Potential Budget CGT relief and profit split for selling to long term tenants?

Potential Budget CGT relief and profit split for selling to long term tenants?

9:18 AM, 8th October 2018, About 3 years ago 38

Text Size

On Friday we reported on the RLA Press release RLA ask for longer term tenancy tax incentive

However, over the weekend the Sunday Times has reported that government may consider adding an incentive to Landlords for selling to their long term tenants in the Budget on 29th October.

The Article said: “Under plans that have found favour in Downing Street, landlords would not pay capital gains tax when selling to tenants who have lived in a property for three years or more.

“The plan is designed to spur landlords to offer longer tenancies and then to sell on to a new generation of homeowners. Conservatives say a plan could be unveiled their think tank, “Onward” and is under consideration for inclusion in the Budget”

Potentially landlords would be eligible for CGT tax relief with the profit split equally with the tenant, who could use it as part of their mortgage deposit.

News from the Onward Website, Click Here to view, said:

“A new policy paper on the private rented sector in England, argues for a new route to ownership for private renters and greater incentives for landlords to offer long-term tenancies.

“The paper argues that Ministers should give Britain’s private renters a new Chance to Buy their rented home by rewarding landlords who sell to long-term tenants.

Onward’s  3 proposals:

  • Existing buy-to-let properties would be eligible for 100% capital gains tax relief if the property is sold to a sitting tenant who has lived there for 3 years or more.
  • The gain from this tax relief would be split evenly between the landlord and the tenant, giving the landlord a windfall when they sell and the tenant thousands of pounds towards their mortgage deposit.
  • Onward proposes that the Treasury should pay for this policy by tightening other tax reliefs for buy-to-let investors, including reducing the Private Residence Relief period from 18 months to 6 months and abolishing Lettings Relief of up to £40,000.

Therefore, for Landlords there will be some element of giving in one hand but taking from another.



Comments

by DALE ROBERTS

14:35 PM, 9th October 2018, About 3 years ago

Reply to the comment left by Douglas Barley at 08/10/2018 - 09:50I'm bemused by the constant regurgitation of "housing shortage" so often thrown into any discussion when landlords need to castigated.
The only housing shortage I note is that provided by the state. Any property site advertising private property sales is a woeful litany of properties that have languished unsold and unwanted for months. My own unit has been on the market since July and the only two offers I received were so below market value I declined both.
Developers are aware that private buyers are scarce and are subsequently discounting new builds.
My conclusion is that the constant anti-landlord rhetoric has had a rebound effect. Landlords have become extremely fastidious about who they rent to and this has resulted in a reduction of available homes for any benefits recipient. The loud and unsubtle further threats from government has compounded this private shortage - some landlords (like myself) preferring to sell and others (like myself) preferring a vacant property to a difficult tenant who has the right to not to pay you, trash your property, and go on to do the same to another unwary private landlord because the law as it presently stands permits this.
It appears the UK government has absolutely no clue as to how to reduce the very expensive and accumulative demands from benefits recipients unless it includes making the private landlord responsible.
And this is inexcusable, dated and shortsighted.

by Luke P

16:45 PM, 9th October 2018, About 3 years ago

Reply to the comment left by DALE ROBERTS at 09/10/2018 - 14:35
Possibly 'Comment of the Year', Dale...

Certainly plenty of good sense, in any case.

by Joey

10:19 AM, 10th October 2018, About 3 years ago

To clarify - would we still get our £11,700 CGT relief each + money spent on the property deducted, then split the remaining profit with the Tenant ? - It seems that 2 x £11,700 CGT relief each + money spent on the property deducted then pay 28% on the profit made is the better option - Am I seeing this correctly ?

by Whiteskifreak Surrey

10:49 AM, 10th October 2018, About 3 years ago

Reply to the comment left by Joe Shane at 10/10/2018 - 10:19
Thanks for that question Joe, as for me it is completely unclear how much money from the profit we will have to split with the tenants? I am not sure if that has been clarified as this is a proposal only at this stage. But - to be honest - I do not expect anything good for us from this communism-oriented Government...

by Joey

10:55 AM, 10th October 2018, About 3 years ago

Reply to the comment left by Whiteskifreak Surrey at 10/10/2018 - 10:49
Thank You

by Deb

11:55 AM, 10th October 2018, About 3 years ago

So the landlord takes all the risk and hassle of maintaining the property and then shares the 'windfall' with the tenant who has done nothing? Seems a bit of a rubbish idea to me!

by Dee Mc

14:49 PM, 10th October 2018, About 3 years ago

What about someone who owned their property for say 25/30 years but say let it out for 3 or 4 years during this time? Currently, it would be highly unlikely they would have to pay any CGT even if they had a substantial profit. Now if the relief is reduced even further to 6 months and letting relief is removed they could now be facing a CGT bill when selling their home.

TBH I don't know why the government doesn't just go straight for the throat. Remove all relief and tax the PRS at 100%! Mark where in Malta did you say was nice?

by Mark Alexander

15:07 PM, 10th October 2018, About 3 years ago

Reply to the comment left by Anonymous at 10/10/2018 - 14:49
I appreciate your final point was probably 'tongue in cheek' but on the offchance is wasn't ... I live in Sliema, which faces Valetta (7 minutes by ferry) and is next door to St Julians. They are the three best places in Malta IMHO, but then again, we all like different things don't we.

by Dee Mc

15:18 PM, 10th October 2018, About 3 years ago

Reply to the comment left by Mark Alexander at 10/10/2018 - 15:07
I'm seriously giving it consideration. Was in Malta last year but only for a week. Would definitely agree you are at the nice end of the Island.

I had no desire to leave the UK but sadly it seems the Government are leaving good landlords little or no choice.

by Joey

20:20 PM, 10th October 2018, About 3 years ago

Anyone know the answer to this Question : W ould we still get our £11,700 CGT relief each + money spent on the property deducted, then split the remaining profit with the Tenant ? -

It seems that 2 x £11,700 CGT relief each + money spent on the property deducted then pay 28% on the profit made is the better option - Am I seeing this correctly ? ? ?


Leave Comments

Please Log-In OR Become a member to reply to comments or subscribe to new comment notifications.

Forgotten your password?

BECOME A MEMBER