CGT 'may jeopardise rental market'

Friday, May 14th 2010

The rental market is under threat from the proposed increase in the capital gains tax (CGT), one body has warned.

According to the Association of Residential Lettings Agents (Arla), the planned tax rises are a risk to the private rental sector.

The alterations would raise taxes on capital gains to a level comparable to the levies applied to income.

Ian Potter, operations manager for Arla, said investors may be discouraged from moving into the sector, while others look to sell off their property assets in a bid to avoid the charges.

"With the anticipated increase in capital gains tax rates for non-business assets, we could potentially see a fire sale situation arise in the buy-to-let market with investors offloading properties," he stated.

Mr Potter added the amount of rental property available would fall as a result, jeopardising the recovery of the industry.

His comments came after chairman of the National Landlords Association David Salusbury noted a rise in the taxes may "act as a barrier" for investment in residential property.

He called for landlords' profits to be exempt from the upcoming levy.