Home income plans to be hit by another drop in house prices

Home income plans are likely to suffer again as government plans to increase the capital gains tax (CGT) will probably lower house prices.

The new coalition government could find itself in the eye of a storm as voters increasingly raise their dissatisfaction with the decision of the cabinet to double the CGT on houses.

Conservatives are bound to upset some of their voters with this proposal, which did not have any mention in their pre-election manifesto.

However, business secretary Vince Cable's comments have sparked growing concerns among landlords who may now flood the market, before the anticipated rise in taxes comes into effect after the emergency budget. This would reduce house prices and negatively affect home income plans.

Mr Cable said: "Individual capital gains are going to be taxed in a way that is closer to income rates. Property is part of individual capital gains."

Recently HSBC published a report which highlighted how the fluctuations in house prices had impacted equity held in homes.

Ashall Glover Financial Services home income plan advisers