With Capital Gains Tax (CGT) changes on the horizon, letting agencies will have an important role in helping landlords to understand them.
This is the latest opinion from PayProp, the lettings payment automation provider, who say that in addition to the coronavirus pandemic, letting agencies must also help landlords to be compliant with CGT changes.
From April 6th, anybody who sells a property subject to CGT will have to pay the tax estimate within 30 days of completion. Before the changes, this period could last anywhere between 10 and 22 months.
There will also be changes to lettings relief, which will now only apply to the period of time in which the owner occupied the property at the same time as their tenants.
In addition, principal private residence relief – which is provided to landlords selling a property they have previously used as their main residence – will also be reduced from 18 months to nine months.
“These significant and complex CGT changes are set to affect many landlords who are looking to sell properties in the near future,” says Neil Cobbold, Chief Sales Officer at PayProp.
“Despite this, they have arguably gone under the radar, receiving less coverage than other industry issues such as stamp duty changes, the removal of Section 21, the Tenant Fees Act and the Homes (Fitness for Human Habitation) Act.”
“Over the coming weeks, it will be important for letting agencies to ensure their landlords are aware of these changes and advise them where appropriate,” says Cobbold.
“Most landlords selling properties after April 6 will need to seek expert tax advice when paying their CGT bill.”
“It could therefore be beneficial for agencies to have a partnership with a professional tax expert in place, so that landlords looking for advice can be referred to a trusted source quickly and efficiently,” he says.
All of these tax changes also coincide with the final stage of Section 24 – the removal of buy-to-let mortgage relief, meaning that a lot of legislative changes that affect landlords are coming at once. It is up to agencies to guide landlords through this critical time.
“Agencies need to make sure they are on hand to guide their clients through this busy and potentially costly time, while also offering them value for money and a first-class personal service. This is an opportunity for agents to demonstrate their value to landlords who may be looking to cut costs or reduce activity,” says Cobbold.
“While these tax changes will require some adjustment, due to the strength and growth of the PRS, there will still be plenty of opportunities for the best letting agencies to take on more business and thrive in 2020,” he concludes.