It’s not just navigating a path through the Coronavirus crisis that is proving the value of letting agents - it’s their work helping landlords through this week’s changes to Capital Gains Tax too.
The chief sales officer of lettings payment automation provider PayProp, Neil Cobbold, says agents now have a critical role in raising awareness, offering advice and referring clients to tax experts about the tax changes which come into effect today.
With immediate effect, anyone who sells a property on which CGT is payable will be required to pay an estimate of the tax within 30 days of the sale completing - a huge reduction from the existing grace period of between 10 and 22 months.
And also from today lettings relief - which allows landlords to claim tax relief when letting a property in which they used to live - will only apply for any period in which the owner has occupied the property at the same time as tenants.
The final exemption of principal private residence relief - which is provided to landlords selling a property they have previously used as their main residence – will also be reduced from 18 months to nine months.
"These significant and complex CGT changes are set to affect many landlords who are looking to sell properties in the near future … [but] they have arguably gone under the radar, receiving less coverage than other industry issues” says Cobbold.
He continues: ”Most landlords selling properties after will need to seek expert tax advice when paying their CGT bill. It could therefore be beneficial for agencies to have a partnership with a professional tax expert in place, so that landlords looking for advice can be referred to a trusted source quickly and efficiently.”
These reforms coincide with another crucial tax change affecting landlords - from today the final stage of Section 24, which involves the removal of buy to let mortgage interest tax relief, will commence.
This means that landlords will only be able claim a tax credit on buy-to-let mortgage interest at the basic rate of income tax, currently 20 per cent.
"Agencies need to make sure they are on hand to guide their clients through this busy and potentially costly time, while also offering them value for money and a first-class personal service. This is an opportunity for agents to demonstrate their value to landlords who may be looking to cut costs or reduce activity" says Cobbold.
"While these tax changes will require some adjustment, due to the strength and growth of the PRS, there will still be plenty of opportunities for the best letting agencies to take on more business and thrive in 2020," he concludes.