In a bold fiscal manoeuvre, Chancellor Jeremy Hunt’s decision to slash capital gains tax on property sales from 28% to 24% has ignited concerns of an imminent exodus among disenchanted landlords, industry experts caution.
Set to take effect on April 6th, the Treasury, in tandem with the Budget, asserted, “This will incentivize landlords and second homeowners to offload their properties, thereby increasing availability for a diverse range of buyers, including those venturing onto the housing ladder for the first time.”
The alteration translates to a saving of £680 for a higher-rate taxpayer realizing a £20,000 gain on a secondary residence.
Nevertheless, sceptics argue that the government should prioritize fostering new rental stock rather than a move that may deplete it. Andrew Noton and Phil Blackburn, partners at the esteemed Lubbock Fine, remarked, “It appears the government is dissuading private buy-to-let landlords, urging them to exit the market.”
Steve Richmond, General Manager UK&I at Reapit, expressed reservations, stating, “While the Chancellor claims this may lead to more transactions, I am cautious that it might merely shift supply from an already overheated lettings market to the sales sector. This could trigger a surge in rents amid dwindling supply as disillusioned landlords capitalize on the opportunity to divest.”
Kate Davies, Executive Director of the Intermediary Mortgage Lenders Association (IMLA), issued a comprehensive response, contending that a revision of the 3% stamp duty surcharge would have been a more prudent course of action.
Davies asserted, “The Chancellor’s announcement is little more than a placation for landlords compelled to exit the private rental sector due to tough economic conditions and a punitive taxation system. IMLA would have preferred to see the Chancellor extend support to the sector by announcing a reduction in the 3% additional Stamp Duty, which has burdened second and subsequent property purchases since 2016.”
As of January 1st, 2025, the capital gains tax-exempt amount is slated to decrease from £6,000 to £3,000, partially offsetting the reduction.
In a contrasting viewpoint, Ryan Etchells, Chief Operating Officer at Together, adopted a more optimistic stance, deeming it a “welcome move to extend the market to a new wave of buyers and property professionals.” He added, “This will instil confidence in those who have deferred downsizing, paving the way for more family homes and opportunities for first-time buyers. The property market stands to benefit significantly from this much-needed boost.”