The weekend press has been full of comment about the impact of the suspension of Home Information Packs and also the expected announcement of an increase in the rate of Capital Gains Tax from 18% to 40% in the emergency budget on the 22nd June 2010.
Estate Agent Today has already reported that some agents are reporting the busiest week for new listings in many months following the rapid and largely welcome suspension of Home Information Packs.
Edward Greeves of Morris and Co an accountant that specialises in legal practices says “there is a lot of speculation in the accountancy sector as to how increases in CGT may impact on the buy to let sector. It is clear that many amateur landlords will be concerned that their pension planning will be less effective than they had hoped if CGT rises”. He went on to say that he is sure many will seek to shift to other asset types. Quite how large this shift will be is unclear but potentially it could create additional properties coming to market and more transactions would be positive for conveyancers.
It is also unclear when any CGT change may be implemented from. The Telegraph has reported that it would breach Parliamentary convention for the rate change to be effective at a time that did not coincide with the start of a new tax year. This would imply that any increase in CGT would occur next April.
The market this year has largely been characterised by the number of buyers slightly out numbering the number of sellers. This has caused a trend of slowly increasing prices but volumes of transactions have been relatively flat at historically poor levels. The double impact of CGT increases and HIP suspension could see more sellers coming to the market and lower prices. Conveyancers must hope that this will flow through to increased transaction numbers as prices fall and the mortgage market becomes easier.
At the same time summer is a traditional slow period for housing transactions, the long term interest rate predictions are upwards and the impact of the World Cup is uncertain.
Countrywide has announced “The Big Kick Off” event the largest open house event over the 5th and 6th June to try to tempt buyers into the market just before the World Cup starts and Battens Solicitors have a 20% off offer for first time buyers who use their services during the Summer period.