PricedOut.org.uk Opposes Budget changes to Capital Gains Tax

PricedOut.org.uk Opposes Budget Changes to Capital Gains Tax

The Chancellor's Pre-Budget Report - issued 9th October - includes a radical overhaul of the Capital Gains Tax system. The overhaul includes scrapping the "taper relief" system, whereby a progressively lower percentage of the capital gain on selling a business asset is counted as taxable the longer the asset has been held. Further, the previous structure of 10%, 20% and 40% thresholds with indexation has been scrapped and replaced with an 18% tax overall.

The rationale behind the overhaul has been to make the tax payable by private equity firms and other businesses fairer. In doing so, however, the Chancellor has introduced a major incentive for yet more speculative investment in an already obscenely over-inflated housing market. The very last thing the housing market needs - having not seen inflation dip below double figures for around 7 years - is incentives for more money to be poured into it.

The Prime Minister and Housing Minister have both publicly expressed they want to help first-time-buyers (FTBs) get onto the property ladder. The government also wants to improve social cohesion. And yet this government is the first since the 1950's to oversee a fall in the rate of owner occupation from 70% to 69% this year. They persistently ignore the obvious link between recent levels of property investment and bubble-like house price inflation, despite several other countries worldwide acknowledging this fact. The two-fold effect of lack of housing supply, coupled with over-demand from investors - many simply trying to offset losses in their pensions - has created unsustainable house price inflation and forced thousands of would-be owner occupiers into renting against their will.

The Housing Act of 1988 introduced the Assured Shorthold Tenancy and created conditions which favoured owner occupation and made renting a favourable option for people who wanted flexibility to move home with short notice. Today's families, priced out of owner occupation, no longer want this flexibility and yet they are regularly forced out of their homes under these same tenancy laws with just 2 months' notice when their investing landlords decide to sell up and realise their capital gains. This situation will only become much worse under the new CGT rules. The Government will do nothing to improve social cohesion while this nefarious activity is allowed to continue. Priced Out completely opposes scrapping the incentive offered by "taper relief" for property investors to hold their asset for the long term.

Allowing the housing bubble to rumble on unchecked has created a completely polarised society, divided between people who bought property 5 years ago and people who didn't. Between people forced to pay rent to property investors and the property investors themselves. A generation has been priced out of owner occupation and faces an uncertain future of ever increasing rent long into retirement. The Government must act now to
level the playing field across this new economic divide.

Contact: press@pricedout.org.uk
Website: www.pricedout.org.uk