RICS research showed that 72% of chartered surveyors believe a rise in CGT will deter investors from entering the private rented sector, while just 11% said it would have no effect.
Simon Rubinsohn, RICS chief economist, said: “While it is unlikely that there will be a near-term glut of supply, a fire sale of properties by landlords looking to avoid a higher rate of CGT could, if it were to materialise, have a significant impact on the fragile improvement in sentiment in the residential sector.
“In addition, there could well be a drop in the supply of land for housing development. An increase in tax may discourage landowners from putting forward their land for development, which would reduce the number of homes built.”
He said one way of limiting the effect of a rise in CGT was to re-introduce some form of taper relief on income for certain types of asset: “With taper relief in place, the amount of CGT owed would depend on the length of time the asset has been owned. This would fit with the business model that many people in the private rented sector use, where they own a property for several years before selling it to realise some of the capital value.”
