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Industry news


Buy-to-let landlords could face shorter deadline to pay capital gains tax


The consumer protection magazine Which? is warning landlords and second-home owners they could be required to pay capital gains tax within 30 days of selling their properties, under new rules being proposed by the Government. Currently sellers of second homes or


investment properties can postpone paying capital gains tax (CGT) until they file their tax return for that tax year, which could be more than 18 months after the property is sold. But draft legislation will mean property investors have just 30 days to pay up. CGT is payable when people sell a valuable


asset like a second home or a buy to let property for a profit. People can earn £11,700 (or £23,400 for couples who pool their allowances) before paying tax. Above this, basic-rate taxpayers have to pay 18 per cent of any gain on property, and higher rate taxpayers pay 28 per cent. Under the current rules, landlords must


pay CGT for property sales by 31 January after the end of the tax year, at the same time as their self-assessment tax returns are due (for online filings). So, if they sold an investment property in July 2018, it would be taxed within the 2018-19 tax year, and the landlord could wait until 31 January 2020 to pay the bill. But under the new rules, people will need


to pay up within 30 days of the sale going through. For some landlords, this could move up their payment date by more than a year and a half and cause problems with their cash flow. This follows a number of other tax reforms that have pushed up bills for landlords, including the scaling back of mortgage interest relief, and the introduction of a stamp duty surcharge on buy-to-let and second homes.


The new rules have not yet been confirmed, as the draft legislation is currently passing through Parliament


The change was originally due to come into


effect in April 2019, but the proposals have been delayed and are likely to take effect for property disposals on or after 6 April 2020.


Think tank calls for an end to deposits on private rentals


damage and future payments of rent, should be replaced by an insurance scheme. In his new report ‘Down with deposits’, Brian


A


Sturgess proposes that the Government should promote a deposit replacement insurance system as an alternative. This would allow renters to insure against potential damage or missed rent payments without having to find a large up-front deposit, currently estimated to average around £1,041. Such insurance schemes could easily be


developed within the existing insurance market and they would allow renters to keep more of their own money when moving into a rented property. It would avoid them having to borrow money to gather enough funds for a deposit. This would be particularly useful for the 31 per cent of private renters who have less than £100 in the bank. An insurance-based model would also allow


renters to build up a reputation as a good tenant through a ratings system similar to no-claims bonuses for motor insurance, while ensuring that landlords received protection against property damage and missed rental payments. The report has been published by the Centre for


Policy Studies. Another benefit of the proposal is that an insurance-based model would significantly improve the lives of ‘Generation Rent,’ but at no cost to the Treasury. In the report Brian Sturgess said: “Many people


are simply unable to enter the rental market due to the need for a large upfront deposit to be provided before they move in. These proposals offer a


18 | HMM September 2018 | www.housingmmonline.co.uk


property expert is proposing that the deposit system used in the private rental sector for protecting property from


Polling by YouGov has shown that 43 per cent of renters would support a deposit replacement insurance system with a small cost, rather than the current system of tenants paying large upfront deposits


solution to the inherent unfairness of renters losing out on the interest they would have accrued on such a deposit, and often having to struggle to get their money back at all.” Polling by YouGov has shown that 43 per cent of


renters would support a deposit replacement insurance system with a small cost, rather than the current system of tenants paying large upfront deposits. The report finds the average renter loses over


£300 per tenancy due to lost interest and inflation because of forced participation in the existing deposit protection schemes. Forcing tenants to pay large up-front deposits


means many people struggle to move between properties. They also lose out on earning interest on their money which instead is retained by their landlord or letting agency, and they often face a struggle to get all their money back.


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