Nearly a million homes will be lost to the rental market if Chancellor Rachel Reeves (main picture) goes ahead with a widely-rumoured increase in Capital Gains Tax (CGT), it has been claimed.
Reeves is said to be considering a rise in CGT in the Budget later this month despite warnings it could have a devastating effect on the private rented sector.
End the war on investors
Now, consultancy Capital Economics claims more than 900,000 rental properties will be taken away during the next ten years, with 790,000 sold and another 120,000 buy-to-let purchases not taking place.
If Reeves aligns CGT with income tax as has been suggested, it will mean the tax increases from 24% to 45% for higher earners.
The Daily Telegraph, which reported on the research findings, has launched a campaign calling on Labour to “end its war on property investors” and “risk driving decent landlords out of the market”.
Dominic Agace, Chief Executive of UK estate agency Winkworth, says the post-election boost to the property market has been undone by the vacuum created as everyone waits to see what Reeves has in store on October 30th.
He warns Reeves: “The first step has to be macro-stability and effectively not intervening too much in the UK economy. In prime London, wealthy high net individuals are deeply concerned.
“Inheritance tax is the focus for the overseas investor who chose to move to London, having built their business and then to be told their family wealth will be taxed in the UK, it’s a step too far for many of them.
“Capital gains tax hikes are making landlords trade their long-held buy to let investment. We need to see investment in the court system if you remove no-fault evictions for those anti-social tenants so that landlords have a reasonable timeframe to address these challenges. Otherwise, why be a landlord?”.
Sales surge
Simon Gammon, Managing Partner at Knight Frank Finance, told The Telegraph an increase in CGT would see a wave of second homes and rental properties put up for sale.
Landlord purchases are already at a record low.”
And Aneisha Beveridge, Head of Research at Hamptons, told The Times: “Landlord purchases are already at a record low, with buy-to-let investors making up 10 per cent of all buyers so far this year.
“Consequently, we’re likely to see a further loss of around 30,000 private rental homes across Great Britain this year, a trend which is unlikely to reverse over the next few years.”
Propertymark warned that many landlords are set to exit the PRS or switch to short-term lets when the Renters’ Rights Bill becomes law.