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Capital Gains Tax scrapped for landlords selling to tenants - Tory pledge

The Conservatives say they will scrap Capital Gains Tax for landlords who sell to sitting tenants, if they win the General Election.

The scheme would last for two years and is designed to convince landlords to free up more housing stock, and also benefit long-term renters by increasing their chances of getting on to the housing ladder.

The Conservative manifesto, released today, does not estimate how many people would take advantage of the change if implemented. It is set to cost only £20m a year, suggesting a limited uptake.

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Other housing policies include the return of Help To Buy allowing first time buyers to get a mortgage with a deposit of just five per cent of the property price.

The Government would effectively provide a loan worth 20 per cent of the property; developers would also contribute some money, in a revision to the old scheme.

The Tories are also promising to permanently abolish stamp duty for first-time buyers on properties up to £425,000; at the moment this relief is due to end in March 2025.

At the manifesto launch Rishi Sunak said: “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.”

 

Here's a summary of all the Tory housing pledges made today:

- 1.6m new homes in England in the next Parliament;

- Fast-track planning for new homes in 20 key cities;

- Strong design codes to improve housing appearance; 

- Greater density of housing in London and new regeneration areas in York, Leeds and Liverpool;

- More help for SME builders through reduced S106 obligations;

- Infrastructure Levy to be used on-site at new housing schemes; 

- Cast-iron commitment to protect Green Belt;

- No stamp duty for first time buyers paying up to £450,000;

- A resuscitated Help To Buy scheme and enhanced discounts for Right To Buy; 

- Mortgage Guarantee Scheme to be continued; 

- Tougher on anti-social behaviour by social housing tenants; 

- Pledge not to raise council tax, CGT on principal homes, and stamp duty;

- Temporary Capital Gains Tax break for landlords selling to sitting tenants;

- Leasehold ground rents capped at £250 pa, reducing to peppercorn;

- A Renters Reform Bill scrapping Section 21 and strengthening Section 8;

- Review quality of temporary accommodation for homeless;

- Further help for leaseholders with historic building safety costs;

- New powers for councils to control holiday lets; 

- More planning assistance for self-builders;

- Greater police powers to remove illegal traveller sites.

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    If they thought this was a good idea why did they not do it earlier?

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    They hadn’t called an election then! 😂

     
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    Its all irrelevant - they won't get in!

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    Tinkering around the edges. Won't make a scrap of difference. Rishi is a fool if he thinks anyone is gullible enough to swallow this this one.

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    You could have stopped after FOOL. 😀

     
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    Most tenants can't afford to buy that's why they're renting.
    They're hoping landlords will sell at a reduced price to benefit from not paying capital gains tax... It's a case of six or half a dozen.... What they're offering is basically nothing!

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    Yep good idea, but way way too late ⏰, they are going to be wiped out.

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    Cgt is a total scam anyway. It makes no allowance for inflation.

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    The operative word being “ sitting” tenants.

  • Rob NorthWest-Landlord

    Problem being tenants only want the best houses, the ones you want to keep, and when a tenant last approached me with her intention to buy her valuation was about £40k (25%) below market value. She also had it in her head that if she wanted it she could have it, don't know where that came from. Phrase 'Right to Buy' heard once to often?

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    Yes I had similar experience!! The one I am selling, the tenants will never be in a position to buy, so they had to move on. I had tenants in my better property wanting to buy, but not at a viable price.

     
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    Approximately none of my tenants would or could buy the houses they currently occupy. The self-contained units are almost all occupied by UC assisted low income families. The others are HMOs. Most of the HMO occupants will become homeowners at some point but are far more likely to either do the HTB or move to another country after their visa expires.
    We don't need stupid sound bite policies, we need indexation or taper relief. Just think how much SDLT and VAT would result.
    We also don't need stupid 2 year timeframes, which have repeatedly overheated the market every time cut off dates have been applied.

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    In principle a good idea. In reality it will be viable for close to no tenants.

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    I had a tenant who bought a house this year. She would've loved to buy the house she was renting but could only afford one half the price! That's why they rent!

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    I believe a CGT incentive to sell to tenants is a great idea. Lots of costs saved for both parties. I think mortgage companies could very well support a no deposit type scheme if they have showed they have paid rent on time for say two years. This would get them on the housing ladder and also make it clear to tenant if a LL doesn’t intend to sell.
    They can then move on and buy another house.

    HOWEVER now it will be completely clear that most of the tenants we in fact rent to are in no position due to their circumstances or lifestyle habits to buy the property they live in. They are indeed privileged that we have taken the burden off them.These are the very people that will be affected by Shelter and Gen Rent. The tenant to lower their standard & move to whatever is left in the rental market.

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    Actually, they can say whatever they like, but they aren't going to be in government. They need to be thinking ahead to the next election, and how they are going to get back in, to what will be an even bigger mess than they created. Whatever happens, we have to put up with whatever rubbish politicians want to throw at us and decide when to get out. The viable model currently seems to be SA or HMOs via limited company, but for those of us who aren't in that business, and don't want to be, bad luck.

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    Worried Landlord - Becoming a limited company is the only viable option if you want to remain in the PRS. Sadly the golden days of being a landlord are over.

     
  • David Saunders

    So they intend to outlaw section 21 and make all tenants sitting tenants thus reducing value of property by 50% but the good news is no CGT to pay, what's not to like.

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    Exactly David! Little CGT to pay if properly halved in value. As moving one’s property into a limited company is a taxable event then would be the time to do that and thus get better tax advantage for the future.

     
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    That is spot on David.

    It is in their manifesto:

    "We will pass a Renters Reform Bill that will deliver fairness in the rental market for landlords and renters alike. We will deliver the court reforms necessary to fully abolish Section 21 and strengthen ground for landlords to evict private tenants guilty of anti-social behaviour."

    The capital gains tax exemption would only be available for existing tenants, not to any new tenants.

     
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    Most would neither want or be able to buy even with a discount, no housing benefit and just think of the costs,mortage, repairs,and insurance to pay out

  • Nic  Kaz

    Why would a sitting tenant want to buy the house which they have the right to rent forever? They are sitting pretty….

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    If the sitting tenant gets the property cheap he/she can then sell up with vacant possession and make a huge profit. They then move to another property and become a sitting tenant again. Tenants who took advantage of Right to Buy their Council properties sold on at huge profit especially in London.

     
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    Margaret
    Not all tenants sold under RTB.

    My late parents bought their house under RTB in 1972 and lived in it until their deaths in their 80s - 2010 & 2012.

     
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    Margaret we could have a claw back term in the contract to have 50% of any gain within 10 yrs paid to us, maybe councils should have done this with their RTB

     
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    Margaret - the discount on RTB properties was often less than the cost of bringing them up to a decent standard. Mine had dry rot throughout, needed fully rewiring, new windows, central heating, new kitchen and bathroom. Obviously when I sold it I recouped the renovation costs but it certainly wasn't a huge profit. When general house price inflation is taken into account the RTB scheme didn't actually give much away. What it did do was provide Local Authorities with some cash to maintain their remaining housing stock.

     
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    • A S
    • 11 June 2024 10:07 AM

    Elementary economics (supply and demand) dictates that we have more people than we have housing units in this country.

    The ONLY solution is to reduce the number of people OR build more housing OR a combination of the 2.

    No party have offered a solution that addresses the above. Reform go some of the way with their net zero migration policy but that only keeps the problem where we are today, rather than reversing the problem which is what is needed.

    And again, no journalist ever quizzes these so-called politicians about this. Makes you wonder what the point of all these expensive university degrees is if this is the product of that superior thinking!

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    Jo, I do not believe the local authorities used the money to maintain other properties. Money just got spent or lost in other ventures, probably installation of speed monitors, parking meters etc. Housing and maintenance of them have been low on their agenda. They have always had plans that the PRS will look after all the tenants. Social housing has been decreasing and remaining ones are not being looked after either. I have a bought a property with some discount (was a probate, 15% discount), due to a lot of work needed to be done; damp walls with mould, practically no floors in some areas, no working boiler, chimney and roof needed work, practically everything needed to be gutted out and new walls, flooring, new boiler with new radiators, kitchen, bathroom, roofing, chimney flashings at a cost of 30% extra and took 3 months of work on an empty property, so 15% discount was not sufficient discount. However, now after almost 20 years, the value is a lot higher with a large profit. It depends how long you keep the property. Probates do sell with a discount, but not as much as the discount by LA under the RTB scheme. In consequence the ex-council properties have sold at a very high profits, even after all the work being carried out. Most of the buyers have sold and moved and ben able to buy a home in better areas and also managed to become landlords themselves. These are the good stories, if these buyers are responsible and turn their lives around. There are some buyers who have never been able to take any responsibilities and not able to pay mortgage or get the work done and he properties are repossessed.
    Selling to sitting tenants, how long is it before a tenants are considered sitting tenants. I rather pay the CGT, then give the tenants a discount of over 20%. I will avoid sitting tenants. Not let the properties to working tenants but mostly to students.

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    Bearing in mind that the CGT is paid on profits and not on the selling price, so why give them even 20% discount on the valuation or an offer price. So for most landlords, a discount is not viable. Tories are on the way out, anyway. Labour wants to turn all properties into social housing with landlord's investments and all the work done by landlords with a license scheme. There will be some landlords remaining under these circumstances, maybe they have made their profits and they feel nothing matters any more to stay in renting. We all have different agenda, different expectations from our properties. Some will wish to call it a day and sell their properties within 2, 5 or 10 years.

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    I have a couple of houses that I've offered to sell to tenants but they have said that they can not afford them. They will be sold once the tenants leave.

    I had 1 last year that was interested buying another 1, 2 years ago but their circumstances changed and they also can not afford to buy it now.

    Shame as if I could sell with zero capital gains tax, I'd happily sell it.

  • Sarah Fox-Moore

    This sounds like a good idea, but in reality will be taken up by a miniscule number of people & basically make zero difference.
    I would love it if my Tenants could buy one of my properties, but even with a discount, l doubt very much they can afford it. Plus the Tories aint getting in. No chance.

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