W A Ellis comment on the Budget

The prospect of today's budget had effectively put the residential market in central London "on hold" over the last month, with noticeably fewer applicants registering and vendors anxiously hoping to effect exchanges prior to a potential rise in Capital Gains Tax.  Agents throughout central London, I believe, will be breathing a collective sigh of relief as the expected rise in CGT has been relatively modest at 28%.  Whilst some second home owners will be relieved at saving 10% of their profits, many will decide to take a long term view and continue to hold their investments with the continued benefit of capital gain and rental yield. 

Banks have lobbied for the levy to be on profits rather than UK balance sheets and it is doubtful that the £2bn suggested revenue will make much difference to our national debt.  The sentiment amongst city buyers is still relatively strong, if somewhat more discreetly expressed.  In April 2011 we will see the implementation of the increase in stamp duty, with property of a value in excess of £1,000,000 being liable to a flat rate of stamp duty at 5%.  This may have something of a dampening effect on the market between £1M-£2.5M.  None of the above will have a radical effect on our market particularly whilst interest rates remain at record low levels but what is certain is that now the new Government have announced the long awaited budget, at least we are no longer in limbo and we believe that this will revive activity into the market place.