Finally, the new Liberal Democrat Conservative coalition has published its after-election manifesto. It is a sizable document which offers a selection of prospective policies, promises and pledges which it hopes the electorate will welcome with open arms.
But what does it mean for those with real estate investments
in the country? We take a look at two of the most pressing snippets of information that have come out of the text.
According to the manifesto, the government is looking at including housing costs into inflation calculations, with it saying: "We will work with the Bank of England to investigate how the process of including housing costs in the Consumer Prices Index (CPI) measure of inflation can be accelerated."
Currently, the CPI is a measure of a basket of goods and services, without housing costs included, which forms part of the Retail Price[s] Index and determines the rising (or falling) cost of goods and services.
Quite what the government would decide to bracket under the term "housing costs" is the important matter at stake here; would it take into account insurance, price and mortgage payment? If it does, then the Bank of England may decide to raise the base rate from its current 0.5 per cent position to help reduce inflation.
Capital Gains Tax
It is the news that many individuals that had decided to invest in property did not want to hear. "We will seek ways of taxing non-business capital gains at rates similar or close to those applied to income," the document reads.
It is a subject that has been mentioned many times, but it is sure to be a sore point for private investors, who are likely to bear the full brunt of the expected increase - from 18 per cent to 20 or 40 per cent dependent on income. In addition, to further confuse investors
, it remains unclear when the changes would take effect, either straight after the emergency Budget, or next April - which is sure to lead to some uncertainty among investors
Now that the coalition is working towards making its mark on the political landscape, it will be only be a matter of time before the details behind the policies become clearer. We have been offered an insight into the broad outlines of any prospective changes and attention will now turn to the emergency Budget on June 22nd for further clarification.
- Monday 24 May 2010