Chancellor George Osborne has launched another attack on the buy-to-let sector in today’s Budget.
Proceeds from investment in residential properties will from 6th April attract capital gains tax at eight percentage points higher than nearly all other asset classes – which we at the RLA believe will deter would-be landlords from investing in the sector.
With forecasts that a million new rental properties will be needed over the next five years whatever the Government does to encourage home ownership, this will lead to further shortages driving up rents.
Whilst Ministers have argued that landlords are crowding out home owners from the housing market, research by Professor Michael Ball of Reading University has shown that many of the properties landlords invest in are not wanted by first time buyers. By choking off investment, the spectre of housing blight and empty homes that landlords are good at bringing back into use is very real.
The RLA, supported by the Royal Institution of Chartered Surveyors, had called for CGT relief where a rented property is sold to a first time buyer or sitting tenant and then re-invested in a new rented property. Research for the RLA had found that 77% of landlords would consider selling properties if such a policy was adopted.
Commenting on the Budget, RLA Chairman, Alan Ward said: “The Chancellor could have used this Budget to encourage and support landlords to invest in much needed new homes to rent.
“Instead he continues his attack on rented housing despite all the evidence showing that landlords are taxed more heavily than home owners and that they buy and improve many properties that otherwise are left empty.”