Landlord Industry Braced for a Sunak Special
AT #TeamCES, we’ve been pretty impressed with Rishi Sunak’s handling of the coronavirus pandemic so far. He has delivered on his promise to do ‘whatever it takes’ by continuously going to the well in order to find vital support for as many people as possible.
By his own admission, he has been unable to help absolutely everyone, but an unprecedented amount of support has been found, arranged and either granted, loaned or paid out, in order to try and keep the flame of the economy flickering for a little while longer.
We’ve praised him when we think he’s got it right then, so it seems only right that we have a little look at something we feel he may be about to get wrong.
And you guessed it, it’s landlords with the short straw, yet again.
This unprecedented package of support was always going to have to be repaid, and one way that Mr. Sunak is looking at getting this process kick started, is by bringing Capital Gains Tax in line with the levels of Income Tax.
We can see the landlords running to the estate agents already, looking to sell their assets for a good price whilst they still can.
Currently at 28% for residential property, this increase in CGT to bring it up to par with Income Tax, would see a jump up to 40% or 45%.
That is a significant difference, and one that would surely see even more landlords deciding that this whole thing just isn’t worth it any more.
Since the first lockdown in March, many landlords have already been turned away due to having their hands tied behind their backs over pursuing unpaid rent and serving evictions.
If that was tying their hands behind their back, this change to CGT is pulling their pants down and giving them a kick up the backside for good measure.
Defending the proposals, the Office for Tax Simplification says…
“A greater alignment of rates would create a more neutral tax system, in which people were left free to make the right decisions for their business or family without the complexity of having to worry about unwittingly stumbling across the wrong side of a boundary...”
...but when you read between the lines, that could be perceived as a little judgemental towards landlords. Are they saying that all landlords bend the rules to suit themselves? No, obviously they aren’t explicitly saying that, but is that what they’re suggesting?
Ultimately, landlords will recover, we hope, whether they pursue their unpaid debt through the usual channels, or decide to sell up and get out of the game for good, but who will suffer the most in the long term?
The vulnerable, of course.
Because with a lack of landlords, as we’ve said all along, comes a lack of safe and compliant, not to mention affordable, rental properties.
You’ve done OK so far Mr. Sunak. Don’t ruin it now.