BTL industry response to CGT

Andy Young, Chief Executive Officer at Landlord Centre says ‘There has been speculation about the how the rise in Capital Gains Tax (CGT), announced in the coalition government’s emergency budget on 22nd June, will affect the buy-to-let market. Although perhaps disappointing, the rise from 18% to 28% for high-rate tax payers will not come as a surprise to most landlords. However CGT is still much lower than some had predicted and it remains at 18% for low and middle earners. The new rate came into effect immediately so there will not be a sudden rush of landlords exiting the market to avoid paying it.

‘Although the hike in CGT will be a disappointment to wealthier buy-to-let investors it is unlikely to have any significant detrimental effect on the buy-to-let market overall. The fact remains that most residential property investors are in the market for the medium to long term and they seek returns through rental yields as well as capital gains.

‘The group most likely to be put-off by the new CGT regime is short-term property speculators who are looking to cash in on the house price index. Most of these, however, have already exited the market. Professional landlords are unlikely to be deterred from maintaining and expanding their portfolios as buy-to-let property is still generating good income and remains a viable medium to long term investment offering competitive returns.’

Free BTL Mortgage Search Tool