Capital Gains Tax Alteration To Diminish Transactions And Prices
The approaching alteration to the Capital Gains Allowance might attenuate the property market, causing fewer transactions and potentially lower prices.
Investors’ Perception
Approximately 45% of landlords express apprehension regarding the impending capital gains tax change. This modification could adversely affect the real estate market by reducing transactions and potentially decreasing prices. Consequently, landlords and investors may exercise greater prudence when making investment decisions.
However, another 45% of investors consider the current crisis a real opportunity to act and make better deals while prices decrease.
Impact of Taxes
The implementation of the new Capital Gains Tax in April, coupled with existing limitations on mortgage interest relief and increased stamp duty rates, will substantially influence landlords' and investors' returns from property sales.
Despite the important role of the private rental market in the UK housing sector, offering housing alternatives for those unable to buy properties and serving as a source of income for landlords, the escalating rates are placing considerable strain on landlords.
Approximately 44% of landlords could consider selling their property because of financial challenges aggravated by the effects of stamp duty and the forthcoming tenant reform bill. Data provided by HM Revenue and Customs reveals a £3 billion rise in capital gains tax revenue, while stamp duty witnessed only a £1 billion increase due to the housing market decline.
Positive Outlook
Despite their concerns, 45% of landlords believe now is a good time to invest in the real estate market and buy new homes, and the same number plan to invest in 2023, using a calmer market for better deals.
As a calmer market, they understand lower prices and plenty of possibilities to reinvest their money in sold houses. In general, a crisis can create urgency and motivation for positive change. It allows managers to solve the necessary tasks and speeds up their implementation.
