Citywire printed articles sponsored by:
View the article online at http://citywire.co.uk/money/article/a408871
Budget tax rises will hit property market, warns CML
The Council of Mortgage Lenders warns that the Budget hike in VAT and other taxes will sap house-buyer's confidence
Markets
The VAT hike risks further weakening house-buyer confidence and putting pressure on residential property prices, the Council of Mortgage Lenders’ has warned.
Director general Michael Coogan the rise in VAT and other taxes will mean that the ‘age of aspiration’ recently referred to by the housing minister will be even further out of the grasp many would-be homeowners.
‘In the short term pain is likely, as the effect of tax rises on household finances dampens the already fragile recovery in house-buyers' confidence, house-building is affected, and support for housing costs across all tenures is curtailed,’ he said.
Stuart Law, chief executive of Assetz, believes that many buy-to-let landlords and professional investors will be undeterred, as most buy into the asset class to receive a steady income stream.
He added: ‘Speculative investors are unlikely to sell off their buy to let property once this new tax rate is introduced at midnight tonight. Professional property investors are generally looking at the long-term benefits and see the importance of the regular income rather than short term capital gains.’
Tools from Citywire Money
Today's articles
- 5 reasons you should worry about Greece and the euro
- Market blog: FTSE inches up as G8 leaders eye growth
- Smart Investor: not even the euro crisis makes me like gold
- Investment trusts: 10 great dividend growers
- Pension saving hits new low but 'unrealistic expectations' persist
- Diary of a Dumb Investor: bigger, badder… dumber?
- Asian equities gain as China turns focus towards growth
- Citywire Top Stocks Daily News Digest
9 comments so far. Why not have your say?
Truth Searcher
Jun 22, 2010 at 16:21
Obligatory winge from the CML. The housing market will just have to allow the only beneficial thing to happen, the one all the vested interests don't want to happen. Yes, prices will drop and help all the poorer first timers onto the market. Unfortunately for the CML and chums, this doesn't line their pockets quite as much as they would like.
report thisAnthony Williams
Jun 22, 2010 at 16:30
not enough to penalise the banks. thave still got our money
report thisAnonymous 1 needed this 'off the record'
Jun 22, 2010 at 16:37
VAT is not applied to existing (already built) properties. It may apply to Estate agent fees and legal fees but I doubt people will change house purchase behaviour on the back of a couple hundred extra VAT pounds.
New built properties will have VAT applied so will be relatively more expensive. The shortage of supply is the key issue and this will continue as far as I can tell.
Can we please ask the CML to provide a more balanced and well thought out winge before they get reported...
report thisAnonymous 2 needed this 'off the record'
Jun 22, 2010 at 16:42
As I understand ita brand new house VAT is recoverable - so won;t affect new builds. It will affect cost of extensions improvements etc
report thisAnonymous 3 needed this 'off the record'
Jun 22, 2010 at 16:50
"As I understand ita brand new house VAT is recoverable - so won;t affect new builds. It will affect cost of extensions improvements etc "
The buyer still pays it! So that means house prices are more expensive. looks like the buy to let parasites have got off lightly. Whereas actual businesses like property developers are being hit by more VAT.
report thisjames goddard
Jun 22, 2010 at 16:51
that should read NEW house prices are more expensive as a result of VAT increases
report thisAnonymous 4 needed this 'off the record'
Jun 22, 2010 at 17:16
As a BTL "parasite" of 24 years standing (providing low cost rentals for young families starting out in life) I am obviously immensely disappointed that I will only have to pay CGT @ 18% when I decide to sell.
Thank God New Labour managed to do one decent thing to help us capitalist lackeys before bankrupting the country.
Hurrah for Mr Darling and good for George - what a splendid couple of fellows.
Toodle Pip
report thisJonathan
Jun 22, 2010 at 17:31
Is a drop in house prices a good thing or a bad thing?
report thisGrumpy Old Man
Jun 22, 2010 at 17:47
CML drivel.House prices are too high....Fact.(based on average earnings to house price ratio)
Taxes have nothing to do with putting,'age of aspiration'(whatever that means),out of reach of would be homeowners.It is the general level of house prices that prevents would be purchasers being able to put a roof over their heads without crippling themselves financially for years.
Why should we want price stability in all things except ruddy houses....why should they go up all the time?It is the rise in house prices that led a lot of people to think they were 'rich' and so remortgaged and foolishly spent money from an illusory profit that didn't really exist.Wiser souls paid off the mortgage and gained freedom that way!
A house should once again be looked at as primarily a home,not a cash machine!
report thisleave a comment
Please sign in here or register here to comment. It is free to register and only takes a minute or two.