The new government annouced a change in policies in May

Capital Gains Tax
Just two years after the flat rate Capital Gains Tax (CGT) was introduced by Alistair Darling, it has been revised by the new coalition government. Announced in the emergency budget on 22 June by chancellor George Osborne, the CGT tax will stay at 18 per cent for low and middle income earners, however, top-rate tax payers will pay 28 per cent to help compensate for raising the income tax threshold. The tax applies to non-business assets, which includes buy-to-let properties, second homes and other investments. Bad news for buy-to-let landlords and investors, however, there is a 10 per cent rate for entrepreneurs to cover the first £5 million of gains, and a taper relief system – where taxes are cut for long-term asset holders – could be introduced, providing some relief for those affected. In preparation for the rise, buy-to-let investors are likely to sell off their properties as soon as possible, which could result in a deluge of flats and apartments on the market and a rapid decline in prices. David Salusbury, chairman of the National Landlords Association, says, ‘A tax increase of this nature will act as a barrier to further investment in residential property just at a time when there is an urgent need for more housing.’ However, estate agents are delighted at the introduction of the tax, as second home owners and investors are likely to come out of the market for the short-term and rent their properties, hugely increasing supply to the market. James Hyman of Cluttons says, ‘The uplift in CGT could give the London market the supply it has been crying out for over the past 18 months.’ Second-home owners are less likely to sell off their properties – according to a survey by Knight Frank three-quarters of second homes are purchased with the intention of retiring to the property.

Stamp Duty
After the introduction of the raising of the stamp duty threshold to £250,000 as a temporary two-year measure by Labour, one of the Conservative government’s most popular policies has come into force, making the stamp duty a permanent tax cut for properties under the threshold. Phil Spencer says, ‘There’s no need for first time buyers to pay Stamp Duty, they need to be encouraged rather than hindered. It’s an unnecessary and unfair tax.’ A huge help for first-time buyers struggling to get on the housing ladder, 90 per cent will not have to pay stamp duty tax. Yolande Barnes, head of research at Savills, says, ‘The raising of the stamp duty threshold will enable first-time buyers to enter the market sooner, as they don’t have to save for stamp duty as well as the deposit. Though it should be noted that the threshold is still too low to impact some of the more expensive London and south east markets.’

Mansion and inheritance tax
Labour brought in the mansion tax in March, charging an additional 5 per cent on homes sold for more than £1 million, but the move was widely criticised for being an empty policy simply to gain more votes. The Liberal Democrats were also planning to introduce a 1 per cent mansion tax on properties over £2 million, but thankfully for property owners, the Conservatives binned the mansion tax altogether. Labour froze inheritance tax at a rate of 40 per cent for those left assets of £325,000 and above. The new government will be cutting the inheritance tax and raising the inheritance threshold from £325,000 to £1 million, at a cost of £1.5 billion. However, this has been put on hold for the short-term, as the income tax threshold raise takes priority over all other tax cuts. 

Home Information Packs
The new government swiftly scrapped Home information packs (Hips) in May, welcome news for house sellers and estate agents, who had to pay between £250 and £350 for the packs. The aim was that Hips would speed up the selling process, however, they quickly proved to be an unnecessary cost. The energy performance certificate, which ranks the energy efficiency of a home, will still be required at a cost of £60. Housing Minister Grant Schapps said, ‘By suspending home information packs, it means that home sellers will be able to get on with marketing their home without having to shell out hundreds of pounds upfront. We are committed to greener housing so from now on all that will be required will be a simple energy performance certificate.’

Council tax
Following Scotland’s lead, Britain’s council tax rates will be frozen for at least a year, with plans to freeze them for a second year if local authorities agree. Most are welcoming the tax freeze, however, some local councils are complaining that without additional support, jobs will be at risk. The Labour leader of Oxford City Council, Bob Price said, ‘We have planned for a two per cent increase in the next couple of years, so a freeze would mean our budget would have to be reduced by £300,000 in year one and £600,000 after year two. Services would have to be cut or efficiencies found. It’s equivalent to something like 30 jobs and it would mean we would have to look at increases in car parking fees and leisure fees – and that would make them less accessible to people.’

Local Housing Trusts
Local Housing Trusts are to be constructed, which will shift power from Westminster and allow councils to make decisions on housing involving communities and its individuals. Regional house building targets that were brought in by Labour have been abolished, with decisions on where and how many houses are built returned to local councils. They’ll also have new powers to stop “garden grabbing” – where houses with large gardens are targeted by developers who then buy their home at an inflated price, and build lots of small houses or flats on the land. In the countryside, farmers will be permitted to convert existing buildings into housing, and communities will be able to form trusts to build homes on public land.

Green loans
The environment is high on the agenda of the new government. Smart meters are to be installed in all of Britain’s 26 million homes by 2020. These smart meters will allow people to read energy consumption levels and monitor their gas and electricity usage, making estimated bills a thing of the past. Smart grids dubbed the “electricity networks of the future” are also being implemented. Former energy minister, Lord Hunt said, ‘Smart meters will put power in people’s hands, enabling us all to control how much energy we use, cut emissions and cut bills. Smart grids will help manage the massive shift to low carbon electricity such as wind, nuclear and clean fossil fuels.’ There are also plans to set up a green investment bank, to give people money toward energy efficient home improvements such as solar panels, domestic wind turbines, double-glazing and boiler upgrades.

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