Doubt over CGT as rental sector demand increases

by Morag Lyall

The government should rethink its proposed increase in capital gains tax (CGT) on the buy to let sector as demand for rented properties increases, one mortgage lender has urged.

According to Kensington, nearly two-thirds of people living in a leasehold property believe that they will not be able to buy their first home within five years, suggesting that the demand for tenancy agreements will rise.

Therefore, the company has appealed to the government to think about the impact increasing CGT will have on the sector.

It is believed that fewer landlords will purchase new properties if the rate increases to its expected 40 per cent from the current 18 per cent.

Keith Street, head of Kensington, commented: "It is … vital that there is the housing stock available to meet this demand and we … need to encourage landlords to build and maintain portfolios for the long term so that tenants continue to have a choice of good quality, affordable rental accommodation to meet their housing requirements."

The increase will be revealed in the Budget on June 22nd.

Published on: June 14, 2010

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