Investors - worried that the Chancellor might back-track on plans to cut capital gains tax (CGT) on property - will be heartened that Alistair Darling is pressing ahead. From April, people who own second or rental homes will have their CGT bill cut from as much as 40 per cent of their profits to just 18 per cent.
Agents are divided on whether buy-to-let investors, who favour the cheaper homes once snapped up by first-time buyers, will choose to exit the market or will sink the extra profits into yet more properties for renovation and eventual resale.
Some believe that the new rules may offer overwhelmed amateur investors a way out. Neil Chegwidden, head of residential research at Jones Lang LaSalle, notes that the new regime will most benefit those who purchased within the past two years (and would have been liable for the highest rates of CGT under the current system). It is this group of investors - many of them beginners, seduced by the easy money others made in the housing market, but now aware that the market is shakier - who will be most grateful for an opportunity for a low-cost exit.
Sadly, owner-occupiers who might have been hoping to join the fray are increasingly frustrated by a lack of easy credit. Buyers are increasingly facing sudden demands for larger deposits from lenders, a factor that has caused some transactions to fail. |
