The idea of getting his hands on some of the bankers? bonus money may appeal to Chancellor Alastair Darling but estate agents have warned that the central London property market could be hit by the bonus tax.
The bank bonus tax ? said to be worth ?550 million ? could have ?severe repercussions? for the capital?s property market ? which has been central to the whole country?s property market in recent years. The London Evening Standard reported that estate agents were warning that bankers choosing to leave the City could have a damaging effect on the recent recovery in house prices.
Ray Boulger of mortgage broker John Charcol said: ?The prime London market has been particularly buoyant recently in anticipation of a return of big bonuses, and so this attack has the potential to hit that sector of the market hard, at least in the short term.?
Knight Frank?s Liam Bailey said that confidence could be knocked back for years by the bad feeling left by the tax. ?This may be a one-off tax, but its knee-jerk nature could make people uneasy about what?s coming further down the line,? he said.
As well as the property market, other sectors anticipated a knock to their businesses resulting from the tax. Restaurateurs and jewellers were among those fearing a downturn in takings.
Nevertheless, despite these fears, it appears that some of the very highest earners in the City will not be affected by the bonus tax because they are on ?guaranteed? bonuses, which form part of their contracts. In the small print of the new tax any ?contractual obligation? put in place before the announcement of the tax are specifically excluded.
