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Cheap mortgages could offset new tax

Date: Mon, 22 May 2006

Government plans to tax property developers could undermine the first-time buyers housing market.

The Royal Institution of Chartered Surveyors (Rics) and the British Property Federation (BPF) have raised concerns that the new tax could have a negative impact on first-time homebuyers.

The Planning Gain Supplement (PGS) is aimed at boosting revenue and ensuring more affordable housing is built. However, it is feared that many developments will be simply be delayed until the government revokes the taxation plans.

"The affordability crisis facing many people today can only be improved by increasing the supply of housing," said Louis Armstrong, chief executive of Rics.

Whilst, the Association of Chartered Certified (ACCA) also stressed that the PGS could result in higher housing costs and force many first-time buyers to borrow more in order to step on the property ladder.

However, wannabe homeowners are being advised to shop around for a cheap mortgage deal to help offset the additional costs associated with the introduction of PGS.


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