Monday 8th October 2018

Landlords could be offered tax incentive for longer tenancies

The government is considering plans to provide financial incentives for those offering longer tenancies, according to the Sunday Times.

The government is proposing a number of options to implement a three-year tenancy model to give renters more security, and that may include a tax break for landlords.

The Sunday Times report that the plans could be unveiled by the Chancellor Philip Hammond during his Budget statement later this month.

The “good landlord” tax break would reward buy-to-let investors who sell properties to sitting tenants.

Under existing rules, investors who sell a rental property are liable to pay capital gains tax at 28% on any profits they make. But the Treasury is weighing up a new Help to Buy proposal whereby landlords would not have to pay capital gains tax when selling up to tenants who had been living in a property for at least three years.

The plan, which has been drawn up by the right-wing thinktank Onward, would see the tax relief windfall split equally with the tenant, who could use it as part of their mortgage deposit.

The thinktank estimates that the average gain per property would be £15,000, meaning a first-time buyer could expect to benefit by an average of around £7,500.

Onward director, Will Tanner, who is a former Downing Street policy chief, said: “Today’s renters are older, more likely to be in rented property for longer and more likely to have children than any generation before them.”

Research by the RLA’s research exchange, PEARL, has found that 73% of landlords would offer longer-term tenancies with a combination of financial incentives and court reform to ensure that they have the confidence that where they provide a longer tenancy they can swiftly regain possession in cases such as tenants failing to pay their rent or committing anti-social behaviour.

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