The Chancellor started by reaffirming the need for stability in the UK economy and finished in Churchillian style with phrases such as:

‘No people will strive as the British will strive.’
‘No country will adapt as the British will adapt.’
‘This country borrowed its way into trouble. Now we’re going to earn our way out.’

Towards the end of last year the Government issued the majority of the clauses, in draft, of Finance Bill 2012 together with updates on consultations. The publication of the draft Finance Bill clauses is part of the Government’s improvements in the way tax policy is developed, communicated and legislated. The Budget updates some of these previous announcements and also proposes further measures. Some of these changes apply from April 2012 and some take effect at a later date, so the timing needs to be carefully considered.

Main Budget proposals

• A further increase in the personal allowance but with a reduction in the basic rate band from April 2013.
• An additional 1% cut in the main rate of corporation tax to 24% from April 2012.
• A reduction in the additional rate of income tax from 50% to 45% from April 2013.
• Details of how Child Benefit will be taxed on those with income in excess of £50,000.
• Proposals for tax simplification for smaller businesses.
• Consultation on the introduction of a general anti-abuse rule.
• Increased Stamp Duty Land Tax on high value residential properties.

Previous announcements

Some of the changes detailed in this summary have been the subject of earlier announcements. Here is a reminder of some of the more important ones:

• The introduction of a Statutory Residence Test
• Changes for non-domiciled individuals
• Reduced rates of inheritance tax for charitable individuals
• Introduction of the Seed Enterprise Investment Scheme
• Reduction of the Annual Investment Allowance from April 2012
• Changes to the relief available for Research and Development expenditure. 

We will examine what constitutes an HMO, what is driving demand for HMOs and the latest planning rules surrounding HMOs, in addition to giving expert opinion and insight from Mortgage Hounds in-house experts.

Nick Blatcher, Director of mortgagehound.co.uk, says “HMOs are an important component of the private rented sector, particularly for tenants seeking affordable accommodation. Demand for HMOs is set to increase over the coming years and it’s important that supply can keep pace. There are a limited number of specialist lenders who operate in this arena and we have the skills and experience to help landlords expand their portfolios in this area”.

What is an HMO?

An HMO is a property shared by three or more tenants who are not members of the same family and who share amenities, such as a hallway, kitchen, living room, or bedroom. An HMO can typically be a shared house, ‘bedsit’ style accommodation, student housing or boarding houses. A household can consist of a single person not related to anybody in the house.

Who typically lives in an HMOs?

A typical tenant of an HMO is a young single adult, such as a student or somebody claiming housing and other types of benefits. However, growing numbers of young professionals are choosing to live in HMO accommodation.

Do I need a licence to operate an HMO?

HMO  licencing was introduced in 2006. An HMO requires a licence if the property is three or more stories high and is occupied by five or more persons who form more than one household. Local authorities can also apply for selective licencing if they feel that an area is becoming over-populated with HMO properties, so landlords need to check their specific local authority’s policy towards HMOs. All HMOs must meet the property management regulation standards with regard to fire, gas and electrical safety, repairs and amenity provision.

What are the benefits in investing in HMOs?

With several individuals or households in occupation and the property let on a per room basis, HMOs offer the opportunity to generate attractive yields. Research from Paragon shows that HMOs generated an average yield of 7.8% during the second quarter of this year; more than any other property type.

What are the downsides?

Landlords looking to purchase HMOs need to do so with their eyes open. HMOs can be labour intensive and tend to require higher levers of maintenance than standard Buy to Let properties, plus there are statutory implications. There is generally a higher degree of tenant churn so landlords have to find new tenants frequently. Therefore, HMOs are typically best suited to experienced landlords.

Where can I find finance for HMO properties?

Due to its specialist nature there are only a small number of mortgage lenders that cater for HMO properties. Please get in touch and the expert advisers at Mortgage Hound will be happy to guide you.

This measure of the underlying trend has turned negative for the first time since June.

On a monthly basis, house prices increased by 1.2% in October. This continues the highly mixed pattern of monthly price movements this year. There have been five monthly rises, four falls and one month of no change.

The average UK house price in October was marginally higher than at the end of last year. The average price in October was £508 (or +0.3%) higher than in December 2010 on a seasonally adjusted basis, at £163,311.

Annually, prices in October were 1.8% lower as measured by the average for the three months to October against the same period a year earlier. This is the lowest annual fall since December 2010 (-1.6%) and continues the improvement since May when prices were 4.2% lower.

Martin Ellis, housing economist, said: “The housing market has proved highly resilient in recent months despite the weak economic recovery and the deterioration in the outlook for both the UK and global economies.

“Despite these developments, house sales and the supply of properties for sale have remained very stable since late 2010. The prospect of exceptionally low official interest rates over the foreseeable future is likely to continue to support the market in the face of a very difficult economic climate.

“Both prices and activity levels are expected to remain close to current levels over the coming few months.”

Why are we so passionate about men’s health?
* 1 in 9 men will be diagnosed with prostate cancer in their lifetime
* This year 37,000 new cases of the disease will be diagnosed
* 1 in 2 men will be diagnosed with cancer in their lifetime
* 26% of men are less likely to go the doctor compared to women