A second agency chief has warned the Conservatives of the possible electoral consequences of higher taxes aimed at the private rental sector.
Marc von Grundherr, director of Benham and Reeves, has spoken out against the Autumn Budget provision which will see landlords’ Capital gains Tax allowance cut from today’s £12,300 to £6,000 in April 2023, and then halved again to £3,000 by April 2024.
“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” cautions von Grundherr.
Last week David Alexander - chief executive of large lettings operation DJ Alexander, part of the Lomond Group - said: “The Conservatives have always been known as the property-owning party, but they now seem in danger of damaging this reputation as they seek ever more punitive means of balancing the books.
“Voters have long memories and these moves, if implemented, will impact people over the period of the next general election so Government needs to be aware of the potential consequences of these actions at the ballot box.”
Both agency chiefs were particularly upset at the CGT change, which is seen as targeting landlords in particular. On top of that, Hunt has announced a cut in the dividend allowance from £2,000 to £1,000, with a further 50 per cent cut from April 2024, meaning that investors will now pay tax on dividends at a rate depending on their wider income.
The typical landlord who sold this year in England and Wales enjoyed £98,050 capital appreciation according to lettings agency Hamptons. After deducting 10 per cent for costs, this would leave a higher-rate taxpayer with a £21,260 CGT bill.
It’s now been calculated that when the allowance is reduced next year to £6,000, an average higher-rate taxpaying landlord would incur an extra £1,770 in tax; from April 2024 that same landlord will pay £2,610 or 12 per cent more in CGT when selling.
Another agency leader - Tom Bill, head of UK residential research at Knight Frank - comments: “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.”
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I had always considered myself as an out and out Tory, but I first started work as Mrs T came to power. I've not voted for them since Osborne hit us with S24 but still think I'm a Tory. It's the party that's changed and we now have socialists in waiting and socialists in power. It probably doesn't make much difference whether it's Conservatives or Labour in Downing St.
I agree having voted Conservative for most of my life. Now my vote will go to Reform UK who have Conservative policies, unlike the shower in government. I cannot support them in any way now.
Conservative policy has never been what it claims. Look at Ted heath claim g the EU was a common market! And, it still isn't. It's a Franco German stich up !
Not my Conservative Party! Too late to change now, would be interested to know how many CP members have resigned in teh past year!
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