Proposals to increase Capital Gains Tax (CGT) would ‘freeze’ the rental housing market, according to the National Residential Landlords Association (NRLA).
This is following the Office for Tax Simplification proposing measures to equalise Capital Gains Tax with income tax rates.
The NRLA is pointing to research, which found that 72% of private landlords said that the tax was a major disincentive to sell property on the open market.
As a result, increasing it would serve to freeze the market making it far less responsive to changing needs from renters, outlined the association.
The NRLA believes that with close to half of landlords having entered the market to contribute to their pension, increasing CGT would negatively impact their retirement planning.
The NRLA is calling on the Chancellor to use the tax more smartly in the forthcoming Budget.
It recommends that to support the government’s ambitions for homeownership, there should be a CGT exemption or reduction where landlords sell properties to sitting tenants.
Ben Beadle, chief executive of the NRLA, said: “Increasing Capital Gains Tax would reduce churn in the rental market undermining the flexibility it has always been good at providing.
“A tax hike would be a kick in the teeth for all those who have invested in property to provide security for the future for themselves and their families.
“The Chancellor needs to end the war on the rental market and recognise the importance of a healthy and vibrant rented housing sector.
“Tax should be used more smartly, not as a blunt attack on the market.”