Buy to let landlords 'should be exempt from capital gains tax increase'

14 May 2010

Written by Jeni Browne.

Buy to let landlords must be excluded from the proposed rises in capital gains taxes in order to save the recovery of private rental sector (PRS), both the Association of Residential Lettings Agents (Arla) and the National Landlords Association (NLA) have said.

A flat rate of 18 per cent is currently charged on capital gains on non-business assets but a change of policy could soon see this replaced by income tax bands at 20, 30 and 50 per cent.

With demand outpacing supply in the property market, buy to let landlords play an important role in offsetting the shortfall between houses being constructed and the growth of the UK's population, Arla argued.

The PRS currently contributes more than three million homes to the market but Arla and the NLA believe that an increase in capital gains tax would see some of these properties being sold off, creating a shortage in a sector that investors will now be reluctant to enter.
David Salusbury, chairman of the NLA, said: "There should be further consultation with the industry before drastic changes are made. The law of unintended consequences should be considered here."

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