Conservatives “no longer the party of the UK homeowner” after Capital Gains Tax change

The government has decided to reduce the Capital Gains Tax exemption, much to the consternation of landlord and estate agency groups.

The allowance will be cut from £12,300 to £6,000 in April 2023, and to £3,000 by April 2024.

Marc von Grundherr, director of Benham and Reeves, said: “Jeremy Hunt’s raid on middle England and landlords, in particular, by slashing the amount exempt in capital gains tax is likely to disconnect this government even further from their traditional electoral base.

“It’s a risky strategy and one that confirms that the Conservative’s are no longer the party of the UK homeowner, which is sure to lose them votes further down the line.”

It’s thought the move could do more to push landlords out of the sector, reducing stock in the private rented stock and therefore causing demand to further outstrip supply.

James Forrester, managing director of Barrows and Forrester, said: “We can expect the nation’s tenants to feel the brunt, as yet another government initiative designed to deter landlords, this time in the form of a capital gains tax raid, reduces the level of stock available and drives up rental values.”

Tom Bill, head of UK residential research at Knight Frank, added: “The cut to the capital gains tax exemption is a further disincentive for landlords but, like other announcements in the Autumn Statement, it could’ve been worse.

“It will disproportionately affect landlords of lower-value properties but CGT rates have not been aligned with income tax, so a material drop in demand or a wave of selling is unlikely.

“Landlords have faced a series of tax hikes in recent years but private rented property accounts for 1 in 5 of English households. At a time when living costs are rising so quickly, policy should remain rooted in economics, encouraging landlords to remain in the sector and keeping downwards pressure on rents.”

And Chris Hodgkinson, managing director of House Buyer Bureau, said: “A bleak budget for the nation, as the government ramps up taxes while we stare down the barrel of a 41 year high in inflation.

“As a result, we can expect the Bank of England to act with a further hike to interest rates in the immediate future and this will put even greater strain on our household finances.

“As it does, we can expect the property market to suffer as buyers can no longer afford to purchase at previous price thresholds, bringing house prices down in the process.

“With changes to capital gains tax we can also expect an influx of stock from hard pressed landlords, who have grown weary of the government’s consistent attacks on their profit margins and are looking to off load their buy to let portfolios.

“In doing so, this additional stock will also help balance the scale of supply and demand, contributing further to a muted housing market.”

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