The Emergency Budget earlier this week started with some of the cuts and taxes that had been rumoured. We all know this to be a necessary evil, having buried ourselves in debt over recent years.
What applied to the property market?
Capital Gains Tax (CGT)- Rumoured to increase to 40-50%, the actual increase to 28% for higher rate income payers is far more digestible. With fears this would de-stabilise the private rental sector, whilst making investment less rewarding for many in London, this is manageable.
VAT- this will rise to 20% on 1st January 2011. Causing a nominal increase to those using agent and other property related professional services alike, the 2.5% increase will dent the pocket without, hopefully, over-burdening.
Council Tax- this will be frozen for a year in 2011. This is good news for the private rental sector avoiding increase in living costs for tenants. This helps keep this sector more viable and should help reduce rental defaults.
Unemployment- stats suggest that this should peak this year at just over 8% with a gradual reduction over the next 4-5 years as the country, and its economy, recovers. As this number does reduce, in theory, this means more viable buyers/renters on the market and therefore we should see a gradual growth over this period of demand across the board.
Overall, many would agree that the property sector has escaped relatively unscathed. How we fair in future budgets, and how well these measures work, remains to be seen.
Comments by Labour attacking many of these measures seemed ridiculous- the government that had systematically buried us up to failing point in debt still seemed to think borrowing more was the way forward! I know they have to comment, and couldn’t possibly agree, but really?? Maybe you should have just kept your heads down this time and tried to let us all forget that it was you that put us in this mess in the first place!
