Buy To Let Landlord Exodus Fears Over Tax Blow
Fears of a new buy to let landlord exodus have been raised over a new tax blow.
It's been revealed that the government is looking to reform lettings relief, which currently sees a landlord earning up to £40,000 free of capital gains tax.
This is when they are renting out their main home for a period of time.
The changes were unveiled in last autumn's Budget but the relief will only be available if they share their property with a tenant.
Essentially, the rule change means that accidental landlords who rent out a former home because they cannot sell it could end up paying more in capital gains tax when they find a buyer eventually.
A financial analyst at investment firm AJ Bell, Laura Suter, said: "For those people who let out their former homes and are assuming they will qualify for the relief, then there will be no transitional relief for them.
ĎLikely to see accidental landlords rushing to sell upí
"This will mean we are likely to see accidental landlords rushing to sell up before next year's deadline, so they can make use of the generous reliefs now."
Financial experts also say that other tough new rules on capital gains tax on private residence relief could see investors leaving the sector.
The new tax rules are set to come into force from April 2020 and it is predicted that the changes could also catch out house sellers in a slow property market.
Currently, someone can leave their home 18 months before selling it and be exempt from CGT but the government's aim is to reduce this time limit to nine months.
The government says that 40,000 people a year will be affected by the rule change and their consultation ends on 1 June.
The news coincides with a survey published by accountants RSM of property professionals which has revealed that half believe that tax restrictions had affected investment decisions and are now a barrier to investment.
Government will crack down on rogue landlords
Meanwhile, it's been revealed that the government is launching an online support platform to help crack down on rogue landlords.
The aim is to help local authorities deal with rogue landlords in their area with details of how they can enforce the law.
The government is also publishing a guidance document aimed at landlords and tenants as part of their drive to give tenants greater protection and help reform the country's private rental sector.
Local authority support will include a digital enforcement package for those officers who cannot attend national training programmes with online learning modules.