The NRLA warns that the Office for Tax Simplification’s proposed measures to equalise Capital Gains Tax with Income Tax rates would freeze the rental housing market.
The National Residential Landlords Association (NRLA) is highlighting research that found 72% of private landlords said that the tax was a major disincentive to sell property on the open market. It believes that increasing it would freeze the market, making it far less responsive to changing needs from renters. This includes the shift in demand out of city centres to properties in suburbs, towns and villages, as noted by Rightmove.
The NRLA points out that almost half of landlords having entered the market to contribute to their pension, so increasing CGT would negatively impact their retirement planning.
Rather than developing more tax hikes for the rental market, the NRLA is calling on the Chancellor to use the tax more smartly in the forthcoming Budget, to be published on 3rd March. 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 that has previously been supported by the now Housing, Communities and Local Government Minister, Eddie Hughes MP.
Ben Beadle, Chief Executive of the National Residential Landlords Association, said: “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.”