Recent figures released by The Land Registry have indicated the cost of a typical flat or apartment in England has fallen between April 2018 and April 2019 by 2.1% compared with detached houses which have risen over the same period by 2.5%.
As with any statistics these are open to interpretation and there are likely to be regional differences across the country. Unfortunately, I haven’t been able to find any statistics locally, but it is interesting to think about some of the reasons behind this statistic and theories as to why there has been a reported fall.
The government are abolishing tax relief on interest for Buy to Let mortgages. A buy to let landlord in 2017 with a rental income on a property of £7,000 per annum and interest payment on their mortgage of £5,000 would be taxed on £2,000. At 40% tax rate this would be in the region of £2,000.
By April 2020 the same landlord will be taxed on the full £7,000 equating to £2,800 so in effect they would be paying out £800 more than they are receiving in rent.
Admittedly this is a rather simplified illustration but it shows Buy to Let Landlords that are highly geared are finding it no longer viable to be in the sector so are selling up increasing the supply of flats for sale.
According to Richard Donnell from Zoopla as reported by the BBC first time buyers want to buy a home that they can stay in for longer than their predecessors. This means they are more likely to push themselves to something bigger and want to “leapfrog” flats.
Some interesting figures from the Land Registry shows the average cost of a flat in Burnley is the cheapest in the country at £54,161 however it is certainly some time since we have seen flats selling for this in Cornwall.
