x
By using this website, you agree to our use of cookies to enhance your experience.
STAY CONNECTED!
    
newsletter-button

Fears mount over fire sale of rental properties

17 May 2010
Written by rosalind renshaw

Concern is mounting over the Government’s plans to hike Capital Gains Tax to the same levels as income tax – effectively, a 22% rise for many.

There are fears that there could be a fire sale among buy-to-let landlords rushing to dispose of properties before the new rate kicks in.

Caroline Kavanagh, pictured, group lettings director for Badger Holdings, parent company of Townends and Regents estate agents, said: “Have they gone mad?
 
“The buy-to-let market has kept many businesses going through what has been and continues to be a difficult financial climate.

“With demand already outstripping supply, the industry is in need of more investors coming to the table, not the complete opposite.”

Mike Goddard, chief executive of Belvoir, called for clarity and said landlords should adopt a wait-and-see policy.

He said: “Until we have the full details of the Government’s proposals, we will not know if there are any plans to offset an increase in CGT. There may, for example, be plans to include taper relief.”

Tax specialists Moore Blatch warned against a fire sale of properties, saying that if house prices carried on rising at the current annual rate of 7.5%, then it would pay to hang on.

David Charlesworth, head of wealth management at the firm, said that an investor selling a £200,000 property now with a capital gain of £50,000 would be liable for £7,182 CGT at 18%. The net worth of the property would therefore be £192,818.

However, if property prices increase a further 7.5% over the next 12 months, the property would be worth £215,000 and the gain would be £65,000, meaning a tax bill of £21,960 at 40%. The net worth of the property would therefore be £193,040 – worth more to the owner than now.

Comments

  • icon

    BTL scum? what planet are you on? Every single one of those BTL Landlords will have been filling in an SA105 tax form and paying taxes
    Please could you supply some suggestions for "something productive"
    Reading your post most 1st year A level Psychology students would have you down as someone who has either missed out on the seriously rich pickings handed out by Mr Blair and Mr Brown to keep themselves in government for 13years. Or you are still living at home with your parents because all the starter properties in your area keep getting snuffled up by folk with more money and a better credit rating than you. The realisation that you are lower in the social order than BTL scum is probablty quite hard to swallow and probably explains your envy.

    • 18 May 2010 21:52 PM
  • icon

    Oh dear,Paul Smith really ought to seek out a decent anger mannagement consultant. Sounds as though he is simply an ill informed and small minded idiot. The Buy-To-Let scum he refers to have supported, reinforced and boosted the private rental sector over many years. Would love to know what P Smith does for a living - if indeed he does anything!

    • 17 May 2010 23:28 PM
  • icon

    Good, the housing market needs rebalancing. most houses are 40% over valued. Go out and do something productive for a living BTL scum.

    • 17 May 2010 19:42 PM
  • icon

    David, And what if prices fall by 7.5% over the next year?

    Net worth £171,000!!

    • 17 May 2010 16:59 PM
  • icon

    Smacks of Nigel Lawson when he gave several months notice of abolishing tax relief for couples in the 80's.
    If this hike goes ahead it must be with immediate effect - it will not then be an advantage for landlords to sell - in fact it could be to their disadvantage?

    • 17 May 2010 12:00 PM
Breaking News
MovePal MovePal MovePal