If the coalition government press on with Tory plans to do away with HIPs this will deliver good news for the bank and borrower, who will be able to make that all-important extra saving in the case of a repossession. On the downside, the suggestion that capital gains tax could be as high as 50% come next April could hinder many buy-to-let investors who are looking to leave the market. This problem is likely to be compounded by creeping interest rates later this year.
“In general, property prices remain unaffordable to many, despite low interest rates. This is not sustainable in the medium-term and when interest rates begin to rise prices will have to fall if they are to remain accessible to hopeful buyers. However, we are likely to see demand subside over the new few years as a result of a lack of low cost, high LTV mortgages pushing back prices. The only thing the new government can do to help home owners is to seek to realign UK house prices, interest rates and personal debt.
