CGT hikes 'may not hurt buy to let market as much as expected'

23 June 2010

Written by Jeni Browne

The rise in capital gains tax (CGT) from 18 per cent to 28 per cent, which was announced in the Emergency Budget yesterday (June 22nd), may not be as harmful to the buy to let sector as some had anticipated, one organisation has said.

Ian Potter, operations manager of the Association of Residential Lettings Agents, said that the policy was not as extreme as many had feared, but it still shows a lack of support for the private rented market from the government.

"The Chancellor risks driving those landlords paying the higher rate of tax from an already very fragile housing market, at a time when they should be actively encouraged to stay and, ideally, further invest," he commented.

Without some relief from the duties for the sector, buy to let professionals will have to pay higher CGT on the sale of one property followed by stamp duty on the purchase of another.

As this could discourage some landlords from remaining in the market, the supply of rental housing could be negatively affected, Mr Potter explained.

Meanwhile, the National Landlords Association said that it was disappointed the chancellor did not distinguish between long-term and short-term speculation.

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