Property hits pause as fear over new tax burden looms

THE housing market is in limbo as buyers and sellers wait to see what's coming their way in the autumn Budget, which will not be unveiled until November 26. As yet, nobody has any idea what Chancellor Rachel Reeves is going to do.

- By Harvey Jones

The uncertainty risks paralysing activity, as homeowners, landlords and first-time buyers don't know how they will be taxed in the future.

There is talk of scrapping stamp duty and replacing it with a new sales tax on properties worth more than £1.5million, or possibly as little as £500,000. That would not just hit the so-called top end, but feed down the market, particularly in London and the South East where even modest homes command high prices.

Rumours of a mansion tax or higher capital gains tax on buy-to-let and second homes have added to the unease. North London estate agent, Jeremy Leaf, said: "Around one-in-four of our buyers and sellers have paused since rumours of Budget property taxes began circulating."

TAX CHILL

Property is already taxed heavily, with stamp duty the main culprit.

When Reeves ended the temporary stamp duty holiday on March 31, mortgage lending slumped more than 24%. Karen Noye, mortgage expert at Quilter, said: "Buyers rushed to complete before the deadline, then activity fell off a cliff."

The market has picked up since but Noye said it faces a "difficult winter" as affordability remains a barrier.

"Talk of new property taxes could result in would-be sellers putting their plans on hold, potentially stalling the market further."

Property experts would love to see Reeves take a knife to stamp duty in November.