Landlord Assist, the nationwide tenant eviction and referencing firm, has urged the coalition Government to offer better tax incentives to private landlords in an effort to stimulate more investment in the private sector and also help with the current housing crisis in many parts of the UK.
Private landlords currently pay income tax on all rental profits and then they pay capital gains tax on any profit made if they sell a property. This means many landlords are facing tax bills of up to 29% of the value at the point of sale, meaning a large number are deciding not to re-invest back in the market once they sell a property. This knock-on effect has seen the rental sector experience a shortage of new properties coming onto the market, despite huge demand from people who are struggling to find the deposit required by lenders to buy their own home. Landlord Assist feels the coalition need to recognise the vital role played by landlords and provide financial incentives to encourage them to reinvest their money in a property that will be protected by landlord insurance.
Graham Kinnear, managing director at Landlord Assist, said “In some EU countries like Spain, residents can claim capital gains tax relief if they intend to invest the proceeds of the sale back into property or a percentage relief if only a portion of the property sale is reinvested. Allowing landlords in the UK to release capital with fewer capital gains tax liabilities would generate new properties and provide some much-needed stimulation to the housing market which would help to ease the housing crisis which currently exists in the private rented sector. Not only do landlords provide vitally needed accommodation in the private rental sector but they also provide revenue by way of stamp duty, professional fees, letting agent fees and refurbishment expenditure.”
On the whole private landlords were overlooked in the Budget but industry experts believe there is scope to help them which in turn would help tenants and the economy in the United Kingdom. They say breaks in capital gains tax would encourage landlords to buy more property and a stamp duty break for those buying to let would also be well received by all concerned.