In the Autumn Statement, Chancellor Jeremy Hunt said that the CGT exemption threshold would then fall to £3,000 from April 2024.
The move was predicted by experts in Mortgage Solutions last week.
CGT changes will hit the rental market
Many in the industry have pointed out that the move is likely to hit landlords and second homeowners.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “The CGT changes are disappointing as they could have a significant impact on the rental sector.
“We want to encourage landlords to stay in the sector and new ones to enter the market, reducing the upwards pressure on rents and stemming the flow of departure.
‘Hopefully, landlords won’t sell now before this measure is introduced, as that will be bad not only for the rental market but the sales market too, as it will increase supply in the latter, reducing property prices more rapidly and therefore undermining confidence. If properties flood the market as a result, it won’t be good for sales or lettings.”
Others agree with this assessment but admit it could have been worse as the Chancellor changed thresholds rather than the rates at which CGT is charged.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “With regard to CGT, the changes could have been so much worse for landlords and second homeowners, with fears that the Chancellor would increase the rate at which CGT is charged rather than tweaking thresholds.
“These changes are unlikely to persuade landlords to sell up before the lower threshold is introduced in April as it will mean hundreds of pounds of extra tax to pay, as opposed to tens of thousands of pounds, so will have a relatively small impact when people come to sell.
Denting property as an investment
Chris Springett, tax partner at wealth management firm Evelyn Partners feels that the move is the latest in a long lines of hits on the rental market.
He said: “Many second homeowners and landlords – accidental as well as buy-to-let investors – who are looking to sell a property now face a higher tax bill on the profits they have made from rising house prices.
“The differences in tax bills from the allowance cut for some property transactions might be relatively small in absolute terms but it is the latest in a series of moves by the Treasury in the last decade that have dented the attractions of property as an investment.”
