Industry news


Landlord tax relief proposals revealed in Onward report


Conservative Think Tank, ‘Onward’ has revealed proposals for the tax relief to encourage landlords to sell to sitting tenants and to offer longer leases. It says the Government should introduce a 50 per


L


cent capital gains tax (CGT) exemption, or ‘Landlord Sales Relief ’, on existing rental properties that are sold to tenants who have lived in a property for three or more years continuously. The report argues this would encourage


landlords to offer long-term tenancies and sell to sitting tenants. The proposals have been cautiously welcomed by the Residential Landlords Association. David Smith, Policy Director for the RLA said:


“We welcome Onward’s acceptance of the need for more positive taxation in the rented sector which the RLA has long argued for. Last year, we suggested using CGT reliefs in a similar way to that being proposed. “Since then, a report by academics at Cambridge


University for the RLA has argued that it is not clear whether a reduction in the rates at which CGT is applied would incentivise landlords to sell their properties to sitting tenants. “A more suitable approach would be a tax relief


on rental income for the provision of longer tenancies with a refund on the stamp duty levy for additional properties where a landlord is prepared to sell a property to a sitting tenant.” He added: “Where Onward is wrong is in its call


for landlords to disinvest from the sector. “With the demand for private rented homes


showing no signs of abating, and the Institute for Fiscal Studies warning of the difficulties many young people have affording a home of their own, to choke off the supply of rental homes would leave many young people stranded and continuing to rely on the home of mum and dad for a place to live. “The Chancellor should use his budget to scrap


the stamp duty levy on additional properties where landlords are prepared to invest in property adding to the net supply of homes. This could include bringing empty homes back into use, new build properties or converting larger properties into


andlords could be offered capital gains tax relief to encourage longer tenancies and sales to tenants in private rented housing.


The report estimates some 1.9 million households would be eligible for these new reliefs, with around 88,000 households benefiting each year, based on current rates of churn and expected take-up


smaller, more affordable units. To tax new housing supply given the current housing crisis we face is simply ludicrous.” In addition to the 50 per cent capital gains tax


exemption the report proposes HMRC should offer any tenant buying a property in which they have lived continuously for three or more years a ‘Long- Term Tenants Credit’ equivalent to the remaining 50 per cent of capital gains tax relief on that property. The report suggests this would operate as a contribution towards the deposit they require to secure a mortgage on the property. “To further encourage longer tenancies and


landlord divestment, the Government could consider extending the relief to any landlords selling to long-term tenants of any property, not merely


those currently resident in the landlords property. This would extend the scope of the policy” Onward suggests that under its proposals:


• In England, an average landlord selling under the scheme could expect to benefit from Landlord Sales Relief worth an estimated £7,500, rising to £19,500 in London.


• The average tenant would benefit by up to £7,500 towards their deposit for a mortgage, providing significant help towards their first home. This rises to £19,500 in London.


The report estimates some 1.9 million households would be eligible for these new reliefs, with around 88,000 households benefiting each year, based on current rates of churn and expected take-up.


Events


London Development Conference 2018 21 November, London londondevelopment.housing.org.uk


Welsh Housing Awards 2018 23 November, Cardiff www.cih.org/events


Homes 2018 27 November, London homesevent.co.uk


Social Housing Annual Conference 5 December, London www.insidehousing.co.uk/events


Futurebuild 5-7 March, London www.futurebuild.co.uk


6 | HMM November 2018 | www.housingmmonline.co.uk


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