Generation Rent could be made central to the Budget later this month.
A front page story in yesterday’s Sunday Times suggested that ministers are looking at a new Rent to Buy scheme, by which private landlords could be incentivised to sell properties to long-standing tenants without having to pay Capital Gains Tax.
Landlords currently have to pay 28% CGT on any profits they make when they sell.
The plan would also encourage landlords to let longer term, because the CGT exemption would kick in only after the tenant had been in situ for three years.
The Government is due to publish its response shortly to its consultation on three-year tenancies.
The Sunday Times credits a think tank called Onward, set up by former No 10 policy chief Will Tanner, with the CGT-exemption idea. The paper says that the plan is to be unveiled today.
In fact, the Residential Landlords Association has been campaigning openly for some time for private landlords to be exempted from CGT when they sell to tenants and has briefed politicians very specifically on this, carefully presenting it as a benefit to tenants rather than a tax perk for landlords.
However, Onward has tied in the proposal with the politics and in particular Tory prospects at the next election: the shift from home ownership to private renting is greatest in marginal constituencies which the Tories need to win. In 2001, there were 18 seats where private renters made up over 20% of households, and by 2022 there will be an estimated 253 such seats.
Analysis by Shelter has suggested from 50% of private renters voted Labour in the 2017 General Election, while only 28% voted for the Tories.
Comments (5)
Have to say that this means almost nothing! In the past 15 years we have had 2 tenants purchase their properties from their landlord both at the lower end of the market. We have had several who have asked the question but have been unable to either raise deposit or arrange a mortgage so I cannot see this wheeze setting the world alight!
If they really want to make rental easier they need to make it easier and attractive for landlords. I just do not think the government have any idea about how housing operates in the UK. There are vast amounts of money available in the private sector which would pour into property investment if it offered a sensible return and sensible tax breaks for the investors.
Not so many years ago we nearly saw SIPS allow property to be held in them, the government bottled it at the last moment. Pension investors are sitting on billions, make it a bit more tax efficient and attractive for the investors and it does not take a rocket scientist to realise that money will go into it. Surely it is a win win situation, lots of private landlords saving tax and getting an income, more property for tenants with controls put on by the government stipulating longer terms and controlling rent levels and increases.
For the most part I agree, apart from the Government involvement in longer tenancies and rent levels. Increases, yes, can’t be above a certain % of inflation/annual rent, but most Tenants like having more flexible contracts, and if there is adequate housing then rents will naturally be more level. We don’t need those with no idea of the industry or market shoving in saying that all rents are too high and we need to drop them immediately by £150 per bedroom. Which you know that shower down in London would decide was a great idea…
This is fruitless deck chair shuffling. Few tenants save anything.
What Onward should research and promote is the withdrawal of S24 who’s decimating the PRS where almost 140000 households will have been evicted due to landkords being forced to sell as it he tax on mortgage interest payments is bankrupting thousands. Get focused on what matters, not popularist ideas that won’t work.
I think it will be pretty rare if this scenario comes into play between a landlord and tenant .. being able to agree a price and then a tenant actually being able to get a mortgage having both deposits and adequate credit rating, I’d say majority are renting because they can’t buy for varied reasons .. a lot of boxes needing ticked before this will work. Just another attempt to win generation rent voters without giving anything away,