The Government has signalled a clear intent for private landlords to sell off their properties and exit the housing market, according to insights from Jeremy Hunt’s Spring Statement briefing document. The details, unearthed within the Treasury’s notes following the Chancellor’s speech to parliament, shed light on the rationale behind lowering the higher rate of Capital Gains Tax (CGT) on residential property disposals from 28% to 24%.
Tax Adjustments Aimed at Housing Market Shift
This strategic tax reduction has been interpreted by some as a gesture towards landlords who have seen their tax liabilities soar due to the gradual elimination of mortgage interest relief. However, the Treasury document clarifies that the objective is to stimulate landlords and second home owners to liquidate their assets. The move is designed to increase property availability for a range of purchasers, notably first-time buyers, whilst also generating additional government revenue throughout the forecast period.
“The lower rate will remain at 18% for any gains that fall within an individual’s basic rate band,” the document states, indicating a targeted approach to encourage property sales in the private rental sector.
Industry Reactions to CGT Changes
The government’s stance has sparked a mix of reactions within the property industry. Amy Reynolds from Anthony Roberts, an estate agency in Richmond, London, highlighted potential repercussions for the rental market, suggesting that the CGT cut could further deplete rental property availability, putting tenants, particularly those grappling with high rents, in a tough spot.
Conversely, Nicky Stevenson, CEO of Fine & Country, praised the CGT reduction as a positive step for increasing housing supply. Stevenson sees the announcement as a motivator for hesitant landlords contemplating selling, thereby offering relief to first-time buyers who have struggled amid rising interest rates.
The Treasury’s explicit encouragement for landlords to divest their properties underscores a significant shift in policy direction, aiming to reshape the UK’s housing landscape with implications for landlords, tenants, and prospective homeowners alike.
