Tax On Landlords Central Housing Group

Capital Gains Cuts Another Tax On Landlords – Originally Posted by NRLA

NRLA Chief Executive Ben Beadle says the decision to slash CGT allowance in the Autumn Statement was another tax on landlords – and a missed opportunity to boost housing supply at a time of ever-increasing demand.

Landlords are set to lose thousands on property sales, with yet another assault on the sector launched by the Government.

In his Autumn Statement, Chancellor Jeremy Hunt announced the annual Capital Gains Tax Allowance (CGT) will be cut from £12,300 to £6,000 next year, before being halved again to £3,000 from April 2024.

This means landlords declaring a gain higher than this exempt amount will be taxed at a rate of 18% – or 28% for higher rate taxpayers – a move which could cost them thousands on every sale.

The potential consequences of such a move are dire, and far-reaching, with fears many landlords – already considering their future in the sector – could cut their losses and sell up sooner rather than later, hitting supply even further at a time when demand is increasing exponentially.

Supply and demand

According to Zoopla, so far this year the demand for private rented housing in the UK is up 142 per cent compared with the five-year average, whilst the supply of such homes has fallen by 46 per cent.

The trend of ever-increasing demand takes place despite the number of owner-occupied households in England having increased by over one million in the past five years.

With rising mortgage rates making home-ownership increasingly unaffordable, the widening gap between supply and demand will force rents up for tenants at a time when they can least afford it.

Missed opportunity

We feel this was a real missed opportunity for the Chancellor, who has failed to realise the potential for housing to drive growth and deliver for the economy, instead introducing a tax on landlords that we believe will dissuade investment for years to come. 

In our submission to Government ahead of the Autumn Statement, we explained that ending the Stamp Duty Levy on the purchase of new rental homes – introduced by George Osborne – could boost Government income by billions.

And this is not just our opinion. Research by analysts Capital Economics suggests that scrapping the levy could boost Treasury revenue to the tune of £10 billion as a result of increased income and corporation tax receipts.

We have also asked for the reversal of the decision to restrict mortgage interest relief in the private rented sector, a decision made in 2015 on a false belief that landlords were taxed more favourably than homeowners. 

Something needs to be done to tackle the supply issue we are facing in England and Wales before it reaches crisis point. 

Some could argue it already has.

The NRLA’s quarterly survey of its members found that in Quarter 3 of 2022 65% of landlords reported the demand for private rented housing has increased. Despite this, the survey also found that only 12% of landlords said they planned to increase the size of their portfolio over the next 12 months, compared with 28% of respondents who said they plan to reduce it.

Against this backdrop the last thing landlords or tenants need is what is effectively a further tax hike on the private rented sector.

All this will do is discourage investment in new homes to rent and drive up costs for renters, many of whom will already be struggling to manage the increased cost of living.

The NRLA is taking the lead on this by bringing together a working group of stakeholders from across the industry to develop a range of practical, pro-growth policies to support landlords to remain in the sector and continue to invest, to provide to homes to rent that this country so desperately needs.

Keep an eye on our news site and social media channels for the latest on this issue – and how you can get involved to campaign for positive change.

Blog Post from NRLA

See details of our Guaranteed Rent Scheme here

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