PROPERTY prices in Oxford could fall further as a shake-up of the controversial capital gains tax comes into force.

This week, new laws came into force lowering the tax that buy-to-let landlords have to pay on capital gains - increases in the value of their properties when they sell.

Following the drop from a maximum 40 per cent to a flat rate of 18 per cent, experts think heavily indebted landlords needing to sell because of the credit squeeze might produce a flood of houses for sale.

Robin Swailes, of the Landlords Association, said: "Smaller, first-time landlords feeling the credit squeeze may sell, and this may have a downward effect on prices. But established landlords will stay in the market."

"The good news for landlords is they will see an increase in yields. We have seen rents in Oxford increase on average four per cent over the past year."

Oxford's buy-to-let market saw a surge in recent years with investors hoping to cash in on rising prices.

Now, just as prices nationally begin to slide - according to new figures from the Halifax - the Government has made selling more attractive for buy-to-let landlords.

Mr Swailes added: "This is extremely good news for residential landlords.

"In effect, this announcement reduces a £100,000 property capital gain by as much as £22,000.

Mr Swailes estimates that up to one in three residential properties in Oxford is let as it is such an expensive area in which to purchase a first home.

"This tax change will have a significant impact on landlords helping to ensure tenants have a large choice of rental property.

Figures from the Halifax, one of Britain's largest mortgage lenders, revealed that nationally house prices fell by 2.5 per cent in March.

In the south-east, which includes Oxfordshire, month-on-month prices showed no change.

Estate agent Graham Macdonald of Summertown agency Kemp and Kemp said: "The fizz has gone out of the market and people coming off fixed rate mortgages are getting a shock.

"But people are realising they are buying somewhere to live, not making an investment.

"Supply is dwindling, but sooner or later people will realise they must move house just in order to get on with their daily lives.

"Oxford has almost full employment, which the Halifax says is essential to a healthy housing market."

Last weekApril10 the Bank of England's Monetary Policy Committee announced a quarter per cent cut in interest rates.

Meanwhile, a Government inquiry has been launched to find ways of stopping quiet residential streets in Oxford spiralling into student ghettos.

The inquiry, announced by Housing Minister Caroline Flint, follows concerns raised in several university towns and cities - including Oxford - that communities may be suffering from an over-concentration of houses of multiple occupation (HMOs) in their neighbourhoods.

Andrew Smith, the Labour MP for Oxford East, said: "I've been pressing for tougher planning control of houses in multiple occupation and we'll be putting in compelling evidence from local experience of how excessive HMOs are damaging the residential character of many parts of Oxford, especially where there are bad landlords, who don't look after the gardens, rubbish collection and parking problems their properties generate.".

11:55am Thursday 17th April 2008

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