UK house prices could crash by as much as a fifth if Boris Johnson pursues a no-deal Brexit, and the biggest falls would be in London and Northern Ireland, a leading accountancy firm has said.
Reflecting the potentially vulnerable state of the property market as Brexit looms, KPMG said house prices would fall by between 5.4% and 7.5% across different regions next year if a new agreement with Brussels was not in place by 31 October. The analysis of average house prices across the country showed no deal could trigger a nationwide decline of about 6% in 2020 and that and a drop of between 10 and 20% was “not out of the question” if the market reacted more strongly than expected. House price growth across Britain has slumped since the EU referendum three years ago, and prices fell across the south of England in August for the first time since the last recession in 2009. Assessing the impact of a no-deal Brexit on local economies, KPMG said house prices in Northern Ireland and London could fall by as much as 7.5% and 7% respectively, because of their greater connectivity with EU trade. Despite the value of the average home in the capital potentially falling to £422,000 next year as a result of no-deal Brexit – down from £453,000 if an agreement is reached – KPMG said it would still have the highest cash prices in the country. Should Johnson strike an agreement to leave the EU with a deal on 31 October, KPMG suggested house prices would continue to rise next year, growing by about 1.3%.
Study calls for overhaul of Capital Gains Tax
The Institute for Public Policy Research has called for wealth to be taxed at the same rate as income tax in a radical overhaul of the tax system. Describing the UK as one of the most ‘unequal countries in the developed world,’ the study by Institute for Public Policy Research (IPPR) warns income inequality could be set to worsen as capital and property ownership become more important sources of income generation. The IPPR believes this divide could be narrowed if wealth is taxed at the same rate as income, which could boost the government’s coffers by £90 billion over the next five years in the process. The study suggests that it is profoundly unjust that those who work for their incomes are taxed more highly than those whose income is derived from wealth. This situation is all the worse when we consider that the wealthiest are less likely to generate their income from labour than the rest of us. Among the richest 1%, over one-quarter of total income is generated from dividends and partnership income alone. To address the balance, the IPPR has called for capital gains tax (CGT) on the sales of shares, bonds, property and other investments to be paid at same rate as income tax.
Buy-to-let landlords under attack from McDonnell
John Mcdonnell has announced a scheme that would allow private tenants the right to buy the home that they live in a discount price. This is on top of a report commissioned by the party earlier this year that also recommended caps on the amounts buy-to-let landlords could charge tenants. Alongside the cap to the rent there would also be curbs on their ability to evict rents “on spurious grounds”. The latest suggestion from the Shadow Chancellor is to apply Margaret Thatcher’s iconic right for council tenants to buy their homes to those who rent properties from millions of private buy-to-let landlords. He hopes it would reverse the fall in affordable housing seen after Mrs Thatcher’s decision to allow council housing tenants to buy their homes. Speaking to the Financial Times, Mr McDonnell said: “We’ve got a large number of landlords who are not maintaining these properties and are causing overcrowding and problems.” Labour could give tenants who rent private homes the right to buy them at a cut-price rate, in the Shadow Chancellor’s plans. But experts believe it would decimate the rental market in the UK, creating a shortage of properties available to rent.
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