Auctioneers have urged the government not to increase Capital Gains Tax at a time when confidence is returning to the housing market.

With Chancellor Rachel Reeves reported to be considering the move in order to fill the £22 billion black hole in Britain’s finances, NAVA Propertymark says this could jeopardise growth in the housing sector during a period when it’s most needed.

Many potential homebuyers breathed a sigh of relief following the Bank of England’s recent decision to cut interest rates, which should lead to a rise in property transactions, explains Propertymark’s auctioneering division.

Hunt's cut

It follows former Chancellor Jeremy Hunt’s decision to cut the higher rate of Capital Gains Tax from 28% to 24% in April, impacting landlords and second homeowners who decide to sell, while the lower rate remains at 18% for any profits within the basic tax rate bracket.  

The Office for Budge Responsibility predicted in its March 2024 Economic and Fiscal Outlook that a cut in CGT payable on residential property gains would boost property transactions by roughly 2%, while the Bank of England’s cut in interest rates from 5.25 to 5%, should lead to mortgages becoming more affordable for many potential buyers, says NAVA Propertymark.

President Richard Worrall (main image) explains that the interest rate cut should help stimulate growth in the housing market.

“This is fantastic news for those who are hoping to buy their next home,” he adds. “However, if the Chancellor increases the higher rate of Capital Gains Tax, this could reduce the number of property transactions on the market at a time when full confidence needs to be restored to the housing market, especially when encouraging housing growth is a central part of the new UK government’s mission.”