NRLA Chief Executive Ben Beadle says this month’s Autumn Statement was a missed opportunity to boost housing supply at a time of ever-increasing demand – with the decision to slash CGT allowance a slap in the face for landlords
Landlords will yet again be penalised by the government, with plans to slash the capital gains allowance revealed in this month’s Autumn Statement.
Chancellor Jeremy Hunt announced the annual Capital Gains Tax Allowance (CGT) will be cut from £12,300 to £6,000 next year, before being halved again to £3,000 from April 2024.
Landlords making a profit higher than this exempt amount will be taxed at a rate of 18% – or 28% for higher rate tax-payers – losing them thousands on sales.
This comes at a time when demand for rented housing is massively outstripping supply and when, more than ever, landlords need the support of the government rather than yet another tax hike.
This situation is unlikely to improve, with rising mortgage rates making homes- ownership increasingly unaffordable, with widening gap between supply and demand forcing rents up for tenants.
This was a real missed opportunity for the Chancellor, who has failed to realise the potential for housing to drive growth and deliver for the economy.
In our submission to the government ahead of the Autumn Statement, we explained that ending the Stamp Duty Levy on the purchase of new rental homes – introduced by George Osborne – could boost Government income by billions.
Research by analysts from Capital Economics suggests that scrapping the levy could boost Treasury revenue to the tune of £10 billion as a result of increased income and corporation tax receipts.
Instead, these cuts to Capital Gains Tax allowances will dissuade investment for years to come.
The last thing landlords or tenants need is what is effectively a further tax hike on the private rented sector. All this will do is discourage investment in new homes to rent and drive up costs for renters, many of whom will already be struggling with the increased cost of living.
According to Zoopla, so far this year, the demand for private rented housing in the UK is up 142 per cent compared with the five-year average, whilst the supply of such homes has fallen by 46 per cent.
The trend of ever-increasing demand takes place despite the number of owner-occupied households in England, having increased by over one million in the past five years.
Something needs to be done to tackle this issue before it reaches crisis point. Some could argue it already has.
The NRLA is taking the lead on this by bringing together a working group of stakeholders from across the industry to develop a range of practical, pro-growth policies to support landlords to remain in the sector and continue to invest, to provide to homes to rent that this country so desperately needs.
About the Author
Ben Beadle is chief executive of the National Residential Landlords Association (NRLA), the UK’s largest trade body for landlords.
A landlord himself since the age of 20, Ben started out as property manager before working his way up through the ranks at Tenancy Deposit Scheme (TDS).
He was then Operations Director at property management business Touchstone before overseeing the merger of the National Residential Landlords Association (NLA) and Residential Landlords Association (RLA) to create the new trade body earlier this year.
His key aims as head of the organisation are to strengthen the voice of landlords in Westminster and Cardiff, to improve the reputation of landlords in the media and to support members through information, training and accreditation.
NRLA: The NRLA updates landlords on all the latest legislation changes affecting the sector and offers expert advice, training and other exclusive services and benefits.