Proposals Could Help Generation Rent
Following the Conservative party conference, rumours have been circulating regarding the government’s plans to help ease the housing crisis. As the Autumn Budget approaches, fresh concerns of how the government could tackle the increasing reliance on private rental properties has emerged.
The conservatively minded think tank, Onward, suggests that making rental properties exempt from Capital Gains Tax (CGT) if the property is sold to a long-term tenant could be a potential solution.
In the proposals, a tenant would need to have rented the property for over three years to be eligible.
A 50% reduction in CGT would then be offered to the landlord selling the property with the remaining 50% being offered to the tenant as a deposit contribution; helping the renter with the funds that they may not be able to save because of the rent obligation.
This additional revenue would be generated by amending current tax reliefs in the help-to-buy schemes.
The think tank has hypothesised that this would then help 500,000 people, over the next five years, leave rented accommodation and buy a home of their own.
Currently, capital gains tax could cost a landlord up to 28% of a property’s profits. Such a saving could encourage more landlords to sell and help finance a deposit for the generation stuck in rental homes.
The suspected financial implication would mean that the government would need to find around £1.3 billion a year to fund the scheme. Further estimations indicate that the average property capital gain could be in excess of £15,000; the thought of receiving £7,500 each would be a welcome bonus to renters desperate to save the deposit needed to buy the property.
While the proposal is being considered by the government for their autumn budget, there is no certainty that it will be implemented. However, when the government are actively trying to reduce the gap between the younger generation and their wealthier predecessors, schemes like this may offer a viable solution.
Will schemes like this enable more renters to buy their rental property? Would this scheme be of interest to landlords? What could this mean for conveyancers?