Abolition of the Home Information Pack provided a welcome fillip to the property market, but if plans to raise Capital Gains Tax goes to 40 or even 50 per cent are implemented it would smother the recovery before it even gets properly started.

Thousands of investors and second home owners who bought in the 1990s or even earlier were relaxed about the 2008 property slump because they could still look forward to a reasonable increase in the value of their assets.  If CGT goes up as much as is rumoured, many will try and sell up before the rise comes into force, an increase in supply that would eliminate the gains we have seen this year.

This will benefit no one.  Many amateur landlords who bought properties to fund their retirement will find they no longer have the investment pot they were expecting, and the stock of rented accommodation will shrink at a time when there is a severe housing shortage.

We recognise that taxes have to go up to get us out of the financial mess we are in, but the government must mitigate any rise in CGT either by reintroducing taper relief or by linking the gain to inflation. Taper relief, abolished by the previous government, reduced a property investor's exposure to CGT the longer they held the investment, encouraging landlords to stick with it for the long term. Indexation would not reduce CGT by as much, but would at least compensate for the reduction in a property's real value caused by inflation.

Either of those mechanisms would mean that prudent investors who have held onto their properties for the long term are shielded from the full blast of the increase. At Sandfords, we believe that the reintroduction of taper relief would encourage investors to regard property as a long-term investment rather than a short term speculation.  This would be good for investors but, much more importantly, would be good for the large number of people who need rented accommodation in London.