The apparent government supporting newspaper The Daily Mail has recently run an article claiming that the government is considering a proposal to reduce PRS landlords Capital Gains Tax, if selling their properties to first time buyers to help increase owner occupier numbers.

The Daily Mail has been used by the government to ‘test’ possible policy proposals and the article says: “The ideas, in the very early stages, aim to make it easier for younger people to get a first foot on the housing ladder. There is growing concern they cannot buy a home as too few are coming to the market, meaning they are over-priced.”

landlords Capital Gains Tax is paid on any profit made from the sale of an additional home such as a BTL property or holiday home with the current rate of tax is 18 per cent for those in the basic income tax bracket, and for those in the higher tax bracket will have to pay 28 per cent, however there is an annual allowance of CGT which can be discounted off the total sum.

Allowable costs that can be deducted from the CGT sum include expenses when purchasing the property or during ownership which reduces the tax on any price growth.

Stamp duty, legal and  mortgage broker fees when buying the property can all be taken into account for the tax reduction as well as during ownership costs such as refurbishment, building extensions, and surprisingly even researching the title of a home.

The massive increase of CGT on BTL landlords selling up or downsizing their properties has significantly lined the government’s coffers, and is one of the three reasons why the UK’s CGT income soared from £10.8bn at the end of January 2021 to the highest ever level of £12.9bn over twelve months.

A national newspaper’s article about possible incentives for selling homes that is being looked at by the government to encourage older owners to downsize, could include a reduction in stamp duty if sold to FTBs or those called ‘second steppers.’

Older owners ‘under occupying’ properties has been an issue for decades and research released three months ago by Professor Les Mayhew of the International Longevity Centre and Bayes Business School, found that 75 plus year olds’ homes in the capital had more than double the number of bedrooms that they needed, whilst 65 – 74 owners had 70 per cent more than needed.

The Greater London Authority also claims that 26 per cent of London homes are under occupied.

Blog Post from PIMS

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