Property businesses are urging Chancellor John Healey to avoid further tax increases on housing in next month’s Budget as weak buyer demand continues to weigh on the market.
The warning comes amid speculation that the Government could lower the threshold for its planned mansion tax from £2m to £1.5m, potentially bringing significantly more properties into its scope.
Capital gains tax changes have also been floated ahead of the 28 October Budget, including proposals to bring rates closer to those charged on income.
Meanwhile, latest RICS figures show buyer demand remains subdued, with its August survey recording a net balance of -19% for new buyer enquiries and -17% for agreed sales.
TAX UNCERTAINTY
Nigel Bishop (main picture, inset left) of buying agency Recoco Property Search says: “The Chancellor is under pressure to find balanced solutions that address inflation but he really should refrain from tax changes affecting the housing market.
“Buyer demand has been incredibly weak this year, leaving sellers struggling to receive serious offers. Rumours of the Mansion Tax threshold being lowered would add fuel to the flame and have crippling effects on an already stagnant property market.
“Speculation about CGT rates being adjusted is another concern. This would have a direct impact on sellers of second homes and investment properties; a segment of the market that’s already been hit by the previous Council Tax increase.
“We don’t need another round of tax jeopardy – what we need is stability that encourages house hunters to proceed with their search.”
FIRST-TIME BUYERS
James Nightingall (main picture, inset right) of HomeFinder AI argues the Chancellor should instead consider tax measures aimed at stimulating demand, particularly among first-time buyers.
First-time buyer stamp duty relief currently means no tax is charged on the first £300,000 of an eligible purchase, with 5% payable between £300,001 and £500,000. Purchases above £500,000 do not qualify for the relief.
Official figures put the average London first-time buyer purchase at £467,000 in July, compared with £550,000 across the capital’s market as a whole.
Nightingall says: “Inflation is up, affordable mortgage products are limited and, from April 2027, it will be harder to save a deposit thanks to the Cash ISA allowance dropping from £20,000 to just £12,000.
“Unsurprisingly, the property market has seen a decline in buyer motivation. To get the market moving again, the Chancellor should consider tax incentives; particularly for first-time buyers.
“One suggestion is to increase the current SDLT exemption threshold of £300,000.”
