Capital Gains Tax and Private Rented Sector

“It’s not fair!”

“Why do they do this?”

“We are only trying to plan for our retirement.”

These will be sentiments that many investors will be thinking (and may be shouting about) in regard to the expected increase

in capital gains tax (CGT). However, there has been an inevitability about this increase.

There was a surprise that this was not in the recent budget – many predicted it would be.

There was also surprise a few years ago when the government cut it – we seem to have a case of “as you were.”

It is very frustrating that rates change, although we don’t complain when it goes down! In most cases investing should be a long term strategy – this is particularly the case with property – and therefore consistency is important.

However, the fundamental issue here is the use of tax to support (in this case not) government policy. There are numerous reports that show that a growing number of people

are unable to afford to buy property and find the private rented sector an important part of the UK housing stock.

This view is supported by the British Property Federation (BPF), its chief executive Liz Peace said:

“Buy-to-let landlords and individual investors will bear the brunt of this 22% tax rise and, while the public at large may have little sympathy with those profiting from property sales, ministers must recognise the massive contribution that these people have made to housing supply over the last decade. Over a million more people rent now th

an in 2001 and this has been made possible through buy-to-let investment.

I noticed recently that the ‘famous’ maths teachers from Kent (Mr & Mrs Wilson) who bought up a portfolio of hundreds of houses were saying they were selling earlier than expected partly driven by the low CGT rate at the time.

I suspect it was actually less to do with the low rate, and more the fact that they expected it to increase – that feels like an oxymoron but does make sense!

So we are back with a CGT rate in line with a few years ago, I hope when we see the detail there are mechanisms to support the long term investment in the private rented sector through say taper relief.

Share Button
Category: Product #: Regular price:$ (Sale ends ) Available from: Condition: Good ! Order now!
Reviewed by on. Rating:

About Neil Young
Chief Executive, Young Group

Visit Us On TwitterVisit Us On Linkedin