The Chancellor, Philip Hammond, has been called upon to consider a new report as part of his Autumn Budget later this month. The Chance to Buy Scheme proposes that UK landlords should receive a considerable tax break if they sell their property to tenants.
Currently landlords face paying 28% capital gains tax on the profits of any rental house sale. The scheme would lead to landlords being exempt from this on the basis that they sell their home to tenants who have been living there for at least 3 years.
The tax break as a result of the sale would be shared equally by both landlord and tenant, ensuring tenants are able to move forward with the purchase with a sizeable deposit. The proposed policy addresses the shortage of properties for first time buyers and is designed to assist first time buyers who are currently renting, to make the move from renting to ownership.
With over 20% of all homes in the UK being privately rented, the report has been drawn up by Will Tanner, Theresa May’s former deputy policy chief, in a bid to address the housing crisis. The tax break is designed to encourage landlords to offer tenants longer tenancies, increase the number of properties for sale and ensure that both landlords and tenants gain from a rental house sale.
According to research by the Institute for Fiscal Studies (IFS), many young people face increasing unaffordability of home ownership. House prices in the UK have grown much faster than the income of young adults, with average UK house prices growing by 152% in the last 20 years compared to the average family income which has grown by only 22% in comparison.
Pursglove & Brown can help you with any questions you have about landlord taxation – call 01244 400315 or email [email protected].