Coalition Agreement – Mixed Bag


The end of last week saw Conservative MP Grant Shapps named as the new housing minister.  The first change effecting housing policy sees the scrapping of Labour’s Home Information Packs (HIPS), which comes with mixed feeling within the industry.  Seen as a hinderance and a costly annoyance to sellers, there will also be those within the industry who’s jobs and income relied directly on the provision of the packs.

The new Government, which is proposing an immediate £6bn cut in public spending, have gambled their virginity with a hike in capital gains tax (CGT) from 18% to a proposed 40% in a bid to bring it line with income tax.  With trends and data indicting strong shifts towards the private residential sector, through slow movement of house sales and difficulty in obtaining consumer mortgages, a CGT rise could spell a collossal disaster for the PRS.

“There are currently 3 million households who rely on the PRS for accommodation as the social housing sector is already stretched far beyond their capacity.  A rise in CGT of this magnitude will no doubt lead to a torrent of houses rapidly put on the market as landlords rush to beat the tax rise”, explained Sim Sekhom of Legal 4 Landlords.

The knock-on-effect could well have adverse effects through the buy-to-let industry, deterring buy-to-let investors including the fragile lending sector, which has only recently begun to show some improvement.

Although a CGT change has never been administered mid-year, the coalition agreement does not state when any of these changes are proposed to take place.

Madalena Penny