Hold capital gains tax to boost buy-to-let, says finance chief


Last year, the government shelved its plans to reform capital gains tax, but industry experts warn the threat of a future rise could impact the private rented sector. 

In December last year, the Treasury passed over previous suggestions by the Office of Tax Simplification (OTS) to bring capital gains tax rates level with income tax, as well as reduce the allowance.

While this meant that many of those facing CGT in the near future could breathe a sigh of relief, including property investors, the threat of a future rise remains very much present. Tim Stovold, partner at accountancy firm Moore Kingston Smith, has labelled it a “stay of execution”, saying rates could rise in a new parliament.

But Jonathan Samuels, chief executive of Octane Capital, is one of several in the property industry who has warned that the ongoing threat of a rate rise could put people off the private rented sector; and the buy-to-let market is crying out for more landlords as tenant demand rises.

Capital gains tax rise could dampen investment

Samuels claims that the government’s policy and tax changes in recent years have been an effort to dampen investment in the private rental sector. This includes things such as tax relief reductions, stamp duty charges and tenant fee alterations.

“The pandemic has also proved problematic for some landlords who have suffered lengthy void periods due to factors such as the tenant eviction ban and a reduction in rental demand across our major cities, in particular,” he says.

“Despite all of this, the sector has stood tall and continues to provide the vital rental market backbone that so many are reliant on.”

He adds that many landlords have also benefited from a significant level of capital appreciation in their properties as house prices have risen over the years. The value of the buy-to-let sector has increased “substantially”.

“Let’s just hope that whisperings of a higher rate of capital gains tax remain just that, as any further increase could spur a reduction in available stock, causing the total value of the market to decline.”

How much is UK buy-to-let worth?

Octane Capital research has found that the UK buy-to-let sector is now worth around £1.7trn, taking into account the total value of property stock. This figure has increased by almost £240bn over the past five years, says the firm.

This means there are around 5.5 million privately rented homes in the UK, with London accounting for around 19% of this with more than a million properties.

With so many people relying on buy-to-let for accommodation, the sector is hugely important and should therefore be supported rather than penalised, many argue. There can be a lot of stigma attached to being a ‘landlord’, and a recent survey even showed that 73% feel they are unfairly portrayed as “this generation’s financial bogeyman”.

Gavin Richardson, managing director of Mortgages for Business, which conducted the survey, said: “What would happen if we took landlords out of the housing equation? The impact on the property market would be significant and almost entirely negative.

“It’s not as if the government is pouring money into social housing – or making any progress on housebuilding.

“Frankly, the government should be championing landlords and lauding their contribution to the housing sector – landlords are bailing the government out!”

Current capital gains tax rules

At the moment, the first £12,300 of capital gains each year is exempt from tax. Above this amount, basic rate tax payers pay 10% tax, and higher and additional rate taxpayers pay 20%. For residential property, basic rate taxpayers pay 18%, while higher rate taxpayers pay 28%.

For more information on rates, allowances and more, see the government website.

Highgrove Mews

High Net Yield Freehold Houses

  • Commutable to London (27 mins to central Paddington station)
  • Rental demand extremely strong with large industry presence in Reading
  • Freehold with 4% net yield

£284,955 - £457,000

St Petersgate – Stockport Manchester

New Launch - Stockport Manchester, apartments from £160,000

  • Discounted launch prices from £160,000
  • Excellent transport links with 3 trains per hour to London Euston and only 9 mins journey to Manchester Piccadilly
  • Experienced development team

Assured Rent Housing Association Leases

Assured Rent Housing Association Leases

  • Assured rent & no rental voids
  • Tenant damage cover & newly refurbished inline with requirements of a corporate sitting tenant
  • Free property and lettings management

From £62,000

Emerging Birmingham Commuter Town With Properties From Just £104,000

The emerging Birmingham commuter town where properties are selling in an average of just 24 days

  • A collection of 62 two bedroom apartments and 28 one bedroom apartments.
  • DE14 is one of the fastest selling postcodes in the West Midlands.
  • 23 minute train journey into Birmingham New Street Station.

Properties from £104,000

Mill, Stockport

The Northwest's emerging property hotspot

  • Discounted off-plan 2-bed prices from £162,000
  • Completion date - Q4 2021
  • Rental yields - 6% plus

Discounted off-plan 2-bed prices from £162,000

South Central – Birmingham City Centre Apartments

Highly anticipated 28 storey launch in Birmingham City Centre with an impressive roof garden and communal facilities.

  • 154 units across 28 storeys
  • Residential multi-media community room, gym, roof garden and sky cinema
  • Excellent future connectivity via the metro system to other key transport hubs and locations around the city

from £205,800


Talk to us

Speak to our UK property experts today: 

+44 (0) 333 123 0320

Open from 9am-6pm GMT

+852 9865 4446

Open from 9am-6pm HKT

Stamp Duty Calculator


Unlock members only investment opportunities and full development details. Join now – it’s free, quick and easy.


Not a member? Sign up for free

Capital gains tax

Hold capital gains tax to boost buy-to-let, says finance chief


By submitting your details via this online form you agree to be contacted via email/phone/SMS by Direct Marketplace Ltd t/a BuyAssociation in relation to property investment and property developments . We do not share your personal details with third parties.  To view our full Privacy Policy click here.