Cuts to the capital gains tax on property sales could push demand for Dundee rental properties even higher, experts have warned.
Chancellor of the Exchequer Jeremy Hunt unveiled a cut to the tax during his budget statement at Westminster on Wednesday.
Mr Hunt claims reducing it from 28% to 24% will “bring in more money” because of increased activity in the market.
But one Dundee property agent warned it could have a huge impact on an already squeezed housing supply.
And a financial advisor said they were disappointed a proposed “99% mortgage” policy was scrapped, which will unsettle first-time buyers.
Landlords not encouraged to stay
We reported earlier this year how the average cost of rent in Dundee and Tayside had skyrocketed.
Rent across the city costs an average of £904, a single bedroom home will cost £581 a month, and is usually let within 11 days of becoming available.
A three-roomed property costs on average £1,116 a month.
And two bedroomed homes will now set renters back £887 on average.
Now there is more incentive to sell properties than rent, property manager Struan Baptie fears the cost is only going to increase.
“What this could mean is landlords finding it easier to just sell their properties, which in turn will put the squeeze on those paying rent,” he said.
“There is a lack of properties available to rent in Dundee at the moment.
“This pushes the cost of renting up.
“For example, our cheapest one bedroom home is around £525 per month.
“A lack of supply, with it being more favourable to sell, will push rent up and put landlords off from entering the rental marketplace.”
U-turn ‘disappointing’
Jeremy Hunt had considered legislating for 99% mortgages, to encourage more people on to the housing ladder.
Kessar Salimi, director at Freedom Finance,
“I don’t think the capital gains cut will have too much impact on the rental market place,” he said.
“What might have more of an impact were the announcements on furnished holiday lets.
“This could see people in more rural, holiday areas selling their properties and freeing up homes for purchase or rent there.
“I was disappointed to see the 99% mortgage policy left-out of the budget announcement.
“As are many first-time buyers looking to get on the property ladder, I am sure.
“If more people were able to buy their homes, and leave the rental marketplace, this would increase the supply of homes for rent and impact rent costs.”
