The Land Registry’s latest quarterly report showed that the annual rate of price inflation in the housing market held steady at 8.2% in May although there was a 0.2% drop in prices during the month. The largest monthly decrease was in the East Midlands, down by 3.6%.

During the last 12 months, London has seen an increase in property values of 14.2% whilst the North East has experienced the lowest growth at just 1.8%.

The number of house sales completed in England and Wales in March this year rose to 48,577; a 37% increase on the corresponding month last year.

A senior partner at Carter Jonas attributes the increase in housing stock to the removal of HIPS and he predicts that prices for more sought-after properties could see further increases.

Anybody who is thinking about moving home or taking out a first time buyer contractor mortgage should take heed of street names according to new research. Buying a property on a Hill’ or ‘Lane’ is likely to set you back 50% more than the national average.

Meanwhile, an increasing number of UK property buyers have turned their attention to properties in France. Athena Mortgages, a French property specialist, received a 100% increase in new buyer enquiries in May compared to the previous month.

The French property market has been growing in confidence over the past year and new build properties have been performing extremely well. French mortgages are competitively priced and the weakening Euro has made France an appealing destination for UK investors looking to purchase a second home.

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Although the rate of CGT for high earners increased in the emergency budget, there was good news for landlords who let out their second home as a furnished holiday let.

Unexpectedly, the chancellor stated that they can still offset the cost of furniture and fittings against tax. Additionally, they will pay a reduced CGT rate when they sell up. George Osborne’s decision was welcomed by VisitEngland, the main UK tourism board. The Labour government had intended to remove these tax advantages because they felt they did not comply with EU regulations.

A senior tax partner at Blick Rothenberg said that home owners who let out holiday accommodation are running a business and therefore it was only right that the previous government’s plans were reversed.

However, the budget contained bad news for people who are struggling to avoid repossession.

The Support for mortgage interest scheme will be based on the Bank of England’s average mortgage rate from this October. The rate currently stands at 3.67% and would lead to a substantial cut in the benefit payable which has been frozen at 6.08% since 2008.

The SMI scheme is designed to help homeowners on income support, pension credit or jobseeker’s allowance who are having problems meeting their mortgage interest on loans of up to £200,000.

The financial Inclusion Centre said this could cost households with a £100,000 mortgage about £130 a month.

Meanwhile, mortgage lending was up in May compared to the previous 2 months, according to the BBA. A total of 36,709 contractor mortgages were approved last month. Approvals for equity release also rose by about 800, whilst remortgage approvals declined by 322 to 21,229.

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What effect will tomorrow’s emergency budget have on home owners and in particular freelancers with a contractor mortgage?

Owners of second homes in particular are no doubt concerned about the rumours that George Osborne is going to increase Capital Gains Tax on non-business assets such as shares and second homes.

CGT currently stands at 18% and it is expected that this will rise to make it more in line with income tax. Therefore for high salaried individuals it could go up to 40%. There is even speculation in some quarters that it could go rise to 50%.

PricewaterhouseCoopers are expecting Osborne to introduce differential rates depending on how long an asset has been owned. The professional services firm said that speculative activity could be discouraged if the Chancellor levies the highest rate of CGT on assets held for less than 2 years.

UK chartered accountancy firm, Grant Thornton, points out that further tax rises will do nothing to help the ailing housing market. Recently foreign investors have been buying properties in the UK, attracted by the weak pound. The firm thinks that another rise in CGT will edge UK investors out of the market and leave the door open for more foreign investors to gather high rates of return.

One measure that they believe the chancellor might take is to introduce changes to “Private Residence Relief”. This relief allows property owners to sell their only, or main, home free of CGT. In recent years, property owners with more than one home have been varying their main residence in order to take advantage of this exemption. Grant Thornton says Osborne might tighten the definition of a main residence thus leaving more people moving home subject to a CGT charge.

A rise in the VAT rate could also hit the property sector. It is thought that any rise will also apply to new build properties and renovations.

One final potential measure that the accountancy firm thinks the chancellor may impose, that will affect the housing market, is a reduction in capital allowances. If this happens property investors would be unable to recoup as much of their costs and therefore their bottom line will be affected.

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