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

Today, new laws come into force lowering the tax that buy-to-let landlords have to pay on increases in the value of their properties when they sell - from 40 per cent to a flat rate of 18 per cent. And scores of people could suffer as landlords sell up, causing property prices to fall.

Experts think heavily indebted landlords needing to sell because of the credit squeeze might produce a flood of houses for sale.

Landlords could put their properties on the market, adding to the supply of houses for sale and lowering already-tumbling prices to boot.

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.

"I estimate 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 is essential to a healthy housing market."