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TODAY'S OTHER NEWS

Buy To Let sell-off underway as Capital Gains Tax threat rises

Landlords are exiting the office on greater numbers since the government called for a review of Capital Gains Tax last year, claims Zoopla.

The portal’s head of research, Grainne Gilmore, says the proportion of previously rented properties listed for sale on the site has risen. The percentage of homes on the market that were previously let us up in all English regions, with 7.2 per cent of all new sales inventory across the UK now previously rented.

This trend is most prominent in London and the South East, with the proportion of previously rented properties now for sale  standing at 13.0 and 8.0 per cent respectively. 

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She says some investors may be selling to beat changes to CGT or looking to take advantage of higher capital values; others may be rationalising their portfolios due to changing rental market dynamics.

And Gilmore adds this goes some way to explain why the supply of property is rising in London, with a higher proportion of new supply made up of formerly rented property, now coming to the market.

“One area of the market where there is more supply coming to the market is among landlords who are bringing their investment properties forward for sale” she comments. 

“The share of homes listed for sale which were previously rented has risen in nearly every region during 2020, as landlords reassess their portfolios in light of current rental trends, or ahead of possible tax changes for investment property. While the homes for sale account for a very small proportion - less than one per cent - of rented stock, it is a noticeable trend emerging in the market.”

 

 

Fears are growing about a possible CGT hike announcement in next week’s Budget following a report from the Office for Tax Simplification proposing measures to equalise Capital Gains Tax with income tax rates.

The National Residential Landlords Association is highlighting research which found that 72 per cent of private landlords regard the tax as a major disincentive to sell property on the open market.  

The association says almost half of landlords have entered the market chiefly to contribute to their pension - for them, increasing CGT would negatively impact their retirement planning. 

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    I am in my 70s and have a buy to let house I was planning on selling last Autumn, to my existing tenants, but this has fallen through due to Covid. Since I have owned it since the early 1980s I would be subjected to a large CGT bill, most of it at 28%. It's then most likely that I would pay a further 40% of the net sale proceedings, in IHT within the next decade or two.
    I do not wish to continue being a landlord, mainly due to all the new Red Tape of recent times. If CGT is increased, I will keep the rental property and will simply turn it into a second home for both myself and my family. It is most likely that the overheads of keeping it as a second home for the rest of my days, will amout to less than the CGT I would have to pay, especially if the CGT rate is increased.
    There is a limit to the amount of new legislation and taxation landlords will accept, yet this government continues to exasserbate the rental housing situation by their constant landlord contempt.

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    The important thing is not to pay CGT and IHT and you seem to have found away around it - good for you.

    You could sell it and give the money away - that too would avoid one set of tax.

     
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    Mike, put your own needs first, you owe it to yourself and your family.
    Everyone else's needs are secondary.

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    If a home is up for sale that means its either going to be brought by someone renting currently or brought by another Landlord, the sad part is a person has probably been given notice for the house to be sold, spare a thought for those that are always being churned around from one rental to another though bad luck & Landlords selling up & costing them a few grand to move each time

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    Agreed David, but you need to be telling the government that one, it's the government that are causing many landlords to sell up, Like Mike above I'm not selling they aren't getting all that CGT out of me just to pass onto the work shy bums in society.

     
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    David, I'm with Andrew on this one. I've got a couple of houses for sale at the moment but if Rishi increases the CGT rate, I'll just pull them off the market - I'm not desperate

     
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    David

    Don't see how it costs renters a few grand to move?

    On the other hand stamp duty, lawyers fees etc. can often cost owners tens of thousands.

    Spare a thought for those who work hard to be independent.

    Incidentally most houses are bought by owners trading up or moving through job requirements etc. Trading up makes a lower cost property available for someone to get on the housing ladder.

    Surely it's better to make more properties available for new owner occupiers?

    High CGT liabilities just stagnate the housing market as others have illustrated on here.

     
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