Landlords Feel The Wrath Of Budget Week
Chancellor of the Exchequer George Osborne has recently announced that the brand new reduction in the rate of capital gains tax will not be applied to UK investment property. Could this announcement result in “buy to let” discrimination becoming more common? The Chancellor used “Budget week” to send out a message of intent, stating that the UK will be standing firm in the camp of house buyers and has little interest in supporting landlords and their growing profits. This development means that landlords will not benefit at all from the new rate of 20% for higher rate taxpayers and 10% for lower rate taxpayers, which was introduced for the new tax year starting on April 6. Instead of this new benefit, landlords will continue to pay the current rate of 28% & 18% respectively, on any gains made when they sell the property. This new development has been heavily criticised by the property industry, it has been widely speculated that this move could lead to far fewer homes on the market for sale and a rise in house prices, as it discourages potential investors from selling. Many landlords are still feeling the knock on effects of the Chancellors previously announced tax changes and are continuing to offload their less financially viable properties.
Industry Experts Have Their Say
A Spokesperson for the estate agent industry recently added; “If the Government dissuades investors from selling their property because of significant tax charges, the market will become entrenched”. “Despite the Government wanting to increase availability stock, house prices may be pushed up as investors put fewer properties on the market, which could allow an asset bubble to grow”. “The Government should stop discriminating against the buy-to-let industry as investors play a vital role in ensuring labour mobility and improving the standard of rental stock”. David Cox, Managing Director of the Association of Residential Letting Agents, also agreed by saying: “This is now the 3rd 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 latest changes announced by the Chancellor, the supply of available property is bound to decrease, and as a result rents will rise”. It is clear to see that the Chancellor has had landlords profits in his sights during the past year and this latest move to deny them the tax breaks enjoyed on other assets means this trend shows little sign of going away any time.
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Author: Michael O'Hara