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PayProp: Time to incentivise landlords to sell to one another

The Chancellor should encourage investors to sell to other landlords using a Capital Gains Tax incentive in the upcoming Autumn Statement, Neil Cobbold, managing director of automated rental payment and client accounting specialists PayProp UK, has urged.

The Autumn Statement takes place on Wednesday 22nd November, and will be delivered by Chancellor Jeremy Hunt.

Cobbold said: “[One] measure the Chancellor could introduce, to ensure as many PRS properties as possible remain in the sector, is to incentivise landlords that need to reduce their stock to sell to other PRS landlords.

“To achieve this, the Chancellor could reduce Capital Gains Tax for landlords who sell their properties to other landlords who commit to keeping it in the PRS for a fixed number of years.

“A measure like this would also stimulate the sales market to some degree, but the main advantage would be in retaining as many properties as possible in the rental market.

“What we don’t want to see is an influx of owners shifting properties to holiday lets, second homes or keeping them empty for asset appreciation.”

For tenants Cobbold called for the government to raise the Local Housing Allowance, which has not been increased since April 2020.

Due to the low amounts on offer he argued that, as it stands, landlords are unwilling to rent to tenants on benefits, which is pushing more people into temporary accommodation, proving more expensive for local authorities.

Thirdly he reckoned the government could extend first-time buyer stamp duty relief – which means they don’t pay it on a property worth up to £425,000 – to tenants who don’t own a home and have been renting for more than 12 months.

That way people who have previously owned or inherited property, or who were married to someone who previously owned, can benefit from this incentive.

He added: “The resulting reduction in demand for rental properties could also help cool rent price increases for other tenants.”