London Braces Itself For Impending Government Increases In Capital Gains Tax

Indications are that the new Chancellor of the Exchequer, George Osborne is about to raise the CGT rates from 18% upwards. Some scaremongers are suggesting it may well go to 50%!

Estate Agents are of the opinion that if this happens then the purchase of secondary, or “buy to let” houses will be seriously curtailed. Existing rental returns means that landlords are relying on capital returns to make the whole investment work.

Current opinion believes that if the Chancellor goes ahead and raises CGT then the secondary market will slump. New investors into this segment of the market will dry up with the result that rental housing stock will reduce. Already there is a belief that the stock of available rental properties has dropped 50% over the recent months. The immediate result of this is that increases of 10% and more are being seen in new rental offerings.

London has always been a center for the purchase of secondary homes, whether by Londoners or by overseas investors. Government increases in CGT will have to be finely tuned if they are not going to put further problems into the already fragile property market.

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Posted by PNeedham on Jun 5 2010. Filed under Business, Featured News, Finance. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry