A finance chief is warning that the threat of possible rises in Capital Gains Tax should be dismissed by the government to help the buy to let sector.
Jonathan Samuels, the chief executive of Octane Capital, says: “The government has tried its hardest to dampen investment into the private rental sector in recent years, with a string of legislative changes around tax relief, stamp duty and tenant fees reducing the profitability of buy to let investments.
“The pandemic has also proved problematic for some landlords who have suffered lengthy void periods due to factors such as the tenant eviction ban and a reduction in rental demand across our major cities, in particular.
“Despite all of this, the sector has stood tall and continues to provide the vital rental market backbone that so many are reliant on.
“At the same time, the nation’s landlords have benefited from a considerable level of capital appreciation on their buy to let investment and the value of the sector as a whole has increased substantially.
“Let’s just hope that whisperings of a higher rate of capital gains tax remain just that, as any further increase could spur a reduction in available stock, causing the total value of the market to decline.”
His comments come after research by his firm which has revealed that the UK’s buy to let sector has grown substantially over the last five years, increasing by almost £240 billion.
Octane Capital analysed the level of privately rented stock across each region of the UK in relation to current market values to find the total worth of the sector. It then compared this buy to let bricks value to 2017 to reveal how it had changed over the last five years.
Octane says there are an estimated 5.5m private rental properties within the UK rental sector and based on current market values, Octane Capital estimates the total value of the nation’s BTL stock to be £1.7 trillion.
With just over a million private rental homes, the London market accounts for 19 per cent of the UK total. With the capital also home to the highest property values, it sits top of the buy to let sector at over £500 billion in value.
The South East is home to the next most valuable buy-to-let market at £247 billion with combined BTL values also exceeding £100bn in the East of England, South West, the North West and the West Midlands.
Octane Capital estimates that the UK’s buy to let market has climbed by £239 billion since 2017, a 16.8 per cent increase.
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Imagine that private rented sector worth £1.7 trillion built on a small foundation that we created when you were making a horse out of the dog, namely Section 21, so now you are removing the foundation before which there was no residential letting, careful now it might end up like Zuckerberg Shares you might be increasing c/gains tax on froth & bubbles.
A tax on inflation is totally unreasonable and unfair, inflation is not profit.
The Government must resist the jealousy tax. We already now pay tax on money we do not receive as an income, namely the mortgage cost minus 20%. This effects Landlords with mortgages whom now potentially have more income in the 40% tax bracket.
Maybe the government should focus on ensuring that the largest companies are paying their fair share of tax, Amazon, Facebook etc.
Lastly, what about other investments. Why not bring them in line with property CGT. This would be levelling up surely!
They already invented a higher rate capital gains tax
especially for us, plus scrapped indexation relief and tapered relief, so it is tax on inflation.
The value of the PRS to the Treasury is considerable.
I pay Income Tax on my lettings, you probably pay Income Tax on your lettings.
If everyone owned there own home, the Treasury would get nothing.
So for financial reasons alone, the Government should be protecting, encouraging, and expanding the PRS
Bill, yes we do and 40% tax payers at that’s a substantial amount twice a year.
The PRS is simply too ' tasty' to ignore in terms of a cash grab, the public will love it and the govt will have no shame doing it..... and no comeback. I can see this coming in, in the near future, as i have said before ' We are sheep to be sheared'.
This sheep is leaving the flock.... Second property gong on the market at the end of the month followed by the other 9. I'll take my profits less capital gains and reassess where to invest my hard earned money.
This is like an action replay from the seventies, win votes by being nasty to those horrid landlords that are encouraged/forced to sell and hence pay CGT or be stuck with sitting tenants, then when homeless figures go up and property sales falters, bring in a scheme to encourage investing in PRS and start all over again.
I don’t want to say I told you so but I have been banging away about this for a long time.
The Interest rate should never have come that low ever. Driving property prices mad the place was wash with cheap money not sustainable. BoE given freedom to change interest to control inflation ?, never going to work long term only to Abolish Savers and add them to the problem….
How many opportunities did they miss, they were bringing interest rates down when it should have been going up. Ok now expect all the people you roped in to over priced property by collusion, SDLT manipulation and ponzu Schemes some for 35 years to be able to pay and cope by magic, what’s all this education you keep on about their mentor’s not very good.
I agree, interest rates silly low, should never have dropped below 6%, too much cheap money around encouraged too much debt and discouraged savers, now it's pay back time and the pips will squeak
We need savers and very young savers as well to get them into the idea of saving which is crucial later in life. Then the economy can work others can borrow this for business and put to good use. We now have a generation after grown up on credit no nothing else or savvy about the little money they have. I always saved half my wages in the 60’s it might only be £1’000 per year but it
went in to post office saving Acc’ every Saturday evening.
Savers now made a mockery of, say in recent years you had savings at Bank sitting there all year with no return and Property went up 10% your savings lost 10%.
(Middlesbrough scored).
Have today pay tomorrow can only end in tears
I have long thought that credit cards should be abolished.
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