Buy to Let vs Rent to Buy: is it win-win?

The government is being urged to give landlords in England a tax break if they sell their rental properties to tenants of 3 or more years.

 

The 100% capital gain tax relief would then be split equally between landlord and tenant, giving renters thousands of pounds towards a deposit and landlords a substantial tax saving. The Conservatives Help to Buy policy has been criticized for driving up demand without increasing supply.  But tax cuts for buy-to-let investors are likely to be just as controversial - tenants' groups already think landlords have benefited enough from the property boom. Rent-to-buy, which aims to increase the Conservative party’s appeal to renting voters, is designed to help young adults get on the property ladder….

 

But will it do what it says on the tin?

 


Yes! says Will Tanner, Director of Tory think tank Onward

 

  • The average gain per property is estimated to be £15,000 so a first-time buyer could typically expect to gain £7,500 towards their deposit.

  • With higher property prices in the capital, Londoners could receive as much as £19,500 under the scheme.

  •  88,000 households could benefit from the proposals each year - turning one million renters into homeowners over the course of five years.

  • Savings for taxpayers would be £1.32 billion per year in lost income to the Treasury.

 

"It is time for ministers to give private renters the chance to make their house a home, just as a Conservative government gave a previous generation of council tenants the Right to Buy their home years ago.”

 

No! says David Smith, Policy Director for the Residential Landlords Association (RLA)

 

  • There is no guarantee that a reduction in the rates at which capital gains tax is applied would incentivize landlords to sell their properties to sitting tenants.          
  • The demand for private rented homes is growing with the Institute for Fiscal Studies (IFS) warning that many young people can’t afford to buy.
  • A  better deal for landlords? Tax relief on rental income for the provision of longer tenancies.
  • Plus a refund on the stamp duty levy for additional properties where a landlord is prepared to sell a property to a sitting tenant.

 

 “The Chancellor should use his budget to scrap the stamp duty levy on additional properties where landlords are prepared to invest in property, adding to the net supply of homes. To tax new housing supply, given the current housing crisis we face, is simply ludicrous.”

 

The Treasury did not respond to our request for comment!


Get the lowdown from our Lettings and New Homes Manager! Call 0207 732 4330 or email kash@garethjames.com

Posted:10/10/18 Buy to Let vs Rent to Buy: is it win-win? Tags: landlords, renters, conservatives, tax breaks, capital gain tax | By Zohra Huda
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