George Osborne has slashed the capital gains tax (CGT) rate – but not for landlords, prompting an angry response from the industry.
Osborne announced in the Budget that the CGT 18% rate will reduce to 10% and the 28% rate will reduce to 20% for chargeable gains. However the new rates do not apply to chargeable gains accruing on the disposal of residential property (that do not qualify for private residence relief), and carried interest.
David Cox, managing director of the Association of Residential Letting Agents (ARLA), said that this is now the third Budget which directly attacks landlords.
“The sector has been punitively taxed, with stamp duty on buy-to-let properties, mortgage interest relief and now capital gains tax changes. It’s an outright assault on the sector.
“Every other sector has been offered a tax break – yet there is nothing here to help the private rented sector, including landlords - and most importantly tenants - who will see rent costs rise to subsidise the taxes that landlords pay on property. The government talks about wanting to help the younger generation get onto the property ladder, but with the changes announced today the supply of available property is bound to decrease, and as a result rents will rise.
Richard Lambert, chief executive officer of the National landlords Association (NLA), said: “The Chancellor said that this government would tax the things it wants to reduce not the things it wants to encourage. On that basis, it’s clear he does not regard ordinary people putting their own money into providing homes as worthwhile.
“The steady upward ratchet of taxation on landlords over the past year shows that George Osborne is determined to bear down on the private rented sector, but he still depends on the tax revenues he expects to pull in from them.
“The NLA called for a short term easing of CGT to allow landlords to restructure their portfolios or to exit the market altogether but it appears that however much he wants us out, he can’t afford to allow us to leave.”