CFI: News Review


Fee opportunity for brokers on furnished lets by


Dave Collier, director, CA Tax Solutions


Brokers are increasingly aware that many of their commercial property-owning clients are sitting on size- able unclaimed capital allow- ances amounting to tens or hundreds of thousands of pounds — and that introduc- ing them to companies that specialise in this field can be a new revenue generator. But we won’t labour that point, as it’s been done to death by others. What’s perhaps more inter-


esting to brokers is the type of property that are turning up the most lucrative capital


allowance rebates. according to some research we carried out earlier this month, the properties that are generating the most sizeable tax rebates are hotels, office blocks, care homes, nursing homes and nurseries. one of the main reasons


for this is that these build- ings will generally have good- quality security and sprinkler systems, which can be costly to install and maintain. at the other end of the


scale, properties that are gen- erally less likely to yield up significant unclaimed capital allowances are retail outlets because the tenant’s ac- countants will already have claimed or part-claimed, and industrial buildings, which are often very basic in terms of their infrastructure.


another type of commer-


cial property that can be par- ticularly high-yielding on the capital allowances front is the furnished holiday let. FHLs also happen to be very topi- cal right now, as the tax rules for FHLs are changing in the near future. Because of this, they should be a priority for securing rebates. So what’s happening?


Without drilling down into too much detail, as of 31 Jan- uary 2012, owners of FHLs (located not just in the uK but also the european eco- nomic area) will no longer be able to offset losses made by their FHL against their total income but will have to offset them against profits from the same FHL business. given that very few FHLs actually make a profit, 31 Jan-


uary effectively therefore sig- nals the end of a very valuable tax allowance. if you want to get techni-


cal, the new rules are already in place but 31 January 2012 is when the two year period of grace for owners of FHLs seeking the maximum tax al- lowance ends. So if one of your clients


owns an FHL and qualifies under the old rules then they should be taking a detailed look at their capital allow- ances now to generate as big a historical tax rebate as possi- ble before the end of January that can then be set against their total income. and because it can take


a few months to get reports and surveys done, and liaise with Hmrc, it’s best to act soon.


Bridging and short-term markets hotting up by


Danny Waters, chief


executive officer at Enterprise Finance


With encouraging Q1 figures, even the interruption of holi- days in april did not seem to stop the current momentum within the bridging industry. the bridging finance market continues to go from strength to strength and is increasing in popularity with the mort- gage related community. in particular, we have and will continue to see a surge of new lender entrants which hope to benefit from the perceived high rates of return, quick re- turn of capital and acceptable


risk profile bridging finance has to offer. i am sure that all distribu-


tors and brokers involved in bridging will agree it is vital for the continued growth of the market that lenders try and innovate and do not just compete for vanilla loan ap- plications already being well catered for in the market. With the sub-prime crisis still fresh in the minds of many, and valuable lessons learnt it is unlikely that we are going to see risk departments throw caution to the wind in search of higher lending multiples. However since the start of


the year we have seen bridg- ing lenders take the decision that pricing is the way to gain significant market share and


attract the best quality loan applications. With monthly interest rates now starting at a jaw dropping 0.75%, i doubt that there is much further room for margin cannibalisa- tion before this type of lend- ing becomes un-commercial and fails to price for risk. that said, the drastic reduction in pricing is most definitely meaning that short-term funding is becoming more viable for many and now es- pecially appropriate for active professional investors. even with the recent posi-


tive pricing developments within the space, i believe it is becoming apparent that the size of the bridging market may not have the scale to sat- isfy the plethora of lenders in


the market and their appetite to lend. and as a consequence, we are already starting to see the highly competitive bridg- ing space compel lenders with more flexible funding models to diversify into alternative forms of specialist finance. it will be interesting to see


which asset classes and prod- uct offerings appeal most. i suspect buy-to-let, longer- term second charge lending, commercial mortgages and development finance may all prove popular. in the coming months i


firmly believe that the buoyan- cy of bridging will help stimu- late much needed liquidity in other areas of lending and help give financial services a much needed kick start.


mortgage introducer JUNE 2011 51


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