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 "CGT
was the main story, as the proposed increase was heavily trailed in advance.
In reality the rise to 28% for high-rate tax payers is a non-issue for
the housing market.
"The rise is coming into play overnight - so there will be no sudden
sell-off of second homes or investment properties. The new rate takes
us back to a similar rate to where we were under the pre-2008 rules, when
taper relief was able to reduce a 40% headline rate of CGT to 24%.
"With higher-rate CGT at 28% the argument for property investment
still looks strong, and capital gains still compare very favourably with
income tax at 40%.
"The other issue of note is that with strong GDP growth forecasts
for 2011 and 2012 - the inference is that the Bank of England will be
encouraged to maintain a very loose monetary policy for longer than recently
expected, suggesting interest rates at current levels could be maintained
for longer.
"This would underpin house prices and also contribute to ongoing
low supply in the market."
*Liam Bailey is head of Knight Frank residential research
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Newsletter:
25 May 2012 2012 to 1 June 2012 - Dullstroom, Mpumalanga, South Africa
