Stamp Duty Exemption

In the chancellor's recent budget, Gordan Brown abolished Stamp Duty relief, (4%) from commercial property in disadvantaged areas. This will now no doubt affect the purchase price of some of the properties that previously qualified for the tax exemption.

Peter Cunliffe auctioneer at Jones Lang Lasalle says: "The abolishment of stamp duty relief will not detract private investors desire to buy commercial property, nor vendors desire to sell. Stamp duty remains low, while the economy is in a good state. Furthermore no other form of investment offers medium to long-term returns like commercial property, consequently private investors continue to perceive commercial property as a safe investment haven."

Despite a general slowdown in the property market, asking prices for UK homes rose again last month, according to Rightmove.

It may well turn out that many sellers and estate agents are being over-optimistic, by holding such high price expectations.

Rightmove found that there are almost twice as many properties coming on to the market, as there are those coming off.

Miles Shipside, commercial director at Rightmove, says: "Since the new year, over-optimistic sellers and estate agents competing for market share of new instructions have pushed asking prices up again. It defies commercial logic that over-supply of property should lead to more competitive pricing,"

Kate Barker, who was commissioned by the Government to investigate the housing market says: "While UK house prices are certainly at historically high levels at present, relative to incomes, there are factors which support an increased equilibrium price: lower interest rates lowering the initial cost of a mortgage; low long-term real interest rates (which have increased the asset value of housing); an inadequate supply of new build; increased use of housing as a savings vehicle for pensions.

"There are some signs which might indicate a housing bubble - increased private buying of housing for letting with the expectation of capital gain, and parents using equity from their own homes to assist children with deposits - but it is not clear how far these may have contributed to higher prices," she added.

One month after introducing an Islamic current account, Lloyds TSB will today launch a home finance product which is compliant with sharia law today.

The facility is an alternative to a traditional mortgage as it conforms with Islamic law, forbidding both the payment and receipt of interest. Rather than lending money to a customer to buy a property, the bank buys a home for the customer, who then pays the purchase price in monthly instalments.

Yields continue to rise steadily according to Paragon Mortgages' March Buy-to-Let Index. The latest report reveals that yields rose for the second month in a row to 6.82%, up from 6.76% last month.

The steady rise in yields is due to a significant pick-up in rents achieved by landlords since last summer, while property values have stabilised. The average rent has risen from £9,524 in August 2004 to £10,520 in February 2005 - an increase of just under £1,000 in 6 months.

John Heron, managing director of Paragon Mortgages, says: "With demand for rented accommodation from tenants steady or growing in many areas and this demand not matched by supply, landlords have been able to achieve higher rents and therefore higher rental yields.

"Whilst owner-occupiers have been biding their time, investors have been growing their portfolios from an average of 11 properties last May to a current average of 13," he adds.