Friday, August 19, 2022

NRLA says CGT hike would freeze the rental housing market

rental housing

Many believe that an announcement to help alleviate government debt by raising CGT will be made during the budget

Amid speculations that Rishi Sunak will change capital gains tax (CGT) rates in the Budget next month, the National Residential Landlords Association (NRLA) has described the tax spike as a “Kick in the teeth” for property investors.

The NRLA said that a hike in capital gains tax would freeze the rental housing market, which will make it less responsive to tenant demand.

Government debt is at record levels due to the Covid-19 crisis and many believe that an announcement to help alleviate this by raising CGT will be made during the budget as part of wider changes to taxation.

Basic taxpayers are now required to pay 10% as CGT. However, there has been demand for an increase across the board or aligned to income tax rates. Capital gains tax is charged at 18% in case of basic rate taxpayers and 28% amounts above the basic rate.

As Rightmove noted: With the proposed measures to equalise CGT with income tax rates, the NRLA is highlighting research which found that 72% of private landlords said that the tax was a major disincentive to sell property on the open market. Increasing it would serve to freeze the market making it far less responsive to changing needs from renters, including the shift in demand out of city centres to properties in suburbs, towns and villages.

Increasing capital gains tax would have an adverse impact on the retirement planning of almost half of landlords that have entered the market in order to contribute to their pension. Many predicate on liquidating assets to fund their later life, which, in many cases, includes their care costs.

The National Residential Landlords Association is now calling on Sunak to use the tax more smartly in the upcoming Budget instead of imposing more tax hikes on the rental market.

It is recommending a CGT exemption or reduction where landlords sell properties to sitting tenants in order to support the Government’s plans for homeownership.

This is a policy which has previously been supported by the now Housing, Communities and Local Government Minister, Eddie Hughes MP.

Ben Beadle, Chief Executive of the National Residential Landlords Association, said: Increasing Capital Gains Tax would reduce churn in the rental market undermining the flexibility it has always been good at providing.

A tax hike would be a kick in the teeth for all those who have invested in property to provide security for the future for themselves and their families, Beadle said.

He said that the Chancellor needs to end the war on the rental market and recognise the importance of a healthy and vibrant rented housing sector. Tax should be used more smartly, not as a blunt attack on the market.


The articles are for information purposes only and Invest for Property shall not be held responsible for any errors, omissions or inaccuracies within it. Any rules or regulations mentioned within the website are those relevant at the time of publication and may not be the most up-to-date.

Invest for Property does not endorse any of the products or services that appear on it or are linked to it and are not liable for any action that you may take as a result of the content of this website, or losses or damage you may incur doing so.

There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.

Please remember that investments of any type may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.

Leave a Reply