There is growing concern within the property sector following reports that the Government may be considering the introduction of Capital Gains Tax (CGT) on main residences, a significant shift from current policy.
At present, UK homeowners are exempt from paying CGT on profits made from the sale of their primary home, a principle that has long underpinned confidence in the housing market and supported mobility within the owner-occupier sector.
However, recent reports suggest the Government is reviewing this exemption, with a view to potentially introducing a CGT charge on gains exceeding a certain threshold. While no official policy has yet been confirmed, even the suggestion of such a measure has raised alarm among property professionals and homeowners.
For EMPO members, many of whom are both landlords and homeowners, this proposed change could have important implications, particularly when considering the future sale of a main residence that has appreciated significantly in value over time.
There are also indications that this proposal may form part of a broader review of property taxation, including possible reforms to stamp duty and council tax, as the Government looks to address a substantial fiscal deficit.
Sector Reaction
Across the industry, concerns are being raised that taxing capital gains on main residences could:
- Deter homeowners from moving, potentially reducing overall market activity.
- Create uncertainty and hesitation among buyers and sellers.
- Penalise long-term homeowners whose properties have risen in value due to market forces, rather than speculative investment.
It has also been noted that the method used to calculate any gains, such as whether they are based on the property’s original purchase price or a future valuation date, would have a major impact on who is affected and to what extent.
Some commentators have pointed out that in parts of the UK, particularly areas with softer market conditions or flat growth over recent years, homeowners may not face significant taxable gains. Conversely, those in high-value regions or who purchased many years ago could face a considerable liability.
What This Could Mean for Landlords
While the proposals currently focus on main residences, EMPO encourages members to consider the potential ripple effects on the wider property market. Any policy that disrupts owner-occupier confidence and transaction volumes could indirectly affect rental demand, property values, and investor sentiment.
It is also a reminder that the Government may be looking more broadly at housing-related taxation as a potential revenue source, meaning further changes affecting landlords cannot be ruled out.
At this stage, no formal announcement has been made, and EMPO will continue to monitor developments closely. Members will be updated as more information becomes available.
In the Meantime
We recommend that members:
- Consider seeking professional tax advice before making decisions about selling main residences or restructuring property holdings.
- Remain informed about proposed changes to property taxation through EMPO updates and newsletters.
- Share concerns with their local MP or relevant industry bodies if they feel proposed changes could have unintended negative consequences.
EMPO will continue to represent the interests of its members and advocate for a stable, fair, and transparent property tax system that supports private investment in housing across the East Midlands