March 3, 2008
Calling all second home owners
Plenty of FT readers have second homes in the countryside. So I feel it’s my duty to shed some light on two big news stories of the last couple of days which would in theory affect them.
1] A Sunday newspaper has suggested that the government is planning a crackdown on second home owners in rural parts. It based its story on a report by Matthew Taylor, Lib Dem MP, which has not yet been written.
Mr Taylor’s comment yesterday was:
“The report is totally inaccuarate…I have reached no conclusions on second homes being subject to planning controls, and won’t even report until July. I have been asked to look at the findings of the 2006 commission on affordable rural homes, and this was one of around 100 suggestions they made - so it forms a small part of my enquiry, but it is very early days and absolutely no conclusions have been reached, let alone reported to Government”.
2] Stuart Burgess, the government’s “rural advocate”, has warned that the imminent cut in capital gains tax on second homes - from 40 per cent to 18 per cent - will make it even harder for first-time buyers and young families to get on the housing ladder. This is a genuine concern in places such as Cornwall and the Lake District.
The only flaw in Mr Burgess’s argument is that the changes to the CGT regime are not necessarily the tax cut that they seem.
Until now, the seller of a second home does not pay the entire uplift in its value. This is because you can apply “indexation” - which takes inflation into account - into your calculations.
From April you will only be able to use indexation up to 1998. As a result, some owners will pay less tax than before; others will pay more. Another of the government’s neat little sleights of hand.
