Kevin Hollinrake, the Conservative MP and co-founder of Hunters estate agents, has tabled an amendment to the Finance Bill calling for landlords to be charged a reduced rate of capital gains tax (CGT) if they sell a property to a sitting tenant.
Earlier this year, the MP spoke out in favour of buy-to-let landlords by insisting that they should never have been denied a tax break on their property profits after the now former chancellor George Osborne excluded them from a significant CGT cut in his Budget statement.
Landlords continue to be stung with a hefty 28% CGT bill when they sell up, a rate that the former chancellor himself described as one of the “highest in the developed world”.
Residential property was deliberately excluded from the tax cut that sees investors in other types of asset benefit from the higher rate of capital gains tax reduced from 28% to 20%, while the basic rate was reduced from 18% to 10%.
Now Hollinrake has tabled an amendment to Clause 72 of the Finance Bill that would extend the new 20% CGT rate to private landlords when they sell their rented property to a sitting tenant.
The motion to put the measure into an amendment to the Finance Bill, which is currently going through parliament, was originally put forward by the Residential Landlords’ Association (RLA) which believes that a growing number of landlords are now thinking about exiting the market as renting becomes financially unsustainable for them.
Research, conducted by the RLA earlier this year, found that 77% of private landlords would consider selling their property to tenants if the tax liability was reduced.
RLA policy director, David Smith, said: “Many landlords are now considering their future in the market following recent tax increases whilst others will be looking to sell as part of the natural churn of properties in the rental market.
“This amendment would help achieve the Government’s aim of encouraging and supporting home ownership for aspiring first time buyers whilst easing some of the excessive tax burdens recently placed on landlords.”