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Property Tax reform
could encourage landlords to sell to private tenants
REPORT into Britain's Property Taxes reveals that
taxation reform could be key to tackling housing crisis.
The Chancellor should help generation rent to own their current properties
through the reform of Capital Gains Tax according to a new report by the
Royal Institution of Chartered Surveyors (RICS).
The RICS Property Tax Report says that the Chancellor should use his budget
to deliver and then stick to a clear property Tax policy, to give private
tenants, home buyers and investors the clarity, certainty and predictability
they need for future stability and growth.
Jeremy Blackburn, RICS Head of Policy said:- "The Government has
changed its policies around property Taxes more often than the Chancellor
has been pictured in a hard hat. That has resulted in uncertainty in the
property market. What we need is a period of stability and we would call on
the Government to set a course and see it through. This budget, the
Chancellor is due to announce his new 'Business Tax Roadmap', it is critical
that Property Taxes are included in this plan."
The Report identifies and proposes solutions for the UK's most unworkable
Property Taxes. Capital Gains Tax (CGT) is identified as 1 of the
Country's least effective taxes for delivering the Government's housing and
property policies.
Buy to let investors are liable for CGT whenever they sell their property,
which is often perceived to be a barrier to the release of available homes
on to the market. Recent research from the Residential Landlords Association
suggested that 77% of private landlords would consider selling their
property to tenants if the Tax liability was waived.
Given the Government's focus on home ownership, RICS recommends one way that
homes could be delivered is if the UK's 3.84m private landlords were
incentivized to sell to existing tenants. If just a fraction were encouraged
to sell at affordable rates, thousands of new homes could potentially be
released onto the market. Further incentives could then be provided to
encourage the seller to invest in further rental properties.
Ros Rowe, Chair of the RICS Taxation Policy Panel Group said:- "By
removing Capital Gains Tax for landlords, the Government could find a
solution to the housing crisis that it has been so keen to address. Houses
could be released to private tenants with the funds reinvested in more
homes"
The report recommends that the proposed change to Capital Gains Tax should
be the carrot that encourages landlords to sell their properties and
reinvest in the rental market. However, RICS feels that the new Stamp Duty
increase for buy to let investors is a disincentive to the expansion of the
much needed Private Rental Sector (PRS). As such, the report is calling for
the Stamp Duty increase to be waived for large institutionalized landlords
to encourage the growth of the professional PRS.
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