The BPF is pleased commercial property is being left unaffected by reform of stamp duty land tax, but has expressed concern that changes to the capital gains tax regime may restrict investment in UK residential property.

Liz Peace, chief executive of the BPF, said:”This CGT change alongside the SDLT proposals needs to be watched carefully, because it could operate to reduce the financial attractiveness of large-scale investment in residential property. Many funds or corporate investors will use offshore structures to hold their assets, and given the reliance on capital growth to generate returns acceptable to investors, losing a big bite to the taxman could cause real problems. Hopefully the Government will recognise during the consultation process that this measure could, if wrongly targeted, deter exactly the sort of major investment that UK housing needs.

“We are relieved that the Government has heeded our warnings and limited its proposed SDLT changes to high value residential property. Extending a similar treatment to commercial property could dramatically reduce already faltering confidence and liquidity in the commercial property market, which uses various holding structures for various commercial reasons, and risk diverting investment away from the UK at precisely the wrong time.

“While no-one likes to see extra taxes heaped upon property, the Chancellor needed to find money from somewhere to fund other pro-growth measures and so we consider these changes to be the best that we could have wished for.”