinity Sutton. Homes may be secured for possible buyers earning more than £18,000 a year. If you want a two bedroom home a £35,000 property could be secured for a household income of £22,000 or more.
Part-buy / Part-rent properties may become a popular option in the future. The deal means that you buy 25 per cent and the remaining 75 per cent, including rent and service charges work out to be about £200 – £300 per month in addition. These properties are currently free from Stamp Duty or Land Tax and include a £500 contribution towards legal and any valuation charges.
Stamp duty is essentially a tax that is placed on legal documents upon transfer. The original use for the stamp duty was when the government use to place actual stamps or impressions on legal documents to indicate that duty had been paid. These days, Stamp Duty Land Tax (SDLT) is categorised into thresholds as follows:
|Purchase price/lease premium or transfer value||Stamp Duty Land Tax rate||Stamp Duty Land Tax rate for first-time buyers|
|Up to £125,000||0%||0%|
|£125,000 – £250,000||1%||0%|
|£250,000 – £500,000||3%||3%|
|£500,000 – £1 million||4%||4%|
The recent budget published by the UK Government laid out some Stamp Duty reforms and by opening up the previously exempt residential property market to the REIT entities.
The REIT or Real Estate Investment Trust is essentially a tax designation which reduces or eliminates corporation’s income taxes for corporate entities investing in real estate. The structure of the REIT was designed to act in a similar way to the mutual fund facility on individual stocks. The REIT’s are required to dole out 90 per cent their income to their investors; this may very well be taxable. Just like other corporations, the REIT can be under public or private ownership and can be listed on the stock exchange.
With the property market now exposed to such a giant, ready and probably willing to vacuum up vast number of properties, whole streets and probably whole rows of terrace houses, what chance will the first time buyer now have? The changes to the Stamp Duty indicate that there are significant tax breaks for those investing in bulk property investments, what first time buyer / individual has the capital to invest in properties in bulk? That said, these new investments in Southampton still look attractive.
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