Chancellor Jeremy Hunt warned tough times were coming ahead of his Autumn Statement...
In an Autumn Statement aiming to balance tax rises and spending cuts, there is plenty that may affect homeowners, buyers and sellers in the property market.
Homeowners could face higher local authority bills, after Hunt gave town halls effective powers to raise council tax by up to 5%.
This could hit the property market and influence buying and selling decisions.
Dominic Agace, chief executive of agency franchise network Winkworth, suggested it could push those in larger properties who are struggling with rising bills to move to cheaper areas.
He said: “Homeowners, particularly those in large family homes and living in areas with high levels of council tax will feel the effects of a rise in council tax.
“This could be deeply unfair on young families, adding to the growing cost of living burdens as they also manage increased mortgage costs.
“A rise in council tax will combine with the effects of rising energy costs and general costs of living, and could be the catalyst for older homeowners to make the difficult decision to downsize into smaller properties in a lower council tax band and maybe move to an area with a lower council tax levy.”
Changes to Capital Gains Tax (CGT) are likely to be of more concern, particularly for landlords already considering exiting the sector.
The CGT allowance will drop from £12,300 to £6,000 from April 2023 and to £3,000 from April 2024.
Tom Bill, head of UK residential research at Knight Frank, describe this as a further disincentive for landlords.
He said: “It will disproportionately affect landlords of lower-value properties but CGT rates have not been aligned with income tax, so a material drop in demand or a wave of selling is unlikely.
“Landlords have faced a series of tax hikes in recent years but private rented property accounts for one in five of English households.
“At a time when living costs are rising so quickly, policy should remain rooted in economics, encouraging landlords to remain in the sector and keeping downwards pressure on rents.”
Sylvie Harris, director of lettings at INHOUS, added: “For the many landlords who have been planning to dispose of their rental assets due to the raft of legislation and adverse tax changes, the announcement to halve the Capital Gains Tax exemption in 2023 will come as a blow.
“This news will make it less favourable for landlords to sell and they will likely continue to let their properties until the conditions improve. However, tenants will benefit as there is already a shortage of rental properties available on the market.”