Its research revealed that 26% of landlords are considering selling their property before the changes to CGT tax are introduced, while 71% of landlords are now reconsidering their future investment in property if the planned rise in CGT is introduced.
Nine out of ten landlords oppose the Government’s proposals.
Despite profitability being determined by a mix of rental income and capital gains, LSL highlighted that 36% of landlords consider capital gains to be the most important aspect of property investment and a quarter of these state they will only consider capital gains when assessing an investment.
Just under a third of those polled gave equal importance to rent and capital appreciation.
Of the landlords still committed to the private rental sector, 41% are unable to sell property before the tax is introduced because their property portfolio represents their retirement plan.
Simon Embley, chief executive of LSL Property Services, warned that house prices could fall if landlords are discouraged from investing and that long-term investors will suffer the most from the proposed changes.
He called for the Government to re-introduce taper relief, which exempted a percentage of an investor’s capital gain depending on how long the asset was held.
Embley said: “The private rental sector is vital to housing the UK’s growing population. There is a chronic shortage of residential housing available and this is going to get worse. Social housing will not cover the shortfall. The government needs to encourage the growth and professionalisation of the sector – not deter it.”