Higher taxes on rental income will cut house price growth according to Office for Budget Responsibility (OBR) – though growth is only predicted to take a 0.1% hit per year.
This would still bring property prices from an average £260,000 in 2024 to £305,000 in 2030.
From April 2027 the government will increase property income taxes by 2% to 22%, 42% and 47% for basic, higher and additional rate taxpayers respectively
The OBR mistakenly unveiled its growth forecasts before the Budget was delivered.
Simon Gerrard, chairman of Martyn Gerrard Estate Agents, said: “The premature leak of the OBR report was the cherry on top of this shambolic sundae. I find the government’s rage at the early release supremely ironic given they had leaked everything already themselves.
“The OBR’s forecasts for the property market look overly rosy. I don’t believe that the increase to property income tax will only reduce house price growth by 0.1% a year from 2028.
“Rightmove’s latest figures show a 1.8% drop in prices in November alone from just the prospect of these changes. The OBR is clearly underestimating the impact of these changes.
“The models appear to be unable to measure and account for the impacts on market sentiment. I fear that once the realities of the impacts are felt, the Chancellor will find she has much less headroom than she is currently expecting.”