Tax break for landlords selling-up to tenants
Landlords could be offered financial incentives by the government for selling their property to a long term tenant, media reports suggest.
It's been mooted that the upcoming Autumn Budget may offer a tax break for 'good landlords' if they sell a property to their sitting tenant.
The proposal has been put forward by the think tank Onward which says landlords should not to pay capital gains tax when selling to someone who's lived in their home for at least three years.
They say that the cost of the policy would be £1.3 billion, and this would be covered by reducing other BTL tax perks.
Now, the Chancellor Philip Hammond is said to be weighing up the proposals for the budget which takes place on 29 October.
Currently, an investor who sells their rental property is facing capital gains tax of 28% being levied on any profit they make.
Landlords would be eligible for the tax relief
However, under the proposals, landlords would be eligible for the tax relief with the windfall being split with the tenant who might then use towards their mortgage deposit.
Those behind the idea say that the gain per BTL property, on average, will be around £15,000, so a first-time buyer can expect to receive up to £7,500.
However, under the scheme, a tenant living in London could receive £19,500 because of higher house prices.
The move has been welcomed cautiously by the Residential Landlords' Association who made a similar proposal last year.
The RLA delivered a submission to the Treasury recently which calls for tax relief on rental income to be increased for every year a tenancy continues up to a five years' maximum limit when the tenancy is renewed.
Landlords say they would be happy offering a longer tenancy
The RLA's research reveals that 73% of landlords say they would be happy offering a longer tenancy if there was a financial incentive to do so, and provided that they can regain possession swiftly should tenants fail to pay rent or commit antisocial behaviour.
Onwards' director Will Tanner said: "The growth of buy to let and rising house prices means that too many people, particularly the younger generation, are stuck on a treadmill of insecure tenancies and rising rents and have no viable route of getting onto the housing ladder."
He added: "It's time that ministers gave private renters the chance of making their rented house a home."