4th March 2008
Second thoughts on second homes
New Labour’s capitulation to the super-rich has been one of the most consistently exasperating features of policy-making for the last decade-and-a-bit. Most of this happened when Gordon Brown was Chancellor and many of the principal beneficiaries, like Ronald Cohen of the hedge fund Apax, were both personal friends of his and big Labour donors. Blair’s passing was hardly going to herald a wave of redistributionary fervour, then. But even my admittedly low expectations took a further heavy blow when the Government announced last year they were going to give a massive cut to second home-owners (which include MPs as the Indy pointed out today).
The Government are about as confused on this issue as they are about on everything else these days. At the weekend we learned they are going to set up an inquiry into the effects of second homes in rural areas. Long overdue, the inquiry will look at the potential for giving local planning authorities the right to curb the conversion of properties into holiday or weekend homes. At the same time the Government are planning to plough ahead next month with a massive cut in the tax rate on second home sales which even the Prime Minister’s adviser says will add further pressure to an already over-heated rural housing market.
You cannot escape the impression that this is a Government that simply cannot find its ‘narrative’. If it stands up for fairness and equality in the housing market and on tax, it risks alienating the high net-worth individuals that have bankrolled it for so long. Founding principles or fat cheques? We’ll see which ones the Government chooses on Budget Day, but this answer doesn’t hold out much hope:
Treasury
Capital Gains Tax: Second Homes
Adam Price: To ask the Chancellor of the Exchequer what assessment he has made of the impact his proposals for changes in the capital gains tax regime applied to second homes will have on the housing market in rural areas. [182305]
Jane Kennedy:The 2007 pre-Budget report announced a reform of the capital gains tax regime for individuals. The impact on investors will depend on their personal circumstances and economic conditions more generally. The Government continue to monitor such issues.
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