Rics calls for CGT reform to solve housing crisis

Rics calls for CGT reform to solve housing crisis

The chancellor should help generation rent to own their current properties through the reform of capital gains tax, according to the Royal Institution of Chartered Surveyors (Rics).

In a new report, Rics argued this week’s Budget should deliver and then stick with a clear property tax policy, in order to give private tenants, home buyers and investors the clarity, certainty and predictability required for future stability and growth.

Rics’ head of policy Jeremy Blackburn said: “Government has changed its policies around property taxes more often than the chancellor has been pictured in a hard hat.”

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The report proposed solutions for the UK’s most unworkable property taxes, with capital gains tax identified as one of the least effective taxes for delivering 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, Rics stated.

But recent research from the Residential Landlords Association suggested 77 per cent of private landlords would consider selling their property to tenants if the tax liability was waived.

Rics recommended one way that homes could be delivered is if the UK’s 3.84m private landlords were incentivised to sell to existing tenants.

Further incentives could then be provided to encourage the seller to invest in further rental properties, the report noted.

Ros Rowe, chair of the Rics Taxation Policy Panel Group, explained by removing CGT 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,” he added.

Rics also suggested that the new stamp duty increase for buy-to-let investors is a disincentive to the expansion of the “much-needed” private rental sector.

As such, the report called for the stamp duty increase to be waived for large institutionalised landlords.

Steve Carruthers, head of mortgage distribution at Newcastle Building Society, said Rics’ proposal should certainly be explored.

He said: “Our primary purpose is to help people to own their own homes and whilst we support people looking to buy properties in order to let, we are supportive of any initiative which has the potential to improve home ownership and stimulate the housing market.

“With mortgage rates at historic low levels, and with rates likely to stay lower for longer mortgage finance has never been cheaper. With upward pressure on rental payments now is a great time to consider owning your own home.”

David Hollingworth, associate director for communications as London & Country Mortgages, said that the idea to incentivise landlords to sell to their tenants takes a rather different approach than we have seen of late.

“Rather than hitting landlords with more tax the relaxation of the current tax regime could be a positive step to releasing more property to market.