Landlords are warning the government that if it increases Capital Gains Tax the rental market will freeze up.
Chatter has increased in recent months about a possible CGT hike 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.
Increasing it would serve to freeze the market making it far less responsive to changing needs from renters. the NRLA says. This includes the shift in demand out of city centres to properties in suburbs, towns and villages, as noted in several recent Rightmove reports.
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.
For many this is predicated on liquidating assets to fund their later life, including in many cases their care costs.
The NRLA says that rather than developing yet more punitive tax hikes on the rental market, Chancellor Rishi Sunak should use the tax more smartly in the March 3 Budget.
It recommends that to support the government’s ambitions for homeownership there should be a CGT exemption or reduction where landlords sell properties to sitting tenants. This is a policy which has previously been supported by the new junior minister at the Ministry of Housing, Communities and Local Government, Eddie Hughes MP.
Ben Beadle, NRLA chief executive, says: “Increasing Capital Gains Tax would reduce churn in the rental market undermining the flexibility it has always been good at providing.
“A tax hike would be a kick in the teeth for all those who have invested in property to provide security for the future for themselves and their families.
“The Chancellor needs to end the war on the rental market and recognise the importance of a healthy and vibrant rented housing sector. Tax should be used more smartly, not as a blunt attack on the market.”
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CGT is only payable if we sell, so don't sell, just keep taking that rent.
Keep taking the rent and the ever increasing bulls**t we've got to eat...If we don't sell they'll just think of some other way to screw landlords....we're powerless and they can do what they like. Some landlords will have no choice and will be forced into selling due to bad tenants, government legislation etc. I got into the game over 20 years ago to provide a pension for myself...I've got 11 properties left and I'm going to be selling them one by one as tenants leave....I've had enough...I've changed 2 of my properties into self contained holiday lets....patiently waiting for some business now...
Raise CGT to make more money!! Great idea if people keep selling. However as more people will say bug ger that tax rate I will keep the property then they make a lot less than they do now.
Now that’s government logic working at its finest
So if we keep the properties rents will drop ? who knows ? but I doubt it, no shortage of good people looking to rent in my area normally have 3 or 4 to choose from when a property becomes available .
Government know landlords will still keep selling, some can avoid but many need to with section 24 squeezes and rouge tenants chasing them out and needing to access the equity etc .. they know they can get them on the way out the door
I see this coming but it’s not going to help the market or tenants that’s for sure who is going to buy knowing gov want 40% of whatever you gain in prices
Easy solution for the fools in Whitehall. Higher CGT on sales from purchases made going forward. Existing one man LL’s will sell companies or owner occupiers will buy. Eventually they will work this out. I’m in this game to win so offer me an incentive to sell or as Andrew says I will just keep taking that ever increasing rent
Same old chestnut. The Tories of all persuasions know that increasing tax rates decreases receipts, not increases them as out of bloody mindedness people avoid the activity that leads to the tax, or simply find ways to reduce their liability. Ergo they reduced income tax from 50p to 45p for this very reason. I remember seeing many uber wealthy people interviewed at the time saying that at 50p, the government could "do one" and conversely at a fairer level they felt obligated to pay their tax in full as their contribution to society.
Reducing property CGT for a couple of years would create the windfall in tax the government craves, whilst at the same time creating a huge amount of economic stimulus in supply chains as we have seen with this stamp duty holiday, whilst creating opportunity for tenants. It would also reduce the size of the pending s8/21 crisis thats coming. Feels like a no brainer.
Quite right...If I get more costs, I only have one course of action to take and that is to charge more for my services, and that will be an addition and ++++++++ £££££££££s than the actual cost.
Yet again the tenant suffers!!!!!
And then you have a void when your tenants decide to take their business elsewhere, and prospective tenants decline to give you theirs; particularly when they have googled the name of their prospective landlord.
Oh I see now you don’t put your own name down as you worried about what could be uncovered by google. Ah I geddit
@ Leics Landlord, We are all free to decide where we take our business, landlords and tenants, but it's a long time since I've had a problem finding suitable working tenants, I have 16 let properties with happy paying tenants in them, all business like good happy customers to be doing business with, what no business is interested in are bad customers.
Yes Jahan, I don't want people associating me with you.
Yeah imagine how much tax the government could get if they put it to 0%...
Matthew you are so ignorant it's painful..
Showing your ignorance again John S.
Look up Laffer curve! Both 0 and 100% tax rates yield 0 tax but there is an optimum somewhere below the 50% rate.
P.S.. It's nice to be nice. Try it some time!
How much increased activity in the sales market might SDLT payments to the treasury have increased by? If the SDLT holiday has put more into the treasury then it follows that by doing something similar to landlords would be of benefit to the depleted after Covid funds in the Gov't pot. It could increase both SDLT and CGT, or is this wishful thinking.
Just a thought.
James , or course you seen it coming I was blogging about this last October, its all about destroying individual LL's, regardless we are not passive investors but hands on, Life dedicated and passionate LL's. Anyway they are destroying us must be the easiest thing in the world to do, what then ? any plan B they have buggered every other Business also. 40 year old kids in charge born into riches, away above their stations shouldn't have those positions clueless totally mismanaged the economy with Furlough 750'000 Firms received it, they all grabbed it even his Billionaire wife now we are all in trouble.
Matthew, agree Capital Gains tax already too high mostly on inflation rather than profit, Chancellor Osborne already stuck on an additional 8% especially for LL's making it 28%, so already paying more than anyone else.
Stamp Duty holiday no such thing in my book its derisory, first Osborne raised SDLT on everyone plus another 3% on top for LL's in effect doubling it for many LL's, say buying a property before for £500k one home it would be £15k SD, but for LL + 3% = £30k SD, so then they half it for now to what it was before you have to still pay £15'000, Stamp Duty on this purchase, that's some Stamp Duty Holiday (£15K), they take us for complete idiots.
Agreed, inflation is not profit, and an allowance should be made for it as it was yrs ago
Yes there used to be allowances for inflation on capital gains tax, from memory the number of years you had it were counted, we had indexation linked, or other was called tapered relief and it wasn't 28% either to start with. It was another 40 year old kid being made Chancellor even before he was 40 born into riches again, coming from a wealthy wall paper manufacturing business in Cheshire. I don't thing anyone should be allowed to be a Minister or Chancellor before the age of 50 years, the huge mistakes that has been made by those highly educated but sadly in experienced men.
Highly educated, but when it comes to common sense and life skills as thick as SSSS.....T
Laffer curve doesn't say such thing is say there is an optimal point for taxes it does not say what that actually is. Why don't you go put all your money in bitcoin that's more your level.
So John you are giving investment advise, are you qualified ?
John S. You're an idiot. There is no single Laffer curve and no single optimum tax rate but all Laffer curves show diminishing returns beyond the optimum point, which received wisdom suggests is almost always below 50%, but is always below what is regarded as punitive rates as self assessment and tax payer compliance and activity all aid tax avoidance if rates are punitive.
If there was a single optimum point then every tax take would be set at it! Environments, economies and behaviour are all constantly changing and so will the associated Laffer curves.
Incidentally, I have turned a £6000 deposit into over £3 million of equity, generating about £250k gross rentals and about the same of annual capital growth, all underpinned by highly saleable properties. Why would I gamble with bitcoin, based on non existent assets?
Andrew - he should certainly have a certificate, signed by 2 doctors!
Bitcoin- Well it’s good enough for Elon Musk.
Over last year massive amount of houses sold that probably wouldn’t have cos of stamp duty. This in turn has created a lot of work for self employed contractors which in turn makes the economy function along with tax generated.
Being serious now John Smith do you see how good positive things can come out of low taxation. It’s called win win
Jahan
Seeing that would mean he understood the economy is not a zero sum or closed system and a reduction can mean an increase.
The first IBM PC's cost around £4000, but gross sales revenue and net profits soared when the prices fell to around £400.
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