Emergency Budget 2010: More Property Industry Reactions

Yesterday's Emergency Budget attracted a huge response from the property industry. The What House? press team has been inundated with press releases, comments, statements and further requests for interviews.

Yesterday's Property Industry Response to the Emergency Budget was also popular with readers - attracting over 5,500 reads. Here are further property industry Budget reactions:

David Salusbury, chairman of the National Landlords Association, said: "Capital Gains Tax [CGT] for higher and additional rate taxpayers will rise from 18% to 28%. Although it is disappointing that the Chancellor has failed to recognise the distinction between long-term investment in residential property and short-term speculation, the immediate increase is not as high as the trailed 40%.

"Nevertheless, the increased rate will affect the vast majority of landlords who supplement a modest income with their lettings activity."

Dawn Carritt of the London Country office of Jackson-Stops & Staff commented: ‘The emergency budget has delivered no great surprises to the property industry but will undoubtedly have a long term impact as taxpayers adjust to the new life of austerity, something that was until recently associated with the 1930's and late 1940's into the 1950's.

"On the face of it, initially it looks as though the buy to let investors will be hit as undoubtedly part of the attraction in investing in a property portfolio was the capital gain. Whether this will be a long term withdrawal is questionable as if the number of properties available through private landlords diminishes significantly and funding for public sector rental properties is not available the simple rule of supply and demand will push up rental income."

Jonathan Bramwell, head of Country at Prime Purchase, said: "As many of our clients own their own businesses, the substantial exemptions for business assets, by way of an extension of Entrepreneur's Relief [at 10%], to be extended to the first £5 million of lifetime gains - will be a very welcome exemption"

"Property owners who expected CGT to rise to 40% or 50% and who rushed through sales of second homes may now regret that decision. And we are now unlikely to see a glut of property of second homes coming to the market"

William Marsden-Smedley, director of William Marsden-Smedley, commented: "The cost of VAT will increase to 20%, though VAT-exempt items will remain so. This may impact on professional fees in the mainstream market although it is unlikely to deter a significant number of vendors".

"Again from our clients' perspective, the news that Corporation Tax rate [currently at 28%] will be reduced by 1% each year to lead to a rate of 24% in 2014/15, is positive.

"Perhaps the biggest surprise was that the proposals by the previous government to remove the tax benefits of furnished holiday properties are to be scrapped. It is assumed that this will allow for the extension of the tax advantages to properties outside the UK but within the EU."

Kate Stinchcombe-Gillies, spokesperson for HolidayLettings, said: "As hoped, the first Con-Lib Budget has rejected Labour's earlier proposed withdrawal of furnished holiday lettings tax reliefs and Labour's plans will not be implemented. Instead, the Government has called for a consultation of the current rules over the summer to ensure that the rules are both in line with EU law and are ‘fiscally responsible' for the future of the economy. They propose to achieve these goals by changing the eligibility thresholds and restricting the use of loss relief, and to apply these changes at the start of the 2011/12 tax year next April. Those who earn a livelihood from holiday lettings will benefit the most."

James Thomas, head of residential development and investment at Jones Lang LaSalle, commented: "The increase in CGT was one of the most widely forecast changes in the emergency Budget but today's announcement was not as severe as anticipated, with some proposing a rise in line with income tax at 40 or 50%. The clarity and instantaneous nature of the CGT hike is good news for the housing market. However, the 10% rise will not support or encourage investment in the private rental sector.

"The rise in CGT sets a precedent for the housing market which might cause investors to be wary around punitive taxation affecting investment in UK housing. With cross-party support of the increase, CGT will become a disincentive for investment in housing, with buy-to-let and the private rental sector facing a higher tax burden in the future."

Rob Bruce, head of residential research at Jones Lang LaSalle, said: "The emergency Budget announcement will have done little to calm the nerves of housing developers who were looking for the government to honour spending commitments on new housing schemes. The proposed reduction in government department budgets by 25% over four years will not help those waiting on housing lists or those unable to buy their own homes. The reduced budget at the Department of Communities and Local Government (DCLG) brings into doubt an increasing number of housing projects. The DCLG has stated already there is a £780 million ‘hole' in required funding and implications for further cuts will be met with disappointment."

Natalia Gameson, property journalist and editor of Energyrethinking.org, said: "From a social perspective, I agree totally with limiting housing benefit to £400 a week for a four-bedroom house. Tenants paying more than this - on a scale going up to £2,000 a week for five-bedroom homes in central London - don't really have much incentive to return to the job market, as they'd never otherwise be able to afford such rents.

However, I hope this limit is accompanied by a concerted look at how housing needs are being met, particularly in the capital. The era of one and two bedroom flats, both for social and private housing, must be reevaluated to safeguard against huge future shortages - and huge future deficits to pay for the outcomes of poor planning policy."

Yasser Elkaffass, director of Adam Hayes estate agents in North London, commented: "We are delighted that the hike in CGT has come into play immediately, as it will prevent a sudden influx of homes coming onto the market. This could have led to house price falls."

Kevin Wilkes, managing director of the Worldwide Property Group, commented: "With the Chancellor announcing a much lower than expected CGT rise, many owners of second properties will be somewhat relieved. This rise will of course impact property investors on higher rate income tax, but generally the fear of such dramatic increases has proved unfounded. I welcome the move to leave CGT unchanged for those people in lower tax brackets which will result in many being untouched by this rise. Property investment offers an exceptional route to greater financial independence for many people, and sensible investors will have factored changes such as this increase into their investment strategies. Overall this was a very brave budget which has delivered the beginnings of a clear strategy to return the country to sustainable growth and better fiscal management."

Andrew Rettie of Strutt & Parker's Edinburgh office said: "I think this is extremely measured and a less frightening and draconian Budget than expected by the public.

"From a property point of view it is straightforward. It is good news that CGT has risen to just 28% for top rate tax payers rather than the predicted 40% or 50%, even if it is being brought in earlier than had been hoped. The increase will hit those with second homes or those with buy to let investments but only if they sell and the majority of owners take a long term view rather than looking for short term gain.

"Estate owners planning to sell in the near future will be more concerned as a 10% increase in CGT will translate into a significant amount of money where there are several properties involved. The rise in CGT will also impact short term investors and developers who will no longer be able to trade in the same way as before without paying significant tax."

Read More Property Industry Responses to Yesterday's Emergency Budget Announcement.