Capital Gains Tax Rise To Have Little Effect On Buy To Let Market

The rise in capital gains tax announced in the budget yesterday should have very little effect on the buy to let market, experts are predicting.

Capital gains tax increased from 18% to 28% for higher rate tax payers at midnight last night, but it is thought that serious property investors will not be deterred from investing in buy to let properties by this tax rise.

As the rise was almost immediate, investors would not have had time to realise any profits, even though there has been speculation that CGT was to rise significantly in the emergency budget. It is thought that landlords will now not be tempted to flood the market with their investment properties, which would have created a wave of sellers looking for a dwindling number of buyers, as some commentators had feared.

“Although the hike in CGT will be a disappointment to wealthier buy-to-let investors it is unlikely to have any significant detrimental effect on the buy-to-let market overall. The fact remains that most residential property investors are in the market for the medium to long term and they seek returns through rental yields as well as capital gains.”, said Andrew Young, Chief Executive Officer at Landlord Centre commented.

Although some short term property speculators may be deterred by the CGT hike, according to Mr Young: “professional landlords are unlikely to be deterred from maintaining and expanding their portfolios as buy-to-let property is still generating good income and remains a viable medium to long term investment offering competitive returns.”