As many expected, the June 22^nd Emergency Budget brought good news and bad news for the property market, but with an overall positive outcome for estate agents. We look at a summary of the key areas.

Stamp Duty

Despite pressure to reform this area, there has been no change to the current system for Stamp Duty. In particular, the £250,000 ‘break’ for first-time buyers remains in place.

Capital Gains Tax

A rise in Capital Gains Tax (from 18% to 28% for higher-rate taxpayers) poses questions as to how it will affect the buy-to-let market and its attractiveness to property investors.

Much will depend on which groups the tax increase really impacts on, with fears that not just high-earners will end up paying the higher rate. The theory is that those on lower incomes will end up paying the higher 28% rate where the gain, added to their income, pushes them past the threshold.

However, the fact remains that at 28% CGT is still far lower than the rates of three years ago of up to 40%, before the previous government introduced the 18% flat rate. Whilst some landlords will see property investment as less attractive on account of these changes, overall the appeal for most outweighs equities and many would argue this is simply an alignment of the two investment vehicles in terms of taxation.

Whilst the extent of the CGT rise was welcomed (compared to fears of a 40-50% higher rate), what has been even more significant to agents is the speed at which it has been implemented. By announcing the increase immediately, the Government has avoided panic-selling by landlords and second home-owners. There had been concerns that this would have seen the market flooded with properties as investors rushed to sell before the higher rate tax came into effect.

Value Added Tax (VAT)

Increased from 17.5% to 20% as of the start of next year, this is at the head of a number of tax rises that may dent confidence generally when it comes to those looking to buy property. Some may feel that this combined with job insecurity may make it “the wrong time to buy”.

Of course, whilst a concern for estate agents, this trend would simply bolster the already strong rental property market nationwide, currently being enjoyed by letting agents.

In summary, despite tax rises, the budget has been generally positive for estate agents and letting agents with a view that they will not impact too dramatically on market confidence. With the announcements being both swift and clear, there is also a sense that the market now “knows where it is going” and this alone will aid investors in making their informed decisions.

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