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Landlords Should be Exempt from CGT if They Sell to Tenants, Says RICS
This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.
The Royal Institution of Chartered Surveyors (RICS) has called upon the Chancellor ahead of tomorrow’s Budget to exempt residential landlords from Capital Gains Tax (CGT) if they sell their rental properties to tenants.
The RICS Property Tax Report states that the Chancellor should use his Budget to deliver a clear property tax policy, which will give private tenants, homebuyers and buy-to-let landlords the “clarity, certainty and predictability they need for future stability and growth”.
It believes the measure could allow 100,000 private tenants to own their own homes.
Landlords Should be Exempt from CGT if They Sell to Tenants, Says RICS
Buy-to-let landlords are liable for CGT whenever they sell a rental property, which is often considered a barrier to the release of housing stock onto the market.
The RICS says that the current tax system is a disincentive for landlords to sell.
“By removing CGT for landlords, the Government could find a solution to the housing crisis that it has been so keen to address,” reads the report. “Houses could be released to private tenants with the funds reinvested in more homes.”
The call from the RICS follows research from the Residential Landlords Association (RLA), which shows that 77% of private landlords would consider selling their properties to tenants if liability for CGT was removed.
The report continues: “Given the Government’s focus on homeownership, we recommend one way that homes could be delivered is if the UK’s 3.84m private landlords were incentivised to sell to existing tenants. If just a fraction were encouraged to sell at affordable rates, thousands of new homes could potentially be released onto the market. Further incentives could then be provided to encourage the seller to invest in further rental properties.”
The RICS hopes that tomorrow’s Budget provides stability for the property market.
The Policy Director at the RICS, Jeremy Blackburn, comments: “The Government has changed its policies around property taxes more often than the Chancellor has been pictured in a hard hat. That has resulted in uncertainty in the property market.
“What we need is a period of stability, and we call on the Government to set a course and see it through.”1
Throughout the Budget and the aftermath, we will provide you with the latest landlord updates and advice. Yesterday, we revealed that 70% of private landlords expect their investments to be affected by tomorrow’s Budget.
1 http://www.rics.org/uk/news/news-insight/press-releases/property-tax-reform-could-encourage-landlords-to-sell-to-private-tenants/
