Landlords most worried about CGT changes

Landlords are worried Labour’s potential increase to Capital Gains Tax in this week’s Autumn Budget, the Landlord Trends report from consultancy Pegasus Insight has found.

Indeed, If the government introduces significant changes to or reduce allowances on CGT, 39% of landlords say they would not invest further in the PRS, increasing to 48% of landlords with four or more buy-to-let mortgages.

CGT is currently charged at 24% on gains from selling additional property for higher rate taxpayers, or 18% for basic rate taxpayers.

Mark Long, founder and director of Pegasus Insight, said: “This research reveals the depth of concern over the attitude and potential actions of the new government when it comes to the treatment of landlords.

“This concern is all the more striking given the strong evidence that the sector is in fact thriving, despite the challenging environment it has recently weathered.

“The Chancellor would be wise to heed the warning that imposing a heavier CGT burden on landlords could result in quarter of them increasing rents immediately and a sizeable reduction in the number of properties in the PRS in the near term, leading to yet more rent rises as the supply/demand imbalance worsens over the longer term.”

Landlords are also concerned about the introduction of rent caps (79%), the removal of Section 21 no-fault evictions (73%), mandatory landlord licensing (54%) and the requirement for properties to reach EPC ‘C’ (51%).

Despite this negativity, the fundamentals for the private rented sector are promising:

There’s strong tenant demand, while yields are nearing a 10-year high of 6.5% per year.

The Autumn Budget will take place at around 12:30pm on Wednesday.

Via @PropertyWire