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News Release

London

Jones Lang LaSalle Reacts to Residential Measures Announced in Emergency Budget


London, 22nd June 2010 – Jones Lang LaSalle reacts to measures announced in today’s emergency budget affecting the UK Residential market, providing comment on changes to Capital Gains Tax (CGT) and the new government’s housing initiatives and policies.

James Thomas, Head of Residential Development and Investment at Jones Lang LaSalle, commented on the increase in CGT from 18% to 28% for those on higher tax rates:
 
“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.  Coming into effect at midnight does remove the feared time-lag associated with this tax change and should forestall a wave of panic sales. A glut of properties entering the market could have had a rapid deflationary effect on pricing.”
 
Thomas continued: “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.”
 
Since the formation of the new government there has been a steady stream of new policies, guidelines and principles with implications for the UK housing market.
 
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.”
 
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