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  • Buy-to-Let

    At last! A tax break for Landlords?



    The Sunday Times is today reporting that Landlords might eventually get a tax break.  According to today's article, in a move that could be announced as soon as this month's budget, Landlords that sell their properties to tenants that have been there for more than 3 years would be exempt from Capital Gains Tax!

    This is seen to be an incentive to encourage longer-lets and get property moving through different hands to the tenants.

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    If true that could be a very good exit strategy for landlords looking to sell up

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    If that turns out to be the case, then that is pretty momentous news!

    I know the RLA have been lobbying for this for a long time.

    I suspect that landlords looking to take advantage of this will start searching for tenants who wish to buy in three years time so will want to know much more what tenants' plans and finances are?

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    Oh the loopholes that could be found with this....  Back dating tenancy agreements, landlords doing Rent to Rent so they are the tenant for 3yrs then buying from landlord owner at a reduced rate because of the savings the landlord owner makes on CGT.

    You could find professional tenant buyers, rent a property for 3yrs, buy at BMV, sell the property, make £20k or so covering the rent for the 3yrs then go rent another property.  Free housing.  Obviously the 3yrs is to try and discourage this practice.

    The problem when you create such schemes is you create hundreds of loop holes.

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    Read between the lines with this topic

    this is not being done to encourage the PRS it’s another way to get landlords to sell

    its good news for a landlord who is selling but it’s not good news for the sector in general

    i still think we will have more bad news for landlords in the future

    this topic confirms to me that they don’t want our services in the coming years

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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.

    This will lead to tenants using the "I may want to buy" line to negotiate lower rents etc.

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    That ploy would only work if prospective tenant had very high earnings vs actual rent - especially in SE where rents are way below cost of a 90% 25 yr Repayment Mortgage - at £525 pcm per £100k loan

    Hence a £300k property with 10% dep needs loan of £270k costing £1417 pcm (plus any Service Charge) and borrower needing salary of £60k plus to justify loan on MMR criteria.

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    I will have to think about it but my knee jerk reaction is ......

    Its a token gesture I fear

    I would be interested in the projected take up and the actual take up after 5 years

    I can work with that policy with perhaps 1% of my tenants . Majority cant afford to buy

    And also it may make you evict a tenant who will never / cant buy and make them homeless

    My application form will change to attract potential buyers

    Its divisive - The rich get richer but poor get poorer

    You would start advertising  for a tenant  with that plan in mind

    Sorry Joe I`m letting you go mate  - you earn enough to pay rent but not to buy my place

    Hello Tom - In 3 years I will save 50K CGT - We will do a deal good for both of us

    Lets work with this new rule and look at a reduced rent / increased rent and a gifted deposit etc

    New websites would spring up and contracts drawn up outside of the AST

    So  its a no go with the majority  I fear

    Many don`t rent where they want to buy. Many wouldn't get a mortgage

    But my job is an investor - Thats what I do  - I`m not really a springboard for others to buy

    CGT is 28% . I work with that as its a known when I start

    I look at the longer term benefits . CGT is an ugly tax yes but it shows Ive made a gain

    So

    100K gain no 28% CGT if I sell to a tenant of 3 years = 100K gain

    or

    100K additional gain in say another 15 years so after 28% tax =  144K capital gain plus say 156K  in rent

    Thanks but on balance  I will wait those 15 years to make  300K  then rather than 100K now

    I am investor - That`s what i do

    But I`m open to persuasion

    It certainly wont win me over to the Gov

    More importantly I  dont think this measure  will solve or even touch the housing crisis problem

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    Jonathan Clarke. http://www.buytoletmk.com


    Very good summary...   I wonder also if its a precursor to forcing landlords to sell to tenants after 3yrs if a tenant wants to buy.

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    May it even become compulsory, to try to steal Corbyn’s clothes??

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    If it is a precursor to Right to Buy/Acquire within the PRS it will be limited to England. RTB and RTA have already been abolished in Wales and Scotland.

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