Tax break could help tenants buy their home from buy-to-let landlords

Renters should be offered the chance to buy their home from a private landlord if they have rented it for more than three years with landlords and tenants sharing a major tax break in the process.

Think-tank Onward has proposed that existing buy-to-let properties should be eligible for 100 percent capital gains tax relief, a tax break that would potentially cost the Treasury £1.3 billion a year.

To finance such a policy, Onward suggests other tax breaks that are currently available to buy-to-let investors should be cut.

Save thousands on mortgage deposit

In its report Make A House A Home, Onward said the gain from the tax relief should be split evenly between tenant and landlord, meaning the landlord collects a windfall when selling up and the tenant can save thousands of pounds on a mortgage deposit.

Chancellor Philip Hammond could announce the policy as soon as the end of this month when he presents his 2018 Budget in the Commons on October 31.

According to Onward, 88,000 households could potentially benefit from its policy every year, bringing a million people out of the private rental sector and into home ownership by 2023.

Its modelling predicts that the average gain per property would be £15,000, benefiting the average first-time buyer to the tune of £7,500. And with property prices much higher in places such as London, where first-time buyers struggle to afford to buy, the saving on capital gains tax in the capital would mean an average £19,500 to a privately renting tenant.

Planned reform of sector

The Government is currently consulting on proposals to reform the private rented sector, including introducing mandatory three-year tenancies.

The sector has doubled in size in the last two decades with 4.7 million households renting privately. Those households now pay a higher proportion of their living costs towards their rent than previous generations did, from an average 10 percent of income in the 1980s (15 percent in London) to more than 30 percent today (40 percent in London).

Make a home with Homeward Legal

Looking to buy your rented home from your landlord? Get the best conveyancing team on your side with Homeward Legal. We work with expert property lawyers across England and Wales who can ensure your purchase transaction goes smoothly from start to finish.

Our quotes are always competitive, the services we offer high-quality, and with our no-completion, no-fee guarantee, you won’t lose out if your purchase fails to complete for any reason.

Call now on 0800 038 6699 or get a no-obligation quote online for the conveyancing service you want.

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