The Conservative Party has announced plans to eliminate Capital Gains Tax (CGT) for landlords who sell properties to their sitting tenants. This initiative aims to increase housing stock and help long-term renters become homeowners.
Details of the scheme
The proposed scheme, set to last for two years, is designed to encourage landlords to sell properties to their current tenants. This move is expected to benefit long-term renters by improving their chances of getting onto the housing ladder. The news was reported by the Daily Telegraph, which claims to have had an advance look at the Conservative manifesto, due for official release later today.
While the manifesto does not estimate the number of people likely to take advantage of this change, it is projected to cost only £20 million a year, suggesting a limited uptake.
Additional housing policies
Other significant housing policies in the manifesto include the revival of the Help To Buy scheme, allowing first-time buyers to secure a mortgage with just a five per cent deposit. The government would provide a loan worth 20 per cent of the property value, with developers also contributing funds, in a revision of the previous scheme.
The Tories also promise to permanently abolish stamp duty for first-time buyers on properties up to £425,000. Currently, this relief is scheduled to end in March 2025.
Rishi Sunak’s statement
At the manifesto launch, Prime Minister Rishi Sunak says: “We Conservatives have had to take difficult decisions because of Covid. But we are now cutting taxes for earners, parents and pensioners. We are the party of Margaret Thatcher and Nigel Lawson, a party, unlike Labour, that believes in sound money.
“In this party, we believe that it is morally right that those who can work do work, and that hard work is rewarded with people being able to keep more of their own money. We will ensure that we have lower welfare so we can lower taxes.”
Despite this, the Conservatives will not pledge to cut or abolish inheritance tax, a move that has disappointed some within the party who have long advocated for this change.
Industry response
Nathan Emerson, CEO of Propertymark, responded to the announcement: “Propertymark welcomes the concept of tax breaks, and we would like to see more support for homeowners. However, if the Conservatives are serious about supporting the private rental sector to grow, then they need to reverse the changes to mortgage interest relief and reduce the amount landlords pay when purchasing a buy-to-let property.”
Implications for landlords
The Conservative Party’s proposal to scrap CGT for landlords selling to tenants could provide a significant boost to both the housing market and long-term renters. By incentivising landlords to sell to their tenants, the scheme aims to increase housing stock and support renters in becoming homeowners. However, the effectiveness of this policy will depend on its uptake and the broader support measures for the private rental sector. For landlords, understanding these changes and their potential impact on investment strategies will be crucial as the new policies take shape.
